Are you a hands-on owner? Not satisfied how the management company is operating the property?
Or maybe you are frustrated that your properties financial reports are frequently late or consistently inaccurate?
There are many reasons to start your own firm. In a survey we performed prior to an IMN Middle Market Multifamily Conference earlier this year, we found there were three main reasons why owners started their own firms:
- More control over the operation of the properties
- Access to expertise and information
- Financial savings
Better Control & Expertise
Regarding control and access to expertise, let me share with you one example of an owner in Texas on his decision to take over the management of his properties. This owner had five properties with 1,500 units. The owner felt his properties weren’t getting the attention they needed and was looking for ways to have more control over his properties.
His best regional manager from one of the two property management firms was talented and efficient…but spread too thin. He wanted to continue working with that regional manager but allow her to focus more on his properties and less on paperwork and other administrative functions. He was able to hire her to directly to oversee the properties, and he outsourced the accounting and financial reporting. A surprising result also occurred. With fewer properties to manage than when the regional manager was employed by one the national management firms, the regional could spend more time on the owner’s properties. As a result of Ascent’s extensive knowledge of the management software, the client was able to optimize their use of the system and implement best practices based on Ascent’s input.
Within twelve months, the firm saw occupancy and rents increase by an average of seven percent per property. This gave the owner more than $55,000 in additional income per month.
Outsourcing as an Option
Have you been thinking of starting your own management firm but become overwhelmed by the notion of managing things like accounts payable, payroll, benefits, office space and financial reporting?
We can help.
As an outsourcing specialist for the apartment industry, Ascent Multifamily Accounting does everything the traditional in-house accounting department would do. With Ascent, each property’s accounting will be managed by CPAs and accountants with significant experience in property management accounting.
Ascent manages the payables process, pays bills weekly, assists with budgets, handles payroll and HR issues, provides technical support on the software, prepares monthly financial reports, reconciles bank and mortgage accounts, controls the accounting for resident refunds and cuts and mails all tenant refund checks and processes and mails all year-end tax documents (W-2s and 1099s).
We’re experts in the major multifamily software platforms (RealPage, Yardi, Entrata, ResMan, etc.) and can show you and your properties’ on-site staff how to get the most from the systems.
Our Human Resources team has great benefits packages due to our large-scale buying power and can provide the health insurance for the property staff anywhere in the country.
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.
- Ten properties, 2,000 units – This Midwest-based owner paid a three percent management fee that amounted to $63,000 per month. She chose to hire a VP of Operations, who with benefits cost $11,800 per month. She outsourced accounting and HR to Ascent and the marketing and advertising to a real estate marketing firm. The total cost of outsourcing was $31,000 per month, creating a savings of about 51 percent.
- High-rent, small properties – This owner with 800 high-rent units (20 properties) spent $61,000 per month in management fees, with the management company taking four percent of total rental income. They were able to hire a VP of Operations at $150,000 per year ($12,500 per month plus benefits), outsource their accounting and marketing for better service to their properties at a total annual savings of $334,000 or 46 percent.
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.