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Property Management – Keeping your eyes on the ball
those ABC’s
Good property management has always been about applying common sense
to the administration of investment real estate. This also applies to
condo/strata administration which, even though its ownership
objectives are not profit driven, still too must be done with safety,
comfort and economy as the major tenets. However, as we know, common
sense isn’t all that common!
All
too often, property managers get caught up in some of the peripheral
activities associated with running a building and portfolio. Such
tasks as realty tax appeals, complicated spreadsheets to calculate
additional rent charges and budgets, client meetings and Annual
General Meetings, tenant/occupant newsletters, tenant retention
programs, lease clause interpretation and enforcement of rules and
regulations, checking messed up utility accounts, and even tracking
down the source of ladybugs in a room supposedly sealed off from the
outside elements.
These are all interesting distractions, yet they often take away from
the basic fundamentals of the business – the three core activities
that have always been the cornerstones of property management and
always will be. They are – (1) collecting the money, (2) making the
repairs and, paying the bills. A wise old dog in the business passed
this crystallized view of property management on to me more than 33
years ago, and now, as a mature puppy myself, I pass it on to the
young pups in the business.
A
property manager can earn one or several of the well recognized
professional designations – the CPM® (Certified Property Manager®)
ARM® (Accredited Residential Manager®) and RPA (Real Property
Administrator) from the USA, the RCM (Registered Condominium Manager),
AIHM (Associate of the Institute of Housing Management) in Ontario,
and some of many other related real estate tickets – the CCIM and SIOR
(again from the USA) and the FRI, CRES, CLO, CRF, and CRU through the
Real Estate Institute of Canada. All of the courses deal with a
specialty focus, ASSuming that the practitioner has “common sense” and
knows the fundamentals. Common sense is not taught as a subject.
Neither is good judgment. Write a book on how to get them and you’d
make a million. Nobody knows where common sense comes from – it’s
just there, or it isn’t. Some property managers, unfortunately, never
seem to get it. Good judgment, on the other hand, is acquired, and
arrives with varying speeds to different people, usually through the
proper treatment of one’s mistakes.
It
is quite natural to avoid those things that one doesn’t like to do –
whether it’s dealing with a difficult employee, commercial tenant or
condo/strata owner – and gravitate to those things that you like. For
some it’s haggling with contractors, or pontificating at meetings and
leaving as you came – with no pen. For others it’s leasing, composing
newsletters or Friday afternoon roof inspections at properties close
to home. But, common sense dictates that a good property manager
always keeps his or her eye on the ball – the A B C’s – those three
fundamental tasks.
If
the rent or fees are not paid on time, cash flow problems often
result. This can lead to extending the times that contractors and
trades are paid. Extending a “net 30 day payment” to “net 60” then to
“net 90” strains the relationship with them to the point where you’ll
eventually become last on their own “preferred list” during a crisis
or a pinch with one of your properties. Repairs are then delayed.
Quotations take longer to arrive. The result is usually unhappy
tenants or residents, with somewhat compromised safety and comfort.
Sure, this is oversimplified, but you get my point. There is a very
tight relationship amongst those three fundamentals - the important A
B C’s.
All
other property management activities are spins and twirls around the A
B C’s. A pretty colour spreadsheet, three designations or being a big
shot on some committee don’t matter at all to an owner if the rents,
condo/strata fees are not collected, his building is unsafe for the
public and occupants, or the suppliers are being paid twice for the
same job. The common sense focus on those basics in the property
management system must be automatic. But like any system subject to
entropy, it wears down. The A B C’s get relegated to the back of the
mind.
A
sure fire way to discover if those A B C’s are not being tended to –
one that experienced senior management knows – is to listen to what I
call the “hen chatter” when asking about any of them. This relates to
the instinctive practice in nature that a mother bird puts into play
when her nest is being threatened by a predator. The wings start to
flap wildly; she flies and feigns injury away from the nest, and
chatters like crazy to distract the predator – all with the view to
distract. Excuses are like this “hen chatter” for why the accounts
receivable are so high, for why the property manager has a new
electrician and plumber each year at the property and why the manager
has difficulty collecting money. In all likelihood, the fundamental A
B C’s have been neglected. Listen for it in abundance the next time
you sense that you’ve hit a raw nerve or weak point in the property
manager’s activities.
It
is well worth the pause every once in a while to reflect on those
fundamentals – to recharge the battery and remember to “keep your eye
on the ball”. If you’re a property owner, be careful not to be too
dazzled by the “hen chatter”, the moves and the spins – watch the ball
yourself too!
John J. Molnar, BA FR, CRP CPM® has been a property
manager, lecturer, and consultant for 33 years nationally and
internationally and now has is own firm in Hamilton doing condominium
reserve fund studies, insurance appraisals and commercial property
management.
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