BACHELOR OF SCIENCE IN REAL ESTATE MANAGEMENT

PROPERTY MANAGEMENT SYSTEM

Property Management
• Real Estate Specialization
• Need for Skilled manager due to property complexity.
• Oversight of property

Scope of Properties handled in Property Management

• Single family houses
• Condominiums
• Townhomes
• Duplex
• Apartment buildings
• Mix use

Segments of Projects:
1. Economic 3. Mid-income 5. Luxury
2. Affordable 4. Upscale

Real Estate Management Organization Key factors

• Linking mechanism and services
• Monitoring of processes
• Appropriate skills and competencies

Property Manager
• Hired to handle the daily operations of a real estate investment
• Responsibility
1. Rent
à Setting Rent
à Collecting Rent
à Adjusting Rent
2. Tenants
à Finding Tenants
à Screening Tenants
à Handling Leases
à Handling complaints / emergencies
à Handling move outs
à Dealing with evictions
3. Maintenance and repairs
à Preventive maintenance
à Repair
4. Landlord – Tenant Law
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 à Handle security deposits
à Terminate a lease
à Evict a tenant
5. Responsible for supervising
à Other employers (Concierge, Security)
à Vacant properties
6. Responsible for managing the budgets / maintaining records
à Operating budget
à Property records

Property Management Specialist opportunities

• Leasing
• Asset
• Corporate property management
• Association management
• Housing program management
• Office buildings

Considerations of Property Managers

1. Owner’s objectives
2. Competitive property market àLocal & Regional
3. Market Indicators à Occupancy & Vacancy rate
4. Revenue source
5. Projected expense

Facility Management
• A profession that encompasses multiple disciplines to ensure functionality of the built environment by
integrating people, places, process and technology
- International Facility Management Association

Inter-relationship Core, Non-core and Facility management

1. Core business: Business strategy, objective, plan and process.
2. Non-core business àSupport services, ICT infrastructure
3. Define facility management: Service scope & delivery, resources, sourcing model

Facility Management basic plan

1.) Develop facility management strategy
à Strategic analysis, Solution development and strategy implementation.
2.) Determine sourcing model
à Insource, Outsource, Co-source
3.) Procure services
à Prequalification
à Request for proposal / tender
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 à Tendering
4.) Deliver services
à Mobilization à Contract management
à Transition
5.) Manage performance
à Service review
à Performance measurement
à Benchmarking

Space Management
• Process of planning space requirements, identify weakness, allocations of current necessary space to the
clients, monitoring and identify usage problems.

World Intellectual Property Organization (WIPO)

• Assists applicants in seeking patent protection internationally for their inventions
• Self-funding agency of U.N.

End user experience

• Customers are impacted by facility management
• E.g. Airport, Colleges

Value for Money

• Term long used to express the relationship between the cost of a good or service and it’s quality or
performance.

Challenges of a Property Manager

• Difficult tenants
• Long hours of work
• Need for emergency capital
• Potential liability

THE PRACTICE OF THE PROPERTY MANAGER

Role of Property Manager

• Operations Manual
• Physical and Building operations
• Financial
• Marketing
• Legal

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 Values

Value in use
• “Property itself”
• Value to the owner(s)

Value in exchange
• Considers outside forces of property
• Appraised value

Values elements / determination

 Demand
 Utility
 Scarcity
 Transferability

Management Agreement
• Define key responsibilities of the parties
• Includes PF of property management companies

Types of Property Management Operations

1.) Fee management
à Companies are paid P.F. For operational experiences & controls.
2.) Asset management
à Investment oriented financial planning of a portfolio
3.) In-house management
à Asset managers hire professional property managers
4.) Self management
à 1 person in charge of leasing & bookeeping
à Others for maintenance
à Inefficient

Considerations in Property Investments

• Location
• Rental prospects
• Track record
• Price

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Budget Considerations
• Net operating income (Monthly & Annual)
• Cash flow (Monthly & Annual)
• Capital reserve budget
• Bookkeeping
à Tracking of receipts & procedures

Insurance Considerations
• Protect the building structure & activities surrounding the general management of the building.
• Covers:
1. Fire
2. Property damage due to catastrophes
3. Machinery & Equipments

Security
• Comprehensive procedural manual
• 4 Dimensions:
(1) Design (2) Hardware (3) Staff (4) Management

Maintenance Plans
• 4 Steps:
1.) Assessment of property needs
2.) Identification of capabilities of on-site staff & equipment
3.) Estimating the time for each jobs
4.) Rearrangement of maintenance jobs according to staffs

Improvements
Custodial maintenance
à Day to day cleaning & up keep.

