Property asset management is an important part of the property management job. Not only is property management responsible for managing tenants, renting units, paying common expenses and letting contracts to complete repairs, they are also responsible for managing both fixed assets as well as non fixed assets. Units must be rented, contracts signed with tenants and rent collected on a monthly basis either by check or by electronic means. This is the common most understood portion of property management. But keeping track of all of the assets and completing an inventory every year or more often if needed is a necessary part of the job. Missing items have to be replaced and this can represent an additional cost to the owners. As a result of an inventory audit of the asserts, further action may be needed to investigate chronic problems.
Property Asset Management
Property asset management is another major part of the job that is completed by property managers on behalf of their clients. Management of fixed assets includes repairs, painting, plumbing etc as needed for both interior and exterior portions of the building. Sometimes enhancements are planned to make the building more attractive to tenants and customers. Management of non fixed assets also is needed for asset in common areas of buildings, assets in each unit that is rented and assets that are needed to allow for properly maintain the building. These items could include tools, ladders, cleaning supplies and supplies typically needed for routine repairs. This also includes items such as refrigerators, stoves and cook tops, dryers, washing machines and dish washers if the apartment or town home is equipped with all of these items. Common areas might have chairs and tables, a stove and refrigerator in shared common rooms or club houses etc.
All of these repairs and purchases need to be recorded as expenses and the larger items accounted for in the asset management system being employed by the property management income company. This is required to keep track of how much money is spent on various categories and for the larger items that depreciate as well. This is necessary for tax purposes to ensure that the appropriate tax deductions are taken to avoid paying too much tax under the tax law. Each asset may be in a different tax class and any repairs and changes must be reflected accordingly.
Property managers need to have all of this material recorded in the asset management system. In addition contracts between the owner and the property manager must stipulate the requirements for tracking purposes and also reporting purposes. This information must be made available to the owners accountants for audit purposes as well as for preparation of the tax statements at the end of each year.
Contracts should include what reports are required on a monthly basis as well as on an annual basis. Most will include rental income, rental expenses, rental records, lease records, and income statements. In addition, asset changes should also be reported. In most cases the report will include or report the value of assets at the beginning of the period, the additions and removal of assets during the period and then the value of the final assets at the end of the period. The property manager should also be able to report an inventory of all assets as well.
This is pretty standard for property managers and expected by client owners. Many owners will review these reports regularly as part of their due diligence and over view of the property that they own. Owners will also query anything that looks out of place and any large expenses that may be reported. Property managers should be prepared to deal with these questions and even provide a narrative report routinely addressing anything that owners may be concerned about. They should be preparing these exception reports as a matter of course to deal with questions that the owner is likely to have. This saves time for everyone.