Internship Report (18-26 pages)

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RIGA TECHNICAL UNIVERSITY

Faculty of Engineering Economics and Management

Study Program: Master Study Program

Name of the Program: MSc in Civil Construction and Real Estate Management

2021, Full Time

Vinay Kumar Paladugula

Student ID No. 191AIG048

Table of Contents ABSTRACT ...................................................................................................................................................... 2

AIM: ............................................................................................................................................................... 2

INTRODUCTION ............................................................................................................................................. 2

GEOGRAPHY AND SOCIAL FACTORS ............................................................................................................. 3

FIG 1 .......................................................................................................................................................... 4

FIG 2 .......................................................................................................................................................... 4

RESIDENTIAL MARKET IN LATVIA .................................................................................................................. 5

FIG 3 .......................................................................................................................................................... 5

TYPES OF RESIDENTIAL HOUSE MANAGEMENT ........................................................................................... 8

FIG 4: ......................................................................................................................................................... 9

EXPENDITURE FOR THE ADMINISTRATION OF A RESIDENTIAL HOUSE AND FACTORS INFLUENCING THE

PRICE FORMATION ........................................................................................................................................ 9

FIG 5 ........................................................................................................................................................ 11

PROPERTY MANAGEMENT .......................................................................................................................... 11

MANAGEMENT OF RESIDENTIAL BUILDINGS ...................................................................................... 11

CONCLUSIONS AND PROPOSALS: ............................................................................................................... 16

REFERENCES: ............................................................................................................................................... 17

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ABSTRACT

This study discuss about the need to decide consumer satisfaction and how to utilize it in maintenance

companies for improving their proficiency and the board. The investigation intends to find the

fundamental components important for guaranteeing consumer satisfaction in such organizations. A

consumer satisfaction review, which empowers the upkeep organization to acquire data about client

needs and control the nature of offered types of assistance, is fundamental for the effective activity of

the organizations to keep an elevated expectation in one of the crucial qualities – the nature of client

assistance. The present study analyses the results of the research obtained by interviewing the clients of

the maintenance company. In the conclusion, proposals are made for methods to continue improving

customer satisfaction...

Keywords: Maintenance Company, Customer satisfaction, real estate Management Company, residential

houses, Residential sectors in Latvia.

AIM: To make questionnaire about real estate maintenance companies in street and collect

information’s on which companies managing their houses and collect reviews about their performance

and possible solutions to improve. What suggestions do they have to make maintenance companies and

Property owners to make maintenance and communication very good?

INTRODUCTION

One of the primary points of each organization's improvement is to advance collaboration with its

customers. This improvement objective perceives the significance of the customer and proficient staff in

each organization's activity and improvement, including the arrangement of uniform, excellent client

support norms, structures, and types. Consumer satisfaction is progressively seen as a conclusive factor

in guaranteeing an organization's monetary achievement. Effectively in the twentieth century,

experimental examinations and logical conversations from the world's most exceptional nations

prompted an end that a more significant level of consumer loyalty supported client fascination,

reinforced their devotion to explicit organizations, items, or brands, given better yields, made less

requirement for item overhauls, and guaranteed lower cost adaptability One of the principle points of

each organization's improvement is to advance participation with its customers. This improvement

objective perceives the significance of the customer and proficient staff in each organization's activity

and improvement, including the arrangement of uniform, great client support norms, structures, and

types. Consumer satisfaction is progressively seen as an unequivocal factor in guaranteeing an

organization's financial achievement. Effectively in the twentieth century, exact investigations and

logical conversations from the world's most developed nations prompted an end that a more elevated

level of consumer satisfaction empowered client fascination, fortified their dedication to explicit

organizations, items, or brands, given better yields, made less requirement for item overhauls, and

guaranteed lower cost adaptability The point of the paper is to discover the fundamental components of

consumer satisfaction evaluation, their need and effect on future tasks for land organizations, just as to

evaluate consumer satisfaction which provides maintenance to private houses in the city of Riga. To

accomplish the point, the accompanying undertakings have been set: to consider the hypothesis of

consumer satisfaction evaluation; to lead a study of the organization's customers in request to get

mindful of the nature of the administrations gave (as indicated by the customers' assessment); to assess

consumer loyalty, distinguish risky issues, furthermore, present proposition for the help quality

evaluation. The point of the paper is to discover the fundamental components of consumer satisfaction,

their need and effect on future activities for support organizations, just as to evaluate consumer

satisfaction such organization that gives such administrations for private houses in the city of Riga.

