Mary Manuel, Asset Manager for Cinnaire (formerly Great Lakes Capital Fund)
Nonprofit organizations across Michigan (and the country) are helping to create vibrant and sustainable communities. Through a variety of neighborhood programs, opportunities for disadvantaged populations enhance their quality of life through access to safe and affordable housing and other supportive services.
However, real estate development is complicated and requires many decisions and functions that require diligent attention for it to be successful.
Asset and Property Management: A Necessary Pair
At the very core of property ownership, asset management and property management are two important functions in successful real estate development and ownership. The two go hand in hand, yet they function very differently from one another. As assets, particularly real estate assets, are incredibly valuable to owners, success (or failure) is a direct result of understanding the details and expectations of these two essential functions.
A better understanding of these two important components will help those investing in real estate and working on development projects determine how to best use their resources.
A Global Outlook with Local Management
Broadly defined, asset management refers to any system that monitors and maintains things of value to an entity or group and takes on the global view of an asset. This includes the financial structure, short and long term goals for the asset, performance expectations, maintenance and perhaps eventual disposal and/or improvement of the asset.
Property management, on the other hand, is the day-to-day operations on the ground, resulting in systems and processes that ensure the functionality of the asset. Some examples include performing repairs, routine maintenance items and managing the people utilizing the asset (i.e. residents in apartments or commercial tenants in office buildings).
The Role of a Nonprofit
As many nonprofit organizations consider engaging in projects that require property development and/or management, it’s important for the strategy-developing team to decide how involved to be in each component that is required. Every single property owner, which may be the nonprofit organization, needs to build a skillset that understands the complexity that both components entail and manage them for sustainability and success, even if certain functions are contracted out.
Leverage Your Position
Real estate development has the potential to create important placemaking within communities, opportunities for residents and a better Michigan for everybody. Understanding the importance of marrying these two concepts into a bigger strategy, along with the implications of mismanagement is a serious consideration when organizing the necessary resources to prepare for future projects.
Whether your organization is interested in getting into real estate development or is already doing projects, a better understanding of these two functions and how their interrelationship supports successful projects is highly recommended, and will only enhance your proposals.
I encourage you to join us in Detroit on November 4 at Destination: Vibrant Communities, a professional development day hosted by CEDAM and CDAD. I will be leading a session that better explains these two functions: “Hand In Hand: Understanding Asset and Property Management Functions.” I hope to see you there!