TO GET TO THE HEART OF THESE QUESTIONS, A SERIES OF
INTERVIEWS WAS CONDUCTED WITH REAL ESTATE INDUSTRY
LEADERS, many of them asset managers who hire third-party managers on
behalf of their institutional clients. The findings suggest 12 tactics third-party property managers can adopt to establish their value to clients and position
themselves for success. And while not all clients will be represented by asset
managers, it stands to reason that most clients want their properties managed
against similar standards.
1. BEGIN WITH THE BASICS
Property management was described by those interviewed as the “blocking and tackling” of real estate investing that must be dutifully executed before pursuing any other
strategic goals. Accounting, budgeting, human resources, risk management, maintenance programs—proficiency in these tasks is an absolute must.
2. UNDERSTAND INVESTMENT STRATEGIES
Just as important as knowing the basics is an understanding and appreciation of the
factors influencing asset management and investment decisions. Property managers
can stand apart by doing such things as reading investment prospectuses prepared for
debt and equity providers, reviewing underwriting assumptions made at the time properties were acquired, and asking questions about ownership’s anticipated hold period
and targeted rates of return. Armed with this type of information, property managers
can know where owners want to take their assets and can help them get there.
3. TRIAGE EFFECTIVELY
There never seem to be sufficient resources to address all of the maintenance and
tenant concerns that need attention. But what should be done first? That’s where the
importance of triaging effectively comes into play. Property managers can distinguish
themselves through their ability to prioritize properties’ needs, make recommendations
about how to satisfy them, identify what is both urgent and important, and evaluate the
potential ramifications of alternative courses of action.
4. AVOID COMPLACENCY
It’s easy to be lulled into a false sense
of security when things are progressing
according to plan. Managers who stand
apart avoid the complacency trap and
remember that there are always opportunities to enhance an asset’s competitive
positioning, operate it more efficiently,
and improve the level of service provided
to tenants. Searching for such opportunities, in good times and bad, without
being prompted to do so, is the mark of a
strong property manager.
5. BE CREATIVE
Creativity is the key to avoiding complacency, yet many underperforming property managers lack it or express it in ways
that negate properties’ investment strategies, according to the asset managers
who were interviewed. Property managers who are stuck in either of these ruts
and unable to offer creative recommendations are rarely viewed as influential
players who can add value.
6. SPEAK THE LANGUAGE
Sophisticated real estate owners and the
asset managers who represent them speak
the language of finance. And if property
managers want to effectuate change and
make an impact, they have to learn the
language. Referencing even the most basic rate of return calculations can signal
that property managers understand that
capital outlays must be evaluated based
on their potential impact on an asset’s future cash flows. The more robust a property manager’s financial analysis skills,
the more likely he or she is to have a seat
at the table when asset management decisions are made.
SEARCHING FOR SUCH OPPORTUNITIES,
IN GOOD TIMES AND BAD, WITHOUT BEING
PROMPTED TO DO SO, IS THE MARK OF A
STRONG PROPERTY MANAGER.