Property risk managment

Risk management of real estate is a necessity to avoid the property owner, developer, contractor, building owner (investor), and financial provider loosing assets. Ottmann Consulting analyses in detail the risk impact on the property. Following the assessment, the company reduces, accepts, transfers, or even completely eliminates all risks.

When do you need risk management?

Risk management is possible at five different times:

Before constructions starts: If the idea of use or the key tenant are no longer available.

During construction: If the key tenant is no longer available, e.g. in the event of bankruptcy. In addition, if cost increases due to planning, execution, or contracting errors endanger the project's financing.

During the times of use: If the key tenant is no longer available due to bankruptcy or financing becomes more costly.

After the times of use: If after the end of the leases, there are still residual values of the property's financing.

How does risk management work?

The control processes can be broken down into three steps:

Situational Assessment and Market Analyses: A combined analysis is used to identify together with the project participants and all parties involved, the actual situation with all its legal and financial consequences. Based on this analysis, an intensive market analysis is used to identify which problem solutions are possible under what premises and conditions.

Technical Analyses: In problems during planning, execution, and contracting, experienced architects and engineers must analyse the actual situation and show possibilities to solve the problem. 

Implementation: Based on the analysis, together with the project participants and all parties involved a structure and time schedule must be determined based on which the property must be restructured sustainably and in a timely manner.

Special Problem: If as a consequence of the so-called "Real Estate Bubble" project and property financing breaks down as was the case in the United States, Ireland, and Spain.

Important links about the topic

www.risknet.de

www.risiko-manager.com

 

 

 

Business Experience with Risk Management

Between 1977 and 2005, Diplom-Ökonom Reinhard Ottmann and his employees completed 350 half-finished apartments in cooperation with experienced architectural and engineering firm. This undertaking was commissioned by four large German financial institutions. The apartments were completed, rented, managed, and sold to self-users and investors.

For the responsible receiver, 800 existing flats that were renovated and move-in-ready were managed until they were sold to a housing company. In addition, the Dorsten company realized completion of a large apartment and commercial building complex, which was subsequently sold to a group of investors.