Is your real estate in good hands? A look at property management. (Insiders Outlook).In today's difficult economic climate, it is becoming ever more important that property owners ensure that their property management agents are properly managed themselves. Too often, the property owner becomes excessively comfortable with the owner/manager relationship. If the rent is being collected on time, if the bills are being paid and the tenants are not complaining, everything must be okay. Well, that doesn't does·n't Contraction of does not. necessarily mean that the managing company is doing all it can to protect the owner's interests. Perhaps understanding some of the problems involved in property management would make the owner think twice. Property owners should ask themselves some questions. For example, how strong is the manager's internal control system? Does a weak vendor management system allow for excessive charges or potentially avoidable repairs? Is your manager trying to obtain competitive market rates from regional service providers for your preventive maintenance The routine checking of hardware that is performed by a field engineer on a regularly scheduled basis. See remedial maintenance. preventive maintenance - (PM) To bring down a machine for inspection or test purposes. See provocative maintenance, scratch monkey. contracts? Is there an aggressive and well-monitored bidding and approval process for capital expenditures? Are the leases being abstracted properly? Is the work being performed on the building really the responsibility of the landlord? Perhaps the rent increases or tenant passthroughs are delayed or inaccurate, causing lost cash flow. Are warranties and insurance related expenditures being monitored to insure Insure can mean:
Does your property qualify for any real estate tax reductions or enterprise zone relief? Does your current property manager have the capacity to handle all of your needs, along with the needs of its other clients, without losing efficiency? Property management firms earn substantial fees from their clients to maintain and manage properties. Services ranging from snow removal to general repairs are often left to the property manager. Quite often, the management firms contracts with the service providers directly and bills the property owner for the work performed. This arrangement allows for potential errors outside the control of the owner. Since the financial responsibility rests on the owner, the incentive for the property manager to identify and correct any errors is small. Double billings In commerce, double billing is the error of charging a customer twice for the same unique product. This can occur due to a change in product name[1] or due to a software error.[2] The American Bar Association prohibits double billing. , over-billings, billings for work proposed and not approved, overlooked warranty and insurance reimbursements are just a few examples of problems we have found when examining the books of certain managers. So how do you know if your property manager is doing everything properly? Maybe its time to make an unscheduled unscheduled Adjective not planned or intended Adj. 1. unscheduled - not scheduled or not on a regular schedule; "an unscheduled meeting"; "the plane made an unscheduled stop at Gander for refueling" visit. The owner holds certain audit rights. Under those rights, an accountant trained to identify potential areas of real estate mismanagement mis·man·age tr.v. mis·man·aged, mis·man·ag·ing, mis·man·ag·es To manage badly or carelessly. mis·man  age·ment n. can examine the
books and records of the property manager and determine, if everything
is in good order.
Our real estate team has found alarming instances of neglect An omission to do or perform some work, duty, or act. As used by U.S. courts, the term neglect denotes the failure of responsibility on the part of defendants or attorneys. and mismanagement across the board, from small property management companies to large, national firms with multi-million dollar clients. A flaw in one property manager's internal control system resulted in thousands of dollars of over-billing by vendors. Low level employees were permitted to approve work orders as long as they did not exceed $250. The vendors were able to interpret this limit to be the authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: billing amount, creating invoices for $250 without regard to the actual work performed. The property manager's accounting controls did not catch the error, since the vendor invoice An itemized statement or written account of goods sent to a purchaser or consignee by a vendor that indicates the quantity and price of each piece of merchandise shipped. A consular invoice is one used in foreign trade. was always equal to or less than the dispatcher's approval limit. Even though the company had a state-of-the-art software system, software cannot reach a decision as to the validity and economic justification justification In Christian theology, the passage of an individual from sin to a state of grace. Some theologians use the term to refer to the act of God in extending grace to the sinner, while others use it to define the change in the condition of a sinner who has received for charges. Another case uncovered Uncovered may refer to:
The owner, in this case, was dealing with a management company with high integrity, but it did not monitor the service provider to whom it had sub-contracted the work. Unfortunately, this multi-tier system of sub-contracting out the work is far too common. So what is your property manager not catching? Maybe it's time It's Time was a successful political campaign run by the Australian Labor Party (ALP) under Gough Whitlam at the 1972 election in Australia. Campaigning on the perceived need for change after 23 years of conservative (Liberal Party of Australia) government, Labor put forward a to take a good look around. |
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