The most important decision a passive investor will make, after evaluating the investment itself, is who will manage the asset. If you are investing passively in an apartment community, the apartment asset manager will be managing your money and investment and making executive decisions, often daily, that will impact the performance of the investment. Below are five things to look for in an apartment asset manager.

1. Integrity

The number one most important characteristic of a quality apartment asset manager is his or her character. Does the apartment asset manager exhibit and demonstrate a pattern of acting with integrity? Does the asset manager do what they say they will do, and within a reasonable time frame? What kind of attitude do they convey? What kind of reputation or referrals have they cultivated? Vet the apartment asset manager by finding out what others in the industry think of them and how they do business.

2. Experience

Although past performance is not a guarantee of future results, it is comforting to know how past investments have performed. A quality apartment asset manager should be able to demonstrate historical performance managing money in apartments. How many deals have been completed? How long has the asset manager been investing? How many deals have been completed within the most recent few years? Are there patterns in their portfolio that raise concerns? The answers to these questions will help reveal their level of experience.

3. Depth of Management

Some apartment asset managers put the deal together, take their fee and then largely disappear. Others put the deal together, take a fee and hire a property management company to handle the rest. Still others put the deal together, take a fee and intimately manage the entire investment in perpetuity. From my experience, a successful operation is most likely to occur when a quality asset manager puts the deal together and then remains in-place at all times to oversee the investment. This could mean living local to the investment, managing the property in-house, running the construction projects, touring the property periodically (without notice), producing and distributing financial reports, performing market surveys, etc. The level of involvement the apartment asset manager has after the deal is closed matters just as much, if not more, as the work they conduct putting the deal together.

4. Focus

Is the apartment asset manager singularly focused on managing their apartment investments or are they distracted by other pursuits? Some of the most quality apartment asset managers I have met focus on apartments exclusively, and often focus their efforts in a limited locale. As an example, of three apartment asset managers I know (all of whom own thousands of units), the first owns apartments in many states, the second owns apartments and single family homes in a few states, and the third owns 70% of his 10,000 apartment units in one submarket of one city. All things being equal, I will bet on the asset manager who controls his units in one locale and has a single-minded focus. The level of intimate understanding and control over your investment becomes more difficult when you are spread across various investment types and locations.

5. Alignment of Income

How an apartment asset manager earns his or her income is an important question to consider. In my opinion, the best apartment investment arrangement is one in which everyone, active and passive investors, profit together or suffer together. I know an active investor, also known as a syndicator, who earns a fee upon putting a deal together and another upon the sale of the deal. Because the syndicator only earns money on the way in and the way out, he has little vested interest in how the property performs in the time between buying and selling. A more ideal setup is where the apartment asset manager earns something for putting the deal together, managing the asset in the interim, and upon selling the deal. When in doubt, ask yourself how the asset manager is getting compensated, and whether or not you agree with it.