In this video, we delve into a comprehensive overview of asset management in the real estate industry, shedding light on compensation structures and factors influencing professionals’ earnings.
We will video cover key topics such as an introduction to asset management, real estate investment basics, understanding compensation structures, factors affecting earnings, career growth opportunities, and expert insights.
Whether you’re exploring a career in real estate asset management or seeking a better understanding of financial aspects in this field, our analysis provides valuable insights into asset management compensation.
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Transcript:
Chris Bounds 10:24
So, how did you find yourself in this field? And how did you get started in real estate and find yourself doing asset management.
Andrew Pope 10:34
So I started out, I’ve been doing this a variety of asset management, my whole career has been since before 1989, but I started with a large Life Insurance Company. And we manage the risk mostly. But what they did, they had a billion dollars of commercial mortgages a year operation nationwide. And then they had about three or 4 billion own across the nation. And we kind of were in a matrix environment, and we kind of plugged herself into the teams per region. So I remember going to the West Coast one month and going to the East Coast next month, you know, do the on the ground work, and then plugging into the teams under one roof that covered the nation. So it was really a How can you say a lot. So what it was was just plugging into a team that needed your expertise and guidance, because they were all about lending. And they may not have known what the asset or the collateral was, or the market conditions was the we were to set them up for success and make sure that they could pull it off because we were, they had less experience than us.
But we had more specialized knowledge and they justified we had a whole group of them of professionals, mostly engineers, and architects and so forth. And my specialty was construction management at the time cost engineering putting together cost estimates. And but we had environmental people, we had HVAC people, we had construction management, contractual people. And so we we set up straight underwriters, straight finance people with the nuances of owning, say, an office building or a shopping center in Boston, and getting them set up for success. And there’s a lot of pitfalls and a lot of traps out there that we we you know, somebody’s not knowing the terrain. We got them so that people would have had eyes and ears locally who had worked for us and watch that, watch it while we were back in the home office, so to speak.
So we had a big chalkboard, and they were across the nation. Most outfits work regionally, let’s say out the southeast, or inner city or metro area. So that’s more specialized. But I’ve worked across the nation, and each market has its own story, its own particular set of risks. And we just were had the experience and knew what to look out for. But there’s a lot of things that how can you say, Construction wise, property manager wise, anybody who work for a fee. There’s human behavior behind that. And it’s easy to see how they’re going to behave based on their agreement.
So we manage those folks as consultants as service providers to the deal. And we’ve put together FTC contractual agreements and made sure that we met with them, and we had a connection with them, and that they were working on our behalf working for us instead of against this, if that makes sense. Anybody in real estate tends to know that you need to be careful if you’re an absentee owner. So we facilitated that absentee across country type. Distance gap. Yeah, it
Chris Bounds 13:49
definitely requires a tight team. You can find yourself in a tight spot if you don’t have that nailed, nailed down and from a single salmon family standpoint, I never personally I know people who do it successfully I just the economics and it really found found worthwhile multibeam it’s easy because it’s a business. How are assets managers? How are they typically, like in across there’s a lot of different I mean, you can have asset manager pretty much any type of asset class but what sticking with like multifamily like residential, multifamily single family, how are they typically compensated?
Andrew Pope 14:27
So right now the industry standard is that an owner or portfolio er would hire an asset manager, their going rate would go anywhere between 90k a year to 200k a year with benefits depending on experience. So there has to be a certain amount of critical mass in order to make that work. And then the asset managers have to extract the value make sure that the assets are performing and that the performers are cash flowing and the investors are getting their cash. The become the eyes and ears and we take the load off The owners.
And we’re kind of the glue that that brings together the property management teams, the construction teams and all the consultants involved and get overlap and provide backup for underwriting for accounting, and Problem Management. So it’s multi faceted, it comes down to foreseeing and getting out in front of the risk. Because once you get into this business, you realize there are a few risk components that you need to be wary of. So a lot of it is you can learn on the job, through experience, a lot of it is just knowing the numbers and having a, you know, a good solid financial modelling construction background.
So I’ve touched on a lot of different facets there. So I guess the more value you can bring to the owner, the more valuable you are. So that’s what I’m doing is becoming a freelance asset manager and doing on a fractional basis talking to owners, where they don’t have to pay the full yearly cost or hire someone, but they can hire me on a fractional basis, like two month basis project basis by the hour, we’d like you to work on us for six months train our teams are bad better at it. And then we can take it from there
Chris Bounds 16:17
based on percentage of GCI, or
Andrew Pope 16:22
it’s really, it really depends, because everybody’s asset is in different states of ownership with say they’re in development and lease up, they just close on it, and they have to implement a value added plan. Well, things get, things get pretty hands on pretty busy. So if it is something that is, you know, they have 10 properties that they bought, they’re all 9% occupied, or cash flowing, we just want to make sure that it continues on that way, you know, means budget, it’s a different set of things. So there’s a there’s a lifecycle component to understanding where you fit and what you’re going to perform. So obviously, one is different than the other and more time involved. So it comes down to an hourly basis, basically, but
Chris Bounds 17:07 I just don’t I see how its its charged to investors in syndications and funds. And now, of course, the fund manager or the operator, you know, they then typically have staff that they’re paying to do this. So it’s now there could be a spread. I know. I don’t know, it depends on the asset and the game plan.