Many multifamily operators (Atlas included) utilize 3rd party property management to oversee the day-to-day management of their properties. It’s great in many ways. You can maintain a lean team, utilize the resources of a large institutional management firm, and make a change if they’re not performing up to your standards.
That said, implementing a 3rd party to oversee your deals is hardly a ‘set it and forget it’ solution. Multifamily properties require aggressive hands-on asset management and certain tasks must be handled at the ownership level.
In my experience, here’s what 3rd party management does well and here are the aspects that should be managed by ownership:
3rd Party Management Responsibilities
- Hiring and overseeing the onsite staff.
- Negotiating service contracts with local vendors.
- Overseeing contractors on minor renovation projects.
- Managing reimbursement request with lenders.
- Dealing with resident issues.
- Running resident events.
- Leasing and renewals.
- Overseeing social media and ILS’s.
- Property-level accounting.
- Access to market information/reports.
- Assessing new deals; creating operating pro formas for expenses and determining basic capital needs.
- Overseeing lender inspections.
Asset Management Responsibilities
- Revenue Management; overseeing LRO/Yieldstar and setting renewal rents and concessions.
- Identifying and implementing technology to improve the resident experience.
- Negotiating larger corporate housing agreements or partnerships with STR operators.
- Determining marketing/branding strategy to identify opportunity/niche within the submarket.
- Driving physical repositioning; unique amenities to differentiate from the competition.
- Determining unit interior design scope; opening up kitchens, adding washer/dryer units, general design aesthetics etc.
- Deferred maintenance strategy; strategic improvements to bring down expenses such as roofs, plumbing, windows, electrical systems etc.
- Appealing tax assessments.
- Managing the insurance policy and any claims.
Asset managing deals, even if they’re stabilized, is time-intensive. There are many high-quality 3rd party management firms out there, but it’s critical to recognize their core competency is handling the blocking and tackling and it’s the owner’s responsibility to step in and run the rest.
What has your experience been with 3rd party management?