One of our most important priorities at commencement of managing a property is to do a comprehensive Property Management Audit, which includes a service and status update of fixtures, furnishings and documents from light bulbs to rent rolls and everything in-between. This is because your property is not just a structure and the grounds around it; it is a valuable asset that should be operated efficiently and effectively, as the difference between profit and loss is oftentimes in the details. After all, best practices in property management are to add value to the property and ensure the asset is always in a position to appreciate. As an owner and landlord, you recognize the value in that perspective.
A Property Management Audit would include:
1. Property Status
The physical state of the building is determined and the age of replacements (e.g. roofs, asphalt, HVAC, other building systems) and major repairs or deficiencies identified. Paperwork that reflects the history of what has been done to date is often mislaid and needs to be tracked down and kept together in a clear and concise report, as this will assist in future planning.
2. Building Plans
All plans and as-built drawings, land surveys, tenant layouts and aerial photographs are located. Plans can get damaged or mislaid, or individual sheets can go missing. It is important to know if they even exist, where they are located and what condition they are in. Are there any outstanding permits? So often these items are given a low priority, and there are savings to be gained in keeping these records complete and in an easily accessible place. If possible, a complete set of CAD files should be procured.
3. Building Records
An extremely important component of the audit is the building records. These include any operation manuals, measurement certificates, fire plans, key access, building standard definitions, description of base buildings, leasehold improvements and itemized descriptions of all furnishings and fittings. Once again, determine if they exist, where they are and what is their condition?
4. Operational Contracts
A proficient property manager should know where the operational contracts are and determine which are current and which need to be reviewed or tendered. Reports such as the engineering assessment, life-cycle reports and annual inspection reports need to be included, as well as any programs in place; for example, green initiatives, energy management and tenant retention.
5. Ownership and Leasing Documents
Items often overlooked include title and mortgage documents, budgets, rent rolls, lease abstracts, tenant procedures, agreements, standard leases, proposals, and procedures for new rentals. Special attention should be given to those leases that are close to expiring. Best practices for value management include reviewing that financial reporting is in place, annual and quarterly financial reports, accounting procedures and whether tenant insurance documents are up-to-date.
Property owners need to be kept current with any changes in tax legislation that could impact the building’s income either positively or negatively. Once the audit is complete, everything should be retained in one place for fast and easy reference.
Do you have or know where all this information is for your property?
Armadale Property Management’s policy commits that all information and documentation for any property we manage is audited, tracked and maintained so that it is always in current condition and immediately accessible by the Landlord. This is just one inexpensive way to add value to your asset, and future asset planning.
Our next article in this series will cover the best practices of setting priorities, and putting together plans of action to set yourself up for success.