introduction to property management

UNIVERSITI TUN HUSSEIN ONN MALAYSIA08/04/2023 1

Introduction to Property Management

Lecture 1Department of Real Estate Management

Faculty of Technology Management and Business

(Semester1 2012/2013)

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Lecture outlines

• History of property management• Property management today• Where property managers work• Different property management jobs• Property management as a career

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History of property management

• In its earliest day, the property manager had only one job,– TO COLLECT THE RENT

• In the 1930s, economic depressions, where people out of job, the stock market crash, mortgage default that end up with the banks kept many of properties.

• But bankers have no knowledge to manage property.

• Thus the property manager was born.

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Property management today

• For the last 25 years, most people became property managers by unintentionly.

• In the 21st century, the growth of real estate investment by the investors and companies that manage large properties, demand for property management is indeed a full-time career.

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Where property managers work

• Third-party managers– Work for the property owners of the property they

manage• Real estate investment trusts (REITs)

– Employee of the company• Institutional owners

– Work for group of building owners: banks, large limited partnerships, foreign investors, etc.

• Corporate real estate management– Work for corporations to manage their income

producing real estate

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Different property management jobs

• On-site manager– Day to day operation: collecting rent,

preparing reports, supervising maintenance, cleaning works

• Leasing agents– Leasing broker: locating & signing new

tenants to occupy space in building• Tenant representative

– Mostly for commercial property: assisting tenants in locating space and negotiating lease

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Different property management jobs

• Property manager– Responsible for the operation of several

properties, overseeing on-site manager, involve in planning and budget for property management activities, and usually report to asset manager

• Portfolio (asset) manager– Executive responsible for large no of properties,

evaluate the properties performance, act as a substitute to owner, approve policies and financial, act as advisor to owner.

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Property management as a career

• Board of valuers, appraisers, estate agents (BOVAEA)– Role of property managers can be found in

http://www.lppeh.gov.my/role.php

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Property management as a career

• The Board was set up in 1981 under the purview of the Ministry of Finance, Malaysia.

• The setup and operation of this Board is governed by the provision of Valuers, Appraisers and Estate Agents Act 1981.

• Its primary function is to regulate the Valuers, Appraisers and Estate Agents practising in Malaysia

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Property management as a career

• The Functions of The Board are– To keep and maintain the Register of Valuers,

Appraisers and Estate Agents, Probationary Valuers and Probationary Estate Agents and firms of Valuers, Appraisers and Estate Agents.

– To approve and reject applications for registration. – To hold disciplinary proceedings. – To conduct examinations. – To prescribe Scale of Fees. – To regulate the professional Conduct/Ethics of

Valuers, Appraisers and Estate Agents. – To award scholarships

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Property management as a career

• Role of Property Manager– Currently only a registered valuer can practice as a

Property Manager. – The property manager ensures that the owner gets

the best returns of his property investment. – He also ensures that the building is well maintained,

the building services well looked after and all expenses paid.

– He is able to optimise usage and enhance the investment in property.

– He advises on lease renewals, selection of quality tenants and the appropriate tenant mix.

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Number of Firms & Registred Members &

Probationary Members (Active) • Firms

Firm Type Firms

Valuer & Estate Agent (VE) 300

Valuers (V) 80

Appraisers & Estate Agent (AE) 9

Estate Agents (E) 900

Estate Agent & Property Management (EPM)

7

Property Management (PM) 35

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Number of Firms & Registred Members &

Probationary Members (Active)

• Registered Members

Licence Type Member

s

Registered Valuers (V) 840

Registered Appraisers (A) 17

Registered Estate Agents (E) 1650

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Number of Firms & Registred Members

& Probationary Members (Active)

• Probationary Members

Licence Type Members

Probationary Valuers (PV) 520

Probationary Estate Agents (PEA) 243

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Payment to Property Managers

• An annual fee based on:– 5% of the gross annual rent on the first

RM30,000– 3% of the gross annual rent on the residue up to

RM 100,000– 2% of the gross annual rent on the residue over

RM 100,000• The fee is applicable to each holding. • The expression ‘holding’ as used here has

the same meaning as defined in Section 2 of the Local Government Act 1976.

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Section 2 of the Local Government Act 1976

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Payment to Property Managers

• The expression ‘gross annual rent means the rents reserved or deemed to be reserved by the lease or lettings plus any incidental receipts collected accounted for or both in the course of management.

• Minimum fee : –As above but may be subject to a

maximum discount of 30% and a minimum fee of RM50 per month.

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Discussion

• Would you prefer to work as an employee manager or a third-party manager?– Why?– What are the advantages or

disadvantages of each?

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Answer

• Employee manager– Advantages

• The security of a paycheck• The freedom from having to solicit clients and

properties to manage

– Disadvantages• Being confined to working for someone else

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Answer

• Third party manager– Advantages

• The freedom of running one’s own business (although the property owner’s goals must always be fulfilled)

– Disadvantages• The work (and insecurity) of finding new clients

and new buildings to manage

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References

• Evans, M, (2007), Opportunities in Property Management Careers, McGrawHill.

• Kyle, R, (2000), Property Management, 6th Edition, Dearborn.

• http://www.lppeh.gov.my/role.php