September 29, 2023
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.
We require our 3rd party property management company to send us daily, weekly and monthly reports.
Monthly reports are your regular financials, including Twelve Month P&L statements, cash flow statements, rent roll, accounts payable, and balance sheet.
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 reports, we require three:
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.
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.
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.