What You Should Know About Property Management of Commercial Properties

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Now that you have made an offer to acquire a commercial property and are waiting to close escrow, you may want to start looking for a property manager to professionally manage the property. Your real estate investment advisor should present you with 2 or 3 local companies, each with its own proposal. Your job is to decide which company you will hire. The property manager will be the main point of contact between you, as the landlord, and the tenants. Her main job is to:

  1. Receive and collect the rents and other payments from your tenants. This is typically simple until a tenant does not send the rent check. A good property manager will somehow get the tenant to pay the rent while a lousy one will throw a monkey on your back!
  2. Hire, pay, and supervise personnel to maintain, repair and operate the property, e.g. trash removal, window cleaning, and landscaping. Otherwise, the property loses its appeal, and customers may not patronize your tenants’ businesses. The tenants then may not renew their lease. As a consequence, you may not realize the expected cash flow.
  3. Lease any vacant space.
  4. Keep an accurate record of income and expenses, and provide you with a monthly report.

A good property manager is critical in keeping your property fully occupied at the highest market rent, the tenants happy and in turn helps you achieve your investment objectives. Before choosing a property management company, you may want to:

  1. Interview the company with focus on how the company handles and resolves problems, e.g. late payment.
  2. Talk to the person who will manage the property day to day as this may be a different person from the one who signs the property management contract. You want someone with strong interpersonal skills to effectively deal with tenants.

The property managing company normally wants a contract for at least one year. The contract should spell out the duties of the property manager, compensation, and what will require the landlord’s approval.

Agent’s Compensation: you will have to pay someone to manage and lease the property. You may have one company to manage the property and a different company to lease the property. However, it’s best to work with one company that handles both managing and leasing to save time and money.

  1. Management fee: the fee varies between 3-6% of the base monthly rent for a retail center, depending on the amount of work needed to manage the property. For example, it takes much less time to manage a $2M retail center with just a single tenant than a $2M retail strip with 12 tenants. So, for the center with 12 tenants, you may have to pay a higher percentage to motivate the property manager. You should negotiate the fee as a percentage of the base rent instead of the gross rent. Base rent does not include NNN charges. Ideally, you want a lease in which the tenants pay for their share of property management fee.
  2. Late fee: when a tenant pays late, he is often required by the lease to pay late fee. The property manager is allowed to keep this fee as an incentive to collect the rent.
  3. Leasing fee: this fee compensates the property manager to lease any vacant space. In a typical lease contract, the leasing company wants 4-7% of the gross rent over the life of the lease. It also wants the leasing fee to be paid when the new tenant moves in. In addition, the leasing company wants around 2% of gross rent when the lease is renewed. The tenant may also ask for Tenant Improvement (TI) credit, typically between $10-20 per square foot to pay for construction expenses. So if a new tenant with a 10-year lease goes under after one year then you may lose money. As the landlord you should:
  • Approve a long term lease (10 years or longer) only when the tenant’s financial strength is solid. Otherwise, it may be better to reduce the lease to 3-5 years.
  • Make sure the new lease has a provision for some kind of rent escalation, preferably based on Consumer Price Index (CPI), i.e. inflation which is 3-4% a year instead of lower fixed 1-2% annual increase.
  • Consider TI request from the tenant as one of the factors to approve a lease. The TI credit depends on whether you need the tenant more or the tenant needs you more.
  • Negotiate for a flat rate renewal fee, e.g. $500 instead of paying a percentage of the rent for the life of the lease. The negotiation is easier with one company that handles both leasing and management.
  • Negotiate to pay the leasing agent a lower percentage, e.g. 4% when no outside leasing broker is involved.

You can see that it’s very important to minimize tenants’ turnover rate as it has a direct impact on the cash flow of your commercial property. A good property manager will help you achieve this goal.

Monthly Report: each month the property manager should send you a report on income received, expenses incurred, and property status. You should Review the report to see if the numbers make sense. You should:

  1. Request a report showing both rent and CAM fees received.
  2. Request a separate bank account for your property and have a monthly bank statement sent to you. Without this, the property manager will deposit and commingle all the rents from all properties that she manages into her company’s bank account.

