For those of you who came to the Barefoot User Conference, this is a follow up on my asset management presentation. For those of you who couldn’t join us, over the next few months I will continue to send out more information on this topic. I also hope that this starts a conversation, because overall, you are innovative. We are focused on helping you become a property asset manager.
The general definition of Asset Management-is the act of guiding ones’ investments in a positive direction. This term is typically used in the financial industry for someone that manages a portfolio of stocks, bonds and other monetary instruments. However, for most of us, our biggest asset is the properties we own.
If you have an asset manager, I would hazard a guess that our homes are never a focus, as most asset managers don’t have that expertise. In fact, there are very few companies who focus on really guiding your properties as assets in a positive direction. Real estate companies only engage when the house goes on the market and property management companies typically act reactively when something needs to be fixed. You could argue that an asset manager ‘s job is partially to react to broken things and to prepare the breaking of the item, making their job proactive.
Part of the reason we ask you to think this way about managing properties is to leverage the topics that your asset manager will ask you monthly, quarterly, yearly to define your goals. These might include:
What is your exit strategy?
What is your realistic goal in this upcoming period?
Are there any changes to our ongoing strategy?
This allows them to proactively craft a plan that defines success and happiness for the you as a client. In addition, it also can highlight monthly or quarterly issues that come up should the plan start to fall short and adjust either to stay on target or reset your expectation.
Why is this important?
Historically, as a vacation rental manager, you have booked properties, checked them in, cleaned the unit and fixed the property when necessary. These activities are generally reactive. Additionally, as this industry has become mainstream, there are more companies providing these services and automation has made this service a price sensitive issue. Your value proposition is, in part, based on how inexpensively you can provide your services.
To stay relevant, you need to add to your value proposition and own your owner. Keep in mind that the average owner according to National Association of Realtors lives at least 200 miles away. This makes being the local expert part of your value proposition. This may seem to be less relevant as portals like Airbnb, VRBO, HomeAway and companies like Evolve and TurnKey gain interest. Their goal is to provide a stronger value proposition than you.
25 years ago, the stock market went through a very similar situation. Companies like eTrade, an automated stock management and trading system became popular (like Rent by Owner and Airbnb). As a result, we saw a significant increase in discount stock brokers (like Evolve, Turn Key and Vacasa). An emphasis on auto tools and empowering the investor to do their investing themselves was promoted. A new crop of discount brokers came on the scene who added a meeting or two for each year and provided you with the ability to yell at the broker when the market failed. These discount brokers mantra is to stay steadfast in the market, and ride out ups and downs, with no energy around being proactive.
All these tools have driven commissions down and made the market very competitive. Brokers (both discount and full service) are still very strong because of two things:
- I don’t have time to manage my investments
- I would rather leave this in the hands of someone that understands the complexity.
So, to further this comparison, I would suggest that an owner that lives close to their home and for the most part can duplicate your local expert property services. These folks are the ones you have already lost.
The key for your future is to add value and proactively work with your owners to increase their investment towards their future goals. Next month we will delve into some of the strategies.