The ability to improve your multifamily property boils down to you being a good asset manager. The purpose of asset management is to increase equity by raising NOI to cap out the property. Asset management boils down to four areas: property management, repositioning, adding income sources and reducing expenses. Do not confuse asset management with property management. Property management is the day-to-day operation of a property. Property management involves keeping the multifamily apartment property up, collecting the rent and maintaining it. Asset management is adding value to the property. Asset management is the fun part of owning multifamily apartment property. This is where you get to be creative. Thinking of creative ways to raise rent and decrease expenses is an example of asset management. You are looking for value plays. Every time you consider a multifamily property deal, you need to be examining it through asset management "glasses". You are not a retail buyer. You are looking for ways to improve your multifamily apartment property and add value to it. You need to always be wearing your asset management "glasses" when looking at potential deals and when operating your properties. Property management is pushing the rents, raising the collections, increasing the occupancy, and keeping expenses in check without much capital expenditure. This involves making improvements without investing a lot of money. Repositioning is changing the appearance, reputation, and/or the image of the property. It involves capital if you are rehabbing properties and changing the tenant mix. It might mean converting an all bills paid property to an individually metered property. Many times it has to do with the reputation. Changing the name on a property may help change the reputation. Adding income sources involves adding onsite laundry facilities or putting in vending machines. You could also amenities like cable or internet services. Other possibilities include a childcare facility or storage units. You can really get creative when it comes to thinking of additional sources of revenue for your multifamily property. Reducing the expenses on your multifamily apartment property means that you look at every expense as something that can be eliminated or reduced. This does not mean that you become slumlords but instead means that every expense should be something that can be optimized. You have a responsibility to provide your tenants with safe and decent housing and responsibility to yourself to do so the least cost possible. Evaluating a multifamily property with the asset management aspect of it in mind can greatly assist you in determining whether it is an investing deal worth pursuing. At the same time, if you currently operate a multifamily property, you need to always find ways that you can add value to your property. Proper asset management will enable you to cap out your property.
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