If you instruct the property manager to send you the excess cash flow then you will also get a check.

Landlord’s Approval: the management contract should specify the dollar limit for exceptional maintenance expense above which would require your approval. This amount varies from landlord to landlord as well as the type of property. However, it’s typically somewhere between $500 to $2,000 dollars.

Communication with property manager: in the first few months, you and the new property manager should communicate often to make sure things go smoothly. You should give instructions in writing, e.g. email, to your property manager and keep records of all your correspondence. If the property manager does not do what you instructed, you may refer to your records and minimize disputes.

If you want to work hard for your money, you may want to manage your own property. However, if you want to work smart, your partner should be a good property manager.

What The World’s Greatest Managers Know And Do Differently

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It has been a debate forever about the role of a Manager and what knowledge and skills does a manager need to possess to be effective in his/her role? When we talk about the role of a manager, it is the context of the business environment and what are they expected to do? There may be different expectations in different organization environment even then when the managers as a cadre is discussed, there a platform in which they are evaluated and rated one above the other based on their contribution, skills and competencies. So, it is the knowledge and experience of a manager that sets him apart from the other. A lot of managers operate out of the conventional wisdom and are reluctant to experiment anything new lest it fails! There is nothing wrong or right about it, it is a managers prerogative how he wants to operate, however, past statistics have always proven that the individual approach, style, beliefs, values etc have a bearing on the people who work for these managers or are a part of the team.

So, what is it that Great Managers know? What is that powerful insight that the world’s great managers know and use in their daily work life that puts them ahead of the pack and helps them get the best out of their people? Is there actually a prescriptive knowledge capsule that one can use to have people queuing up to work for you? In many books, the writers have outlined a collation of insights that managers across the world have shared about their experience of working with people and their observations converted as their beliefs. Very interestingly, the insights are as follows:

“People don’t change that much”

“Don’t waste time trying to put in what was left out”

“Try to draw out what was left in”

“That is hard enough”

It may be fair to calibrate this as the powerful insight that base the wisdom of great managers and often it can be attributed as the success factors of the Mangers’ success. Of course the seemingly simple insight is difficult to decipher and even more difficult to use in the work life. It needs a sophisticated approach by the practicing manager to use the insight effectively and increase the effectiveness quotient.

Once the knowledge is acquired, the real challenge is to put the wisdom/knowledge to apply this in the respective organizations. As a manager, it is important to anticipate what will it call for the employees, how will it impact the organization etc while applying this insight.

Referring to the initial statements on the Role of the Manager, one of the key roles that the managers play is of the Catalyst. Yes, you as a Manager play the role of the catalyst an in you capacity unleash the individual strengths of each of your team members and effectively translate them into performance as per the organization standard. What differentiates one manager from the other is how effectively this role of catalyst is being played! The other differentiator is the ability of the manager to play multiple roles at the same time, one is expected to be the Individual Superstar, subject matter expert, and leaders in their own way! The manager aspect of their role is often most effectively lived by playing the Catalyst role with each team member and turn it into a success story. It is the “individual approach” that works well, you may choose a person, set expectations, motivate the person and develop the person, this multiplied into the no of team members and you have got it all right to etch your name as one of the World’s Greatest Managers!

To be equally great in your organization context, it helps to refer the defined competency of the manager in your respective organization and benchmark them with the managers’ competency in general as listed by various organizations.