Rehabilitation
 Property restoration w/o change in style & floor plan

Remodeling
 Floor plan & form style change to correct functional or economic deficiency

Adaptive reuse
 Conversion with creative reuse
 Former airport tower to restaurant

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Building Owners & Managers Association
• Composed of building owners, managers, developers, leasing
professionals, facility managers, asset managers and providers of goods & services
• Standard for measuring buildings.
• Founded in 1907
Building Information Modeling (BIM) & Facility Management (FM)
• Purpose:
1. Reduce costs 2. Improve Performances 3. Integrates systems

• Applicable systems
1. Computerized Maintenance Management System (CMMS)

2. Computer Aided Facility Management (CAFM)

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3. Demographical Information System

4. Building Automation System

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 5. Enterprise Resource Planning

Property Characteristics
• Suffer from Physical deterioration
• Suffer from obsolescence
à Changes expected from buildings
• Supply controlled by planning or zoning regulations
• Cash flow delivered by the property asset
à Controlled or distorted by lease contract between owner & developer
• Valuers may be influenced by the clients
• Effect of comparables

Growth of property management

(1) Simultaneous population growth & space needs
(2) Large range of Real Estate property that requires professional management
(3) Widely acknowledge specialize training and education

Trends in Properties
1. Co-living
à Hybrid of private & shared residential spaces
à 9,276 beds as of 1st qtr 2019
à Key factors:
1.) Convenience 2.) Community 3.) Cost 4.) Collaboration

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2. Flexible workspaces
à Client can lease out space on lighter terms
à Key factors
1. Cost reduction
2. Flexibility
3. Collaboration / Innovation
4. Talent management

Tenant Reps
• Broker or agents that specializes in helping tenants find suitable spaces

PROP TECH
• “Property Technology”
• Use of I.T. to help individuals and companies research, buy, sell and manage real estate.
• Rapid technological change: Real estate industry is not spared

Impact of Technology to Real Estate

• Developing new products from traditional real estate
• New mobile world filled with apps and capabilities
à Internet reshaped consumerism
• Challenges:
1.) Commitment to adopt marketplace 3.) Learning as they go / “Relearning”
2.) Agent’s: Friend or Foe 4.) Expand beyond comfort level

Disruption
• Innovation that creates a new market and overtakes an existing market
• Displaces market leading firms, products and even industries
• Aim:
1.) Democratize information / data
2.) Maximizes profit and minimizes costs
3.) Make it easier, Better faster and cheaper

• Address with the rise of Proptech

1.) Keep up with industry use 5.) Work on your added value
2.) Invest 6.) Keep in touch with your clients
3.) Experiment 7.) Keep up with younger generations
4.) Innovate

Virtual Tour
• Simple to use
• Fast to create
• Fast to show more projects
• E.g. Panoroo
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Alexa
• Voice technology for Real Estate (Amazon)

Why prop tech emerged?

Buyers / Renters Brokers Owners / Landlords
 No authentic data  Lack of collaboration  Property stays on market for
 Price discovery  High cost per lead long time
 Too many brokers  Lower productivity  High selling cost
 Lots of paperworks  Lot of paperworks

Prop tech Danger

• Offer free tools / data
à Collect your data à Sell it to your competitor
• Customer data privacy
• Become your competitors

Prop tech impact

• Negative impact: Traditional business models may be lost
• Positive impact:
1.) New market and opportunity
2.) Higher value service / product
3.) Saves time

Real Estate Tech companies

1.) Real Estate Search

• MLS, E.g. Property 24

2.) Agent Tools

• Apps useful in transactions
e.g. Loan calculator, google maps/waze
canva (design template)

3.) Property Management

• E.g. Appfolio, Cozy

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4.) Facility Management
• E.g. Happy inspector
(Facility inspection)

5.) Construction management

• E.g. Procore (Status)

6.) Home services

• E.g. Clutter (Public storage facility)

7.) Portfolio Management

• Crowd sourcing (e.g. Realty shares)

8.) Indoor mapping

• E.g. Matterport

9.) Land Titling management

• E.g. Conveyance

P2P Lending
• Peer to Peer lending.
• Online platforms help to match borrowers with lenders and bypassing banks

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 Considerations in Property Investment

• Location
à Buying a property in the right location is key.
• Rental Prospects
à Look for strong rental and high occupancy
• Track record
à Buy from a developer that will produce a quality product on time.
• Price
à Buy the best that you can afford w/o compromising on other consideration.
• Population characteristics
à Proportion of World’s Population living in Urban areas: 2018: 55% 2050:68%
à +2.5 Billion people (Shift from Rural to Urban areas by 2050)
à Currently: Pax/sqk (2019)
Metro Manila Density: 42,628
Greater Manila area: 19,988
National density population: 337

COMPLIANCE AUDIT AND LEASING CONSIDERATIONS

Compliance Audit
• Systematic, independent and documented verification process of objective obtaining and evaluating audit
evidence to determine whether specific criteria are met.

