Real Estate Asset Management

The Ins and Outs of Real Estate Asset Management: What You Need to Know

Many of us are familiar with real estate property management i.e. the management of the daily activities of a property’s operation. But, when the conversation turns to real estate asset management, things can get a little murky.

Although there are many facets to this industry, to put it simply – the goal of  real estate asset management is to maximize property value so that it can be sold, rented, and/or leased for a profit. Interested in learning more about the ins and outs of this complex, but intriguing, industry? Keep reading for a concise, but comprehensive, breakdown:

 

Investing in Real Estate

Corporations, private companies, individuals, and even governments buy real estate for investment purposes, usually for one of two reasons:

  • To renovate and resell
  • To renovate and lease or rent

 

Sounds fairly simple right? But, this is where things become a little more complex. You see, there are challenges in this industry that aren’t in the capital markets. For instance, unlike most other commodities, property can get damaged, it deteriorates over time, and the buying and selling process can get quite involved.

In order to circumvent these issues, the asset management of investment properties promotes improvements that will increase the property’s value and minimize risks. But, that’s not all – real estate asset management also concerns itself with effectively navigating the sometimes hard to understand tax and legal rules that govern the investment property industry in the US – thus effectively helping real estate investors avoid many of the potential pitfalls that can befall them.

investments
Real Estate Asset Management Goals and Objectives

Just like other types of investments, diversification is key when it comes to building a strong real estate investment portfolio. To this end, a large portion of an asset manager’s responsibilities tends to revolve around three main things:

  • Revenue forecasting
  • Data analysis
  • Market research

Furthermore, they help their clients create well-structured and attractive rental agreements and leases that will:

  • Limit liability exposure
  • Minimize vacancy rates
  • Provide their tenants with much of the flexibility they desire

This responsibility may seem strange when considering the other aspects of this industry, but  you must remember that resources have to be strategically apportioned and managed. The failure to do so will impact the portfolio’s value negatively..

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The Bottom Line  

In short, the goal of real estate asset management is to help clients increase property value and, as a consequence, their returns. Good managers, like the ones at RAM Real Estate Management in Southern Nevada know how to reduce expenditures whenever possible. In this way, we are able to help our clients find the highest and most consistent revenue sources while simultaneously mitigating risk, liability, and other factors.

Property Management Company

Landlord vs Property Management Company: Which Will You Decide?

When you become a rental property owner, one of the first things you have to decide is whether you want to take on the responsibilities of a landlord or hire a property management firm to do the hard work for you.

To gain a better understanding of these two choices, our comprehensive guide details the pros and cons of each:

 

Landlord

A landlord is essentially a property’s gatekeeper, with responsibilities to both the rental business and the tenants. Some of them include:

  • Finding new tenants
  • Marketing/Advertising
  • Collecting rent
  • Setting rental rates
  • Repair and maintenance

Although, the aforementioned tasks can be challenging, being a landlord has its advantages:

  • Income: You get a monthly check to pay the property’s mortgage and – dependent on current rental rates – make a sizable profit as well.  
  • Tax deductions: You can deduct the costs of replacing water pipes, replacing damaged furniture, professional services, and more.

landlord vs property manager

Cons include:

  • Vacancies: If your property is vacant, it can’t generate an income, making it essentially worthless. It’s up to you to create and implement advertising and marketing campaigns to attract applicants, screen them, and much, much more.  
  • Legal issues: You must remain current on the Nevada’s land and property legislations and laws to know where you stand when it comes to evictions and other legal issues.

property managment

Property Management Firm

Every savvy entrepreneur knows that it’s better to work smarter, not harder. And sometimes it’s just good business to have a professional do something that you don’t want to do. For instance, some of the responsibilities that you can expect your property management company to take over include:  

  • Finding new tenants
  • Advertising/marketing
  • Delegating repair and maintenance duties
  • Collecting rent
  • Setting rental rates

 

Some of the benefits that come with going this route include:  

  • Higher-quality tenants: They use rigorous screening processes to cull the reliable tenants from the bad.
  • Shorter vacancy cycle: Experienced companies, like RAM Real Estate Asset Management, have effective strategies to attract new tenants as well as a time test tenant retention policy to keep existing ones happy.
  • Fewer legal issues: The property managers at RAM are always up-to-date on the latest laws in the real estate industry. This knowledge ensures that your property – and how it’s ran – is legally compliant, shielding you from frivolous lawsuits.
  • Less responsibility: You won’t have to handle as many tasks as before, giving you more time and freedom to invest in other things.  

