Utilizing Asset Management to Optimize Returns
What it is and how you can free up time and optimizing your portfolio
Beginning investors are often told that commercial real estate investing is a passive sport. Invest in a building, lease to a tenant, sit back and watch the checks roll in. But, if you have owned a building or have a portfolio, you know there is nothing further from the truth.
Even if you have professional property management, you still need to oversee them on a regular basis, handle leasing details, oversee building renovations and tenant improvements, manage cashflow, and keep a keen eye on the market cycle. Furthermore, if you are looking to increase your portfolio, you have to analyze the market, analyze the property financials and budgeting, assess risk, and determine tax implications. For many investors, this is beyond their time and expertise.
Professional portfolio and asset management handles a lot of these situations and essentially does three major things:
Maximizes Property Values by utilizing highest and best use practices
Maximizes Cashflows through effective leasing structures and expense efficiencies
Minimizes Risk through comprehensive market analysis and data analytics
Many of the decisions made in real estate asset management, such as contract negotiations, overseeing key personnel, and leasing and finanacial analysis, require both broad and specialized knowledge. The managers who make the biggest impacts for investors tend to have diverse backgrounds in private equity, brokerage, and business operations. Make sure to look for real estate asset managers who are experienced and can bring value to duties such as:
Establishing long and short-term goals
Ensuring the portfolio's returns are maximized
Hiring key personnel including property managers
Working with current leasing agents
Managing the cash flow from properties within the portfolio
Negotiating leasing and sales contracts
Communicating with fellow investors and stakeholders
Asset management is not for everyone, but if you are looking to grow your commercial real estate investment portfolio and don't want to make it a career, consider having your portfolio professionally managed. Perhaps you can make it a passive sport after all!
About the author:
Michael Hironimus, CCIM is the Certified Investment Advisor and Principal Broker for Duckridge Realty specializing in portfolio and asset management for high net worth clients and institutions, with a strong focus on market, financial and risk analysis. He is also a faculty instructor for the CCIM Institute, teaching professionals globally in the CI-102 Market Analysis Core Course.
For more information, reach out to firstname.lastname@example.org.