A Multifamily Trend to Watch in 2018
- Sep 20, 2017
With just a little more than a quarter of 2017 left in the books, multifamily property owners and managers are budgeting for 2018 and looking for new ways to propel their businesses forward. Many are finding that outsourcing their accounting can provide multiple benefits—from easing the headache of managing the back office to direct cost savings.
Mark Weinstein, founder & president of MJW Investments in Los Angeles, recently began outsourcing the accounting for his portfolio. MJW Investments is one of the largest private owners of student housing in the nation and owns a $600 million portfolio of apartments in Los Angeles and the San Fernando Valley.
“We were constantly frustrated with our accounting as it related to property management,” he said. “We would get very immersed in the stuff and it took up a lot of our time.” Weinstein began hearing about outsourced accounting as a best practice in the multifamily industry and started researching it.
“I reached out to friends and asked them if they outsourced and who they outsourced to…a lot of them were going to accounting firms,” he said. “It wasn’t very efficient or cost effective.” Weinstein said he found Ascent, which specializes in accounting for the multifamily industry, his best option. “I felt that with their structure, it could be cost effective and we could benefit greatly from it.”
Roland Stewart, chairman and CEO of Paramount Investments in Texas, found a similar challenge with his properties. “I don’t believe accounting and Human Resources functions are profit centers in this industry,” he said. “And with 1,500 units I don’t have what I see as a critical mass to have a full-time team in house. By outsourcing these functions, we are more efficient and have more time to focus on revenues rather than operations.”
A key benefit to outsourcing his back office has been letting the accounting firm manage both the technology and employees required to function at peak efficiency for his company.
“Technological advances are at the forefront when it comes to succeeding in the multifamily industry, whether it be forward facing with marketing and sales or in-house with the accounting functions,” said Scott Seegmiller, CEO of Ascent Multifamily Accounting. “There have been great strides in technology for the back office and more and more owners and managers are utilizing it for their benefits.”
MJW Investments also found immediate benefits to outsourcing, including the elimination of a full-time accounting employee and streamlining of its apartment portfolio’s processes. “Our portfolio in Los Angeles isn’t as big as our student housing, but it (outsourcing) had a huge impact on reducing staff and also simplified what we do. Now I think we can focus on other things that are more profitable for us.”
Weinstein said he is now apt to pursue new acquisitions now that he doesn’t have to worry about the back office for his portfolio.
When it comes to streamlining processes and advancing the industry, both Weinstein and Stewart see social media marketing as an emerging issue that needs to be streamlined. “Lead generation is for future prospects is key to our future and something we need to get more involved with,” said Weinstein. “How we attract potential renters, whether for regular apartments or student housing, is a big technological need in the industry.”
Stewart echoed the sentiment. “New techniques and programs to utilize social media will be a major influence on how we will grow as an industry,” he said.
Sarah Thornton is a Las Vegas-based public relations professional. She has worked in the real estate industry for more than 25 years and is a regular author in local publications about both real estate and legal topics.