Online Casino’s Fun For All Players

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The dream job for many Americans would be that of a professional gambler and fortunately online casinos are a way of making that dream come true. A player can pick their own hours, their game, their days off, and earn a month’s pay after just a night’s work – the new American dream. Many years ago, traditional playing at local casino sites, bars, and the neighbor’s garage used to be the only way players could find a game, but with the explosion and growth of the internet throughout the 1990s, online casino’s has opened an entirely new way to play. This has attracted players who have never, and probably never will, set foot in an actual casino.An amateur player can log into an online casino site and play for absolutely no charge in real games. This no risk-solution to gaining experience, without having to potentially humiliate yourself playing games you have no experience with, is a key to the success of online casinos. Once the players feel confident enough to bet (and win!) money, they are allowed to do that as well, but all within their own comfort level financially and physically. There is no pressure, especially when you’re sitting at your computer, in boxer shorts, at 3:00 AM. Also with online casinos, gamblers can log in anytime, from anywhere, and play immediately any game they choose and for however long they want. In online slot tournaments gamblers are playing against a variety of different players from all over the world, all ready and willing to part with an endless amount of cash.There are a wide variety of games offered, including slots, poker, blackjack and roulette. The majority of casinos will have the customer install their software upon joining, allowing them to log right in from their desktop as long as there is an open internet connection. Nowadays it is quite common to find no download casinos, which are instant play right on the site. The no download applications are somewhat limited as to the games and limits available though. New to the market are mobile applications for your cell phone that allow players to play on their phones after a small download. These are really gaining popularity.To entice gamblers to sign up on their sites online casinos offer sign up bones. These bonuses can be quite lucrative and go up to $12,000 depending on how much you deposit. To reward players, there are bonuses offered just for playing, or after spending certain amounts of dollars. It is kind of the equivalent of getting a meal or room on the house at a land-based casino. These bonuses encourage players and make the games more worthwhile for everybody.What makes online casinos unique is gamblers on the site could be from many different countries playing in many different languages all at the same time. The casino manages the money exchange, so a US casino player would add US dollars to his account, and cash out in US dollars, even if he just took $500 from a grandma in Russia and $760 from a student in Japan.Online casinos are just one of the industries that have absolutely exploded with the advent of the internet, and with millions of people all over the world logging into play every day, it will be one of the industries that continues to grow and thrive.

Casino Games – Poker Intellectual Component – Part Three

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Similar advantage can be also achieved in poker. To the position advantage in poker we can refer the factors of your position with relation to your opponents, the availability of varied membership and the number of opponents continuing the tournament, your aggression, the size of opponents’ stacks and so on. From all of the arts of poker the most important is the creation and realization of position advantage. Here it is as important as in chess.The conclusion is that an intellectual analytic effort is present both in chess and in poker but they are not alike as the position advantage differs in quality.The third type of an intellectual effort is connected with the analysis of the part of a game situation which is not connected with the game process itself. This type includes taking into account the psychological peculiarities of the duel.Strictly speaking, this psychological element is not as widely used in chess, mainly because of the game information which is fully open to both opponents.In poker the psychological element is very important indeed. It provides almost the half of success of the player. The restricted type of information in poker makes the players only deducing it and it can be done only by observing your opponent. And here you meet a great chance to misinform or manipulate him or create the psychological pressure upon him, and etc. We can name at least three aspects of a psychological element that are often used by experienced players.Firstly, it is watching for the “signs” of an opponent and the “sings” that you send him. Secondly, one uses the continuous assessment of the psychological state of opponent. Thirdly, one may cause the psychological pressure upon the opponent in order to impose one’s will on him.To summarize the aforesaid we can say that both games are intellectual fights but their profiles differ. From the three component of an intellectual effort – logical, analytical and psychological, the most important ones in chess are the first two while in poker the last two. But the analytical component dominates in both the games, which is quite understandable because these two games are intellectual.And finally there is the last comparative observation. In chess, the role played by psychology, is far less important than the role of logic and analytics. Chess in this sense appears as the game of spirit. Irrespective of the state of mind the player must and can find the way to victory, with this way not depending on human feelings and emotions. Chess is the philosophy, the game of aristocrats of a soul.In poker the role of psychology is more important especially in comparison with logic. The moral state of the opponent, their feelings and emotions not only influence the course of game but change the way to victory. In this sense poker is a game of plebeians, the battle of human passions.Both, philosophers and plebeians, we are all human. Moreover, in our life in turns we become these and those. Both the games are beautiful, both are worth your attention under condition that your intellect needs a check in a battle with equal ones, in other words, under condition that you are a human being.In America active poker is not older than 100 years. In this regard if we make analogy between chess and poker we need to compare modern poker with the 19th century chess. Those were difficult times for chess players. Outstanding chess talents, which have received the universal recognition in our times, had to spend sometimes all their energy to find supporters who would agree to pay for such expensive and not perspective event as the world chess match for the champion title! But the reality was sad, any seeker for the title had a possibility to call for the world champion after fulfillment of one obligatory condition: he had to pay prize money by himself, losing the great part of it in case of a failure. If the pretender would loose such match, the poverty was almost guaranteed for him. Many years had passed before chess became the honorable and respected thing and the tragic fates of losers became history.The situation has changed greatly today. There are poker clubs, poker community and poker life goes on.

