What Is Asset Management?

Asset Management is a strategic plan used to monitor a portfolio of similar property types or a class of assets. The goals of asset management are to optimize the financial performance while maintaining the asset and mitigating risks. Developing and leasing housing to income qualified households is the cornerstone of the Low-Income Housing Tax Credit industry. Each LIHTC property represents a public-private partnership worth millions of dollars, where developers and owners have made commitments, assertions and guarantees to investors about the demand for housing and how each property will perform in return for equity investments. Consequently, there is a lot at stake. Asset managers provide safeguards for these investments.

Within the Low-Income Housing Tax Credit (LIHTC) industry, the overarching goals of asset management are to ensure conformance with the Limited Partnership Agreement (or governing documents) and compliance with the land use restrictive agreement. This usually includes regular assessment of the financial statements, physical inspections of the property, adherence to Section 42 compliance requirements, and risk mitigation. These tasks serve as guardrails to protect the asset from recapture and foreclosure. There is not a one-size-fits-all approach to asset management. The strategies or tasks performed by an asset manager vary by the role or lens through which you are connected to the asset. For example, an asset manager for a lender will likely be primarily concerned with the property’s ability to repay the mortgage. An asset manager for a syndicator will monitor construction progress and completion, lease-up, file compliance, receipt of 8609s and more.

What’s the Difference between Asset Management and Property Management?

The lines between asset management and property management are often misunderstood. These two roles serve very different purposes and perform very different tasks. Here are some of the most common tasks for each role:

Property Management

• Lease Administration

• Move-in/Move-Out Inspections

• Rent Collections

• Processing Work Orders

• File Compliance

• Management of site staff

• Tenant screening

• Unit inspections

Asset Management

• Review of monthly financial statements and annual audit

• Site inspections

• Underwriting

• Planning of capital improvements/replacements

• Debt assessments

• Stakeholder reporting

• Compliance monitoring

• Developing a watch list plan of action

Who Needs Asset Management?

Any entity or company that has …

• A fiduciary responsibility to another party

• Committed to providing safeguards

• A portfolio of 5 or more properties

• Investors

This can be Syndicators, Owners, Developers, Lenders, Investors, Program Administrators, and more. In this series of asset management articles, we will visit specific topics that intersect property management with asset management.