To Outsource or Not One of the key decisions most executives must make when they go out on their own is whether to rely on outsourcing because property management and construction can be unnecessary burdens to many multifamily firms. “For many people, the property management process is difficult and time intensive,” says Matt Perrin, principal of Trillium Residential in Phoenix. “A lot of people just don’t want to deal with it.”
Randall Friend, a partner in Eagle Real Estate Group in Anaheim, Calif., is one of these people. He says property management would take away from his company’s main strength, which is staying focused on deals and finding opportunities. Stuart Gruendl, founder of BayRock Residential LLC in Emeryville, Calif., also outsources property management so that he can keep his attention on “creating revenue.” The high insurance and worker’s compensation cost in California and the relatively low cost of property management services also played a part in Gruendl’s decision. “If you are starting a business in a down economy, the outsourcing resources are so competitive that they beg for business, so we get great pricing,” he says.
But if a multifamily firm has expertise in property management, construction, or rehab, outsourcing may not be necessary. With Pete Vilim’s experience, Waterton Associates LLC does its own property management and even has regional offices in Chicago, north and south Florida, Las Vegas, and Seattle. “We look to be as close to the real estate as possible,” says David Schwartz, managing member of Waterton in Chicago. “In a perfect world, we would have regional people in every city we are in.”
Perrin’s background in property management not only helps Trillium, but also it gives him a perspective somewhat different from those offered by Friend and Gruendl. “Property management can be a truly value added process – a way to enhance the value of your asset,” he says. “That’s the way we look at it. Manage it well, enhance its value, protect your investment, and have control as the developer. I believe that is critically important.”
