Simple RE

Commercial Real Estate Investing and Property Management Require Two Different Skill Sets

Crescendo Properties has acquired 16 commercial properties  valued at over $100 million over the last 5 years.  We've also acquired or leased, and arranged for the debt and equity financing for several Splash and Dash Carwash development sites.  We also manage our portfolio properties.  From this experience I've discovered that real estate investment and property management require two completely different skill sets.

If you consider yourself an investor or developer and are able to you grow your portfolio to more than one or two properties you need to do some hard thinking before you plunge into doing your own property management. 

Don't believe me?  Consider this...

Successful investment requires an understanding of market cycles, financing, cash flow forecasting, due diligence, and contract negotiation. 

Successful property management requires an understanding of operations, leases, facility maintenance, marketing, hiring, training, and bookkeeping.

Investment companies tend to be very lean with small staffs full of well educated and intelligent people that don't require a lot of managing.

Property management firms require professional managers because they have larger staffs with more hirearhy.  By professional managers, I mean people who know how to give direction to their direct reports, give adjusting and affirming feedback, coach and develop direct reports, hire, discipline, and fire employees.  They need to know how to train and coach. 

What it really comes down to is this question. Are you willing to do the hard work of developing the second and different skill set within your company?  If not, you are better off hiring a professional third-party management firm.

If you operate self storage properties and want to swap ideas shoot me an email and we'll talk. 

Back Against The Wall

Crescendo has one portfolio property that is struggling... a lot. Our back is against the wall with it, and that is a gut-wrenching place to be. 

The one silver lining about being in a position like this is that you start looking at operational changes and marketing strategies from the perspective of not having anything to lose.  In one sense, this is a powerful place to be mentally because it allows you to try things you wouldn't have tried before.

All of the activity, creativity, effort and freedom to try may lead to a breakthrough.  A success with a strategy or tactic never tried before.  (I can already think of a few things we are trying that have huge potential).  Not only could that breakthrough be used to benefit the struggling property, but can be replicated and leveraged at other portfolio properties.  What would you do if your back were against the wall?  Maybe there's a breakthrough there, just waiting to happen.

All in Rates

Heres a chart sent to me by Wells Fargo that shows this year's history of their break-even all-in rate on conduit loans.  Since these represent "breakeven" levels, you need to add 25 - 35 basis points to get to what your rate as a borrower would have likely to been.