3x CEO. Led $1B+ in asset acquisitions & growth from 3K to 18K units in third party platform. Led teams of 450+ teammates.
Asset management “versus” operations in multifamily: ?? This is a frequent misalignment to be aware of. Both the asset manager and the operator have different goals/metrics of tracking success and if they aren’t aligned on the overall business plan of the investment, property, residents, and owner(s) will feel it. ?? The operator focuses on the day-to-day execution at the property. A key metric for success for the operator is occupancy and renewals. ?? The asset manager takes a broader view – focusing on long-term value and financial performance. Their success is measured by the alignment of the asset to the overall business/investment strategy. Asset managers are more likely to be on “offense.” What does this mean? They are willing to trade a few bps of occupancy to execute their business plan if it calls for renovations: In order to get “product” (i.e. apartment homes) available, they have to sometimes forgo renewals in favor of vacancy – which then allows a capital expenditure to bring the unit up to the new spec. ??Here’s some math: ? A 3% renewal increase from a $1,300 rent will bring rent to $1,339/month. That’s an additional $468 for the year. ? On the other side, if a renovation can increase the monthly rent by $200, that unit would be leased at $1,500. That’s an additional $2,400 for the year. ?? It takes about a month for a full renovation – for that month, that unit is not making any money. But it is finally putting investor capital to work and driving appreciation into the asset. Of course, there is more to deciding on whether to keep a unit leased or vacant than this math. But the point is, executing on the investment business plan sometimes means “compromising” the operator’s leasing strategy. ?? The asset manager and operator need to be fully aligned or your investment value may ultimately be nothing more than a number in an investment presentation. ATX Acquisitions, ResProp Management #realestate #operator #manager #investment #team
It’s a push and pull relationship. Steven R. there are simple processes and tools to help convey this and get the parties on the same page: 1. Have all PMs get access to review the property budget upon onboarding and prompt questions between the PM and RM to build knowledge. Although the budget is just a guide - it will include most of the must-hit renovation and set strategy information in there. 2. Create prompts for the weekly or monthly RM and Asset Manager meetings to ensure there is still alignment. Ex. Are we still onboard track to renovate x number of units by x month? Should we pivot if the plan is behind? Or talk about competitors. 3. Talk about priorities - since things happen and plans change - it’s important to always understand what will need to be prioritized over what. Alignment is critical, but the prop management company can always help drive some of those conversations as well.
At the end of the day the goal is the same, as long as the communication is there the results will follow ??
Idk which I like more - they’re all killers!
Well said! I’ve been hyper focused lately on trying to change the narrative around multifamily and one of my highest priorities is to shift the way we look at and utilize our operating partners. Specifically 3rd party property management. If you treat them as partners instead of like a vendor, you will elevate your execution beyond measure.
Slade Weishuhn brings more than a decade's experience in Operations (and outstanding work ethic) to this Asset Management role in ATX Acquisitions. His time in Operations allows him to get on the same page with Operators and execute as a team. Well said, Daniel French!
Couldn't agree more! Alignment is key! ??
Slade actually hired me for my first leasing job and got me into property management!! He's fantastic. ??
Good stuff, Dan!
Fixing Multifamily One Step at a Time | Innovating onboarding, tech adoption, and team support to build a better future.
4 个月As long as the industry fails to teach its property and regional managers the lens of investors and asset managers this issue will continue to be extraordinarily prevalent. If we don’t speak from the same language, how could we ever communicate effectively? How many PMs or RMs could accurately relay the goals of their clients? Almost none. Both operators and asset managers get trapped in metrics that may correlate to success but are not causal to success. There is one metric that matters and should be a target - Net Operating Income. Everything else is a measure to help you to determine the subtle changes needed to hit the target and execute the owners business plan. “When a measure becomes a target, it ceases to be a good measure” - Goodhart’s Law Bad Targets: Occupancy, Lease Trade Outs, Maintenance WO close rate, Average anything (inherently obscure where help is needed), Renewals as a snapshot, and others Good Measures: Length of stay, Process-focused metrics (tours, follow ups, WO call backs, Days to Make ready) Operators need to do a better job asking questions of owners to understand the business goals so there is never a need to compromise on strategy, because there is already a shared strategy in place.