This article was original published in Forbes
By Kyle Crown
The property management industry centers on stewardship — supervising and caring for the assets of others. A common sentiment in ads for management companies goes something like this: “We manage your property as if it were our own.” It would seem to follow that in order to serve investors at the highest level, property managers should know the investment side of the industry.
My own career began in industrial real estate investment, and the skills I learned in that field have proven invaluable to me in commercial property management. So if you’re a manager, I advocate learning the basics of investment, and if you’re an investor, I advocate working with a manager who has done so.
During my tenure as an investments analyst for KTR Capital Partners, I devoted countless hours and cups of coffee to reviewing commercial leases, analyzing the credit strength of corporate tenants and poring over spreadsheets to measure the profitability of prospective purchases. Practically speaking, that really just means I spent so much time in Excel and Argus during those years that financial models still haunt my dreams.
Those skills aren’t exclusively available to people who have worked in the area of the industry I did — nothing is stopping a studious property manager from learning them online. But all of them have shaped my ability to view the properties we manage through the unique lens of the investor, so I always encourage other property managers to seek them out.
One concrete way property managers can apply investment knowledge to their field is by reviewing running financial models and pro forma analyses for clients. We’ve willingly bowed out of management opportunities before by being honest with our clients about how thin their deals look on paper. As a manager, being literate in the language of a prospective client’s past investments can make you more aware of that client’s expectations going forward, sometimes even allowing you to anticipate their requests and bring future needs to their attention.
Another investment-related skill that can help set a manager apart is the ability to quickly glean important details and craft lease abstracts, the summaries of leases that owners can refer to rather than reading entire 50-page leases. Reviewing an infinite stream of commercial leases makes a manager uniquely aware of which items in a lease will matter most to a given owner or ownership group, and therefore which items they’ll want to see in the abstract of the lease.
As it relates to that point, I want to clarify that although knowledge of the investing side of the business makes a property manager better able to take care of a property, it’s never the manager’s job to assert their unsolicited opinion on matters of investment. However, if an owner knows they can trust their manager’s investment acumen, they have all the more reason to stay with that manager in the long term.
It’s one thing to advertise that you’ll manage a property as if it were your own; it’s quite another to prove you have the skills and experience to do just that.
