MB 141: Under the Hood of Asset Management for Multifamily Syndicators – With Drew Kniffin

In a perfect world, we could syndicate a multifamily property and then sit back and wait for the checks to roll in. But in the real world, we must oversee the apartment buildings we’ve purchased and make sure they perform according to plan. What all is involved in asset management? What is the best way to communicate with investors? And how does your property manager’s competence impact the amount of work that falls to you? Drew Kniffin is the President of Nighthawk Equity, a firm committed to helping real estate investors achieve financial freedom through practical education and high-quality multifamily investment opportunities. Drew became an ‘accidental landlord’ in 2008 when he was unable to sell his condo and rented it instead. But it wasn’t until 2015 that Drew shifted his focus to small apartment buildings. Eight months and three deals later, he was able to quit his job and pursue real estate full-time. Now, Drew helps manage a 1K-unit portfolio through Nighthawk, and he also serves as a mentor with The Michael Blank organization. Today, Drew joins me to share his definition of asset management and explain the syndicator’s role in finding problems to solve during the acquisition process. He describes the significance of a good property manager, discussing how to gauge if a property manager is the right fit, what you should expect from a property manager, and how replace a property manager if necessary. Drew also covers reporting, offering insight around the level of detail to expect from your property manager as well as the key performance indicators a syndicator should monitor. Listen in for Drew’s advice on communicating with investors and learn what aspects of asset management can be outsourced as you scale! Key Takeaways Drew’s definition of asset management What you do once bought property Make sure performs according to plan What to look for in the acquisition process Capable, competent property manager Problems that can be solved How to find a good property manager Ask for stabilized profit and loss projections Learn how report, communicate with owners What makes for a great property manager Execute on marketing property, managing to budget Less than 10 minutes/month to review financials The reasonable expectations for a property manager Online listings, ads competent Changes made first time asked Interested in communicating The fundamentals of reporting Consult with bookkeeper, accountant re: details Know investors, report to desired level of detail How to determine if a property manager is not the right fit Micromanaging on smaller level as time goes on Change after 2 months if ‘managing the manager’ The key performance indicators to monitor Net occupancy Punch list items Actual vs. budget How to keep a property manager honest Require plan to deliver on budget Quarterly audits Drew’s advice on replacing a property manager Transition in middle of month Know what files need to transfer (e.g.: rent rolls, leases) Don’t use 30-day earn-out, bring in new team on Day 1 The fundamentals of investor relations Deliver ongoing communication (monthly report) Provide high-level qualitative and financial summary How to communicate with investors when things go wrong Build long-term trust by delivering bad news Be honest but have plan...