In the course of research, quantitative research methods and direct interviews have been used. The

survey has identified various customer service related issues based on the opinions of the tenants in

several Latvian municipalities. Clients (tenants) have been interviewed remotely (using distributed

questionnaires).Due to the prevailing pandemic situations various surveys conducted by various studies

has taken as reference for supporting the study and reviews of various maintenance companies have

taken from the different websites .

GEOGRAPHY AND SOCIAL FACTORS

FIG 1: Source Google images

FIG 2: Source, Latio Annual residential Report

GEOGRAPHY & SOCIAL

Coordinates: 57 00 N, 25 00 E

Area: 64,600 km²

Border countries: Belarus, Estonia, Lithuania, Russia

Capital: Riga

Ethnic groups: Latvians 62.1%, Russians 26.9%, Belarusians 3.3%,

Ukrainians 2.2%, Poles 2.2%

RESIDENTIAL MARKET IN LATVIA

The residential house management sector influences all levels of the society, starting from the state and

ending with the individuals, and it does not only have economic features but the housing and its

management has also a social character. Since Latvia gained its independence, residential house

management has evolved chaotically. Taking into account the fact that during the Soviet times, there

was no ownership of the apartment, and then quickly offering apartments to planned privatization, in

the society there did not develop an understanding and responsibility for the property, especially for the

property in multi-story apartment buildings. Similarly, the understanding of the property owner did not

facilitate the transfer of the ownership rights of residential property using privatization certificates,

without explaining to the potential owner the burden of responsibility of having the property in the

ownership. Since the beginning of the privatization and due to the current economic situation in Latvia,

in society, the discussion on housing management issues and problems has become a topical issue. The

State wants to implement the residential building insulation program using the European Union funds,

while the apartment owners in Latvia are still not sure about making such decisions having different

reasons for such doubts.

FIG 3: Number of completed

apartments increased by 65%

Source, (Latio Annual residential

Report

Consequently, due to the apartment privatization, the responsibility for maintenance of residential

buildings has shifted to apartment owners, but the apartment owner's understanding regarding the

property maintenance is still low. There is a lack of experience of the apartment owner to perform their

duties and to carry out reasonable actions (Kučinskis 2006). After 15 years, Latvia is now moving

towards professional facility management that is evidenced by several significant laws and regulations

determining the provisions of administration and management of residential houses which have been

adopted during the last two years. The Law “On Residential House Management” (here-in-after referred

to as the Facility Management Law) has entered into force as of 1 January 2010, but in some cases, the

provisions of this law have not been observed in the practice and noncompliance with the laws and

regulations create problems for the companies operating in the sector. Cabinet Regulations of 28

September 2010 are adopted as a supplement to the Facility Management Law. A new Law “On

Residential Property”, which I think is more updated and which more clearly defines the rights of

apartment owners, their duties, and responsibilities, has entered into force as of 1 January 2011 and

substitutes the previous law with a similar title. Currently, the biggest challenges referring to the facility

manager activities are the low solvency of the property owners and the gaps still existing in the current

legislation (On Residential Properties: Law of the Republic of Latvia 2010)

The importance of facility management service and different types of residential house management.

Generally, till the improvement of the Facility Management Law, its reception and section into power, in

the enactment of the Republic of Latvia two terms “facility administration” and “facility management

“existed close by and none of the laws or guidelines clarified them in an exact and precise way. From a

syntactic interpretation of the previously mentioned arrangements of the law, it very well may be

perceived that it is feasible to isolate the organization from the administration, and the office head from

the administrator not deciding the duties of any of them. Since 1 January 2010, the Residential House

Management Law in which the lawmaker has removed the expression "organization" and has held the

expression "the executives" has gone into power. Characterizing the terms utilized in the Law, the

definition for the expression "organization" isn't given. In the remarks of Oša, I., Auders M., Krauze I.

2010. Office Management of Residential Houses is given the accompanying clarification: "… actually, the

issues with the arrangement and understanding of the idea of "private house organization" and "private

house the executives can emerge in light of the fact that in the law the meanings of those terms are not

given. It ought to be noticed that in the underlying variant of the Residential House Management Law,

which was given into Saeima by the Cabinet of Ministers, the before referenced terms were clarified

(Oša et al. 2010). In particular, the private house organization was characterized as the arrangement of

exercises needed for private house upkeep and safeguarding for the utilization in a condition vital for

the utilization of the house and the support of the land that is practically fundamental for guaranteeing

the utilization of this property following the decided objective. While, the clear of the private house the

board was the accompanying – bundle of specialized measures by utilizing which the choices made

during the private house the executives interaction are carried out to guarantee upkeep and protection

of the practically essential land and the private structure. Nonetheless, in additional assessment of the

draft of the Law, the governing body denied the clarification of these terms. Hence, presently the

expression "private house the executives", inside the extent of this Law, incorporates the

significance of the expression "private house organization" (Puķīte 2010).

