Past year Jun 2019

QUESTION 1

a) Explain the significance of property management in preserving the building life span to ensure the
safety and comfort of the occupants. 15 marks.

The significance of property management in preserving the building life span and ensuring the safety
and comfort of the occupants is multifaceted and encompasses several important aspects:

Maintenance - Property managers are responsible for scheduling and supervising regular maintenance
of the building and its systems, such as heating, cooling, plumbing, and electrical systems. This helps to
prevent equipment malfunctions and extends the life span of these systems.

Safety - Property managers are responsible for ensuring that the building and its systems meet all
necessary safety standards and regulations. This includes conducting regular safety inspections,
addressing any potential hazards, and making necessary repairs and upgrades to ensure the safety of
the occupants.

Comfort - Property managers play a critical role in ensuring the comfort of the occupants by maintaining
the building's temperature control systems, ensuring that lighting and ventilation systems are
functioning properly, and addressing any comfort-related issues in a timely manner.

Building code compliance - Property managers must be aware of all relevant building codes and
regulations and ensure that the building is in compliance with these codes. This helps to maintain the
safety and stability of the building and its systems.

Cost-effectiveness - Property managers play a critical role in controlling costs associated with
maintaining the building by prioritizing necessary repairs and upgrades, negotiating contracts with
vendors, and managing the budget for maintenance and repairs.

Tenant relations - Property managers are often the primary point of contact between tenants and
building owners and play a crucial role in maintaining positive relationships with tenants. They are
responsible for addressing tenant complaints, resolving disputes, and ensuring that the building and its
systems meet the needs and expectations of the occupants.

Market competitiveness - By ensuring that the building is well-maintained and meets the needs and
expectations of its occupants, property managers can help to increase the building's competitiveness in
the market and attract new tenants.

In conclusion, the role of property management in preserving the building life span and ensuring the
safety and comfort of the occupants is critical. Property managers play a crucial role in maintaining the
building's systems and equipment, ensuring compliance with safety regulations, and maintaining
positive relationships with tenants. These efforts help to ensure that the building remains safe,
functional, and attractive to tenants for many years to come.
b) one of the financial policies in property management is the budget guideline. identify the
components of the budget guideline. 10 marks.

The components of a budget guideline in property management typically include:

Operating Expenses - This includes all the expenses required to maintain and operate the property such
as utilities, repairs and maintenance, property management fees, insurance, and taxes.

Capital Expenditures - This includes expenses for major improvements or upgrades to the property such
as renovations, installations of new equipment, or construction of new buildings.

Reserve Funds - This is an amount set aside to cover future expenses such as replacement of equipment
or major repairs.

Rent Roll - This is a record of all the tenants and their rental payments. This information is used to
calculate the expected income for the property.

Income and Expense Projections - This involves estimating future income and expenses based on past
performance, current market conditions, and anticipated changes.

Debt Service - This includes payments for any loans taken to finance the property, including interest and
principal payments.

Cash Flow Analysis - This involves analyzing the inflow and outflow of cash to ensure that there is
enough money to cover all the expenses and to determine if there are any surplus or deficit funds.

Break-Even Analysis - This involves determining the minimum amount of rental income required to
cover all expenses and generate a profit.

Marketing and Advertising - This includes expenses for promoting the property to potential tenants,
such as advertising in local newspapers, online, or through direct mail.

Contingency Planning - This involves planning for unexpected events, such as a downturn in the
economy or a natural disaster and setting aside funds to cover any potential losses.

In conclusion, the budget guideline is a comprehensive and detailed plan that helps property managers
effectively manage the financial aspects of their properties.
QUESTION 2

a) identify two objectives formulation in the context of property management. 5 marks.

In the context of property management, there are several objectives that can be formulated in order to
ensure the success and profitability of the property. Here are five common objectives:

Maximizing rental income - One of the primary objectives of property management is to maximize
rental income by ensuring that rental units are leased to tenants at market-competitive rates, and that
rental agreements are structured in a way that maximizes revenue.

Maintaining property value - Property managers aim to maintain and improve the value of the property
through regular maintenance and upgrades, as well as by promoting the property's strengths and
addressing any weaknesses.

Enhancing tenant satisfaction - Property managers strive to create a positive living environment for
tenants by responding to their needs and concerns in a timely and efficient manner, and by providing a
high level of customer service.

