In basic terms, an asset manager manages assets. When the term is related to real estate, the asset manager is responsible for managing someone’s real estate assets. That means making decisions about the real estate portfolio to help it gain value and to manage risk. An effective real estate asset manager will need to understand the market, keeping current with research, including financial, political, and economic events. Note that an asset manager is not a property manager who manages an investment property's physical and financial operations.
What Does a Real Estate Portfolio Include?
Any property held for investment can be part of a real estate portfolio, and managed by your asset manager, including:
- Residential rentals such as apartments and single-family homes
- Office buildings
- Hospitality properties like hotels and restaurants
- Retail developments including malls, mixed-use, and stand-alone buildings
- Self-storage and warehouse facilities
- Medical and research properties
How Does a Real Estate Asset Manager Add Value?
A real estate asset manager is the lookout for the investor—seeking opportunities for investment that may be profitable. The asset manager also wants to control costs by identifying areas where expenditures are higher than necessary and reducing them if possible. That means negotiating favorable financing terms, overseeing costs for closing or leases, and similar administrative matters. Some of the ways that an asset manager can support a real estate investor are the following:
- Identify attractive properties for acquisition.
- Find good financing options.
- Negotiate leases and other agreements.
- Maintain market research.
- Formulate strategy.
The asset manager is probably in charge of the overall portfolio strategy, which means determining the mix of sectors, asset class, and geographic footprint within the investor's real estate holdings. It also involves recommending the right time to sell, strategic next steps, and disposition options that offer opportunities.
Are There Other Ways to Invest than with an Asset Manager?
Investing in real estate depends on each investor’s goals, risk tolerance, risk appetite, and available capital. For some, direct ownership of a portfolio of assets is appropriate. For others, a satisfying alternative may be fractional ownership, such as investment in a Real Estate Investment Trust (REIT) . A REIT is a company that invests in real estate and related assets, or real estate financial instruments, or a combination. An investor can own commercial property without a significant capital position and without dedicating time to management. While some REITs are private and non-traded, most are available on public exchanges, making buying and selling simple and providing greater liquidity than physical property ownership.
For accredited investors with more significant amounts of available capital, a Delaware Statutory Trust or DST is another option for passive investing. These trusts are limited to a specific amount, and once that level is reached, the fund does not take additional investors or new capital infusions. DSTs typically have holding periods of five to ten years, so they are illiquid, but unlike direct ownership, they have a planned termination.
This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. No public market currently exists and one may never exist. DST programs are speculative and suitable only for Accredited Investors who do not anticipate a need for liquidity or can afford to lose their entire investment. All real estate investments have the potential to lose value during the life of the investment. A REIT is a security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate. There are risks associated with these types of investments and include but are not limited to the following: Typically no secondary market exists for the security listed above. Potential difficulty discerning between routine interest payments and principal repayment. Redemption price of a REIT may be worth more or less than the original price paid. Value of the shares in the trust will fluctuate with the portfolio of underlying real estate. There is no guarantee you will receive any income. Involves risks such as refinancing in the real estate industry, interest rates, availability of mortgage funds, operating expenses, cost of insurance, lease terminations, potential economic and regulatory changes. This is neither an offer to sell nor a solicitation or an offer to buy the securities described herein. The offering is made only by the Prospectus.
