Syndicating real estate, particularly multifamily properties, can serve as a path to wealth and financial freedom. Despite the opportunity in this landscape, success in this venture is not without its risks. Effective management strategies for your properties are crucial for success.

Industry leaders like New York-based company Lone Star Capital, Dallas-based Elkhorn Capital Partners and Salt Lake City-based Lift Residential said that their decision to outsource certain operations has been game-changing, allowing them to focus on what is important to developing their business.  

"Bringing in Ascent from the beginning and having them fill those back-office requirements was critical for our overall success. It took us about three years to get to scale, and we could not have done it without Ascent,” said Rob Beardsley, principal of Lone Star Capital. Ascent helps businesses scale while handling the day-to-day back-office services, keeping costs low and variables to a minimum.

In addition to a growth in properties, Lone Star Capital also experienced growth in staff as a direct result. What started as only two employees has expanded to seven top-level team members at the corporate level, six at the management level and approximately 50 onsite employees.

The third-party management approach offers benefits like professional expertise and access to greater resources. Ensuring you're a priority to your third-party management firm is crucial. Often, owners face delays in task completion, leading to frustration. Many switch to self-management for more control.  

The key issues include not getting timely updates in the preferred format, affecting decision-making. Aligning objectives, improving communication and meeting expectations can enhance the relationship between owners and the firm, boosting efficiency and satisfaction.

On the other hand, Bruce Fraser of Elkhorn Capital Partners LLC has embarked on self management early in his firm's development.

For Bruce, implementing self-management resulted in an immediate positive impact, with all his properties showing improvement within a few weeks. "The same month we flipped the switch, all of our properties improved, and it was shocking,” said Fraser. “Since then, our entire portfolio has been up about 30 percent, and it has made a huge difference.”  

Self-management is not without its challenges, to successfully manage your properties, hiring someone to be the leader of that process for you and give the new venture enough of your time is key. Hiring someone to be the leader of that process for you and to give the new venture enough of your time.  

Just like Lone Star Capital, Lift Residential found significant value in partnering with Ascent for its back-office support. “When pitching the company to potential partners, Ascent has become one of our strongest selling points,” said Alex Madsen, partner at Lift Residential. “By entrusting Ascent with our back office, we have been able to look into pursuing new ventures and business opportunities.”  

The strategy adopted by Lone Star Capital and Lift Residential can serve as an example of identifying functions that are optimal when outsourced, becoming a strategic asset to real estate investment firms. This approach contrasts with the hands-on, self-management route chosen by others in the industry, such as Bruce Fraser, who has seen immediate and substantial benefits from directly managing his properties.

Deciding which strategy is right for your firm and properties is not a one size fits all process. There are benefits to both routes, third-party management and self-management. As Bruce's story shows, with the right approach and scenario, self-management can transform your portfolio’s performance and may also help you sleep better.

For more information or strategies about multifamily business transformations, call me at 702-467-0789 or email me at mike@ascentmfa.com.

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