In this video, we’ll explain how it plays a pivotal role in maximizing the value of properties, optimizing returns, and achieving long-term investment goals.
From tenant relations to maintenance and financial management, we’ll cover the essential responsibilities of property managers and how they contribute to the success of real estate ventures.
By the end of this video, you’ll have a comprehensive grasp of how these two vital aspects of real estate management differ in their objectives, strategies, and scope. Hit that subscribe button to stay updated with more insightful videos on real estate, investments, and property management.
Also, don’t hesitate to leave your questions or comments below; our team will be glad to engage with you!
Transcriptions :
Chris Bounds
Whether you’re in multifamily or commercial or single family. Asset management’s always involved. But for those who don’t know what Asset Management is, can you explain what that is, and maybe how it differs from property management.
Andrew Pope 01:26
Asset Management is looking out for the owners and the investors are risk and cashflow and making sure they get the returns as represented to them. So, you know, in a nutshell, I used to say revenue minus expenses equals noi, and then that gets split and affects the valuation going forward. So what we’re trying to do is enhance and improve and protect the cashflow and the sales price in the future. That was shown to the investors and then that way that the ownership is able to carry on do business again with those investors and hopefully, look good in the process of doing what they say and protecting the pro forma that was originally done. Okay,
Chris Bounds 02:12
how does that differ from property management?
Andrew Pope 02:15
Property measures are higher at four fee, they typically do the leasing the collection, and pay the expenses and sometimes had the accounting. So they’re what they’re doing is a vital service to the property. They provide staffing, that being leasing representation on the property and maintenance. And so they provide the team and the customer service. And they’re kind of the sticky part the the human part that keeps the tenants there. That makes sense. Yeah. And so
Chris Bounds 02:45
they’re the boots on the ground, whereas the asset managers making sure that they’re doing their job, is that some sound fair,
Andrew Pope 02:55
then executing the plan? Yeah, the exit, the asset manager is there to review metrics, make sure that financial performance matches what they are saying, and that they are performing their work, and providing the focus needed for that particular asset. And working behind the scenes on renovations. According now with new tenants. Property Management typically writes the leases for the tenants, and they pay the bills for expenses to take care of the property while they’re there. And they are the representation. So sometimes they stray outside of that, and that’s the manager’s job is to bring him back into focus. So they are able to perform on their core competencies, if that makes sense.
Chris Bounds 03:42
Yeah. And so then anyone can be an asset manager, or I guess, what, right when I saw that phrase, and I was kind of really trying to distinguish what it was, and you really described it very well. But it kind of it kind of hit me, it’s like if you had a single family property, because usually this term is in commercial real estate or multifamily, you don’t really see this term unless you’re talking about big portfolios of single family. But really, if you own a single rental property, and that property is being managed by a third party management company, you’re an asset manager is basically what you are, because you’re making sure the property managers aren’t me, you should be at least you’re making sure the property manager is doing what they’re supposed to be doing,
Andrew Pope 04:26
right. Yeah. So a lot of owners start out doing their own asset management because you operated as an owner the same concerns. And then once they reached a certain critical mass of portfolio where they had are spread too thin, they need somebody to help kind of help get them to the next level or peel off their responsibilities. They can go to our property management. We’re an asset management person who oversees a property management company, and it’s a duplication of themselves and way So at a certain point with Porter follows as they grow as managers become. It’s a hard handoff for some owners. But it is a point where they is asset management fee and and that fee goes to pay an asset manager to take over, rather than the owner doing everything themselves being hands on.
Chris Bounds 05:16
So yeah, that’s ultimately why like, it’s going back to single family, just most people involved in real estate or they’re involved in the single family side. It’s why real estate and rental properties or single family rental properties, they’re not truly passive, I mean that they definitely have passive natures to them. But at the end of the day, you’re always actively even if you’re not properly managing the property, you’re actively managing or managing the asset. So you’re an asset manager, which means like, at the end of the day, the buck still falls on you to solve some of the critical problems that can come up unless you bring in an asset manager and you build a portfolio and you bring someone in, and then it can be a bit more passive. Does that sound right?
Andrew Pope 06:05
Correct. Yep, asset managers have the same Have you say task list, as most owners are concerned with meeting the pro forma as it was underwritten, which means that there’s rent growth, typically making sure that the occupancy is up and happening and who’s accountable for that, that would be the property management company, and making sure the taxes are paid and the bills are paid, and knowing the details under the hood so that they can act on behalf of the ownership. No. And then they also report back to the owner and their investors and provide let’s say the market and what’s going on. But typically the brought in when the portfolios are big enough that the owners can justify paying an asset manager for their services. Institutional people, it’s a must.
There’s there’s a football team asset managers, typically the portfolio is broken down. Gearing ratios, this is for debt equity and ownership. I’ve managed up to 3040 properties. But then again, it matters what the tasks on a daily, daily and monthly basis are. But large institutional owners want asset managers to touch their asset at least two times a month, and make sure things are going to per plan. And the ones that are in development or lease up or new, they require being touched every day. So it varies on the type of asset there is. So it is a mixed bag. And there’s various definitions of the term what it is, you just kind of have to look and see what what is needed by the dealership.
Chris Bounds 07:39
And from an asset manager standpoint, you mentioned 30 properties or so is that 30 Like multifamily communities or is it 30? Like single families or?
Andrew Pope 07:51
Yeah, so I worked for AIG in America and then a financial they did equity and debt for multifamily, some affordable some market rate. And so they had total company wide, let’s say 150 in process at any one time, and each asset manager would take on about 30 If there was a construction component because it took more hands on work. Once it becomes stabilized and cash flowing with with a stabilized loan. Those asset managers handled up to 70 and 80. And it was all automated and checks and balances, making sure that you know things from the ownership side were taken care of. And that’s kind of an extreme case. I mean, 80 is a big load.
So younger that right now there’s a lot upstarts and ownerships and portfolio sizes of less than 10. Those owners are, let’s say 10 Single Family rentals, that’s about the time we bring it asset manager because they’re looking for growth and asset manager as a growth agent, where we can automate and get things all pulled together and the quality of data performance and they want to acquire more so asset management tends to dovetail overlap with acquisitions, and dovetails and overlaps with accounting, and all the consultants and the tax base and and getting the grant the growth plans and the NOI growth from year to year to happen with certainty. So there’s strategies to get that to happen. And we look at all that so it is a big topic and but there are various scopes and varieties of asset managers you just have to ask the question how detailed and how experienced they are.
Chris Bounds 09:36
It seems like it’s a it’s like a dream job for someone who loves numbers loves projections love seeing those play out Excel graphs, charts, especially when it’s tied to something that’s real, that you could actually touch to and something interesting like like real estate
Andrew Pope 09:59
So you have, yep. So you have to look at you have to see the forest for the trees, you have to look at the details and back up and see is this going the right direction? And provide an overall strategy and course correction, if need be for the property managers who may be able to see it, but in most cases, they are very much how can you say very close to what they’re doing and need some guidance and some strategy?