2 risks hurting your investment management business

By John Wilhoit September 1 2021 20 min read
08 2021 2things

Your business is evolving every day. The tools your company uses in real estate are tried and true, trusted and steadfast. As General Partners and Investment Advisors, you build out investment models on spreadsheets and workbooks converted to investor presentations and financial reports every day. It’s the way we work. So the thought of building out a new platform, an investment management system, using advanced tools seems like a faraway dream. First, you have to build it, and then it has to be maintained; there’s staff training and worry about information security. However, are some solutions available today in the marketplace that work very well for our industry.

Investment management software solutions have evolved and morphed in every direction. The concept of having a secure system in a real estate investment environment isn’t something that may be here one day; it’s here now. An investment management software solution can dovetail multiple manual tasks into an automated environment that increases accuracy, reduces staff time, and provides a dashboard environment for investors that allows for self-service access to their investments.

Why Now?

Why consider an investment management solution now? To stay competitive, deliver superior service to your investors, and create an opportunity within your organization to devote greater human capital to growing your business rather than maintaining spreadsheets and converting documents for distribution. Staying competitive requires using every tool at your disposal to get ahead and stay ahead.

If you are still running your business from a spreadsheet, there is room for improvement. Keep the workbooks. Potential productivity gains are at your fingertips that can exponentially improve new deal underwriting, tracking, and closings. Spreadsheets and workbooks are great; web-based software solutions are better for many reasons. The first reason is that web-based storage automatically stores your critical data in multiple off-site locations. A fire, theft, or flood cannot erase your data when it’s cloud-based.

The two things that are hurting your investment management business

The two things hurting your investment management business are: maintaining accurate deal information from spreadsheets (for both existing and pipeline deals) and making incremental improvements to investor relations. Implementing real estate investment management software improves the two categories hurting your business by changing how people think and act. You can’t afford to be left behind.

Creating Accurate Deal Information Not Buried in a Spreadsheet

Critical to your business is having real-time accuracy from your data and data outputs. So let’s take a deeper dive into improvements you can implement now with a web-based portfolio solution.

With decentralized deal information (such as an Excel workbook for each deal), redundancy is the norm as access for changes or updates is often limited to one person at a time. Not only can this slow the pace of progress, but it can also lead to missing or deleted critical data. A centralized online solution provides dashboard access to up-to-date information at your fingertips.

Of the three pillars represented in the real estate management business; people, paper, and property – your people are the most critical asset. Implementation of an online solution creates enormous time savings for staff responsible for analysis allowing for more time to focus on the people-side of the business.

Centralized operations for data collection and distribution assure you never lose a data point or need to hunt through a paper file – it’s just so much more efficient to have an online investment management system that is always on, always ready to access.

Delivering Better Investor Relations

An investment management solution is an excellent tool for investor relations allowing one of your greatest assets, re-occurring investors, to have 24/7 access to their investments under your management. It sets you apart. How do you measure success? As a professional in real estate, we measure success by investor satisfaction.

How do you know if investors are satisfied? Retention. If the existing investor base is the same people writing checks for your subsequent private placements, you know the answer. If not, why not? Could it be that your existing systems are falling short of delivering investors’ expectations? It’s one thing to give on yield. But, investor yield aside, the investor experience has the most significant effect on retention.

An essential requisite to gaining investor trust is the belief that your organization provides financial information with a total focus on accuracy and transparency. Any means for accomplishing this is a plus for your business because it eliminates one of the most significant barriers to your continued success; investor satisfaction leads to reinvestment. Outside of family, there’s nothing more important to an investor than their money. Therefore, any aspect of financial information about assets under management (AUM) must be as accurate and transparent as possible.

Like any other business, customer retention is paramount. The better you are at investor retention, the more time you fill the development or acquisition pipeline. Consider investor retention similar to apartment turnover – the better job your property manager is at reducing turnover, the better your cash flow (presuming rental increases pace with the market). The same holds with your investor base: with better retention, you can focus more time and energy on your business operations than devote more time to identifying and replacing investor’s that depart. To accomplish this, improve investor deliverables. Yield is just one part of the deliverables investors expect. They also require transparency, ease of access to information, and standardized report outputs.

The AppFolio Solution

AppFolio Investment Manager brings all of these components to you in a single solution. The upside is immediate usability by your team. In addition, quality access to information forms the baseline to build next-level investor interaction and improved investor relations. Here are just some of the benefits:

  • Improved investor relations and back-office operations
  • Direct investor access – investors have 24-hour access to their investments
  • Investors can quickly summarize their portfolio metrics
  • Your platform is providing an investor tool that increases trust
  • With centralized data, staff will have faster response times to investors questions
  • Delivering deep data on individual assets from a single dashboard
  • Providing an online solution for investors to compare and contrast investment alternatives
  • Provide real-time delivery of financial outcomes and yield metrics on existing investments
  • Create and deliver fully automated monthly, quarterly and annual investor reports

Elevating and then delivering on investor expectations will always set you apart from the competition. However, providing investor transparency requires leading with crystal-clear financial information.

  • Present investment alternatives with complete confidence
  • Increase investor retention
  • Increase investor trust with accurate and accessible financial reporting
  • Measure deliverables
  • Present viewable knowledge

AppFolio Investment Manager is the solution to eliminate the two things hurting your investment management business. This all-in-one solution brings measurable improvements to deal information and investor deliverables with a web-based, easy-to-use resolution that eliminates barriers creating a transformation in your business persona and your standing in the marketplace as an investment advisor with cutting-edge tools. It’s a 21st-century response that will push the envelope and your results well past “the usual” and help your investment management business fly above the competition.