Asset Managers Bridge the Gap Between Multifamily Investors and On-Site Teams
A Q&A with Stuart Keller, SVP of asset management for Lloyd Jones, in which he shares insights on the role of an in-house asset manager, and how an asset manager can effectively bridge the gap between multifamily owners/investors and property operations teams.
Keller leads owner/operator Lloyd Jones’ asset management group, which monitors the strategic plans for each multifamily property to ensure business goals are being met. The team studies market trends and demographics while keeping an eye on the financial performance and capital improvement efforts throughout the life of each asset. Finally, the team helps determine the right time for asset disposition.
What are the benefits to real estate investors of having an in-house asset manager?
It’s being able to provide context and clarity to the day-to-day operations, and how that’s going to be reflected in the financials. An in-house asset manager can speak to the on-site team and get real-time answers about performance. This adds a layer of understanding to the financial reporting and its impact to the investors’ returns. We can track adherence to the business plan and make suggestions as to adjustments, or even course-correct when necessary. Knowing the ins and outs of the operation piece, plus being able to have that open conversation, is a real advantage. Investors really wouldn’t have that with a third-party operator.
What are the key differences between an asset manager and property manager?
The analogy that I like to use is that the asset manager puts the recipe together and the business manager cooks. The asset manager will develop the business plan, come up with the financial goals and what the end results need to be in terms of property performance. And it’s up to the operations team to execute the strategy and report any deviations or variances and provide feedback to the asset manager, who will then turn around and provide feedback to our investment partners. The asset managers are the financial planners and strategists for the asset, and operations teams are the “doers.”
How do you interact with the property management and its on-site teams?
Typically, interactions with operations are conducted through the regional managers. It’s up to the regional leadership to deliver or adjust any sort of directions to the property. But from a site visit, the asset manager can see firsthand the needs, the wants, and the critical items of the on-site teams and really be able to get that real-time feedback as to what’s working and what’s not working. And we can make adjustments.
How do you help make on-site teams understand the importance of their role of protecting and improving a multimillion-dollar asset?
We start by calling our team business managers rather than property managers to encourage them to treat the asset like a business. We do that by educating the on-site teams on the true impact of value to an asset when we ask them to decrease expenses or increase revenue, and how those dollars will later be reinvested into the property.
How has your experience as a regional vice president helped shape how you work with on-site teams as an asset manager today?
That experience gave me insight as to what actions and events can make an impact at the property level. I understand the people side of the business, and that a 300-unit property is home to 300 families, where kids and families live. I also know the day-to-day challenges of the on-site staff. For instance, unit readiness is probably the single leading cause of poor performance, because when units aren’t ready you don’t have the product on the shelf to sell. So I understand that it might be necessary to call in additional staff to help the maintenance team get the job done.
What should real estate investors look for when considering a real estate investment firm?
In addition to the firm’s strength in multifamily and its experience as an owner/operator, investors should ask about the investment firm’s approach to asset management. Is the asset management team in-house or outsourced? What’s their relationship to the property management team? An in-house asset management team brings value to any partnership by committing more time, energy, and local expertise to an investment.
Stuart Keller has a diverse background in asset management, financial analysis, and property operations. In his role as SVP of asset management, Stuart is responsible for working with property management teams to implement business-plan objectives and to maximize net operating income through enhanced revenue management strategies and cost-saving initiatives.