There aren’t many disadvantages to hiring a property management company, but one of the biggest is cost – you will either be charged a flat annual fee or anywhere from 8 to 10% of the monthly rent.

At the end of the day, the decision to become a landlord or hire a property management company is up to you. No matter what you decide, you must take the necessary steps and adopt effective strategies that bring about your long term success.

Real Estate Asset Manager

Responsibilities of A Real Estate Asset Manager and How It Can Help You

Most of us are familiar with the role that property managers play i.e.  they manage the financial aspects of owning a property:

  • Collecting rent
  • Taking care of taxes
  • Ensuring insurance, payroll, and maintenance bills

Real estate asset management, on the other hand, is a little different.  In short, asset managers maximize the performance and value of a company’s real estate investment portfolio, whether it consists of offices, retail, and/or multi-family units.  

 

How Does This Benefit Me?

Real estate returns have a lower risk than other asset classes like stocks and bonds i.e. when managed properly, they can net you higher returns. Asset managers not only help you maintain the day-to-day duties of your portfolio they also increase your ability to influence performance.

An effective asset manager – like the ones at RAM Real Estate Asset Management – will have a more hands-on approach when it comes to helping you increase your property’s value. They will help you work out even the tiniest details i.e. replacing leaky roofs, improving the exterior, or populating buildings with higher quality tenants.

effective asset manager

What’s the Catch?

Like with many other things in life, real estate investments come with some risk. For instance, transaction costs are significant when compared to other investment classes. In this way, it is more efficient to purchase larger real estate assets, as this spreads the cost over a larger base.

Following this tactic requires ongoing maintenance on two levels:

  • Property Management: To deal with the day-to-day operations
  • Strategic Management: To help you find long-term investment positions

Handling this type of investment on your own can be tough and time-consuming. So, if you want to build a strong portfolio that will provide you with a decent ROI, consider employing the services of the experts at RAM Real Estate Asset Management – not only will they give you everything you need to stay on top of market trends, they will also help you measure risk to increase your chances of acquiring an investment property that turns a profit.

 

The Bottom Line

When it comes to real estate investing, having an intelligent, savvy, and experienced professional on your team that helps you effectively manage your property is a valuable asset. At RAM Real Estate Asset Management, we have over 125 combined years in the real estate  business and we pride ourselves on professionalism, helping our clients find high-quality properties and – most of all – making sure that their investments generate money. Contact us today to learn how we can help boost your portfolio with lucrative real estate investments.

property management

4 Benefits of Professional Property Management

When we first start investing in properties, we tend to have the best of intentions. But due to a high level of self-awareness or nasty run-ins with tenants, we learn quickly that handling the day to day operations can be a very frustrating and time consuming experience. 

If you don’t have the desire, knowledge, or time to do all the things that are required of a landlord in Nevada, consider employing the services of a professional property management company to take over the day-to-day operations. 

Property Management Companies Explained

A property management company handles everything from applications to evictions. Other services include but are not limited to:

  • Delivering official notices to tenants
  • Collecting rent
  • Making maintenance and repair-related appointments
  • Vacant apartment marketing

Benefits of Professional Property Management

The biggest advantage of professional property manager is the money and time they can help you save. These experts remove much of the hassle of investing by helping you in four key areas:

Screening

Rental properties only make money when they are occupied by tenants who not only pay their rent on time but care about the property i.e. avoid damaging the unit more than the normal wear and tear. A thorough and comprehensive screening process will help you sift the good from the bad, significantly increasing your chances of getting the tenants you want in your units. Cutting the corners here is a surefire way to lessen the monthly revenue potential of your property.

Vacancies

Empty rental properties are a waste of money. If someone isn’t there to pay the rent, the responsibility of paying the mortgage falls on you. Understandably, handling the turnover process, doing the marketing, as well as the other tasks associated with vacancies can take a lot of time but, property managers with expertise and experience can help shorten the vacancy time and get the unit ready for new tenants.

leaseagreements

Lease Agreements and Other Legal Issues

Coming up with and implementing good lease agreements takes a lot of effort and time. Furthermore, they tend to play a major factor in possibly the most frightening aspect of being landlord – the legal issues that inevitably arise. A property manager will make sure that your property and everything associated with it is up to snuff.

The Bottom Line

If you own several properties or have little to no experience in property management, you should consider employing the services of a reputable firm like RAM Real Estate Asset Management. They will ensure that you fully enjoy the benefits of real estate investing without having to put in all the hard work.