Home Blog Real Estate Asset Management vs Property Management: What Is the Difference?

Real Estate Asset Management vs Property Management: What Is the Difference?

February 17, 2022
understanding real estate asset management vs property management

At first glance, the terms property management and property assets management look very similar—and in many ways, they are! However, a careful examination of real estate asset management vs. property management reveals substantial differences in the type and scope of responsibilities for real estate specialists who are looking to explore these important roles.

Learning the distinctions between the two can help clear up confusion and significantly enhance your familiarity with real estate investments and property assets management. In this blog post, we’ll explore key points regarding real estate asset management vs. property management and how an online master's degree can cement your future in a lucrative real estate career.

An Overview of Real Estate Roles

Real estate property management and assets management are both vital processes that ensure and enhance the value of real estate investments. Property management, however, is tightly focused on the day-to-day operational aspects of individual properties, whereas property assets management is more broadly concerned with the entire life cycle of one or more properties.1

Generally speaking, the relationship between an organization's board of directors and its chief executive officer (CEO) offers a good analogy for understanding the differences in asset management vs. property management. While the board of directors have an influence on the company, the CEO does the tangible, day-to-day work that the value of the company relies on. The successful relationship between both is necessary to ensure the overall goal of maximizing investment property profitability while generating revenue, reducing expenditures (if possible) and mitigating risks and liabilities.2

Let’s get into some of the more specific differences between property assets management vs. property management below.

Property Assets Management

Investors, from individuals and private companies to huge corporations and even governments, often include real estate in their investment strategies. The types of real estate assets that investors hold in their portfolios can include condominium communities, apartment complexes, hotels and other vacation venues, shopping malls, warehouses and other properties for residential, retail and commercial use.2

As an investment owner's real estate portfolio grows, so does their need for a qualified real estate asset manager. Successful property assets management depends upon the expert implementation of individual strategies for each asset and the entire real estate portfolio as a whole. Such strategies will vary depending upon the property, but success is directly related to the the asset manager's expertise and thorough understanding of each property's life cycle—from acquisition to holding and final disposition.1

Ultimately concerned with the investment owner's overall long-term success, property assets management focuses on achieving the highest return on investment (ROI) by maximizing the profitability of every property in the portfolio.

The following list offers a detailed look at the key responsibilities of a professional real estate asset manager:1, 2

  • Carefully working with investment owners to define their personal financial goals over the short- and long-term
  • Recommending specific forms of investment, types of ownerships, partnerships and other investment strategies, covering the potential pros and cons of each
  • Working closely with the owner's investment partners and lenders to increase potential returns through leverage
  • Advising investment owners on structuring the capital stack of equity and debt most effectively
  • Employing and directly working with key teams of real estate brokers, property managers and leasing agents
  • Determining and overseeing the key performance indicators (KPIs) defining key asset controls that impact the investment asset's return
  • Overseeing and managing each asset's cash flow across the entire portfolio
  • Allocating investment resources and capital across the portfolio for accomplishing capital improvements
  • Generating and reviewing property and portfolio financial performance reports, recommending and implementing necessary adjustments in line with the investment owner's financial goals

Property Management

While property assets management focuses on maximizing the financial returns of investment properties, the focus of property management is on maximizing a property's operational aspects. Property managers are often hired by property asset managers as key investment team members. Collaboration between asset managers and property managers helps ensure that leases or rental agreements attract good tenants, reduce vacancies, offer flexibility and limit exposure to liabilities.2

Real estate investment owners, asset managers and even individual landlords often hire property managers to ensure full legal compliance to any applicable federal, state and/or local laws and regulations, such as landlord-tenant laws and property management regulations. Additionally, property managers oversee the day-to-day tasks related to maintaining the occupancy, security, upkeep and ultimately the income of investment properties.3

The following list presents a more detailed account of the key roles and responsibilities of property managers:1, 3, 4

  • Communicating regularly with the property owner and/or investment team regarding all responsibilities and concerns
  • Advertising and showing vacant properties or units
  • Finding, screening and keeping good tenants
  • Executing leases and enforcing their terms and conditions
  • Regularly collecting and depositing rents and other applicable payments
  • Resolving tenant concerns and complaints
  • Performing light cleaning and/or other handyman tasks
  • Scheduling, supervising and adhering to budgets for building maintenance and or repairs
  • Providing monthly and year-end financial reports to the property owner and/or investment team

Key Takeaways

As with other types of financial investments, real estate presents substantial challenges to investors. The investment owner's goals, risk tolerance and investment strategies must be respected when selecting the right property assets.2

Choosing the right investment team leader is likewise challenging. Property assets management relies significantly on entrepreneurial expertise. It requires strong analytical and negotiation skills, making financial forecasts and taking calculated risks.2 Successful asset managers research and monitor the market and follow current political, economic and financial trends. Their ultimate goal is to mitigate potential risks while maximizing yields and returns on investments for owners.1

Hiring great managers to oversee the day-to-day operations of asset properties is both challenging and vital, as well. Successful property management professionals serve as asset managers' eyes and ears. Owners and investment teams rely on property managers to care for their properties professionally, performing all responsibilities efficiently and effectively.4 As such, they only hire professionals with the right personality, interests, and dedication for the job.

If there’s one final thought you should take away from the discussion of asset management vs. property management, it’s this: Understanding the roles and responsibilities of these key professionals is crucial for successful investing in the real estate market.

Ready to Enhance Your Expertise?

Perhaps you're a business professional seeking to pursue your entrepreneurial dream, or maybe you're someone hoping to position yourself well for a lucrative real estate management career. If so, earning an online master's degree from a world-class business school is your best plan of attack.

The Sy Syms School of Business at Yeshiva University offers a top-ranking online MS in Real Estate degree forged in the prestigious business hub of New York City. Our dynamic degrees are customizable to meet your personal needs and are fully accessible from your favorite location, no matter where you live. When you're ready to take the next step and embrace the Sy Syms approach, we’ll be waiting.

Sources
  1. Retrieved on January 27, 2022, from learn.roofstock.com/blog/real-estate-asset-management
  2. Retrieved on January 27, 2022, from investopedia.com/ask/answers/040815/what-does-asset-management-mean-regards-real-estate.asp
  3. Retrieved on January 27, 2022, from investopedia.com/terms/p/property-management.asp
  4. Retrieved on January 27, 2022, from investopedia.com/terms/p/property-manager.asp