What Passive Investors Should Know About Their Asset Management Team

Posted September 26, 2017

The (3) most important things that any passive investor must consider when potentially investing in a deal are the property, market and team. It is very difficult for a property/investment to perform without all of these big ticket items operating well.

But maybe the most important of these (3) items is the Asset Management Team (in my opinion). After all what good is a beautiful car if you don’t have someone who is trained driving it. So what are the most important things to consider when vetting the deal’s Asset Management Team (AMT)?

TRACK RECORD

The first thing you will want to ask yourself is “does the AMT have a long and successful track record of investing in real estate?” How many years have they been investing? Do they always hit their target projections for investor returns? You’ll want to ask about past deals and how they performed. Don’t be afraid to ask the AMT what it is about their approach and strategy that allows them to perform above the competition. Track record and experience. Always, always ask about track record and experience

ASSET MANAGEMENT TEAM’S SPECIALTY AREAS

It’s one thing if your AMT has a history of success investing in real estate. It’s a totally different thing if they have history of success in exactly what YOU are investing in. In sticking with the car analogy, it doesn’t do you a lot of good to have a mechanic who specializes in electric vehicles working on your 1958 Corvette. If you’re investing in a B-class 200-unit apartment community with a large renovation plan in an A-class sub-market then you need an AMT who specializes in exactly that. Don’t invest in an AMT who is learning a new investment strategy on the fly. Invest with an AMT who has spent years perfecting the exact type of investment you in getting involved with and I promise you it will be worth your while.

ALIGNING YOUR INVESTMENT GOALS

This may seem like an obvious thing but a lot of passive investors skip over this step when choosing a potential Asset Management Team to partner with. However, “does this AMT’s goals align with my own” is a very basic question you need to answer before you invest in a deal. Consider the following.

What type of returns am I looking for?
How long will my money be tied up?
Why is my risk tolerance?
Am I investing for cash flow or big pay-off potential at the disposition of the property?

Spend the time to get to know your AMT in depth. Partnering with the right AMT for you is paramount to your investing success.

Asset Management Team, multi family investing

Edward Noseworthy

Ed has been actively involved in commercial real estate development and construction since 2005. Ed began his career as a Master Electrician licensed in multiple states and grew to become an Operation/Sales Manager overseeing large construction projects throughout New England for a large, regional construction firm. Ed brings a wealth of construction and operations management experience.