What is asset management?
Asset management and property management: the two terms may appear to be interchangeable when it comes to commercial real estate. In fact, they’re two different, if related, occupations. This article will explore the roles that asset managers and property managers play in CRE ownership and investment.
In real estate, asset managers are responsible for purchasing, selling and maintaining properties in order to increase a company or individual’s total portfolio value. At the individual property level, they must keep track of net operating income (NOI) and return on investment (ROI). They’re on the front lines of decision-making when it comes to determining the right properties to buy or sell, and the right time to perform these functions. They also advise ownership on obtaining debt and equity.
Asset managers are charged with maximizing the value of an investor’s portfolio. That means weighing risks that could pay off—or not—and balancing those risks with safer investments.
Portfolio management is more closely related to the concept of asset management than property management is. There’s a key difference, though: portfolio managers strictly oversee financial matters, while CRE asset managers handle properties as well as cash flow and investments.
What is property management?
Property management, simply put, covers property: tangible assets, as opposed to assets more generally, which can be of anything of value, including securities, rights and patents. Tangible assets include buildings and land.
The daily responsibilities of property managers include attracting and retaining tenants, executing and enforcing leases, collecting rents, paying vendors, maintaining the properties and providing monthly and year-end financial reports to the owner. When property vacancies arise, property managers are the ones who arrange and conduct tours with brokers.
Along with supervising the day-to-day operations of properties, property managers may also increase the properties’ value by updating amenities and installing new technology. These actions can potentially make the properties more appealing to current and future tenants.
In fact, property managers often are hired by asset managers. They may be employed directly by the owner/investor or may work for a commercial brokerage. Generally, they’re given a budget to work with and expected to devise a plan on how to use that budget.
Just as they’re hired by asset managers, property managers in turn hire the staff to run the properties. These may include maintenance workers, front desk personnel and contractors.
Property management also entails a strong grasp of soft skills. Bay Management Group lists verbal and written communication, attention to detail, organization and patience—the latter for calming irate tenants or anxious owners—among those skills.
How do you become a real estate asset manager?
The entry pathway to a career as a commercial real estate asset manager is similar to that of other professionals in the field, such as brokers. Asset managers typically need a bachelor’s degree in real estate, finance, economics or a related field. The state in which they work may also require a license.
Asset managers must also have accounting experience and an understanding of the real estate industry, according to ZipRecruiter. Additional qualifications include excellent analytical, interpersonal and computer skills, along with the organizational ability to oversee multiple assignments and prioritize tasks.To advance their careers, asset managers may need to accrue experience related to asset management, such as working as a financial analyst or portfolio manager.
According to the Sy Sims School of Business at Yeshiva University, “With so many investments and stakeholders under their direction, asset managers can make impressively high salaries with lots of room for job growth depending on the asset types and the cities in which they work. In the U.S., the average salary for an asset manager is $99,966, with some making as much as $167,000 a year. In New York City, however, the average salary in asset management is around $112,414 per year.”
The employment outlook for real estate asset managers is considered good, with above-average growth through at least 2026. However, the responsibilities of an asset manager may shift according to market conditions, so it is advisable to be well-rounded in all aspects of the job’s functions.
How do you become a property manager?
In all but six states, a real estate license is the first requirement for becoming a property manager. That being said, the bar for entering the field is frequently set lower, compared to asset management. A high school diploma or GED may be acceptable, although many owners or asset managers prefer to hire property managers with college degrees. Undergraduate study in fields such as business administration or real estate weighs strongly in a job candidate’s favor.
Knowledge of technology and software programs, such as Yardi or Realpage, is a plus. That’s especially true as the use of technology increases for all aspects of real estate operations.
As with asset management, related experience is also helpful in advancing your property management career. Before considering yourself a property manager, you may need a few years of working for a property manager, in a position such as an assistant property manager, an office administrator or a leasing agent.
As the main point of contact for a building or buildings, the property manager focuses on keeping buildings fully functioning and profitable, says the Sy Sims School of Business. “Thus, the profit potential for their work directly correlates to the success of the buildings themselves, which is often quite high in urban areas like New York City. The average salary for a property manager in New York City is $75,487, with the highest end of the range falling at $119,000. The average salary across the U.S. is $64,473.”
In common with real estate asset managers, the job outlook for property managers is bright. The U.S. Bureau of Labor Statistics says employment of property, real estate, and community association managers is projected to grow 5% from 2022 to 2032, faster than the average for all occupations.
About 35,900 openings for property, real estate, and community association managers are projected each year, on average, over the decade, according to BLS. Many of those openings are expected to result from the need to replace workers who transfer to different occupations or exit the labor force upon retirement.
Real estate asset management and property management are interdependent job functions, but they’re not interchangeable. The job responsibilities of both asset managers and property managers involve real estate, yet each has a different focus. What they have in common is a high level of responsibility, along with a potential for being both fulfilling and financially rewarding.