PROPERTY
MANAGEMENT
By Michael Lustig
Copyright 2011 Real Estate License Services, Inc.
Smashwords Edition
PROPERTY
MANAGEMENT
Textbook and Student Workbook, Combined
Course
by Correspondence.
For Qualification For a California Real Estate
Broker
License or to Extend a California Real Estate Sales
License
(D.R.E.Approval #1228-90)
New Department of Real Estate Rules Allow You to Avoid All Quizzes and to Go Straight to Your Final Exam, Which is Open Book! You May Suggest Your Own Test Administrator Also! For Details, Please Turn This Page and Read the Student Instructions/General Information Page.
REAL
ESTATE LICENSE SERVICES
5059 Newport Avenue, #209
San
Diego, CA 92107
(619) 222-2425
Includes “Student Instructions,” Quiz Questions and Answers, and Page References for the Quiz Questions for the Course “Property Management.” Please Read and follow the complete “Student Instructions” just after this page.
Copyright © 2011, 2003, 2000, 1991, 1990, 1989, 1988, 1987, 1983 Real Estate License Services, Inc. Copyright registered. All rights reserved. No part of this material may be reprinted, reproduced, transmitted, stored in a retrieval system, placed in a computer or on the Internet, or otherwise utilized, in any form or by any means electronic or mechanical, including photocopying or recording, now existing or hereinafter invented, nor may any part of this course be used for teaching without permission from the copyright holder.
STUDENT INSTRUCTIONS/GENERAL INFORMATION
The California Department of Real Estate DOES NOT REQUIRE COMPLETION OF QUIZZES OR ESSAYS PRIOR TO YOUR FINAL EXAM. Study the "Written Assignment" questions based on the chapter readings as well as the answers with page references that are on the following page. YOU DO NOT NEED TO SEND IN ANY "WRITTEN ASSIGNMENT" ANSWERS. To complete this course, just study the practice questions and answers, take the final exam online or on paper and, if on paper, make sure the final exam question sheets and completed Scantron answer forms are returned to us along with the completed "Certification of Test Administrator." THE FINAL EXAM IS OPEN BOOK. If you have any questions, please call (619) 222-2421.
1) This course consists of text reading and a final examination.
2) Practice questions ("Written Assignments") covering most of the chapters in the book are based on the text reading in each chapter. Answers to those practice questions (with page references) are included for your convenience and may be found on the page after this page. The "Written Assignments" are for your practice only. NO QUIZ QUESTIONS ARE REQUIRED PRIOR TO YOUR FINAL EXAM.
3) The minimum time limit to complete one course is 20 days from the date of enrollment. The maximum time limit to complete one course is six (6) months from the date of enrollment. Two three (3) month extensions may be obtained (see section below on Extensions and Re-enrollments). Under no circumstances can your enrollment last beyond twelve (12) months.
FINAL EXAMINATION: When you are ready to take the final test, please fill out the form "Request to Take Final Exam." You may mail it to Real Estate License Services, 5059 Newport Ave., #209, San Diego, California 92107, or fax to (619) 222-8593. Real Estate License Services will arrange for your final examination online or with a test administrator. If your final exam is not online, you may suggest who your test administrator will be. The examination consists of 100 multiple choice questions and you must complete it within 150 minutes (2.5 hours). When you finish the test, if your final exam is not online, turn it in to the test administrator, who will mail it to Real Estate License Services. The questions used for the final exam must be mailed to Real Estate License Services along with the answers.
GRADING OF THE FINAL EXAM AND ISSUING OF CERTIFICATES: A passing grade is based on a minimum passing score of 60% on the final examination. Only the final examination grade is used in determining the student's overall grade. Students will be assigned a letter grade, but the grading system reflects the 60% passing requirements.
% OF POINTS = GRADE
100% - 90% = A
89% - 80% =
B
79% - 70% = C
69% - 60% = D
59% - 0%
= Fail. In this case the course would have to be repeated and passed
in order to receive credit.
An official certificate of your course grade will be mailed to you within two weeks after receipt of your completed final examination if taken with a test administrator. Additional certificates are $15.00 each.
REFUNDS: Students may apply in writing to REAL ESTATE LICENSE SERVICES, mailing address, 5059 Newport Ave., #209, San Diego, California 92107 within 15 days from the date of enrollment and cancel and receive a refund for the full tuition. All REAL ESTATE LICENSE SERVICES materials must be returned in good condition at the time of cancellation; the materials should not be soiled, torn or marked upon. Refunds are not allowed if any work has been submitted.
EXTENSIONS AND RE-ENROLLMENTS: If the course has not been completed within six (6) months of enrollment, the student may receive an extension of three (3) months by paying an extension fee of $35.00. If at the end of that three month extension the student still has not completed the course, a second three (3) month extension may be obtained by paying an additional fee of $30.00. IN NO CASE MAY THE PERIOD OF ENROLLMENT EXTEND BEYOND TWELVE (12) MONTHS. If the student has not completed the course within 12 months from the original date of enrollment, the enrollment expires and no further extensions are allowed. The student must re-enroll and begin the course over again in order to complete the course. The student may re-enroll under such circumstances for a discounted re-enrollment of $40.00 per course.
TRANSFERS: Courses may be transferred to another person by paying a transfer fee of $30.00 per course. Transfers are not allowed if any work has already been submitted.
PROPERTY MANAGEMENT
To finish this course, you need to do the following:
1. Quizzes are NOT required. Included below are the answers to the questions at the end of most chapters. Page references for the topics in each question and answer are also listed. Read the book and study the questions and answers. You may take your final exam 18 days after having possession of the textbook.