Section 4 of the Residential House Management Law determines the following 5 principles for the

administration of a residential house:

 The continuity of the administrative process shall ensure the preservation of the properties of

use (quality) of the residential house throughout exploitation thereof;

 The selection of as optimal administrative work methods as possible, including the formation of

optimal administrative costs of the residential house, concerning the solvency of the owner of

the residential house;

 The content and quality of the provided services shall ensure the preservation of the properties

of use (quality) of the residential house throughout exploitation thereof;

 The preclusion of invasion of the safety or health of an individual during the administrative

process;

 Provision of the preservation and improvement of the surrounding environment during the

administrative process (Law on Residential House Management 2010).

In turn, Section 6 of the Residential House Management Law lists the activities, which include the

concept of residential house administration. First of all dividing these activities as follows:

 Mandatory administrative activities;

 Other administrative activities.

The mandatory administrative activities shall be as follows:

The maintenance (physical preservation) of the residential house following the requirements of

regulatory enactments, the sanitary servicing of the residential house, the provision of heating, cold

water, and sewerage, as well as removal of household waste; the inspection, technical servicing and

current repairs of the residential house, the facilities and communications located therein. The provision

of the requirements set out for the residential house as an environmental object and the provision of

the fulfillment of the minimum energy efficiency requirements set out for the residential house as well

as the planning, organization, and supervision of administrative work, including the preparation of an

administrative work plan, including a plan of measures necessary for the maintenance, the preparation

of the relevant annual draft budget, and the organization of financial accounting are included in the

mandatory administrative activities. Keeping of the file of the residential house (hereinafter referred to

as the house file), entering into a contract with the owner of the land parcel regarding the use of the

land attached to a residential house and the provision of information to the State and local government

institutions are also considered to be mandatory administrative activities. Other administrative

activities, within the scope of the Residential House Management Law, shall be activities, which are

related to the administration of the residential house and are performed following the will and solvency

of the residential house owner and which shall include the activities related to the improvement and

development of the residential house and the preparation of a long-term plan of measures required for

this purpose. Any real estate property is a unique property and there cannot be two identical houses

found. Due to the uniqueness of the real estate property, it is difficult to apply a universal service

“basket” to any residential house. In practice, it is very important to define and identify what are the

service components, their regularity, job descriptions, etc. and, consequently, what expenses are

included in the Administration Contract and residential house maintenance plan - the estimate, and

what emergency measures for residential house maintenance and quality assurance will be provided for

an additional cost, especially if the apartment owners do not have savings fund or the residential house

reserve fund.

TYPES OF RESIDENTIAL HOUSE MANAGEMENT

The job of the property manager is to maintain the owner’s investment to ensure it is making a profit.

Apartment owners have just two alternatives either to deal with the private property themselves or

assign the management of this property to someone else – the supervisor. Residential property

management companies oversee all types of real estate, including homes, apartments, and mobile

homes.

A property manager provides duties on behalf of the property owner. The properties they manage are

residential income-producing investments. The facility manager can be either the founded community

of apartment owners - in any form permitted by the law of the Republic of Latvia - a

Joint Stock Company or Limited Liability Company and apartment owners’ co-operative society or the

apartment owners’ association or another legal or natural person.

The community of the apartment owners decides upon the form of the residential house

management. It can choose either to perform facility management services by itself or assign this task to

somebody else entering into a residential house administration contract with him or her in writing:

• With one apartment owner;

• With another physical person;

• With a legal person established by apartment owners;

• With another company that offers facility management services (Puķīte 2010).

EXPENDITURE FOR THE ADMINISTRATION OF A RESIDENTIAL

HOUSE AND FACTORS INFLUENCING THE PRICE FORMATION

FIG 4: The form of residential house management in Latvia

(Source: Puķīte 2010)

In Paragraphs 3 and 4 of Section 10 of the Residential House Management Law, it is determined that

when assigning administration of a residential house to an administrator the residential house owner

must provide the financing necessary for the fulfillment of this task. According to Article 2307 of the Civil

Law of the Republic of Latvia, an authorizing person (residential house apartment owner) is obliged to

compensate the expenses to the authorized person because “it cannot be required the authorized

person to donate personal financial means to achieve objectives set by other persons” (Apartment

Property Law 2010, Civil Law. Part 3. 2010; Rozenfelds 2004; Grūtups and Kalniņš 2002; Comments of

Civil Law: Part 4. 1998).

