Case Topic: A Perspective On Coaching and Asset Management
Client Overview
My client was a young, successful real estate professional who built a thriving commercial real estate brokerage. He learned much of what he knew from his father, a successful real estate investor. He worked with his Dad, overseeing property managers who took care of the several investment properties the family held throughout California. Over time Dad became less and less available, choosing to spend time away from the office having fun with Mom. Unanswered questions from property managers began piling up. Then one day Dad called my client and told him to take over answering property manager questions, overseeing turnovers, reviewing leases, and generally keeping the properties going. Dad also turned over the family enterprise operations, expense management, and reporting.
With Dad being less available, my client recognized the wisdom in having access to additional guidance, support, and connection. He initially engaged me to be an advisor and coach in developing family enterprise practices, and also to be available to talk through real estate strategies and transactions. The conversations expanded as the weight of managing the property managers settled in on my client.
The Issue
My client asked two critical questions: how am I going to continue to drive my own business forward while also stabilizing our family enterprise and real estate holdings? And with the family enterprise, are we doing it right; are we set up properly?
As we talked, it became apparent that the time and energy it took to run his own brokerage business and run his family’s real estate business left him with little time and energy for his partner and new son. He shared with me that caring for Family is his true priority and highest value.
The property managers were reaching out to him for every little thing. He’d get bogged down with simple property manager communications like maintenance requests for less than $100 or authorization requirements for well-qualified apartment applicants. He’d provide scopes of work for turnovers, but find that the contractors that property managers were bringing in were not quoting the full scope, and the property managers were charging additional, unnecessary fees.
The Impact
My client could see that if it kept going the way it was going, his brokerage business would start to suffer. Market conditions were not strong in the high interest rate environment, which meant he needed to give his valuable time and expertise to listing presentations for investors looking to sell. He needed to be prepared for those meetings to keep his business top-tier.
What’s more, the projects going at the rental properties would stall out if he didn’t give them time. And, with strong cash flow from one property thanks to a wisely negotiated lease agreement, he was looking to book projects by year-end to offset the new, higher income.
My Approach
I started with the most important concern: finding time for my client to be with his young son and fiancé. We approached this goal with a range of options to create the time he needed by employing the principles of delegation, empowerment, and education for his employees. I shared with my client some of the tools and practices that I had picked up asset managing family portfolios for a national bank, and suggested he implement those.
One such tool is to establish a clear, written delegation of authority structure so property managers know what they should look to him for authorization on, and what they can decide on themselves.
Ultimately, the client hired me to take on the asset management responsibilities, where I would manage the property managers myself. We worked through a delegation of authorities for my service and for the property managers, he introduced me to all of the property managers, and empowered me to answer their leasing, turnover, capital improvement, tenant relations, and repair and maintenance questions and make relevant decisions. He would be involved in any large-dollar decisions.
The work would proceed on a consultative basis, with each of us sharing the oversight and responsibility. Where I was unavailable, he would step in. Where he was unavailable, I would step in.
The Results
Bringing on Tony Rishell Real Estate Wealth allowed my client to lean on my real estate expertise to make quick decisions for property managers and investigate property issues. Within a month I performed physical inspections at properties, reviewed and improved management practices, and began sourcing additional contractors to save thousands in turnover costs and construction management fees.
Later, when we touched base, my client asked me to review his family’s trust. As a real estate consultant, I can provide insights based on my experience, but not legal advice. I am not an attorney. (Please consult a qualified attorney for guidance on your specific legal question.) That said, I have read several trusts when working with a national bank trust company, and I know several attorneys that can help. In my review, I noticed that the family trust structure after the first death allowed for a greater level of discretion than the son had told me he expected. After flagging this, I introduced my client a number of estate planning attorneys. The family verified my understanding of the documents with their attorney, and engaged the attorney to redraft the documents to meet their family real estate succession and estate plan expectations.
Are you facing similar challenges with your family’s real estate portfolio? Give me a call. I’d be happy to work with you on assessing your family’s asset and property management practices, or step in to collaborate with you on the asset management.
Or, are you a real estate family that would benefit from a private wealth real estate consultant—with experience working through trust real estate—assess your current plan? Give me a call. I encourage you to take time to review your plan. Family needs and expectations, and the real estate world, is constantly changing.