2. When you are ready to take the final exam, please fill out the form "Request To Take Final Exam," and fax it to (619) 222-8593 or mail it to: Real Estate License Services, 5059 Newport Avenue, #209, San Diego, CA 92107. Real Estate License Services will arrange for your final exam online or with a test administrator.
Answers with Page References to Practice Questions at the End of Most Chapters in this Textbook
TABLE OF CONTENTS
Chapter 1 PROFILE: HISTORICAL BACKGROUND & JOB DESCRIPTION
Chapter 2 APPLICATIONS: CATEGORIES OF MANAGED PROPERTY
Chapter 3 THE FOUNDATION: RESEARCH AND ANALYSIS
Chapter 4 THE STRUCTURE: RENTS & BUDGETS
Chapter 5 ADMINISTRATION: RECORDS, PROCEDURES & PERSONNEL
Chapter 6 LEASES: VALUES & CONCESSIONS
Chapter 7 RISK MANAGEMENT: EXPOSURE & PROTECTION
Chapter 8 ESSENTIALS: ETHICS & THE LAW
Chapter 9 MAINTENANCE: PREVENTION, PRESERVATION, & CORRECTION
Chapter 10 MARKETING: ADVERTISING, PROMOTION & PUBLICITY
Chapter 11 RESIDENTAL PROPERTY MANAGEMENT - APARTMENT MANAGEMENT
Chapter 12 RETAIL PROPERTY MANAGEMENT
Chapter 13 OFFICE AND INDUSTRIAL PROPERTY MANAGEMENT
Chapter 15 PROPERTY MANAGEMENT: RECENT DEVELOPEMENTS AND FUTURE POSSIBILITIES
PREFACE
This book is organized in the following ways:
1. Wherever a subject under discussion, such as “risk management,” applies to a variety of property management situations, an attempt is made to cover them all (i.e., the management of residential, commercial, and industrial property, etc.).
2. The focus is primarily on the management of investment property, since that is the type of property which most often requires professional management. The management of non-investment property, such as condominiums, is also treated, but is set aside for separate discussion.
3. No attempt has been made to apply a consistent use of masculine or feminine or non-gender pronouns when referring to such entities as “the property manager,” or “the investor.” Usage has been determined mostly by which pronoun appeared to make a more readable sentence, although a concerted attempt has been made to convey the assumption that men and woman are both equally likely to be managers, investors, etc. No discrimination is intended toward either gender.
4. Since property managers may be either self-employed, employed directly by an owner, operate as a consultant, or work for a management agency, this book is not addressed to any one of these, but rather to all. A certain amount of emphasis has been placed on the manager who works for an agency, however, since it is assumed that the majority of managers are employed in that way.
The text contains fifteen written assignments, reviews which are organized as multiple choice exams to be taken as you progress through the book. Some chapters will contain more than one review because of the amount of material covered; other chapters contain no review.
Chapter 1
PROFILE:
HISTORICAL BACKGROUND & JOB DESCRIPTION
THE PROPERTY MANAGER
The development of the profession of property management has been intimately connected with changes in the fluid and dynamic world of real estate over the course of the twentieth century. Originally, a property manager did little more than serve as a caretaker of investment property, performing routine maintenance and collecting rents. Technological and demographic developments, however, brought about radical and sweeping changes in the way we live and the way we use real estate, changes which in turn affected the role of the property manager. What began as a simple caretaker function has developed over the past several decades into a highly specialized, multi-skilled profession.
The development of steel construction, for example, which led to the erection of high rise multi-family dwellings, intensified the need for property management. As apartment buildings, cooperatives, and condominiums increased in size and complexity, as the tenant population grew, and as investments became more substantial, the skills required of property managers multiplied accordingly.
Another development which affected the real estate industry, and consequently the opportunities for property management, was the proliferation of private automobile transportation and the consequent move of the population from urban to suburban centers. Office buildings and regional shopping centers sprang up across the country, all requiring a steadily advancing degree of sophisticated scientific property management methods and skills.
Management of investment property has therefore become a highly specialized area of the real estate business. Arising as it has in an age of specialization in all fields of endeavor, this particular specialty would seem to be just another example of a national trend: as the demands of modern life and the application of scientific technologies and methodologies have required an ever increasing number of specialists in all fields, generalists in any endeavor have become increasingly rare.
Real estate, of course, has been no exception. People who make their livelihoods in the real estate industry respond to the increasing complexity of modern life in the same way, by recognizing special areas of need and opportunity and by filling those areas with specialists, such as property managers, who are experts in solving particular kinds of problems and providing certain services. The curious thing about property management as a specialty, however, is that it requires a very broad understanding of many other professions, crafts, and skills.
The specialist known as a property manager must be a multi-disciplined generalist capable not only of marketing and sales strategies, but also complex record keeping and accounting, budgeting and economic forecasting, effective interpersonal communications, and high levels of analytical and organizational skills — a very sophisticated Jack-of all trades operating in one small area of real estate
An effective property manager will be familiar with basic economic principles and the language and application of certain aspects of law. Those who manage shopping centers must understand the language and practices of the retail industry. Industrial property managers must learn negotiating skills in working out complex long-term leases between manufacturers and owners of industrial space. Marketing surveys have to be conducted, demographic information gathered and analyzed. Properties must be advertised and promoted. Above all, investor goals must be achieved.