Poker and Expected Value

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Ed Miller, David Sklansky and Mason Malmuth, in their extraordinary book Small Stakes Hold ‘em argue that poker is gambling but it is gambling in the same sense that brick and mortar casinos gamble. Assuming an even game, where everyone playing receives a random distribution of possible hands, one earns money by playing soundly and respecting expectation, or the money one expects to win or lose by making a single wager. The brick and mortar casinos make nothing but money because they take advantage of expectation. Winning poker players learn to make the most of the expected value (EV) of any given poker hand.Let’s take the game of roulette. On an American roulette wheel there are 38 numbers, 18 red, 18 black and 2 green numbers. The odds of hitting any number on a roulette wheel are 38 to 1 against or once every thirty-eight spins of the wheel. The casino pays out based on 36 to 1, reserving two numbers (the 0 and 00) as their EV. So what is the EV one can expect from a $5.00 bet on 23 Red? The specific number, 23 Red, will hit 1/38 times (2.63%) and will miss 37/38 times (97.37%). These are the only two possible outcomes as it makes no difference which number hits if it is not 23 Red.EV=(%w)($won)+(%l)($lost) where %w is the percent of the time you win and %l is the percentage of the time you loseEV=(1/38)(180)+(37/38)(-5)=(.0263)(180)+(.9737)(-5)=4.37+(-4.87)=$-0.50In short, for every $5 bet you make on a specific number on a roulette wheel your EV for that bet is a loss of 50 cents. Each time your number hits the house pays you $5x$36 or $180 and each time your number fails to hit you lose your entire bet of $5. The house’s EV looks something like this…and it is not what you might expect!EV=(.9737)(5)+(.0263)(-180)=(4.87)+(-4.73)=$0.14That’s right, the casino will earn $0.14 on your $5 bet. Not on each bet mind you but over time given an even distribution your EV is a small loss while the casino earns a gain even larger than your initial bet.The roulette wheel is a rather simple analysis, there are only two outcomes, you win or you lose. Your information is known absolutely based on the probabilities that come from only 38 possible outcomes. Poker is not so simple. Information is always incomplete and the possibilities are quite large. On the other hand, when one grasps the potential outcomes based on a range of hands one is willing to play one increases the potential for generating positive EV.Some hands, like AA or KK or QQ have positive EV from the outset. AA wins 85% of the time against a single random hand for example. Other hands, say 72 off-suit only wins 32% of the time giving the hand a negative EV. While this might not need saying, it makes sense to play AA in any position and to muck 72 off-suit from any position.Poker is gambling when one chooses not to raise pre-flop in order to wait to see what the flop brings for this action reduces the EV for your premium hands. Entering too many pots with marginal hands is another way to reduce your EV because you play too many opening hands with negative EV. Remember the casino’s goal to maximize EV by offering solid, fair games. Your goal as a poker player is to maximize your EV.This is not to say that luck does not enter the picture. It does. Many years ago while playing roulette I hit 23 Red 3 times in a row. That happened once in my lifetime and never again. That was a lucky moment in time when the roulette gods happened to smile upon me. Nevertheless, over time, the distribution of hits to that number will be exactly 1 in 38 spins of the wheel.I have had AA cracked and I have won with 72 off but I know that over time I will win 85% of the time I hold AA and lose 68% of the time I hold 72 off. Knowing this basic fact alone makes me better able to make positive EV hand choices pre-flop.