Objectives of Compliance Audit

• Ensuring credible regulation
• Improving compliance with legislative requirements

Roles of Auditee
• Assess compliance with legislation
• Review documents issued of the auditee
• Report findings and follow-up action

Audit Activities

Pre-site visit
• Planning and preparing for the audit
• Collecting background information
• Compiling checklists

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On-site activities
• Conduct opening meeting
• Collecting audit evidences through:
1. Gathering information 2. Observation 3. Interviews

Post-site visit
• Evaluating audit evidence
• Compiling a compliance audit report
• Developing a follow up program

Lease
• Contract between 2 parties to enjoy another one’s property for a certain price & period

Sublease
• Lease of the property leased made by the lessee.

Lease duration
• Best determined: Contract stipulation
• Absence in contract: Term of payment

Lease fee estate – right of owner to rent and reversion of the property at the end of the lease

Leasehold – right of lessee to use and enjoy the property subject to lease terms

Causes for Ejectment by the Lessor:

A) Expiration of agreed period
B) Lack of payment
C) Violation of terms & conditions in contract

Lease contracts control Cashflow

• Distorted by the lease contract agreed between owner and occupier.
• Full right of ownership or Fragmented ownership (e.g. Time Share)
• Market influence
• Supply availability
à Inelastic supply side (Zoning regulation)

Leasing Considerations

1.) Types
• Years
• Periodic
• At will
• Gross or net
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 • Sufferance
> Absence of objection

2.) Owned and leased inclusion

3.) Reversionary owners rights

à All rights of ownership revert to owner at end of lease term

4.) Landlord rights and responsibilities

à Rights (1) Enter premises (2) Receive payment
à Responsibility (1) Provide habitable conditions (2) Building Maintenance

5.) Tenant rights and responsibilities

à Rights: (1) Quiet enjoyment
(2) Habitable conditions

à Responsibilities:
(1) Return property in prescribed condition (4) Obey rules
(2) Use only for intended purpose (5) Give proper notice
(3) Pay rent

6.) Eviction
à Actual: Prescribe legal procedure through
a. Notice b. Judgment c. Taking of premises
à Constructive:
> Tenant vacates for landlord failure, e.g. Maintenance failure

7.) Tenants Improvements

à Ownership of and payments for improvements (per agreement)

8.) Security deposit details

9.) Cause of a termination of a lease

a. Expiration b. Performance c. Abandonment d. Breach

Leasing Problems
• Non compliance to legal aspects
• No rent escalation clause
• Unclear Charges for late payments
à Administrative fees
à Late payment fees
à Returned checks

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Commercial Real Estate Lease
• Longer duration than Residential
• Property Value Calculation
Land Value + Building cost – Depreciation = Estimated property value

Office Space Lease Consideration

1.) Space you need

2.) Location à Foot traffic, Parking (if needed)
3.) Legal
4.) Affordability à Capacity to pay over duration
5.) Plan for the building

Common Types of Commercial Leases

1.) Gross Lease
• “Full service lease”
• Landlord pays for utilities, upkeep of building and maintenance costs
• Tenants pays for everything in 1 check

2.) Percentage lease

• Tenant pays for Base rent + an additional percentage of monthly sales

3.) Triple Net Lease

• “NNN” lease
• Owner receives base rent, Responsibility structure and capital elements of properties (e.g. Roof, parking
lots)
• Lessee pays for Taxes, Insurance and Maintenance

4.) Modified Net Lease

• Features of Gross lease and Triple net lease
• Base rent for 1st year then percentage of operating costs in subsequent years

Tenant Improvements
• “Leasehold improvements”
• Customized alterations a building owner makes to rental space as part of a lease agreement
• Aim: Configure the space for the needs of that particular tenant.
• E.g. Walls, Floors, Ceiling & lightings

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Department of Human Settlements and Urban Development
• “DHSUD”
• R.A. 11201
• Consolidation of HLURB and HUDCC
• Transition Period: Dec 31, 2019
• Role of the new department:
• As to Human settlement and urban development
1. Primary national government entity
2. Sole and main planning and policy-making, regulatory
a. CLUP & ZO
b. Real Estate developments
c. Homeowners association
• Attached Agency: (Administrative Supervision)
1. National Housing Authority (NHA)
2. National Home Mortgage Finance Corporation (NHMFC)
3. Home Development Mutual Fund (HDMF)
4. Social Housing Finance Corporation (SHFC)
• DHSUD Hierarchy

