Real Estate: Third Party Management

This Business Scenario map shows how the real estate manager manages real estate objects on behalf of owners, and maps his relationship with both the owner and the tenants occupying the property. Interaction takes place between the owner, the real estate manager and the tenant. You can use this business process to manage real estate holdings for third parties. A management contract is used to map the contractual relationship between the owner and the real estate manager.In this case, the owners do not manage the real estate objects themselves but entrust the manager with this task.

The real estate manager and the owner are represented in the system as two companies, each one having a distinct company code. This ensures proper accounting as well as transparency in the business since the two company codes ensure that there is a distinction made in accounting between expenses and revenues of the manager and those of the owner.

A management contract is used to map the contractual relationship between the real estate manager and the owner. The management fees (conditions) that the owner pays to the real estate manager are calculated using flexible calculation methods.

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Business Benefits

Improved customer satisfaction

Record all contractual details between owners and tenants

Direct calculation and allocation of management fees

Optimized rental processes

Transparency of expenses and revenues

Tenant

Real Estate Manager

Owner

Sign contract

Pay rental charges

Create mandate

Activate mandate

Create objects and contracts in mandate

Create management contract

Analyze reports for contracts

Perform periodic postings

Manage real estate objects and business partners

Create lease-out

Give mandate to manage real estate objects

Sign management contract

Pay management fees

Business Benefits

Reduced administration costs

Automated processes

Information transparency


Real Estate: Third Party Management The objects to be managed (third-party objects) are created in a separate mandate company code for each owner. You create the mandate company code directly in Customizing, or more comfortably in the real estate application. The company code is created as Third Party Management mandate type. The mandate company code is created automatically using a reference company code. This saves time and effort in creating a company code manually each time a mandate is needed. All master data for the mandate that cannot or should not be copied from the reference company code is maintain in the mandate master data record. The mandate master data is saved as additional information to these company code settings. The bank account information, such as bank country, bank routing number and account numbers are maintained for each new mandate created. The business partners are also maintained. These are created as business partner roles, for example, owner, architect, notary, or caretaker. The mandate is then activated.The reference company code data maintained in Customizing is copied to the mandate company code.Once the mandate is create, the real estate objects and contractsthat are to be managed on behalf of the owner in the mandate company code are created. These include business entities, buildings, land (property), and rental objects. You create real estate contracts for the rental objects. The management contract is a contractual agreement between the owner of real estate and the real estate manager, according to which the manager manages the real estate on behalf of the owner. In the management contract you define the objects to be managed and the fees agreed upon for managing the objects. Conditions can be periodic (for example, monthly, quarterly) or event-driven (for example, tenant changeover).Special calculation methods are available for calculating these management fees. Charges can be calculated according to the following: Amount per Object Amount per Rental Object Status Amount per Tenant Changeover % Share in Condition Group A cash flow is generated based on these condition amounts. If all the rental objects in a business entity or a building are managed, you only need to assign the business entity or the building (highest level object) to the contract. You create and assign the business partners to your management contract. All other contractual details are maintained, for example term, posting parameters, and so on. All real estate processes are carried out in this mandate company code as usual by the real estate manager. These processes include contract management, the periodic collection and processing of rental charges, adjusting rental conditions, managing sales-based leases, service charge settlement, processing correspondence to business partners, including owners and tenants, and evaluating the real estate portfolios using the various reporting tools.