Why Commercial Real Estate Investors Need A Dedicated Commercial Real Estate Asset Manager

As family offices and wealthy investors dedicate more of their investment portfolio to commercial real estate assets, a specialized skill set and expertise are required that is quite different from those of investing in the capital markets. As real estate investment portfolios grow, some investors don’t realize the benefits of engaging a 3rd party asset manager nor do they know what an asset manager really does.

What a Commercial Real Estate Asset Manager Does

The primary objective of the asset manager is to maximize the value of an investor's properties. To that end, the asset manager oversees not only property management and leasing, but also financing, capital improvement programs, and the eventual disposition of the asset, operating and capital expenditure budgets, negotiating leases and third party contracts, managing cash flow and monthly owner distributions, and providing acquisition due diligence consulting for new properties.

An investor could handle all these responsibilities themselves but asset management done properly is time consuming and requires experience to master. That’s why a dedicated 3rd party asset manager is a good option for someone who doesn’t have extensive time or experience in the industry to do it themselves. For example, the acquisition, sale, or leasing of a large commercial asset can be a significant undertaking. A good asset manager will be able to carefully balance not only what’s best for getting maximum short-term revenue for the property, but also what’s best for maximizing the long-term value for the asset.

Asset vs. Property Management

The distinction between a real estate asset manager and a property manager is that the property manager is responsible for overseeing the day to day operations of the property, such as collection of rent, payment of expenses, and financial reporting while the Asset Manager is responsible for creating and implementing the overall strategy for the asset.  

Why You Would Hire a 3rd Party Asset Manager

Most dedicated real estate companies have in-house asset managers. But individual investors or smaller firms may not have the critical mass of properties to justify the expense of a full-time in-house asset manager.  Other reasons to outsource the asset management function include: (1) real estate is not a core business, (2) the owner has been acting as the asset manager but wishes to focus on other efforts and wants to step away (3) the owner is from out of the country and needs assistance overseeing assets in the United States.

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