Expenditure for the administration of a residential house is determined in Section 7 of the Facility

Management Law and they are defined as follows: Expenditure for the administration of a residential

house (hereinafter – administrative expenditure) shall be, based on the decision of the residential house

owner, specific payments - the expenditure necessary for the mandatory administrative activities -

mandatory expense; other expenditure intended for the administrative activities and remuneration for

the administration of a residential house, if such has been provided for in the residential house

administration contract (Cabinet Regulations No. 906. 2010; Cabinet Regulations No. 907. 2010,

Grūtups, Kalniņš 2002). The Residential House Management Law determines that management

expenses are expenses that the house owner has decided to shift for the residential house management

and maintenance, and management costs are split into 3 parts. To specify, the facility manager’s

administrative expenses shall be added to the mandatory expenses and other expenses related to

residential building management. While the remuneration for the facility management is counted as the

administrator’s profit (Law of Cooperative Societies 2010; Tunte 2010). The obligation of the apartment

owner to pay the management expenses is fixed in Paragraph 2 of Section 10 of the Law “On Residential

Property”. Expenditure for the administration of a residential house (hereinafter – administrative

expenditure) shall be, based on the decision of the residential house owner, specific payments (On

FIG 5. Specific payments for the administration of a residential house (Source: Grūtups, Kalniņš 2002)

Residential Properties: Law of the Republic of Latvia 2010). While the remuneration for the facility

management is counted as the administrator’s profit.

PROPERTY MANAGEMENT

For the maintenance of the real estate, property management companies or associations may be used.

In multi-apartment houses, owners of apartments may establish an association of owners. The status,

rights, and obligations of these associations are regulated by a special law.

MANAGEMENT OF RESIDENTIAL BUILDINGS

Maintenance and management of a residential building is an obligation on the owners of the building,

that is, apartment owners. In small buildings, this is usually carried out by the owners themselves. In

larger buildings, maintenance and management tasks are usually outsourced. The Law on Management

of Residential Housing provides minimum requirements for the management of residential buildings.

The law also regulates relations among persons involved in the management of residential buildings,

such as managers, owners of residential buildings, and others. Management structure of residential

buildings depends on the ownership structure.

Based on the survey I came across some of the maintenance companies in Latvia where most of the

residents depend on:

 TEHHE

 SELECTUM HOME

 INDUSTRY SERVICE PARTNER

 ALPEX SIA

 VITRUM PLUS

 RIGAS NAMU PARVALDNIEKS

 RIGAS APSAIMNIEKOTAJU ASOCIACIJA

 SIA APARTA

1. What are the main responsibilities of maintenance companies?

The resident in Latvia mainly depends on maintenance companies for:

2. Why do people depend on maintenance companies rather than focusing on specific

freelancing workers?

 We believe that smart house management provides a tidy environment and helps maintain the value of the property.

 Providing a personal manager

 Provision of utilities and contracting

 Providing financial accounting of the building

 Debt administration, legal support and record keeping

 Compilation and solution of apartment owners' proposals

 Home monitoring budget development and monitoring

 Providing building renovation

 Monitoring of engineering equipment and house constructions

3. Do real estate companies focus on Technical maintenance and how they work?

 Regular maintenance of building engineering systems

 Minor repairs

 Supervision of building structural elements

 Emergency service 24 hours a day

 House renovation, smart house management

 Energy audit, analysis and solution preparation

 Renovation type selection and implementation

 Warranty performance control and management

4. Other than renovation and technical works what all are the additional services?

 Cleaning of common areas and maintenance of territories

 Periodic general cleaning

 Disinfection, deratization, disinsection

 Environmental cleaning, green area installation and monitoring

 Landscaping and providing seasonal work

5. How much percentage of people depends on maintenance companies?

More than 50% of people depend on maintenance companies, mainly people living in cities and other

means are:

 With one apartment owner;

 With another physical person;

 With a legal person established by apartment owners;

 With another company that offers facility management services (Puķīte 2010).

6. Do real estate companies help behalf of the owner for the rental procedure?

 Evaluate the property and determine an accurate rental rate

 Perform detailed documentation of the interior and exterior including photos

 Offer recommendations on repairs and cosmetic improvements that maximize monthly rent

while providing good ROI.

 Gather data on rental rates in the area and work with owners to determine the optimal rental

rate. Rent research will vary but should include looking at the recently rented comparable

according to size and type.

