Cost-per-unit or Pricing Worksheet
Condominium and
cooperative management fees can be
calculated using either the cost-per-unit method or the pricing worksheet
explained in chapter 9. Condominiums and cooperatives that contract only for an
accounting or consulting service can be charged a minimum fee, but there should
be an additional charge for attendance at more one board meeting per year.
With the per-unit
method, a surcharge should be added for the additional time spent satifying a
board of directors or an owners’ association. The manager should also charge
additional fees to cover the time expended on other specified duties such as
attending board or association meetings or developing a newsletter for
circulation to stockholders or owners.
Flat fees
There is a compelling reason why the
management figure should be a flat fee rather than a percentage of gross
income, as is used for residential apartement fees. A percentage fee gives the
residential manager incentive to raise rents and thereby gain extra profit. The
revenue from cooperatives and condominiums comes not from rents but from
monthly assessments to cover operating costs. Managers who contract for a
percentage fee profit more by allowing operating costs to skyrocket because
this increase the monthly assessments (total revenue) and therby, the
percentage management fee. They also profit from increases in the real property
taxes and reserve funds.
Because a
percentage fee would place the owner and the manager in opposite camps, a flat
fee should always be used when dealing with condominium and cooperative
properties. In general, the manager also should quote a fee slightly higher
than that on the estimate because any increase in the management fee will have
to come from negotition with the board or association, at which time
competitive bids will usually be solicited.
LEASING COOPERATIVE AND CONDOMINIUM UNITS
Many condo and
co-op units are not owners-occupied. Serious problems may arise if tenants are
not carefully qualified or do not follow association mandates.
Rental may be
handled individually by the owner, by a third-party manager, or by or through
the owner’s association, either on an individual unit basis or as part of a
rental pool. Under a pool management, all rental income from all units. In the
condominium is placed in a fund that is shared equally after management
expenses. Thus, an owner with a unit that may not be attractive to prospective
tenants can be participate fairly with units for which there is higher demand.
In any event, the apartement rental principles
discussed in chapter 11 are applicable to renting condominiums and
cooperatives. The only real difference is that the association
declaration,bylaws, and resident rules and regulations take precedence over the
terms of the lease. For this season, a manager should secure legal assistance
in drafting a clause, which should appear in each lease: Tenant occupying (the
owner’s unit) acknowledges that the premises and rules and regulations. A copy
of these documents has been furnished to tenant. Tenant aggrees to abide by
these rules and regulations. Tenant understand that violation of any of them
may be grounds for eviction.
MANAGING MANUFACTURED HOME PARKS
Manufactured homes
(formerly referred to as “mobile homes”) have changed a lot over the years.
They are no longer trailer houses being pulled down the road or rusting
exteriors next door to an automotive dump. However, these images have been hard
to overcome. Today’s manufactured home is efficient, practical, and affordable
housing for 8 percent of americans. Some are even luxurious.
Today, the
manufactured home park is a combination of individual home ownership and
homesite rental. It is usually an orderly, well groomed entity and sometimes is
indistinguishable from a more traditional development. Once the manufactured
home has been moved to the site, most are never moved again, as their value comes
from the desirability of the community.
Inexpensive Hounsing
Manufactured
housing can be purchased for far less than it costs to build a traditional
home. This is appealing to those with lower incomes, including the elderly on
fixed incomes. Today’s manufactured home is larger than ever before; 83 percent
of the manufactured homes have three or more bedrooms, and the average
single-wide has been growing in size more than 2 percent per year. More than 1
million Californians live in manufactured homes and there are more than 2,000
manufactured home parks in New York state.
Near-Elderly Housing
Under the Fair
Housing Laws, certaint housing is exempt from the law requiring access to
housing by families.with children. The U.S Departement of Housing and Urban
Development (HUD) defines “near elderly” as 55 and older and “elderly” as 62
and older. Once a community qualifies for this designation from HUD, it can
refuse to rent to anyone with children, and many manufactured home parks do
just that ; in fact, some even market themselves as housing for the elderly.
Marketing to these folks is financially sound: near-elderly ages 55 to 64have
the highest per capita income, and seniors age 65 and over have the most
discretionary income.
Role of the Property Manager
Manufactured home
park management requires a combination of the skill of managing apartement
communities with those of managing condos and co-ops. A common task is making
sure thatthe tenants clearly understand the rules and regulations of the park
community. If the park consists of rented manufactured homes, then the manager
collects rents for the units. In other sitations, the home is owner-occupied,
and the manager collects a rental fee for the site.
The duties of a
property manager vary widely depending on the typeof park being managed. In
some communities, managers will do little more than show space, collect rents,
and prepare reports for the owner. Those managing “seniors” parks will no doubt
perform these traditional duties in addition on scheduling community events
that involve many of the members. In fact, creating and inspiring a community
feeling is one of the best ways to foster referrals and waiting lists.
In any event, the
manager generally is charged with minimally maintaining the value of the park,
and often with increasing the value by improving condition and appearance.
Every attractive, well-maintained property will attract sound tenants and sell
for a higher price when put on the market, even when compared with a poorly
maintained park bringing in the same amount of income.
The manager may be
directed to track other sources of income from laundromats, vending machines,
convenience stores, and the like. Computer software can help greatly. Anyone
specializing in mobile park management should consult Managing Mobile Home
Parks, a book published by the Institute of Real Estate Management (IREM).
MANAGING SUBSIDIZED HOUSING
Actual construction
and operation of public housing for low-income families has traditionally been the responsibility of local govermments.
In 1965, Congress authorized the U.S. Departement of Housing and Urban
Development (HUD) to provide financial assistance to local housing authorities
for the acquisition and operation of existing buildingor privately constructed
new housing for low-income tenants. Under the 1968 Housing and Urban
Development Act, the Federal Housing Administration (FHA), an agency of HUD,
was authorized to encourage private participation in the development and
construction of housing low-income families through rental and mortgage
insurance programs. FHA-insured mortgages and govermment subsidies were awarded
to nonprofit cooperative groups for the construction of low-income housing.
