Last week we discussed some of the characteristics you should look for when vetting a property manager (PM) which is the party responsible for handling the day-to-day tasks of an apartment such as leasing, repairs, and execution of CapEx improvements. On this week’s blog we shift our focus from the PM to the asset manager (AM), the partner responsible for overseeing the successful execution of the business plan.
During the acquisition process, the business plan for a given property must be developed and clearly defined. For a stabilized property this could be as simple as holding to a certain occupancy level which might be achieved through other lead indicators such as quantity of marketing, number of showings, average time to complete maintenance requests and many others that would both drive applicants to the property and keep current tenants happy. A more involved property business plan could include the completion of large CapEx projects and changing the tenant base to secure leases with better residents. While the business plan for each property will look different, what they all have in common is that they should be executed by the PM who is held accountable by the AM. The AM therefore plays a crucial role in the execution of the business plan by accepting a level of responsibility to the partners or investors for meeting the targets of the business plan. Additionally, should adjustments need to be made to the business plan the AM would be responsible for identifying these gaps, bringing a solution to be agreed upon by the other parties involved and then relaying that to the PM for executing once again in a clearly defined manner.
Like a PM an AM will typically receive a percentage of the property’s income as compensation for their higher level of involvement with the property’s operations. Individuals with strong leadership skills and abilities in project management typically make solid AM as the tasks required bode well with this skill set.
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