While there can be many different approaches to managing multifamily property or a real estate portfolio, the best practices employ effective asset management as a way to get the most out of real estate investments.
There are several benefits to using asset management to optimize a real estate portfolio. By carefully selecting and managing investments, sponsors and investors can potentially achieve higher returns and minimize risk.
Effective asset management also can help owners and operators of apartment communities make more informed investment and operational decisions by providing insights through research and analysis. And by working in partnership with professionals who bring their expertise to the table.
Asset managers can use a variety of analytical tools and techniques to evaluate the performance of individual investments and the overall portfolio. These may include financial ratio analysis, market analysis and portfolio analysis. This often includes benchmarking. (Comparing company data to industry averages or market specific averages.)
Effective asset management also involves regularly reviewing and adjusting the portfolio to ensure it remains aligned with the investor’s goals and objectives. This may involve buying and selling properties based on market conditions, rebalancing the portfolio to maintain the desired asset allocation, or making changes to the portfolio based on the investor’s changing financial situation or investment strategy.
I believe you must fully understand the market to optimize your properties’ performance. While renting and getting the best possible rents for the market may seem like the simplest solution, you also need to consider how expenses are being managed. There needs to be a balance of both inputs and outputs to ensure you get the most out of your properties.
In addition, there needs to be a clear understanding of the relationships that are critical to achieving and maintaining success. Your property management team needs to understand the bigger picture and be provided with the right tools to succeed.
For instance, having the right software platform is critical in terms of how we collect and share data for the purposes of decision making. Conducting market surveys and talking to members of the community are ways we assess and better understand the needs and challenges in a particular community.
Asset management’s ultimate objective is to execute the business plan of the ownership, by operating efficiently while providing value for investors. Multifamily properties are often purchased with a strategic destination in mind. Asset Management is the vehicle that takes you there.
Robby Thomas is vice president of asset management for Camino Verde Group and is responsible for asset management and oversight of third-party property management firms. He also assists the firm in securing and financing affordable housing communities in Nevada.