September 18, 2018
I spent last week in Texas, ultimately at the Texas Multifamily Summit in Austin. It was a great experience. As I moderated the panel, it was surprising how fast the trend of multifamily property owners creating their own firms was spreading. The panel included Richard Fishman, founder of ValCap Group in Dallas and Jason Cohen of the JoCo Partners, of Austin.
Our panel started with an informal poll of the audience, a group of about 40 multifamily owners and developers. It appeared that 90 percent of the audience had already created their firms but were looking to streamline their internal operations and learn best practices. We discussed the motivations, risks and benefits of creating your own firm. Richard Fishman, of ValCap Group shared his experiences in first outsourcing some back office functions to India and then switching to our firm, based in Las Vegas.
We've had numerous requests for the presentation slides. So here is the link to download the slides.
One of the questions are what are the financial benefits of creating my own management firm? Is there a financial benefit to having my own firm?
The answer was best illustrated with a few slides in a direct comparison. Below are two case studies of owners, one with eight properties and 2,000 units and another with ten properties and 400 units in a high-rent market like New York.
The one thing I see is that most of our clients don’t change solely for financial reasons. Most make the change because something else wasn’t right. They are frustrated that reports aren’t right or on time or there is some other indication that the interests of the management firm weren’t aligned with the owner’s goals.
As a partner in one of the industry’s larger outsourced accounting firms, I help clients make that decision every day. It isn't for everyone. We've seen two companies go back to third-party management in the last year.
If you would like to discuss why or why not, please give me a call at 702-467-0789. I'd love to take your tough questions and share real world examples t0 help you any way I can.