Using the expertise of a commercial real estate asset management company in Canada not only takes away some of the stress of operating an investment property, it also helps maximize your value as well. Not to be confused with real estate property managers, who execute the day-to-day operations of the property, the job of a real estate asset manager is to maximize the property's value for investment purposes. The main goals of asset management is to improve the market value for property owners through increased returns and also assist in managing the owner's property's portfolio. Real Estate as an Investment Asset Many groups and organizations such as the government, large corporations, private companies, as well as individuals will purchase real estate as an investment asset. One intent of purchasing real estate is to add value to the property and resell it for a higher profit. Other times, it can be rented or leased out to continuously generate revenue. The job of real estate asset managers is to mitigate potential risks and promote property improvements. Another task they perform is to review legal and tax regulations governing commercial real estate properties. There are, of course, some risks that come with investing in real estate properties. For instance, there is always the possibility the property will face damages. Another challenge is that properties often deteriorate over time, and upkeep can be expensive for the owner. Also, commercial properties often have a more complex process of buying and selling than other types of real estate. Building Real Estate Portfolios Portfolio management is a significant part of a real estate asset manager's role. It involves asset selection and allocation of properties from informed property development and maintenance experts. A large part of asset management occurs once the portfolio has been chosen. Diversification is also an important factor when choosing real estate investments. Often large investors will build their portfolios with a variety of property types within several different real estate markets. This is to minimize potential risks and increase the higher potential of returns. Operation of Asset Management As a large portion of an asset manager's role is market research, which includes revenue forecasting and data analysis. Most asset managers tend to specialize in certain types of properties or operations. Resources need to be administered strategically. For instance, rental and leases have to be managed in a manner that limits liability exposure, reduces vacancies, and ultimately attracts tenants. Resources that are not properly managed will negatively affect a portfolio value. In most scenarios, the asset manager will select a different property manager for the project. The property manager will deal with day-to-day operations of the property, while the asset manager will focus on growing the financial investment. The relationship between the asset manager and the property manager is significant, and they need to work well together to ensure the value of the real estate does not diminish. Think of it like how a board of directors must work closely with the CEO of a corporation. If they don't work together harmoniously, they can jeopardize the success of the business. Real Estate Asset Management Goals The goal of asset management is to maximize the investment returns and the value of the property. This includes goals such as:
- finding high and consistent sources of revenue
- decreasing spending where possible
- decreasing liabilities and risks
Real estate asset managers are required to make decisions, and all potential risks need to be evaluated to make the best decision in order to increase the value of the property for investors. These include tenant approvals, lease analysis, and negotiations. Asset managers who can make good decisions with financial capital, tend to be rewarded with larger portfolios and higher profits.
Want to learn more about how a commercial real estate asset management company in Canada can help maximize the value of your property? Call ReDev Group at (416) 225-5700 to discuss your options.