Why Effective Asset Management Is Important In Multifamily Investing

Dear valued existing investors and future investors,

Welcome yet again to this week’s CPI Capital’s news briefing. Our regular, weekly newsletter contains a mixture of updates, commentary and informative related articles about the lucrative world of passive real estate investment. And this week we have some important news about the growth of CPI Capital which you can read about below.

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Asset management is a crucial aspect of multifamily investing that is often overlooked or undervalued by investors—or even confused with property management which mainly relates to the day-to-day operational aspects of running a property. In this article, therefore, we will explore the importance of asset management in multifamily investing and why it should be a top priority for all types of investors.

What actually is Asset Management?

Asset management is the ongoing process of monitoring, maintaining and optimizing the value of multifamily and/or BTR-SFR real estate assets to achieve specific investment goals. It involves a range of activities such as evaluating assets, developing investment strategies, and making informed decisions based on market trends and data analysis.

Why is Asset Management a high priority?

Effective asset management for multifamily investors can result in higher returns on investment, increased cash flow and improved overall performance. It is particularly important in the context of multifamily investing, where the value of properties is closely tied to tenant satisfaction, occupancy rates and rental income.

The foregoing can be achieved by regularly analysing key performance indicators such as occupancy rates, rental rates and maintenance costs, and making data-driven decisions to optimise the property’s operations and ensure the long-term success of investments.

What have CPI recently done to strengthen their asset management capabilities?

CPI Capital is pleased to announce the appointment of Paul Hopkins who has a wealth of asset management knowledge and experience.

Paul is responsible for sourcing, underwriting and negotiating the acquisitions of multifamily assets across the Sunbelt States. In addition to his acquisition responsibilities, Paul oversees asset management, ensuring the successful execution of CPI Capital’s wealth creation process.

Let’s have a closer look at what asset management involves

As mentioned, asset management is a critical component of successful multifamily investing.

There are both financial benefits, as well as less tangible benefits, such as enhancement of the multifamily syndicators reputation and brand development.

Here are some of the key benefits of effective asset management:

Maximizing investment returns 

One of the primary reasons why asset management is important in multifamily investing is that it can help investors maximise their returns on investment. A multifamily property is a long-term investment, and the key to maximizing returns is to maintain a high occupancy rate, increase rents and control expenses. Asset management can help investors achieve these goals by providing them with the tools and strategies they need to manage their properties effectively.

For example, an asset manager may analyze the local rental market to determine the optimal rent prices for a property, and then implement a marketing strategy to attract high-quality tenants. They may also negotiate contracts with service providers to lower expenses and increase profitability. By implementing these strategies, asset managers can help investors increase their net operating income (NOI), which is a key metric for measuring the profitability of a multifamily investment.

Risk management

Asset management also helps investors manage risk. Real estate investing is inherently risky, and there are many factors that can affect the value and performance of a property. These factors include economic conditions, tenant turnover, property damage and regulatory changes, amongst other things.

Asset managers can help investors mitigate these risks by implementing proactive strategies to address potential problems before they arise. For example, they may conduct regular property inspections with property managers to identify maintenance issues or potential hazards, or they may implement risk management policies to address liability concerns. By taking these steps, asset managers can help investors protect their investments and minimize the impact of unforeseen events. 

Tenant retention

Another key aspect of asset management in multifamily investing is tenant retention. Retaining high-quality tenants is essential for maintaining a stable income stream and maximizing the value of a property. Tenant turnover can be expensive, as it requires landlords to spend money on marketing, repairs, and cleaning in order to attract new tenants. In addition, vacant units can result in lost rental income, which can have a negative impact on the financial performance of a multifamily property.

Asset managers can help investors retain tenants by providing a high level of customer service and implementing strategies to improve tenant satisfaction. For example, they may conduct regular surveys to gather feedback from tenants and identify areas for improvement, or they may offer incentives such as rent discounts or upgrades to encourage tenants to renew their leases. By focusing on tenant retention, asset managers can help investors maintain a stable income stream and increase the value of their investment properties over time.

Compliance and regulatory requirements

Multifamily investing is subject to a variety of compliance and regulatory requirements, including building codes, zoning laws and environmental regulations. Failure to comply with these requirements can result in fines, lawsuits and other legal issues that can be costly and time-consuming to resolve.

Asset managers will help investors stay compliant with these requirements by staying up-to-date on the latest regulations and implementing policies and procedures to ensure compliance. For example, they may conduct regular inspections to ensure that a property is in compliance with building codes and safety regulations, or they may implement environmental management policies to minimize the impact of the property on the surrounding community.

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CPI Capital is fully aware that, with its financial implications in terms of cashflow and subsequent improvement in value of the property asset, asset management is a critical component of successful multifamily and/or BTR-SFR investing. It can help investors maximize their returns on investment, manage risk, retain tenants and ensure the property complies with regulatory requirements.

By engaging directly an experienced asset manager, CPI Capital can endeavor to ensure stable long-term cashflows and value creation for the benefit of our passive investors. 

Yours sincerely,

August Biniaz
CIO, Co-Founder CPI Capital