EXERCISE 17.2 Contents of a management plan

There is an economic oversupply of property when there are more units than potential tenants.

The property management agreement establishes the terms of the property manager’s employment, creates an agency relationship, and sets forth the authority of the property manager.

As occupancy rates rise, space becomes scarcer and more costly.

If the average family in the area consists of two parents and two children, a property manager would probably be able to charge a higher price per square foot for three-bedroom units than for four-bedroom units.

When a property manager compares the managed property to comparable properties in the neighborhood to determine what advantages and disadvantages the managed property has, she is conducting a regional analysis.

In setting the rental rate for a unit, the manager adjusts a comparable unit’s rental rate either up or down to reflect differences between that unit and the unit being managed.

An economic shortage of rental units exists when there are more tenants able to pay the market rents than there are available units.

When trying to set rental rates for a managed property, the existing contract rental rates of the managed units are more meaningful to the property manager than current market rates.

When conducting a neighborhood analysis, the property manager must define the neighborhood by physical boundaries, such as a body of water or a main thoroughfare.