DHSUD Bureau
• Environmental, Land Use and Urban Planning and Development Bureau
• Housing and Real Estate Development Regulation Bureau
• Homeowners Associations and Community Development Bureau

National Human Settlements Board

• Composition:
1. Director General of NEDA 4. DPWH Secretary
2. DOF Secretary 5. DILG Secretary
3. DBM Secretary 6. Attached agency head
* In case of absence, designate from agency

Human Settlements Adjudication Commission

• Reconstitution of HLURB
• Commission en banc
à 1 Executive Commissioner & 4 Commissioner
à Promulgating rules and regulations governing the hearing and disposition of cases
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DHSUD Voting power
1. NEDA 2. Climate Change Commission 3. NDRRMC

Property Inspection and Valuation (Residential and Commercial)

Property Development
• Process by which buildings are constructed either for owners occupation or for retention or sale as an
investment

Factors affecting Real Estate Values

• Economic factors à e.g. Interest
• Environmental factors à e.g. Pollution
• Physical factors à e.g. Location, Size and condition
• Social factors à e.g. Demand for a Housing type

Reason for Valuing properties

• Ownership Transfer
• Property Investment Performance
• Loan security
• Taxation
• Insurance risk assessment
• Compensation claims
• Reporting of property assets

Property Market Cycle

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Building Marketability
• Affected by age & physical condition.
• May require upgrading or major modification prior to offering to prospective tenants
• Value of Cost per sq ft is less than cost of new construction
• Affected by location by building

Mixed Use Development

• Growing trend to counteract the negative effects of urban sprawl
• Use of a building, set of buildings or neighbourhood for a variety of purpose
• Typical features
1. Customer service oriented businesses
2. Recreational facilities
3. Public transportation options

Covariance
• Statistical concept referring on how 2 things move together or not.
• E.g. Cost of Construction & Real Estate price

Proactive Management
• Most cost and time effective way of running the property business.
• Identify and address potential issues before it happens or worsens.

Property Inspection
• Condition Rating:
1. No repair is currently needed. Normal maintenance must be carried out
2. Minor repairs or replacement
3. Serious and Urgent repairs or replacement are necessary

Property Damages
1.) Structural roof damage
2.) Sinking & Cracking foundations
3.) Mold contamination
4.) Electrical, fire & Safety hazards
5.) Structural dry rot damage
6.) Water and moisture intrusion
7.) Collapsed water and sewer lines
8.) Signs of termite infestation
9.) Missing roofing materials, gutter and downspouts

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Machinery and equipment included in Appraised Value

• Elevator: Passenger and Service

• Building generator
• Sub-station
• AC system
• Escalator
• Air compressor
• Smoke detector
• Motion detector
• Heat detector
• CCTV
• Garbage chute
• Sewerage treatment

Machinery and equipment data during inspection

• Complete name, brand, model type, country of origin
• Serial number
• Physical features
• Replacement cost & market value
• Location in the plant or building

Hotel Stars Rating

• "National Accommodation Standards" for hotels, resorts, and apartment hotels
• Standards developed by Department of Tourism

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MICE (Hospitality Industry)
• Meetings
• Incentive
• Conferences
• Exhibition / Event

Green Building
• Integrates social and environmental goals with financial consideration in projects and of every scale and
type:
1. Energy performance
2. Restoration of a particular ecosystem
3. Fostering of community cohesion
4. Reduced dependence on the automobile

Leadership in Energy & Environmental Design (LEED)

• Green building certification program that recognizes best-in-class building strategies and practices.
• Certified by U.S. Green Building Council
• Aspects measured:
1. Building Design and Construction
2. Interior design and Construction
3. Building operation and maintenance
4. Neighbourhood development
5. Homes

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Materials utilization
Materials of Green
buildings come from a
variety of sources
(Salvage materials,
Recycled / reprocessed
Materials)

Considerations for
Materials:
(1) Foundation
(2) Support
structure
(3) Insulation
(4) Ventilation
(5) Roofing
(6) Interior fixtures
and floorings

Example of LEED Certified Building in the Philippines:

Zuellig Building (Makati) Wells Fargo Center

(Taguig)
Environment friendly
features Environment friendly
 Glass panels (maximizing features
natural light)  Natural light)
 Stormwater collection  Water usage efficiency
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 Recycled construction
materials