When you decide to passively invest with a sponsor in an apartment syndication, you are investing with that sponsor’s team. This is why it is essential to not only vet the deal, but vet the sponsor. When you vet the sponsor, you are looking for capabilities and experience on the team. One important skillset to identify is that of asset management.
What is Asset Management?
To begin, asset management is the role within the sponsor’s team that works with property management to ensure that the business plan is being executed according to plan. This role manages and measures progress against the desired end goal for the property. Put simply, the asset manager makes sure that the the investment outcome happens according to the investor’s vision.
What does an Asset Manager Do?
Asset managers closely align with the property management company that was hired to manage the apartment operations. Rather than wait for updates from the PM once every blue moon, the asset manager sets expectations and creates a regular cadence for managing the PM and holding it accountable to results.
What results does an asset manager drive?
The asset manager drives results outlined in the business plan of the investment. More specifically, these often include the following:
- Increasing occupancy
- Increasing rent collections
- Raising rents to market levels
- Reducing turnover time
- Expense reduction targets
- Renovation progress and status
This list is not exhaustive and the areas of focus depend on the specific property and the plan laid out for execution in order to meet the targeted results / returns for investors.
How Do you Know if your sponsor has a good asset manager?
You can vet the sponsor team for this skillset by looking for past experience, understanding the current business plan and how the sponsor plans to manage to those results. Look for areas of risk, such as aggressive renovation timelines, to see if they are realistic and ask the sponsor for feedback / clarification on how they plan to achieve these results. For more information, check out our other article on characteristics of great asset managers.
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