ASSET MANAGING VS PROPERTY MANAGING

Disclaimer - I and NOT beating up on property management companies at all; rather setting expectations!

I thought I would share some dialogue I had this morning with one of our Asset Managers on our team at reVISION Masters. For context, he was letting me know that some financials and reports were going to be late and some of the numbers didn't match up with our daily KPI reports. Again, I am very happy with all of our PMs.😀

"You are doing fine. Getting financials and information from a PM in a timely manner is like trying to pull a piece of meat out of a Pitbull’s mouth. As you are finding out, PM does NOT keep accurate CPA-compliant books of their transactions. It is a mixture of accrual and cash basis, coupled (many times) with budgets that are typically not given much forethought to (excluding all of our PM companies that we use). Tandy saw this first hand on some of our properties and nothing surprises her now. The reality is that our KPIs allow us to “fact check” and micromanage (as I stated in response to a large investor of ours). Can you imagine if we did not have daily KPIs and not have people like us, pushing, challenging and questioning everyone one?

Ever since COVID started in the beginning of 2020, I have been posting, doing webinars and discussing at real estate seminars how important asset managing actually is. You CANNOT and shouldn't rely on PM for more than 80% of what is needed (and for what they get paid, we shouldn’t expect more than 80%). Honestly, that is not their job and they are certainly not paid enough to do that (I know after having a PM company managing almost 3,000 SFRs). How do you cover the other 20% (which is probably the most important part for us as Asset Managers)? Answer: daily KPIs and Pitbull asset managers (you, me, Jeff Satz, PMP and Tandy Robinson, CPA). At the end of the day, this is not monopoly and we are not playing a game. Rather, we are the C-Suite of 10s of $30M - $50M+ companies. Who in their right mind thinks that a weekly 30 minute call with your vendors is satisfactory in managing and overseeing a $1B+ portfolio with over 10,000 residents in 5 different MSAs.

You and I witness first hand when we bring up suggestions on getting more heads in beds, that should be obvious to them, but is not. Why? They have no skin in the game and probably don't have the luxury of playing coach and QB because they are too busy getting heads in beds. Most are hourly paid and are in fear of being let go constantly. Attrition at PM companies is worse than the mass Exodus from Egypt to Israel (yeah, I went biblical). I have always wanted to tie PM fees with performance; however, 99% of PM companies will not or simply don't want the risk (not sure that I blame them)."

AGAIN, THE KEY TO SURVIVING IS WORKING WITH PM NOT AGAINST THEM!