All Forum Posts by: Kim Hopkins

Hi,

I searched the forums pretty thoroughly and didn't see anything on this. I'm looking for a conference or networking / mastermind group directed at advanced asset managers / principals / owners of mid sized real estate portfolios. 

We own and operate over 300k SF of commercial light industrial real estate. I'm looking to surround myself with others in this category and learn about better systems and ideas for managing our portfolio.

The vast majority of conferences I've found are aimed at beginners. I have no idea what master mind groups are out there. I've only found one I thought sounded pretty good, but for $50k a year, I don't think it's what I want at this point in time.

Thank you!

Kim

Any other Asset Managers want to weigh in on their monthly review process? Thank you!

Hi @Eric Weireter

Thanks for your response. Yes, I believe our property managers do all these things as well but it's our review of their reports that I'm thinking about. 

1. They send us their bookkeeping and their account reconciliation. But we have to enter it into our bookkeeping along with owner distributions and reconcile our accounts. 
2. They send us rent roll but we like to confirm it is correct and highlight units that are turning in 3 months to make sure leasing is on top of it.
3. They send us receivables but we want to see if there are any significant late payments and follow up with why and the action plan to resolve. 
4. We do not get explanations of budget variance. I'd like them to start doing this. 
5. They do send all the financial reports. 

Thanks,

Kim

Hello!

We have scaled to over 300k SF and 11 properties in 5 states, half of which are multi tenant. We use third party local property managers for all the multi-tenant, but otherwise it's just the two of us! I'm looking to outsource as much as possible that is routine. In particular, I'm looking at our monthly asset management review process. My question for starters is: What is your monthly asset management review process? 

Here's what's in mine: 

1. Bookkeeping and account reconciliation  (already in process of outsourcing on Fiverrr).
2. Check that rent roll provided by Property Manager is correct (term dates, rates, etc.)
3. Check that all tenants paid rent on time and in full. 
4. If answer to above is no, find out reason for late/partial rent and plan to rectify.
5. Review monthly expenses and compare to typical monthly expense / budget.
6. If any expenses are atypical or off from budget by more than 20%, explain expense and reason. 

That's it. Anything I'm missing that you do as part of your monthly review? 

Thanks!
Kim

Thanks @Andrew Tripp! Will let you know how it turns out with the request for a credit.

Hi @Andrew Tripp, our company is Iron Peak Properties. Is your group local to Chicago? 

@Andrew Tripp Hi Andrew, that's really good advice and makes me think a lot about our situation. This not our first deal. We are experienced investors and long-term-holders. We want properties that cash flow. We're also a 2-person shop so there is a major opportunity cost if we buy a property that doesn't cash flow or worse, doesn't cash flow and costs us time and headache. So your story about your first deal which sounds like this one is very helpful. We don't need this deal to get started and don't want that experience if we can avoid it. 

My original thinking here was A) we should break into the Phoenix market sooner rather than later at the cost of cash flow so we could get established in a market we'd like to be in long term and B) I thought there was a rush to find a deal before inflation hits and/or interest rates rise. I'm not necessarily sure I was wrong on this, especially B, but we are still seeing some new deals come through in better cash flowing markets like DFW, still expensive, but better cash flow than this. Although there is the thing about the bird in the hand...

Still so on the fence with this one. I guess I'll see what he says with the credit. I'd usually ignore the opex like you said, but the margins may be too slim otherwise.

@Andrew Tripp Thanks I appreciate your feedback. There are only two value add opportunities I can think of: 

1. Replace pedestrian 8.4'x8.4' double man doors with rollup 10'x10' overhead doors. Not planning to do this in the near future. Very expensive and requires an architect to move the lintels.
2. In place rents are at $0.86 PSF and market should be $1.00 PSf, provided the clear height doesn't deter too many tenants. 

I would typically overlook opex discrepancies too, but do you think that's feasible if it drops COC to 2%?

We plan to hold forever in theory. 

The location is in Tempe and is a killer location. 3% vacancy in this market, but 20-30% vacancy during 2008.

Do not have a need to break into Phoenix, just like the market a lot and live a couple hours away so would be a convenient market to get into. 

We are overpaying on price PSF according to several people I've spoken with, however the comps they've presented me with are at a lower cap rate. Since I'm used to doing deals in DFW and SLC (before it was overpriced), I'm not used to this horrible cash flow. On the fence... 

If you do think I should ask for a credit, any experience or suggestions on the best way to be successful with a seller who does not want to budge? 

Thank you!

Kim

Thanks all for the feedback, sorry for the delay in responding, been swamped. It turns out this deal has a lot of other issues stemming from misrepresentations in the OM (which I believe were unintentional, but nonetheless). We haven't presented our analysis to the seller yet but I'm concerned b/c the broker said the seller has said they will not give any credits on price. Here are the issues if you want to weigh in.

1. 
   Omissions in the opex from the OM compared to the P&L.
2. Clear Height Issue discussed above. @James Storey I ended up saying that since it eliminates 50% of the tenant pool, that doubles the vacancy rate per year in the OM.
3. A vacancy for 20% of the RSF starting 1/1/22 that they assumed in the OM would renew. 
4. A claim that a new roof was put on in 2017 but turns out it's much older and needs repairs.

@Andrew Tripp I'm really on the fence with this one. The COC was already a slim 4.5% and now with the above corrections to the OM, it's an embarrassing 2% or something. Great location. Great vacancy rates. 100% occupied but horrible cash flow. I'm questioning my original intent on this one to "plant my money somewhere" to avoid inflation and break into the Phoenix market, and wondering if I should just go find another property in Dallas instead.

I'm thinking they'll tell us to walk when we ask for a credit. We've already paid for the inspections and appraisal. Any thoughts? 

Thanks

Kim