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That lifecycle has three phases:acquisition, holding and disposition.
Acquisition
Asset managers have two key responsibilities during this first phase of the propertys lifecycle.
Disposition
Disposition refers to the disposal of a property from the portfolio.
Property management, on the other hand, focuses strictly on a buildings or complexs day-to-day operations.
Each strategy has its own way of balancing return potential against risk.
Theyre high-quality, turn-key or nearly turn-key properties that providepredictable cash flowwith little risk.
Their value tends to come from income generation rather than capital appreciation, so returns are often lower.
The long lease will provide stable income for decades to come.
Ideally, the property would be modestly leveraged 40% to 45%, according to Episcope.
Value-Add Investment Strategies
Avalue-add investment strategylooks for properties with stronger growth potential, albeit with higher risk.
After they acquire a stock, the managers track its performance and its effect on the overall portfolio.
They buy and sell shares as needed to hedge against risk and increase the funds value.
Asset managers usemarket and economic analysisto identify opportunities and risks affecting the properties.
Alternatively, it could offer incentives for tenants to renew their leases or sign longer ones.
That risk can impact the overall market or a particular segment, such as office buildings.
Debt also poses risks to asset values.
Risk management is perhaps the best example of the importance of competent asset management.
It accomplishes this by creating strategies for optimizing the properties financial performance while shielding them from risk.
Takeaway
Finding and working with a financial advisor is a great idea.
A financial advisor will help keep track of your finances and assist you in attaining your financial goals.
Get to know your Financial Advisor options today for Free!
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