You’ve been getting building stories from me on Thursdays for a while now.
Starting Nov 5, we are changing things up a bit. Over my 20 year career in RE I continue to see the same thing. An over focus on income and an extreme lack of focus on the building itself and the assets within your asset.
I want to change that and help owners, investors and asset managers like you understand your buildings better.
So every Thursday will be a lesson instead: one part of running a building, and one thing to do that week.
This is where it starts.
If you own a building. Each month a report arrives about the money: rent, income and costs, the bank balance. It shows how the business did, not the building.
Your property manager keeps the rent and budget on track, and your maintenance crew fixes what breaks. But the big bills for what wears out next for the asset that defines your value often have nobody planning them. You don’t see it coming, and the bill lands on you. The work is split three ways.
Three jobs, and the one that falls between them
An apartment building needs three jobs done: running the business; watching the money, which real estate calls asset management; and looking after the building over its life, which falls between the other two. On repairs, your property manager can approve work up to a set amount without asking you, anywhere from $200 to $2,500 in sample agreements. Above that, they ask you first. So what you see is what a repair cost, not whether it was needed or how old the equipment is.
What it costs when nobody owns it
A budget judged one year at a time looks better when maintenance waits, and the bill lands in someone else’s year. Waiting turns a planned job into an emergency.
Asset management done right includes the building
Four steps in a loop, each with one question you ask:
Know. What do I own, and what shape is it in?
Plan. What can’t fail, and where does my time go?
Do. Is the work getting done right, by the right people?
Prove. Can I show what was done, and what it was worth?
Your building’s record
Everything goes into one spreadsheet you keep, not your property manager, and the blank copy comes with Lesson 1. Think of it as your building’s Carfax: a car with its repair records holds its value better than one without, and I see buildings the same way.
One thing to do today
Ask your property manager three questions:
What are you maintaining?
What is your maintenance frequency? (How often does each piece of equipment get serviced?)
Show me your asset register: the list of major equipment, where it is and its condition.
If you hear “the maintenance person handles that” or “I just call the HVAC contractor,” the building runs on repairs, not a plan. Write down the answers and the date. They’re the first entry in your record.
What I look at
Your property manager is your executive assistant. The facilities manager, the person looking after the building, is your doctor.
It’s a hard job. On a small building one person does both, because the money usually isn’t there to split them.
The average property manager is not doing facilities management. The closest have a head maintenance person and a maintenance binder they can show you.
Unplanned repairs hit you as surprise bills. Start by listing what you own, so you see the next bill coming.
Next Lesson: The Intro — the whole system on one page, Thu Nov 5
—Jon