Portfolio management – the core business of real estate investors

When it comes to building up a portfolio, the decision to buy or not to buy new properties, as well as the decision to sell, keep, upgrade or not upgrade properties that are already in the portfolio, is based on business calculations.

Building up a real estate portfolio

This is based on an analysis of the opportunities and risks of each individual property, on the one hand, and on an overall view of the real estate portfolio, which ideally complements each other, on the other. This can result in savings potential or a wide range of other optimization opportunities. The result of such targeted, planned and rationally made investment decisions is what is known as a portfolio.

Administrative tasks prevent efficient portfolio management

Portfolio management does not refer to the work within the company, but rather the work on the company. In order for you as an investor to manage your real estate portfolio, all work relating to the management of the individual properties must be very well organized, i.e. it must be outsourced. Operational tasks such as renting, settling accounts with suppliers and service providers or awarding contracts to tradespeople should be routinely handled by a professional property management company and should not end up on your desk at all if possible. This is the only way to keep your mind free for those management tasks that you cannot delegate to management companies or other external service providers, i.e. for portfolio management.

Systematic performance analysis as a basis for decision-making

Successful investors are constantly busy developing their portfolio, making strategic decisions and reviewing the success of decisions that have already been made. To do this, they first need a meaningful data basis. Using statistical evaluations, which are usually created with the help of special software solutions for real estate management, the properties in their own portfolio can be compared with each other according to various criteria and also positioned in relation to the real estate market as a whole. The key criteria here are the quality of the property, the quality of the rental and management, and the quality of the location.

A systematic analysis of the performance of individual properties and of the real estate portfolio as a whole then reveals the possible optimization levers for the owner. On the one hand, measures can be taken to increase the profitability or market value of individual properties. This is possible with regard to two of the three criteria mentioned above: the property quality can be improved, if it seems worthwhile, by means of a renovation or a targeted upgrade of the fittings; to improve the rental and management quality, a concept for eliminating vacancies, payment defaults or other problems must be developed.

With regard to the expansion and conversion of the entire portfolio, the analysis forms the basis for deciding which properties should definitely remain in the portfolio, which ones should be considered for sale if the opportunity arises, and which ones should be sold as a priority. Efficient portfolio management is characterized by the fact that it permanently maintains the best possible overview of the positioning of its own real estate portfolio in the current market and of the existing options for further developing the portfolio, so that risks can be recognized in good time and opportunities seized early on.

If you are interested in efficient portfolio management, please contact us. Together we will find the best solutions for building and expanding your real estate portfolio.

Notes

For the sake of readability, the generic masculine is used in this text. Female and other gender identities are explicitly included, as far as it is necessary for the statement.

Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific case.