APARTMENT PROPERTY MANAGER VS. MULTIFAMILY ASSET MANAGER
Multifamily Asset Manager, by contrast to the apartment property manager, is concerned with maximizing the revenue potential of each property and identifying new ways to create and grow longer-term value in the property as an owned asset. While often used interchangeably, it’s important to realize that the roles are in fact very different and distinct. Apartment Property Management, by definition, entails the operation of residential real estate, including all parts of the property. A such, a apartment property manager acts on behalf of the owner in all routine tasks such as rent collection, administering leases, scheduling of maintenance and repairs, and, perhaps most importantly, building and maintaining relationships with residents.
The Apartment Property Manager is an expert in day-to-day property operations with a focus on making the apartment community a desirable place for residents to call home. The Multifamily Asset Manager is an expert in conducting valuation and developing long-term value strategies, with a focus on making the property a well-performing source of revenue for the owner. While the roles are both entirely necessarily and highly complementary to each other in the larger context of a company’s culture and success — and it’s true that a great property manager should have an excellent grasp of financial performance and a great asset manager should understand the importance of resident relations and retention — each role requires its own larger body of knowledge and set of skills.
The Multifamily Asset Manager
The Multifamily Asset Manager’s world is a dynamic one where the various disciplines of operations, administration, maintenance, financial oversight and marketing all come into play. The Asset Manager views the property as an ‘investment’ and as such, any decision taken for the property impacts its financial performance.
As the apartment industry has evolved to recognize the importance of strategic growth, the role of the Asset Manager has grown in demand over the past few decades as a valuable profession in its own right. The nature of the work is analytical and strategic, and the job description will depend on the organization, position, and the nature of the assets themselves. The role demands vigilant awareness of changing marketing conditions and related economic factors that can impact the property valuation. And, as in most important business roles today, awareness of and the ability to adapt to emerging technology, economic trends, and shifting demographics is a must.
Often the multifamily asset manager functions as the representative of the property owner and is entrusted with the task of retaining third-party management companies and supervising them. In this space, all the activities necessary to enhance the value of a property or portfolio are undertaken, such as defining performance goals, operational functions, and caretaker goals. Other tasks specific to the role might include developing property performance reports, ensuring government and regulatory compliance, or adding and revising lease terms.
Regardless of dynamics, the Asset Manager’s main objective will always be the same: to monitor property performance, analyze data, and apply it to maximizing revenue in the bigger picture and longer term.
Apartment Property Manager
The Apartment Property Manager is entrusted with the task of operationally managing one or more properties. The nature of the work is supervisory: to serve as a liaison between owner and residents and to manage the site’s staff, design and implement management plans, build the community’s reputation and image, and build and maintain relationships with current and potential residents. The Apartment Property Manager, too, has a key fiscal responsibility — to create value by increasing net operating income. This happens by minimizing operational expenses and optimizing rent.
The typical career aspiration is to grow from responsibility for one property to many. A Regional or Multi-Site Manager or Supervisor is entrusted with several sites across a wide geographic area, often traveling extensively to maintain a presence and active role in the success of each. Typical responsibilities include:
- Auditing, analyzing, and improving financial activities (reducing expenses while optimizing rent)
- Monitoring and managing operational performance
- Conducting market analysis and building the property’s profile in the marketplace
- Building and managing the on-site team including recruiting, training, and development
A Matter of Perspective
We frequently see a blurring of lines between Property and Asset Management as a result of confused titling or marketing. Apartment property management firms will often refer to property managers as asset managers. In addition, some third-party firms attempt to differentiate the quality of service they provide by calling their property management function “asset management,” when the service provided is clearly the former and not the latter.
Definition is often a matter of perspective. Multifamily Asset Managers see the lines as clearly defined. They increasingly demand that the property manager do more, but not within the confines of asset management. Most asset managers realize that the responsibility for the strategic management of an asset rests with them alone.
However, today’s Apartment Property Manager has a more demanding and complex role. To meet the challenge, property managers have become more sophisticated, largely through in-house training as well as advanced educational opportunities that expose Property Managers to strategic and analytical skills.
The fact is, Apartment property management and asset management remain two distinctly different functions and areas of specialization; and in general, asset managers have much different educational backgrounds from property managers. This provides a strong argument against allowing the lines to blur.
It Takes Two
It’s true, however, that While the roles are distinct, each informs the others’ success. Asset Managers should apply downward pressure on Property Managers to do more; and today’s Property Managers can, especially given the technological advances made in analytical and data reporting tools in the past two decades. Our industry is developing a better sense of the benefits of alignment, prompted by owners looking to find ways to increase top- and bottom- line revenue, minimize inefficient processes, and achieve a greater synergy of thinking and doing across their organizational culture and structure.
The most effective Property Managers are those who’ve learned to think like Asset Managers. Because they know not just how a property needs to operate but also why, they’re better able to create, execute, or pivot to achieve a desired result. This depth of understanding pays dividends across both the organization and the investment life cycle in increased sophistication, growth, knowledge, understanding, performance, predictability, and profitability.
Sharpening the Line
While there’s a strong argument for placing responsibility for Asset Management in Property Manager’s hands; many multifamily professionals believe the roles should remain, and has never been clearer.
Even in the most vertically integrated organizations, a successful Property Manager should understand the “big picture” of investment strategy—that is, the core or value-add, as well as what the Asset Manager wants to accomplish from an overall investment perspective. And for the Asset Manager, understanding the context within which operations are performed is critical.
But in the larger ecosystem of the multifamily apartment industry, while it would be attractive to imagine fluidity between the two roles, the real-world facts show a lack of interest in graduating from property to multifamily asset management.
It’s true the expectations of apartment property managers are evolving. It’s also true that the best property managers should be more appropriately paid for the value they create. But, the evidence clearly shows the line between the two disciplines has never been clearer. Instead of blurring the lines, for best success, define and align them. The success of your company and communities depends on both.