Asset Management is Key to Successful Multifamily Project

  • By Alain Villegas
  • 09/07/20
  • Guides for syndicators
Asset Management is Key to Successful Multifamily Project

Every new syndicator and apartment buyer wants to become a good asset manager. I am excited to share how to be on top of the property management company running your apartment. This is key for you to keep properties performing well.

I am Alain Villegas, a full-time real estate investor based in Dallas, Texas. I have Over $60M of properties under asset management – just under 1000 doors spread across 8 apartments. Our deals are in Dallas, Fort Worth Metro, and Houston.

Multifamily performance reporting

We require our 3rd party property management company to send us daily, weekly and monthly reports.

Monthly multifamily performance reports

Monthly reports are your regular financials, including Twelve Month P&L statements, cash flow statements, rent roll, accounts payable, and balance sheet.

Daily multifamily performance reports

Daily reports include Collections, total collected as of the end of business day, bad debt and delinquency; Occupancy – units occupied, percent occupancy, vacant units, vacant units pre-leased, notice to vacate, move-ins, move-outs, and evictions; Make ready, made ready units and non-made ready units; Work orders – open work orders.

Weekly multifamily performance reports

Weekly reports, we require three:

  • Property Performance Report has all the information from the daily reports, and this also includes renewals 30, 60, 90 days out, budget vs. actuals for total income, and NOI. The weekly tracking of our bottom line is essential as this helps us in decision-making.
  • Property Make Ready Board / Unit Upgrade Status – for every vacant unit, we have a breakdown on make-ready status per item, including trash out, repaint, flooring, resurfacing, light fixtures, and plumbing fixtures, and appliance.
  • Weekly Report on the status of CAPEX items, lender draws, marketing, community events, staffing, and market surveys. We want to keep tabs on our competition regarding current rents, lease specials, or concessions.

I look at 4 important items as the most critical element:

– For many: (1) occupancy normally jumps out as top of the list, and it is one of the most important pieces of information we need at any given time.

The most critical is the (2) budget vs. actual Net Operating Income for me. Again, this is reflective of the overall performance of your operations – taking into account both your revenue and expense.

– You also want to watch out for your (3) delinquency. You want delinquency to be kept between 3-5%. Ideally, 1% delinquency is desired.

– And the last one is (4) made ready vacant units. Always make sure that you have an available unit for same-day move in as this can help your leasing staff close the deal in terms of getting a new tenant.

When a property is stable, we normally pay attention to the weekly reports at the minimum. Never wait until month-end; a couple of bad weeks can already impact your overall performance for the month. On the other hand, check the daily reports regularly if a property has some occupancy issue and is not performing well. This will help in the real-time decision-making process.

As asset managers, we also create our own reports.

  • We create a rolling T3 snapshot of Total Income, Total Expense, and NOI.
  • We do our distribution quarterly, and a rolling T3 snapshot helps us keep tabs on our cash flow distribution status.
  • We have a bank balance report per property. This will show us our total funds from operations accounts, CAPEX accounts, and cash distribution accounts.
  • We also have a Portfolio Performance Report showing the monthly numbers for each property. This will give us information on which property we need to put more focus on.

We send out a monthly email update to our investors. This monthly update includes the rolling T3 snapshot, general status of operations, capital plan. Also, all monthly financial reports are provided to investors.

We provide very detailed reporting to our investors. Investor pushback comes when our property is not performing well, and we make sure to answer any inquiries as to our short-term strategies to get things back on track. There are few requests for more information every now and then – mostly from investors looking to get into syndications and want to learn more about how we operate.

Property management software

Our property management software is Resman in 7 properties. In addition, we use Yardi Matrix in one property. All the monthly and daily reports are generated from both software. The weekly reports are prepared by our regional managers. Some of the details in the weekly reports are from Resman or Yardi, but information on many of the weekly items can only be gathered manually.

Our goal is to have the best data on hand to guide us in our decision-making. Imagine a daily report where your leasing staff knows where to get the quality tenants to move in and information on the optimum rent to offer. We are making the best of what we have by doing weekly surveys.

You need lots of data: data on the source of potential tenants, how much they make, how much they can afford in terms of rents, the timing of move-ins, what are their sweet spots in terms of amenities that could push them to rent in our properties, real-time information on the competition. All this narrowed down to a daily report to specifically focus our marketing on the target demographic. We can adjust pricing to maximize our revenue while keeping traffic conversion at a very high percentage.

As asset managers, we always stay ahead of things. Leading not only our team but anticipating future challenges. We have been doing a stress test on our numbers. Nobody has foreseen the impact of Covid in apartments. But since we have prepared in advance for worst-case scenarios, our properties, thankfully, are in great shape.


About The Author

Alain Villegas

Alain Villegas, a resident of Irving, TX is a full time Commercial Real Estate investor. Alain is a Chemical Engineer by education and worked as an SAP IT consultant for multinational companies before retiring from corporate world in 2018. 15 years total experience in Real Estate investing. Current ownership in a total of 16 apartment complexes across 3 states, 8 submarkets and over 2,230 doors.

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