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Performance Review |
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More often than not, individual apartment investors are not ideally positioned to assess performance of their property. Many individual investors measure success by the amount of their monthly distribution check, not overall return on investment. Many aren’t familiar with best practices to operate an apartment property, and others possess the knowledge, but not the time and proximity to apply that knowledge. Most individual investors rely exclusively on third-party management companies or on-site property managers to maximize investment performance.
Individual investors seldom benefit from an annual performance review of their property’s operations, performed by an unbiased, outside expert such as NOI. There is simply no substitute for a "zero-based" analysis of all property functions and protocols, to insure that best practices are in place.
NOI’s performance analysis centers on how well management executes what we refer to as Performance FundamentalsSM: revenue, collections, retention, control, and expectations. Poor execution, in whole or in part, begins a negative ripple effect on property performance.
Content of Review
In our initial review, income and expense line items are compared to industry norms and to NOI’s internal benchmarks, organized by location, submarket demographics, size, age, and construction. Financial analysis reveals more conspicuous operating problems and suggests areas for further investigation by our onsite audit team. The team then conducts a thorough site assessment of operations, including: management personnel, administrative practices, the competitive set, marketing/leasing objectives and methods, tenant relations, expense control, condition of the physical plant, and maintenance procedures. The goal is to assess how each function affects top-line and bottom-line performance, and whether value-add opportunities have been overlooked.
NOI’s assignment concludes with a written report that details our findings and makes specific recommendations for improvement. The report examines the feasibility of the client’s investment objective for the property, and may suggest different objectives. It addresses Performance FundamentalsSM and provides the basis for the client to internally evaluate management practices. After the client has reviewed the report, we strongly encourage a web conference or in-person meeting for the client to raise questions, discuss implementation strategies, or challenge our findings.
Follow-Through
Following our report to ownership, NOI offers a number of services to assist in executing Performance Fundamentals, perhaps with new investment objectives. We may continue to consult regularly with the client, to monitor monthly financial progress. We can make recommendations with regard to property management companies. NOI may invest opportunity capital to facilitate the recovery, when our skill set will materially improve performance.
NOI’s impartial, "zero-based" performance review overcomes most of the challenges particular to individual apartment owners. Our service is unique and invaluable to maximize their investment returns.
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| Case Studies |
| Performance Review |
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