Real Estate Portfolio Management

commercial real estate portfolio management

Do you or your business have a collection of properties? And do you use tools, such as CRE software, to organize, track, and manage said properties? If so, you’re already engaging in real estate portfolio management. 

If not, you could be in for a rude awakening as the value and potential return on your holdings dwindle into nothingness. 

Portfolio management is how you control assets, tools, and people related to your commercial real estate holdings. While solid real estate portfolio management helps prevent disaster, competent deployment of portfolio management can boost the returns on your investments. 

In this article, we explore what portfolio management is, who works as a portfolio manager, how they benefit real estate portfolios, and some considerations you can make to maintain profitability. 

What is portfolio management?

A commercial real estate portfolio contains a collection of all the properties your company owns, but who manages that portfolio? That’s where a portfolio manager comes into play. A portfolio manager is someone who controls a client’s financial assets related to real estate. 

You shouldn’t confuse a portfolio manager with an asset manager. An asset manager oversees everything with monetary value, including cash. Instead, a portfolio manager focuses on the individual properties in your CRE portfolio so they can continue to grow value and generate cash flow. 

A portfolio manager also oversees hiring property managers who focus on facilities management. That leaves the portfolio manager to handle and approve leases, create business plans, and buy or sell properties. 

At Blooma, our goal is to make portfolio management easier by providing you with powerful data and insights at the deal and portfolio level. Check out our platform to learn how it can supercharge your CRE processes and eliminate time-consuming manual entry! 

What does a portfolio manager do?

A portfolio manager is a highly-educated individual with at least a bachelor’s degree or higher. The typical LinkedIn job description for a real estate portfolio manager will also demand experience in business, real estate, and finance in order to be successful. 

A portfolio manager must also be an excellent project manager, capable of pulling several moving components together. Failure to coordinate a business strategy with an investment plan could result in lost revenue or a lack of profit, meaning your portfolio manager has a ton of responsibilities.   

Now that you understand who a portfolio manager is, we can cover some fundamentals of what portfolio managers do and how they can help maximize your return on investment (ROI). Here are some common tasks that portfolio managers handle. 

  • Asset allocation – Real estate asset management is vital for generating sustainable cash flow. A portfolio manager will evaluate the resource allocation of your portfolio and redistribute unused budgets and resources to other properties to maximize performance. 
  • Adjust for risk – Portfolio managers analyze market trends and property values to minimize the risk on real estate investments. They ensure proper diversification of the real estate portfolio and reduce risk factors by consulting with industry experts and producing relevant reports. 
  • Supervise transactions – A portfolio manager may also oversee and diversify purchases of various property types, including commercial properties or multifamily units. Likewise, they will sell underperforming properties.
  • Increases property values – Portfolio managers can increase property values by distributing funds for capital improvements and upgrades. They may also work with management companies to update properties for resale. 
  • Evaluating asset strategies – Real estate asset management must align with overall corporate goals. Real estate portfolio managers must ensure that the portfolio of properties aligns with the company’s production and strategic goals by implementing a cohesive investment strategy.  

Portfolio manager jobs are far from a walk in the park, but they are critical to a successful real estate investment portfolio. 

Portfolio management in real estate

Portfolio investment management in commercial real estate provides lenders with an educated method of making the best decisions. A skilled portfolio manager helps you boost your portfolio’s valuation and allows you to generate cash flow. 

In real estate, portfolio management involves more than understanding balance sheets and accounting principles. It takes an in-depth approach to make sure that every property is producing value, and you can do that by: 

  1. Considering factors that impact operations, like location, supply chain networking, and building layouts.
  2. Utilizing trustworthy sources to obtain market information and valuations. 
  3. Staying up-to-date with maintenance and organization activities. 
  4. Standardizing management processes for seamless decision-making. 
  5. Focusing on a holistic approach for the entire CRE portfolio from lease negotiations, buyouts, renewals, incentives, acquisitions, and dispositions. 
  6. Communicating frequently with members of your team so everyone is clear about responsibilities and expectations. 

A successful real estate portfolio depends on knowledge, opportunity, and strategy. Whether you flip, lease, or self-use property, these factors will benefit you and your team, allowing for constant growth and return on investment. 

Key considerations for real estate portfolio management

Optimizing portfolio performance doesn’t have to be a gamble. Prioritizing certain factors can give you decision-making confidence when implementing a new strategy into your overall portfolio. Here are some considerations to make when investing in the real estate industry. 

  • Location. Location. Location. – Evaluate the locations of your real estate properties. Are they close to amenities, public transportation, city infrastructure, warehouse space, or shipping facilities? What is the long-term location outlook like? What do zoning and building requirements look like? 
  • Property valuation – The value of your commercial real estate property can impact taxes, insurance, and financing. Will the property grow in value? Will capital improvements increase tax rates? Is the property suitable for improvements? 
  • Investment purpose and horizon – CRE ties up liquid capital, meaning you could encounter financial pressure and a lack of flexibility if real estate ties up cash. Ask yourself what is the purpose of your investment and the length of time it will stay in your portfolio to maximize the ROI. 
  • Cash flow & profit – Positive cash flow and profits after expenses on your real estate properties are the keys to a healthy return on investment. Develop or compile reports on the cash flow and costs of your commercial rental properties, analyze projections, and make adjustments where necessary to improve performance. 
  • Evaluate risk – High-risk/high-reward properties may be suitable for some investment strategies but not for others. Evaluate your risk tolerance and change your approach to match your company’s goals. 
  • The state of the overall real estate market – Down markets don’t have to mean stalled portfolio performance. Use the overall health of the market to your advantage, such as property inventory, construction costs, mortgage rates, and general property prices. 

You and your portfolio manager will be able to take the steps necessary to continue building private equity for your organization using your real estate knowledge and experience along with these considerations. 

Streamline Portfolio Management with Blooma

Portfolio managers have significant responsibilities when it comes to managing the real estate holdings of a client’s portfolio. They’re responsible for asset allocation, evaluating risk, overseeing transactions, and managing strategies. 

In addition to the day-to-day responsibilities, a portfolio manager will also consider the factors that may impact operations and stay up-to-date on maintenance activities. Of course, keeping on top of market trends and health will play a critical role in success. 

With so many responsibilities, it can feel overwhelming for the average person to step into a portfolio manager position. However, with Blooma’s AI-powered platform, you can streamline and optimize portfolio management for your commercial real estate properties. 

Request a demo from Blooma today to see how CRE lenders can benefit from advanced technology. With Blooma, you can change the way you underwrite your deals! 

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