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Find All The Answers To Your Real Estate Asset Management Questions Here!

  • Author: Tanvi Warekar
  • 5 min read
  • July 16, 2021
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Many of us have been through the process of buying or renting a real estate property. The complexity involved in real estate transactions makes investors nervous and their lack of experience often brews confusion. To aid the investors in managing their real estate properties, Asset Management Companies play a pivotal role with their services. Real Estate Asset Management is the process of managing the properties concerning investment decisions, return optimization, and curating a balanced portfolio of assets.

In today’s times, ‘Work from Home’ is the new normal keeping you and us constantly occupied. Dedicating time to active investment management seems a tough task in our lives. So what if you leave it to the professionals? Yes, in this article we aim to give you a detailed outlook on how Asset management works in the Real Estate Sector and key takeaways for you to invest in well-functioning real estate investments through AMCs.

What is Asset Management in Real Estate?

Asset Management in Real Estate is the process of investing in the right properties and optimizing the factors to maximize the returns. For this, asset managers study the investment potential of prospective real estate and calculate the expected returns to effectively manage the profitability of the asset.

Unlike stock market investments, real estate investment demands more attention span as it involves more complex procedures. The popularity and favourability of real estate investment are pretty high especially in India due to its tangibility and safety hedge against inflation. Thus, to make them profitable, 3 things are required to fall in place correctly. They are:

  1.     High-Yield Potential
  2.     Cost Minimization
  3.     Risk Mitigation

Asset Management Companies leverage on their expertise of qualified asset managers along with an internal understanding of the sector and other related factors like interest rates, economic conditions, global cues, and so on.

What Is The Role of Asset Managers in Real Estate?

All the types of investors whether institutional or retail investors can avail of the services of the Asset Management Companies. But the question arises as to what exactly do Asset Managers manage the real estate properties? To answer your very valid question, here’s a list of functions performed by Asset Managers:

  •  Market Research – For investing in a deal-breaking property, thorough market research is necessary to find the best piece of land. The Asset Manager looks through the available properties beyond the investor’s geographical limits too. In the quest of finding the best property, these managers filter out properties on a predetermined list of parameters like Location, Demand, Growth Prospects, Cost, and so on. One of the best emerging Asset Management firms in the Real Estate Space catering to retail investors is Assetmonk.
  • Financial Budgeting –  Taking into consideration the financial ability of the investors, the Asset Managers make a financial budget for the property which forms the major part in selecting the property. This budget includes the initial capital, future expenses, and investor’s capacity to raise finance.
  • Cash Flow Prediction – After listing out the preferred properties, the Asset Managers employ financial techniques to forecast the future cash flows and thereby compare the overall returns between the properties. The option with the highest Net Profit along with other factors is chosen for investment. 
  • Assist in Real Estate Transactions – With finalizing the best deal on the property, the Asset Management Companies also assist in negotiating the best price for the investment. Along with that, minute details like legal clearance and permissions and paperwork are also looked upon by them.
  • Arrange leverage options – For investors with less capital, Asset Managers also provide leverage options through tie-ups from financial institutions. This enables investors to grab the best opportunities at the earliest.
  • Manage Lease Rental Agreements – Along with investment assistance, Asset Managers also manage the lease rentals from the property and put great efforts into maximizing the returns. For this, selection of lessees is carried out and further agreements are entered into with them. Regular checks are maintained for timely disbursement of rent from the tenants. Furthermore, Asset Managers also look after the expense cuts to increase the overall earnings from the investment.
  • Property Value Appreciation – Asset Managers strive to optimize the factors leading to property value appreciation. For this, internal upgrades like interior, furnishings, rental-friendly, and so on are conducted as per the type of property like Residential or Commercial. Along with that, external upgrades like accessibility, prospects in the vicinity, location, and so on are also optimized. 
  • Portfolio Management – To create a successful real estate portfolio requires exceptional finesse in the asset class. Thus, Asset Managers play a big role in creating a profitable portfolio of real estate assets. With recent innovations in the real estate sector through PropTech, there exist wider opportunities than traditional real estate. So, to maintain a balance of risk and optimize the reward, Asset Managers employ their acumen in crafting the best suitable portfolio for an investor and managing the same.

The above contributions are very vital in an investor’s real estate journey owing to the complex structure of the sector. Having an Asset Management Company by your side, that not only helps you in making thoughtful decisions but at the same time puts your needs as their priority, is a blessing! For that, an investor needs to conduct a background check amongst the best performing AMCs and partner with them to get on the investment journey. To help you lookout for the best AMCs, here are the key things you need to look for:

What are the 7 Things to look for while choosing an Asset Management Company in India?

  1. Registered AMC as per SEBI norms
  2. Adherence to the Regulations
  3. Past Portfolio Returns
  4. Expense Ratio
  5. Customer Service
  6. Investment Security
  7. Risk Management

The above checklist will be very useful for retail investors to follow a quick guide to the Asset Management Process. The dynamic sector of Real Estate is a must-have in our investment portfolio. With calculated decisions, one can earn great returns through Real Estate. Moreover, emerging options like crowdfunding and fractional ownership open up new avenues of passive income. Asset Management Companies operating in the advanced Real Estate domain should be on your radar! 

Assetmonk is one of India’s leading wealth-tech platforms offering a wide scope of commercial real estate investment opportunities. Invest your money in India’s premium cities like Hyderabad, Bengaluru, and Chennai. With an expected return of 14 to 21 percent per annum, Assetmonk provides customized investment solutions catering to the needs of the investor! To start your journey with us, visit us on our website!

Real Estate Asset Management FAQ's:

Asset Management is the process of investing in the right assets and optimizing the factors to maximize the returns from it. For this, asset managers study the investment potential of prospective real estate and calculate the expected returns to effectively manage the profitability of the asset.

The purpose of asset management is to make assets like real estate profitable by undertaking the following 3 things:

  1. High-Yield Potential
  2.     Cost Minimization
  3.     Risk Mitigation

Some well-known types of asset management are:

  • Mutual Fund Asset Management
  • Real Estate Asset Management
  • Enterprise Asset Management
  • Infrastructure Asset Management

The process of asset management in real estate includes the following functions:

  • Market Research
  • Financial Budgeting
  • Cash Flow Prediction 
  • Assist in Real Estate Transactions
  • Arrange leverage options
  • Manage Lease Rental Agreements
  • Property Value Appreciation
  • Portfolio Management

The process of asset management in real estate includes the following functions:

  • Market Research
  • Financial Budgeting
  • Cash Flow Prediction 
  • Assist in Real Estate Transactions
  • Arrange leverage options
  • Manage Lease Rental Agreements
  • Property Value Appreciation
  • Portfolio Management
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