5 Essential Elements for Better Management of Your Residential Assets

Residential property is a highly sought-after asset class for investors right now. While retail and, to a lesser extent, office assets raise some concerns given changing usage patterns, residential property stands out as a sustainable and low-risk investment.

With low volatility, residential property is akin to a bond investment, offering stable and predictable income,

according to AEW, a member of the SONEKA community. In a European study published by AEW, it was highlighted that residential real estate is a more than resilient asset class, with an average total return of nearly 8% per year since 2008.

‍Why do residential assets require a particular management effort compared to other asset types?

Most indicators are used for all typologies: IRR, various yields, market value, physical and financial occupancy rates.

However, it's not possible to do line-by-line forecasting for residential property as you can for commercial assets. There are too many tenants, and Asset Managers have no idea about the longevity of any particular tenant in the building.

‍This is why SONEKA has created the following features to help you better manage your residential assets:

• Different statistical models allowing for projecting cash flows on residential assets : one for creating a business plan for a holding strategy, the other for a break-up sale strategy.
• The projection of statistical cash flows automatically comes with the modeling of all business plan elements : rent inflation, re-letting period, impact of potential unpaid rents, refurbishment works.
• A few assumptions are enough (turnover rate, re-letting / sales period, market rent / sales price) to project perfectly consistent cash flows. This can be done at a very high level with assumptions for an entire asset, or more precisely with assumptions for specific apartment types.

• Furthermore, the stacking plan view in SONEKA is very useful for residential properties, especially for break-up sales strategies. This view allows you to visualize units that have already been sold, as well as those that are vacant or for which the tenant has given notice.
• Finally, certain indicators in SONEKA are particularly used for residential buildings, such as the turnover rate and the comparison of exit rent / entry rent.

You now know what you can do to better manage your residential assets. Would you like to learn how to improve the management of other asset types? Stay tuned!