The Management Plan

The following excerpt is from IREM’s publication, Practical Apartment Management, Sixth Edition (IREM © 2009):

Formal real estate management training classes put considerable emphasis on the management plan and the process for preparing one. A management plan contains much of the data and information gathered in the creation of a business plan but in a largely expanded format. With the business plan, there is an underlying assumption that the subject property’s ownership is interested in the development of a program to maximize and perpetuate the operation and value of the investment. The management plan starts with a much broader approach. It goes into considerable detail describing and analyzing the “health and welfare” of a geographical region. This, of course, would be very important to, for example, a large institutional or out-of-town investor looking for a potential purchase.

The management plan provides a much more intensive analysis of all of the factors related to the property’s location, condition, competitive position, and highest and best use than does the business plan. It is written to thoroughly acquaint the reader to all aspects of the property. Management plans can also delve heavily into financing variables and options as well as different tax-delaying techniques.

A thorough and comprehensive management plan can take a month to research and prepare and consume more than 150 pages of photos, text, charts, and exhibits. When done correctly, it is a valuable work product and can cost many thousands of dollars.