By clicking "Accept", you agree that cookies may be stored on your device to improve site navigation, analyse site usage and assist our marketing efforts. See our privacy policy for more information.

5 Essentials to Better Manage Your Residential Assets

The SONEKA Team
09
/
11
/
2021

Why has residential become a very popular asset class for investors at the moment? What are the challenges of managing residential assets? This article will explain the know-how to better manage residential assets.

Residential is a very popular asset class for investors at the moment. While retail assets and, to a lesser extent, office assets are causing concerns due to changes in usage, residential is proving to be a sustainable and low-risk investment.

With low volatility, residential is like a bond investment with stable and predictable returns,

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

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

Most indicators are used for all types of assets: IRR, different yields, market value, physical and financial occupancy rates.

On the other hand, it is not possible to make line-by-line forecasts for residential properties as we can do for commercial properties. There are far too many tenants, and asset managers have no idea of the permanence of any particular tenant in the building.

That's why SONEKA has created the following features to help you better manage your residential assets:

  • Different statistical models to project flows on residential assets: one allowing to make a business plan on a strategy of holding, the other for a carve-out strategy.
  • The projection of statistical flows is automatically accompanied by the modelling of all the elements of the business plan: rent inflation, re-letting time, impact of potential non-payments, refurbishment work.
  • A few assumptions are sufficient (turnover rate, length of re-letting/selling period, market rent/selling price) to project perfectly coherent flows. This can be done in a very macro way with assumptions at the level of an asset but also in a more precise way with assumptions at the level of flat typologies.
  • In addition, SONEKA's stacking plan view is very useful for the residential sector, particularly for the carve-out strategy. This view allows you to see which lots have already been sold and which are empty or for which the tenant has given notice.
  • Finally, some of SONEKA's indicators are particularly used for residential properties, such as the turnover rate and the comparison of exit rent with entry rent.

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

Ask for a demo of SONEKA