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LEADING THE MULTIFAMILYMARKET While traditional asset management isn’t broken, active asset management can achieve superior results. Instead of sitting back and waiting for problems to be revealed in a quarterly report, asset managers can get ahead of problems as they occur on the ground. With up-to-date information about the portfolio, investors can intervene long before the bottom line is affected. This is the key value of active asset manage- ment: the ability to be proactive, instead of reactive when it comes to your portfolio. Not everyone is open to change, and some investors will con- tinue to passively manage assets and will still see profits, but the market is already shifting. Multifamily market leaders today are adopting the benefits of active asset management, and this trend will only continue to grow. With a combination of data, tech- nology and industry expertise, investors everywhere can adopt active asset management and lead the multifamily market. •
agement approach, it’s all too easy for a property to be mismanaged. This can quickly lead to below-market rents, neglected properties and higher rates of delinquency.
THE SHIFT TO ACTIVE MANAGEMENT Now that you understand the value of active asset management, you can take steps to achieve it within your portfolio. The first step to adopting this approach is gaining insight into portfolio performance. Without access to accurate data at the property level, it’s not possible to practice active asset management. Thankfully, as multifamily tech- nology improves, there are now better options for real estate software that deliver the portfolio insights to enable active asset management. With the right data, asset managers can analyze trends across properties, measure specific KPIs (key performance indicators) and slice and dice information according to asset types, geograph- ic information and more. Investors can use this analysis to find key operational efficiencies across properties and make data-driv- en decisions. Then conversations between investors and operators become simpler and based on facts, not opinions. By working with property managers, investors can advance improvements across the portfolio and actively manage asset performance.
Cara Hogan is the content marketing manager at Rentlytics, the new standard in multifamily real estate business intelligence. She has a background in Software-as-a-Service, analytics, and has written extensively about the intersection of technology and business.
Get—and Stay—Ahead THE KEY VALUE OF ACTIVE ASSET MANAGEMENT IS THE ABILITY TO BE PROACTIVE INSTEAD OF REACTIVE WHEN IT COMES TO YOUR PORTFOLIO.
by Cara Hogan
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ultifamily real estate professionals clearly understand how asset management teams interact with third-par- ty operating partners. At most multifamily portfolios, asset management teams handle the strategy and performance of investments at the portfolio or fund level, while operating partners execute day-to-day management at the property level. It’s all fairly standard within the industry. But when you add just one word to asset management—ac- tive—it completely changes the meaning of the term as we understand it today. Active asset management is defined as investors who work with third-party management companies, but who are also strategically involved in the operations of their portfolio properties. While external property managers continue to handle the day-to-day details of leasing, resident manage- ment and property maintenance, active asset managers step in to help property managers better leverage resources to maximize portfolio returns. A growing number of investors are shifting from the standard approach to active asset management. A number of new technologies have made active asset management easy to execute, and a number of market leaders have adopted this
approach and already seen measurable benefits. Active asset management is quickly gaining steam in multifamily real estate, and investors everywhere should take notice.
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THE DRAWBACKS OF TRADITIONAL ASSET MANAGEMENT
Multifamily real estate hit a record $150 billion in 2015, and that upward trajectory continued in 2016. Because of this incredibly consistent growth, many multifamily investors have been able to passively manage portfolios for years without negatively affecting NOI. Even at top investment firms, a hands-off approach is the standard procedure. Third-party property management companies send over a monthly owner’s report and a more in-depth quarterly report, but not much more. Often, investors believe they’re paying property managers to han- dle the details and optimize asset performance. Unfortunately, a lack of oversight from the top down can sometimes lead to problems at the property level. If no one is managing the property management companies, how do investors know if operators are truly maximiz- ing the value of an asset? How do asset managers ensure that their partners are leveraging best practices? Without an active asset man-
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