Real Estate Asset Management – The Good (& Bad)

Asset management is one of the most popular career paths for new entrants into commercial real estate, and this involves the management of existing properties in a company’s portfolio.

Asset management is very different from property management, in that while it’s heavily involved with property operations, it’s also heavily involved with the overall strategy of an investment.

So you’re interested in a career in asset management, this post talks through some of the biggest pros and cons of going the asset management route, and who asset management might be a good fit for.

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What Is Real Estate Asset Management?

Real estate asset management involves the process of managing the overall business plan of a portfolio of properties, usually somewhere between about 8 and 12 assets at a time. This includes taking on tasks like managing construction, creating budgets, negotiating commercial leases, refinancing properties, or getting properties ready to sell.

Some of these responsibilities may go to specialists in leasing or capital markets at very big companies, but even if that is the case, asset managers are still the ones responsible for making sure that projects either meet or exceed projected investment returns.

This makes these positions very heavily focused on the operations of a deal and how those will affect the long-term performance of a property, with the main goals of an asset manager to increase revenue, decrease expenses, or increase the value of the property when it’s ultimately time to sell.

The Benefits of Asset Management Careers

You’ll Learn Real Estate Operations

One of the biggest benefits of working in asset management is directly related to property operations, in that you’ll get to see the actual performance of an investment over time in these positions (not just the projected cash flows that are presented in a pro forma).

If you plan to go out on your own one day and start your own company, or even invest in deals yourself on the side of a full-time job, understanding real estate operations and things like operating expense loads, market leasing norms, or construction costs for renovation projects can all help you make better investment decisions when you’re building your portfolio.

By working for another company first, you’re also able to learn these things in a controlled setting alongside experienced asset managers who have likely been through multiple cycles, which can help you avoid making costly mistakes on your own deals that you wouldn’t otherwise have even known to look for.

You’ll See Projects Through to Completion

Another big upside of a career in asset management is that, unlike roles in investment sales or acquisitions, asset management allows you to take projects through to completion and see the impacts of your efforts over time.

As an asset manager, you control the business plan, and you make decisions that can ultimately create value. And because real estate is a tangible asset, you also get to watch the transformation of a property directly in real time.

Some people also take a lot of pride in managing big properties, especially if these are located in major gateway markets or have nationally known tenants that are household names. Even though these can be some of the toughest negotiators in the business, if you’re working on a deal to bring a national restaurant chain to a local shopping center or a Fortune 500 company to an office building that you manage, knowing that your friends and family recognize the companies that you’re working with can make this part of the business a lot more fun.

You’ll Have More Job Security

Asset management can also be a great career path for people who are looking for more job security when working on the principal (ownership) side of the business, since demand for asset managers tends to be high during both good and bad times.

Especially when economic conditions soften, and companies need to backfill vacant suites or tighten up operations, good asset managers become incredibly valuable at a time when acquisitions professionals might be getting laid off.

The Downsides of Asset Management Careers

You Don’t Control Your Portfolio

One of the biggest cons of asset management is that, as an asset manager, you’ll be responsible for managing deals that you may not have personally chosen to add to your portfolio.

Asset managers will often work with their acquisitions teams to help with due diligence or provide guidance on underwriting assumptions, but at the end of the day, the acquisitions team (and really the company’s internal investment committee) will have the final say on deals the company pursues.

And even if you’re not on board with an acquisition, it’s still going to be your responsibility as the asset manager to manage that property and hit performance targets.

Significant Travel Requirements

In addition to not having control over your portfolio, asset managers working for bigger companies will often manage properties in multiple cities, which can make these jobs require a significant amount of travel that can quickly become repetitive.

In most cases, asset managers will be going to the same 3 or 4 cities, visiting the same 8 to 12 properties, and meeting with the same on-site teams on a biweekly or monthly basis.

Strong People Management Skills Required

Asset management can also be difficult for people who don’t consider themselves natural leaders or team builders, since asset management requires a lot of people management on a day-to-day basis. This includes working with property management teams, construction professionals, leasing agents, attorneys, lenders, and even investment sales agents when you’re ready to sell a property.

Constant Pressure to Meet Benchmarks

In asset management, you’re also constantly being compared to benchmarks that have often been set for you, often related to a fiscal year budget or even the initial pro forma when a property was acquired. This can put a lot of pressure on you to produce results, especially if you’re up against a tight timeline as a result of a liquidity need or the end of a fund life.

Is Asset Management Right for You?

If you consider yourself someone who enjoys the pursuit of a new deal, and you want to be able to put a check mark next to that project and move on, asset management likely won’t be a good fit for you. However, if you want to see projects through to completion over a long-term time horizon, this is probably the best place in the industry to make that happen.

Prepare for Your Asset Management Career

If you’re looking to break into real estate asset management, and you want to make sure you have the skills you’ll need to get your foot in the door in an analyst or associate position at a top real estate investment firm, make sure to check out our all-in-one membership training platform, Break Into CRE Academy.

A membership to the Academy will give you instant access to over 120 hours of video training on real estate financial modeling and analysis, you’ll get access to hundreds of practice Excel interview exam questions, sample acquisition case studies, and you’ll also get access to the Break Into CRE Analyst Certification Exam, which covers topics like real estate pro forma and development modeling, commercial real estate lease modeling, equity waterfall modeling, and many other real estate financial analysis concepts that will help you prove to employers that you have what it takes to tackle the responsibilities of an analyst or associate at a top real estate firm.