 Discuss with owners the pros and cons of different policies such as accepting pets, allowing

smoking etc.

 Install a lock box

7. How maintenance companies market the property for rent?

 Prepare home for rent

o Clean home and optimize interior appeal

o Manicure landscaping to increase curb appeal

 Create ads tailored to the property and advertising medium. Some of the mediums commonly

used are:

o Paid and free rental listing websites

o Print publications

o Signs

o MLS

o Fliers

 Work with other realtors and leasing agents to find a tenant

 Provide a 24-hour hot-line where prospective tenants can listen to detailed information about

the property

 Field calls from prospects for questions and viewings

 Meet prospective tenants for showings throughout the week and weekend.

 Provide prospective tenants with rental applications that are legally compliant with fair housing

laws

 Collection applications with application fee

8. What is the process involved in the Tenant Screening and Selection?

 Perform a background check to verify identity, income, credit history, rental history, etc.

 Grade tenant according to pre-defined tenant criteria

 Inform tenants who were turned down

9. Does owner have to take responsibilities when tenant Move in?

NO,

 Draw up leasing agreement

 Confirm move in date with tenant

 Review lease guidelines with tenant regarding things like rental payment terms and required

property maintenance

 Ensure all agreements have been properly executed

 Perform detailed move in inspection with tenant and have tenants sign a report verifying the

condition of the property prior to move-in.

 Collect first month’s rent and security deposit

10. Do house owners need to involve in rent collections and other procedures?

Rent collection

 Receiving rent

 Hunting down late payments

 Sending out pay or quit notices

 Enforcing late fees

Evictions

 Filing relevant paperwork to initiate and complete an unlawful detainer action

 Representing owner in court

 Coordinating with law enforcement to remove tenant and tenants possessions from unit

Legal

 Advise in the event of a legal dispute or litigation

 Refer owner to a qualified attorney when necessary

 Understand and abide by the latest local, state and federal legislation that apply to renting and

maintaining rental properties.

Inspections

 Perform periodic inspections (Inside and outside) on a predefined schedule looking for repair

needs, safety hazards, code violations, lease violations, etc.

 Send owner periodic reports on the condition of the property

Financial

 Provide accounting property management services

 Make payments on behalf of owner (Mortgage, insurance, HOA dues, etc.)

 Detailed documentation of expenses via invoices and receipts

 Maintain all historical records (paid invoices, leases, inspection reports, warranties, etc.)

 Provide annual reporting, structured for tax purposes as well as required tax documents

including a 1099 form

 Advise owner on relevant tax deductions related to their rental property

 Provide easy to read monthly cash-flow statements which offer a detailed breakdown of income

and itemized expenses

11. When tenant move out do maintenance companies take care or owners need to involve?

 Inspect unit and fill out a report on the property's condition when the client moves out

 Provide tenant with a copy as well as estimated damages

 Return the balance of the security deposit to the tenant

 Forward any portion of the owner’s portion of the tenant deposit to the owner or hold in owner

reserves for repairs.

 Clean unit and perform and needed repairs or upgrades

 Re-key the locks

 Put the property back on the market for rent

CONCLUSIONS AND PROPOSALS:

The tenants should be looking for someone with the right skills and experience to match your

properties’ needs and someone you can trust to make sound, well thought-out decisions on their

own when appropriate. The more responsibility and independence you believe a candidate can

manage, the more work will be taken off your plate. This will also save you money in the future,

by reducing your need for expensive contractors during urgent situations.

From the questionnaire conducted people have the most pleasing and efficient experience from the

 TEHHE

 ALPEX SIA

 VITRUM PLUS

And other companies are in the position of neutral and finally most people are not satisfied with RIGAS

NAMU PARVALDNIEKS and SIA APARTA.

REFERENCES:

State Construction Control Bureau of Latvia, 2020, Administration of Building Information System.

Retrieved from: https://www.bvkb.gov.lv/en/administration-building-information-system-0

Latvia.lv, 2019, Maintenance of residential buildings and spaces belonging to me,

Preparation of a cadastral survey file of a building or a group of premises.

Retrieved from: https://latvija.lv/en/DzivesSituacijas/Maja-un-vide/eku_uzturesana#show9

Jessica, 2012, Joint European support for sustainable investment in city areas, financing energy efficiency

renovations in the Latvian housing sector.

Retrieved from: https://www.eib.org/attachments/documents/jessica-study-latvia-en.pdf

Law On Residential Properties, 2010, Law of the Republic of Latvia,

Retrieved from: https://likumi.lv/ta/en/en/id/221382-law-on-residential-properties