Property owners own investment real estate for profit. With proper management, they can earn a good return monthly from one property or a portfolio of properties. However, a certain property may have been acquired for an upgrade, to bring in income later or sell for a capital gain. Either way, the investment must be managed, considered, and watched at all times. If the owner and property manager are taking care of business, there may be ways to increase the income, or the value.
Owners of portfolios of stocks and bonds meet with or call their stockbroker often. It makes sense for real estate investors also to meet with their real estate investment representative and property manager often, perhaps quarterly. Exchanging ideas with the professionals who have the daily pulse of the real estate market can be profitable. At each meeting, the investor can plan on finding out the current market conditions that will have an effect on equities that are owned or that can be acquired.
In many cases, the owner’s investment representative is also the property manager. If not, the investment consultant and property manager should always meet with the owner together since both share the responsibility for improving the owner’s position.
The Management/Investment Conference
Planning any professional meeting will make it more productive. To keep a business meeting on track and save everyone time, notes should be made in advance and an agenda prepared by the property portfolio owner or the broker. The following are some examples of questions or subjects that might be discussed at each meeting; or some at least once a year:
1. Are there ways that the management of the properties be improved? Can any current expenses be decreased?
2. How do our rent levels compare with the others in the immediate area?
3. Have there been collection problems–are all rents current at this time?
4. Is the current maintenance of the properties up to the best standards?
5. Has the planning department approved any zoning variances in the areas of my properties? Would it enhance the value of any property in the portfolio to apply for a change in zoning?
6. Have any new construction projects been started nearby? What are they and what effect might they have on my properties or rents in the area?
7. Is the present use of the properties the highest and best use?
8. Could improvements be made that would increase the income?
9. Are we attracting the kind of tenants that should be in this type of property? Would anyone else be more desirable?
10. Are any properties of the type we own on the market at this time in this immediate area? What is the price and how is that price justified? Has there been any buyer interest in it at that price? Should we consider adding it to this portfolio of properties? If so, how can we acquire it, either by cash purchase or exchange?
11. Is our leveraged position in all properties at its maximum potential? Would there be any benefit in a refinance of any properties at this time?
12. Are any properties in this portfolio suitable for a condo or co-op conversion? If so, should we do the conversion or sell the property to an expert in that field?
13. Can we offer any property for syndication? How would we handle it?
14. Which of these properties has the best set of benefits for the present owner? Which has the least benefits?
15. Which of the properties in the portfolio would be the most desirable to dispose of at this time?
Goals for Acquisition
When each of the points in the meeting has been covered, both the property owner and his/her management and investment representatives should have a much better picture of the property portfolio and what should be accomplished. At this time, maybe each property owned should be graded in order of the most desirable to the least desirable to continue holding. Then the answer to item #15 will be apparent.
That answer may be an important result of the meeting. The goal should be set for the sale or exchange of the least productive property (to this owner) in the list of real estate owned. This result is very satisfying since the “weakest” property is identified and the goal is set to use its equity to acquire a certain type of real estate that will fit better into this owner’s portfolio.
This gives a result for the owner that is seldom achieved by many investment real estate owners. At all times, there is a definite effort being made by a top real estate management and investment team to improve the owner’s position.