Minimizing expenses - Another important objective is to minimize expenses by implementing cost-

saving measures such as energy-efficient upgrades, negotiating favorable contracts with suppliers, and
streamlining processes.

Compliance with laws and regulations - Property managers must ensure that the property is in
compliance with all relevant laws and regulations, including health and safety codes, environmental
regulations, and fair housing laws. This requires regular monitoring and updating of policies and
procedures, as well as proactive communication with tenants and regulatory authorities.

In conclusion, these objectives are interdependent and must be carefully balanced in order to achieve
the overall goal of maximizing the value of the property for all stakeholders, including the owners,
tenants, and the community at large.
b) determine the recommended negotiation skills that a property manager should possess. 20 marks.

Negotiating is a critical skill for property managers, as they are often required to negotiate with a wide
range of stakeholders, including tenants, vendors, lenders, and government agencies. Here are some of
the recommended negotiation skills that a property manager should possess:

Active listening - Property managers should have strong listening skills in order to fully understand the
needs and concerns of the parties involved in a negotiation. This helps to build trust and rapport, and
can also uncover new information that can be used to reach a mutually beneficial agreement.

Communication skills - Effective communication skills are essential in any negotiation, as they enable
property managers to clearly and persuasively articulate their position, while also being open to hearing
and considering the perspectives of others.

Problem-solving skills - Property managers should be able to identify the underlying issues that are
causing conflict, and then work collaboratively with all parties to find a mutually acceptable solution.

Emotional intelligence - Negotiations can often be emotional, and it is important for property managers
to be able to read and manage their own emotions, as well as those of others. This requires a high level
of emotional intelligence, as well as the ability to remain calm and professional even in challenging
situations.

Cultural awareness - Property managers may be negotiating with individuals from a variety of cultural
backgrounds, and it is important to be aware of and respectful of cultural differences. This includes
understanding and accommodating different communication styles, negotiating practices, and value
systems.

Flexibility and creativity - Property managers should be flexible and open to new ideas and approaches,
as this allows them to be creative in finding solutions that are mutually beneficial for all parties involved.

Knowledge of the market - A strong understanding of the real estate market and current industry
trends is essential for successful negotiations, as this allows property managers to make informed
decisions and to be able to effectively articulate the value of their property and the terms of their
agreements.

In conclusion, these negotiation skills are key to the success of property managers in achieving their
goals and in building positive relationships with all stakeholders.
QUESTION 3

a) explain operational planning for property management. 5 marks.

Operational planning for property management is the process of creating a comprehensive plan for the
day-to-day operations of a property. It involves defining the policies, procedures, and processes that will
be used to manage the property and ensure its success.

The following are the key components of operational planning for property management:

Resource allocation - This involves determining the personnel, equipment, and supplies needed to
effectively manage the property and allocate resources accordingly.

Budgeting - A budget should be developed to ensure that resources are allocated in a manner that is
financially sustainable and supports the overall goals of the property.

Service level agreements - Service level agreements should be established with tenants and other
stakeholders, outlining the services that will be provided and the expectations for service quality and
timeliness.

Risk management - A risk management plan should be developed to identify and mitigate potential
risks, including those related to safety, security, and environmental issues.

Continuous improvement - Operational planning should include a focus on continuous improvement,

with regular review and adjustment of policies and procedures based on feedback and results.

In conclusion, operational planning is an essential component of effective property management, as it

provides a clear framework for managing the property and achieving the desired outcomes. By defining
policies, procedures, and processes, and allocating resources appropriately, property managers can
ensure that the property is run efficiently and effectively, and that the goals of all stakeholders are met.
b) elaborate four variants of outsourcing model in property management. 20 marks.

Out-tasking Model - This model is a selective approach to outsourcing, where specific tasks or projects
are contracted to external companies, while the core property management activities remain in-house.
This model is beneficial for companies that need to address a specific issue, or if they don't have the
internal resources to handle the task. Examples of tasks that can be outsourced under this model
include maintenance, repair, and marketing.

Traditional Outsourcing Model - In this model, the property management company contracts all
property management services to a third-party company. This includes all tasks such as marketing,
leasing, rent collection, maintenance, and repair. The outsourcing company takes on the responsibility
for all aspects of the property management, giving the property owner more time to focus on other
aspects of their business. This model is beneficial for property owners who don't want to manage their
properties themselves, but still want to have control over the property management.

