Professional Management is Key
Property Management is an integral part of the real estate profession and includes:
> Condominium Administration
> Property Management
> Rental Management
> Fractional Management
Each of these aspects of Property Management are discussed in more detail below.
Condominium communities in the Dominican Republic have an Owner Assembly that meets once a year to elect an Administrator who runs the affairs of the Association. During the annual meeting, the owners approve the previous year financial reports and agree on a budget for the upcoming year — which includes the Administrator’s salary. The Administrator then invoices the owners and builds a reserve fund to pay operating expenses and maintenance of common areas. At the end of the year, financial reports are prepared by the Administrator to be reviewed by the owners at the next annual meeting. The Association of Owners is set up as a non-profit company and any savings achieved by the Administrator belong to the owners. The Administrator may also decide whether or not to hire employees or hire outside contractors to assist in reaching the objectives of the owner assembly. If employees are hired, the non-profit organization provides for medical insurance and pension funding which is all included in the operating budget for the assembly of owners.
Responsibilities of the Condominium Administrator include maintenance of common areas up to the “front door” of interior residences. Management of interiors is the responsibility of each owner. In the case of condominiums, space is defined by measurement of party-wall centers and outside lines of exterior walls. Since a condominium includes multiple floors, the ground beneath the building is considered common area. In the case of a townhouse or villa, title to the ground is held by each owner. Care of residence interiors are the responsibility of each owner. In the event an owner desires interior management, he or she can make arrangements with the Administrator — or any other approved property manager in the local market. Specific requirements of management may depend on condo rules and regulations which may be revised at annual Owner meetings. In any case, a property owner has various options for professional management of vacation rental or investment properties.
Owners who wish to rent their properties may use a Rental Manager to enhance rental income. To be clear, the rental market can be very competitive in certain areas or during certain rental seasons. Online vacation rental companies like AirBNB or VRBO offer great opportunities for international marketing exposure. However, it comes at a price! In today’s competitive market, vacation renters have become serious negotiators and use available properties against others to gain a lower rental price. If and when this occurs, it can become very time consuming dealing with rental requests that work one owner against the other. In addition to this, we see two primary factors that increase rental revenue: “Positive Reviews” and “Instant Booking”. As such, it is extremely important to have positive reviews and a booking system that keeps all rental requests and vacation rentals a positive experience. Adding to this is an efficient booking calendar and professional accounting system. In some cases, a Community Administrator may also be a Property Manager and a Rental Manager. In other cases, some companies may specialize only in one area. Whatever the case, the most important thing is to discuss who controls the rental calendar. As stated above, today’s vacation renter wants immediate satisfaction and prefers an instant booking process whenever possible. Therefore, a professional Rental Manager should have a calendar system that can be easily viewed by the property owner, potential client, and rental manager. To be sure, it does not look good to show an availability calendar with no bookings. However, a good rental management system in place should reduce availability and increase occupancy.
“Fractional Management” occurs when there is more than one owner of an Investment Property. This can occur when multiple names are listed on the Title of Ownership; a Partnership is formed to own the property; or a Corporation is formed to hold title to the property. Whenever shared ownership is in place, management of the property can be performed by a shareholder of the entity owning title to the property, or a professional “Plan Manager” that can be retained to manage the use and operation of the property.