The Real Estate Asset Lifecycle

“If you can’t measure it, you can’t improve it.” Peter Drucker

Every Property Management Business knows there are key metrics that really drive your results and ultimately your profitability.

Question is – have you laid the foundations for your analytics by measuring, managing and mapping your Property Management metrics to facilitate process improvement and ultimately improve profitability?

One really useful framework for understanding, measuring and improving your metrics is the Real Estate Asset Lifecycle.

This is a high-level description of how our clients identify, acquire, develop, operate and divest properties.

Most of our clients are in the “Operate” phase of the lifecycle, which is usually the longest phase in duration.

You can see the major phases of the Real Estate Asset Lifecycle in the diagram below.

real estate asset lifecycle

The four phases are:

  • Acquire
  • Develop
  • Operate
  • Divest


The Acquire Phase

The activities in the Acquire phase of the Real Estate Lifecycle include:

  • Identifying assets for potential acquisition
  • Evaluating the investment alternatives
  • Raising the financing
  • Negotiating the purchase
  • Transferring ownership


The Develop Phase

Here the property is constructed or renovated in order to get it ready for leasing.

Activities in Develop phase of the real estate lifecycle include:

  • Obtaining permits
  • Planning the construction project
  • Executing the construction project
  • Managing subcontractors
  • Managing the construction financing


The Operate Phase

In this phase the real estate firm generates income from the asset. This phase is usually the longest, ranging from one year to decades.

The property management metrics we are going to discuss are for the “Operate” phase of this asset lifecycle.

The major activities in the Operate Phase of the Real Estate Lifecycle include:

  • Generating and managing tenant leads
  • Managing the tenant application-to-lease process
  • Servicing tenant requests for maintenance, improvements and enjoyment
  • Collecting rent
  • Managing the lease ending activities
  • Refurbishing and preparing the units for the next tenants

We will discuss the detailed metrics for the Operate Phase of the Real Estate Lifecycle in our next post

The Divest Phase

In this phase, the real estate firm sells the asset and ceases its involvement with it. Activities in the Divest Phase of the Real Estate Lifecycle include:

  • Identifying potential buyers
  • Preparing the asset for sale
  • Negotiating the sale terms
  • Transferring ownership to new owner

Learn more about using metrics in your Property Management Business to improve your profitability by scheduling a 30-minute consultation in my online calendar using the web form below…