Total Property Management Model - This model is similar to the traditional outsourcing model, but in
this case, the outsourcing company takes on all aspects of the property management, including decision-
making responsibilities. The outsourcing company is responsible for ensuring that the property is well-
maintained, leases are renewed, rents are collected, and tenants are happy. This model is ideal for
property owners who want to delegate the entire property management process to an external
company.

Property Management Agent Model - This model is similar to the total property management model,
but with a twist. In this model, the outsourcing company acts as an agent of the property owner, rather
than as a manager. The property management agent is responsible for negotiating leases, collecting
rent, and handling tenant complaints, but the property owner makes all the decisions about how the
property is managed. This model is beneficial for property owners who want to maintain control over
their properties but need help with the day-to-day management.

Formal Fiduciary Relationship - In this outsourcing model, the property management company acts as a
fiduciary, meaning they are legally bound to act in the best interests of the property owner. This
relationship is formalised through a written agreement, which outlines the responsibilities of both
parties. The outsourcing company takes on the responsibility for all aspects of the property
management, and the property owner retains the right to make decisions about the management of
their property. This model is ideal for property owners who want a high level of control over the
property management process, but also want the peace of mind that comes with having a trusted
advisor.

In conclusion, the choice of outsourcing model depends on the needs and priorities of the property
owner. Each model has its own advantages and disadvantages, so it's important to carefully consider
which model is the best fit for a particular property and situation.
QUESTION 4

a) a property manager must be able to identify and analyse the owner's objectives, which will vary
among individual, corporate, fiduciary and government owners. determine the objectives of corporate
and individual owner. 10 marks.

The objectives of a property owner will vary depending on their type, which can be classified as
individual, corporate, fiduciary, or government. The property manager must be able to identify and
analyse these objectives in order to effectively manage the property and meet the owner's expectations.

Corporate Owner - A corporate owner is a company that owns real estate as an investment or for
business purposes. The objectives of a corporate owner may include:

Maximising profits - A corporate owner may be looking to generate income from the property in order
to increase their overall profits.

Increasing property value - A corporate owner may aim to improve the value of their property through
renovations, upgrades, or other capital improvements.

Diversifying their investment portfolio - A corporate owner may aim to diversify their investment
portfolio by adding real estate assets to their portfolio.

Individual Owner - An individual owner is a person who owns real estate for personal use or as an
investment. The objectives of an individual owner may include:

Generating rental income - An individual owner may rent out their property in order to generate
additional income.

Building wealth - An individual owner may aim to build their wealth by investing in real estate and
benefiting from capital appreciation over time.

Providing a personal residence - An individual owner may purchase a property for personal use as a
primary residence.

It's important to note that the objectives of an individual or corporate owner may change over time, and
the property manager must be able to adapt to these changes in order to effectively manage the
property. The property manager must also be able to communicate with the owner to ensure that their
objectives are being met and that the property is being managed in a way that aligns with their goals.
b) house owner insurance policy can be divided into three sections. explain all three sections in the
insurance policy. 15 marks.

A home owner insurance policy typically covers the structure of the home, personal property, and
liability. It is divided into three sections to provide comprehensive protection for the homeowner.

Structure Coverage - This section covers the structure of the home, including the roof, walls, and
foundation. It protects the homeowner against damage from events such as fire, theft, and natural
disasters. This coverage also provides compensation for living expenses in case the homeowner is
temporarily displaced from their home due to damage.

Personal Property Coverage - This section covers the personal property of the homeowner, such as
furniture, electronics, and clothing. It protects against damage or theft of personal belongings within the
home, as well as outside the home. Some insurance policies also include coverage for high-value items,
such as jewellery, artwork, and collectibles.

Liability Coverage - This section covers the homeowner in case they are sued for damages or injury to
someone else on their property. It also provides protection in case the homeowner accidentally causes
damage to someone else's property. This coverage includes medical expenses, legal fees, and
compensation for damages.

It is important to understand the coverage limits and exclusions in each section of the insurance policy.
The homeowner should work with their insurance provider to ensure that their policy provides
adequate protection for their specific needs and circumstances. Regular reviews of the policy are
recommended to ensure that it remains up-to-date and provides adequate protection over time.