NEWSREAL

A publication of IREM - Central Florida Chapter

Volume 3, Issue 4
April, 2002

The Internet Site for Professional Real Estate Managers

NEWS FROM THE PRESIDENT......

Do well-trained property managers add value to the properties they manage? Does good management translate into value? Of course it does right? After all why would we be CPM’s, Candidates and ARM’s if we did not believe that our training and experience added value? But do property owners believe this?

It appears that the trend among many property owners over the last few years is to reduce staffing levels while hiring less costly, inexperienced, minimally qualified property managers. Why? I think it is because these property owners don’t really believe or understand that good management creates value. Too bad for them because I know better.

Experienced, well-trained managers do much more than collect rent, prepare budgets and make sure the HVAC system is working. Those are minimal responsibilities that are carried out almost routinely. Good property managers control and reduce expenses by smart purchasing, effective vendor contracting and prudent management of real estate taxes and utility consumption. A knowledgeable manager enhances income through effective billing and collection procedures, by creating new sources of revenue, and by providing good customer service. Satisfied tenants translate into renewing tenants and renewing tenants are a grand slam for owners. Not only is a renewal the least expensive leasing method it also produces the highest total rental income. And, if increasing income and reducing expenses is not reason enough to seek out and employ high quality managers, consider this…A well trained manager knows how to avoid litigation, serious loss and even bad publicity. They do this because they know and understand the myriad of local, state and national laws and regulations pertaining to real property including fair housing, construction, ADA and personnel management. They also place a priority on loss control and emergency preparedness to produce a safe environment and an effective response to emergencies.

And the really good managers go even further. They provide much more than a clean box and fast service. They create a memorable experience for their tenants. Talk about value creation. If you don’t think that a manager who regularly engages his tenants in a personal and memorable way creates value then just think about a plain cup of coffee. Buy it at McDonald's for $.75, go to Starbucks and it is $1.75 and go to Manuel’s and it is $2.75. I know managers who have so effectively created a positive experience for their tenants they consistently achieve above market rates.

Well-trained managers do all of these things because they understand the economics of real estate. They know how to improve NOI and just how that affects the property value.

Does good management create value? You bet it does! Help spread the word.

Mike McConnell, CPM
MMCCONN111@AOL.COM

2002 INDUSTRY FORECAST

Our Chapter presented its sixth annual Industry Forecast program at the March membership meeting. A distinguished panel of industry experts discussed current trends and conditions for 2002. The panel included:

Edward Boudreau, CPM, President, Institute of Real Estate Management and President, Capital Consultants Management Steve Buck, CPM, CCIM, Chief Operating Officer, ZOM, Inc. and President, ZOM Residential Services, Inc., Caroline K. Cassity, CPM, RPA, Property Manager, The Pizzuti Companies, Sue Harker, CPM Candidate, Asset Manager, The Sembler Company, William H. Owen, CRE, President, Real Estate Research Consultants

A few highlights…

• Gradual recovery in most sectors of real estate will occur.
• Orlando is globally attractive, considered somewhat of a ‘safe harbor’ and will continue to have steady (albeit slower) growth.
• Depressed prices and ready capital provide some good purchase opportunities.
• Property insurance premiums are increasing dramatically, in some cases as much as 45%. On the coast rates have increased as much as 100%
• Retailers have become much more savvy about CAM expenses and are scrutinizing billings.
• Curb appeal has become of paramount importance in all sectors.
• Energy efficiency is critical. Leased parking lighting is a growing trend.
• Office tenants want 24-hour service, wireless and high-speed Internet access.
• Tenants have increased interest in and demand for good emergency response planning.
• Office occupancy levels declined in 2001 and will remain flat until at least mid-year. Some increase may occur after mid-year.
• Office rental rates remained level or declined slightly in 2001 and will remain flat throughout 2002.
• Few office projects were started in 2001 and most new office construction has been postponed.
• Job growth stopped in 2001. Negative job growth will occur in 2002.
• After 9/11 prospect traffic dried up and stopped.
• 2 month’s free rent is now standard at most apartment properties.
• Owners are increasingly demanding expense reductions in already lean property budgets.
• Owners are driving down management fees.
• On-line apartment advertising/marketing has been embraced by the industry.
• There are genuine opportunities for managers who can make a difference.

This is just a quick summary of the timely and excellent information that was presented by the expert panel. Thank you to each member of the panel for an outstanding program.

2002 FLORIDA IREM EDUCATION

LEGISLATIVE UPDATE

Submitted by Charles J. Mitchell, Jr., CPM, CCIM

The regular session in Tallahassee is over, but not the work. The Governor has called the Legislature back in session in April to finish the budget and address his education plan. Out of the 2,300 bills filed, approximately 120 were acted up and passed to the Governor.

Bills that Passed:

Sales Tax: The harshest version of a proposed sales tax on services failed, but a last-minute compromise between the House and Senate. Lawmakers voted to put the sales tax exemption issue to a referendum this fall.

Windstorm Insurance: SB 1418 caps windstorm rate increases at 10% this year - a substantial reduction from the 40% increased mandated.

Growth Management: Lawmakers approved a growth management bill that requires local governments to include schools in their comprehensive plans to alleviate overcrowding.

Distance Learning: Effective July 1, 2002, real estate licensees are allowed to take post-licensing and continuing education courses via the Internet.

The Commercial Broker Lien Law did not pass.

Beware

Submitted by Scott Pollock, CPM

A notice may appear on your desk one day, not as a notice that your property may not be in compliance with ADA accessibility rules, giving you a prescribed time to remedy the situation, but rather in the form of a filed complaint and thousands in attorneys’ fees ALREADY in tow. While there may be legitimate issues, groups claiming to represent ADA accessibility basically use the same list of "violations" from property to property. In some cases the plaintiffs listed have not actually been to the property! In one particular case, a stadium was being sued yet, it was discovered during a hearing that the individual who was suing had not in fact ever been to the stadium! In another case a hotelier was being sued but, most of the items for which he was cited had already been fixed. He did make several other changes, like widening his handicap parking spaces because they were six inches short. His cost was $1,000. The attorney was suing for $35,000. Because most repairs had been completed prior to the complaint, the judge said he was not entitled to his attorney’s fees.

I don't think there is anyone in our chapter who would purposely not be in compliance with any rule, regulation, or law; however, we all need to realize that a cottage industry has again sprung up, twisting the intent of good legislation not for the benefit of their clients but, for their own gain. Please be aware and know that you do have some recourse with these "fee churners". In some cases, the Florida Bar is investigating these law firms.

NEWSLETTER SUBMISSION DEADLINE

Anyone wishing to submit articles, thoughts, comments or concerns for the upcoming newsletter must do so before April 26th. Please submit all materials in Microsoft Word format and e-mail to: drdotherow@realtycapitaltcn.com

Published by IREM Chapter 60 Newsletter Committee, Jane Bullock, CPM, Chairperson

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