Tip of the Month - April 2022

The plans may not include the continued operation of the property in its present mode. In the course of performing the market and property analysis, the property manager may determine that an alternative use would be more productive. Alternative uses, as well as rehabilitation, alteration and modernization, should be explored with the owner to define his or her objectives.

The management and improvement plan is shaped by the owner’s attitude toward the investment. The owner may want to authorize all suggested expenditures in order to increase the property’s one-term income potential, or to decrease taxes. On the other hand, the owner may prefer to make no changes, treating the property as a short term investment from which the maximum possible income should be derived quickly. Other owners may permit expenditures to be funded out of the property’s income but be unwilling to invest additional capital.

The owner’s objectives will be the deciding factor in the adoption of the management plan. If the manager cannot successfully execute a particular plan as outlined by the owner, the two should try to renegotiate it. One of the most challenging aspects of property management is that there is more than one answer to any given problem. When the manager and the owner agree on a workable management plan for the property, it must be put into contract form so that the management of the property can proceed.