In today’s episode, we are going to talk with Real Estate Investor Sean Thomson. Over the last decade, Sean has been perfecting his processes of scouting, acquiring, and investing in real estate. His approach and philosophy are informed by his passion for building wealth and achieving financial freedom for his family and his investors. Sean considers the health of his investors financially and personally to be one of the most rewarding parts of pursuing financial freedom.
He loves to find and encourage fellow investors so he founded Thomson Multi-Family Group to allow interested, accredited, and sophisticated investors to partake in the investment opportunities that he develops throughout the country. Sean and Sam will dive into the essentials of asset management and the important role that it has, guiding and assisting those looking to acquire properties. Sean also is going to share his experience that had to build his family business and the vision that he created for his company: helping people to achieve the “Next Level American Dream”.
Highlights:
[00:00] – [03:15] Scaling a Family Business
• Sean Thomson has 13 years of experience in real estate and has moved from single-family residential to multifamily residential in the past three years.
• Sean shares how he found it difficult to scale his business and decided to move into multifamily.
• Sean explains his passion for asset managing and how he wants to make sure investors have a “locked down” program.
[03:15] – [07:04] The Personality of an Asset Manager
• Sean argues why a syndicator is not typically good at being an asset manager, and how outsourcing this role to another party can be beneficial.
• He also discusses how someone that is good at making quick decisions isn’t ideal for being an asset manager, as they need to be detailed in their work.
[07:04] – [10:38] THE MVP: Mission, Vision, and Plan
• Sean boils down the essentials of what an Asset Manager needs to do in their role.
• Every project needs a mission, and without knowing what that is, it’s difficult to know how to get there. And to establish a mission, first you need to understand what the project is intended to achieve.
• Once you have a clear vision for the project, you can create a plan to help achieve it.
[10:38] – [14:09] Optimizing Outcomes to Mitigate Risk
• Sean provides insight into how he executes asset management strategies for the properties that he represents.
• Sean explains why an asset manager will need a business plan and be in agreement with the property management company
[14:09] – [17:24] The Importance of Managing your Assets
• Sean discusses the key points of asset management, including the 2% management fee that every client pays.
• Sean recommends the importance of reaching out to an asset manager at whichever stage the client is, as he can provide guidance and assistance throughout the process.
• Sean emphasizes the importance of systems and processes in asset management, saying that his company is scalable and able to take on more properties with an asset team.
[17:24] – [18:47] Closing Segment
· Reach out to Sean
o See links below
· Final words
Tweetable Quote
“I always wanted to be something more than just a worker in my whole life and I thought real estate was a way to do that and I did”. – Sean Thomson
“Every project needs a mission. If you don’t know where your destination is with your project, you don’t know how you’re gonna get there”. – Sean Thomson
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Connect with Sean on his Instagram and LinkedIn or check his company’s website at https://www.thomsonmultifamilygroup.com/ and https://www.unionassetadvisors.com/
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I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
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Want to read the full show notes of the episode? Check it out below:
[00:00] Sean Thomson: The two basic functions of an asset manager. If you wanted to boil it down to like the essence of what an asset manager should be doing, it’s to optimize outcomes for the investment and to mitigate risk, right? So, you’re trying to capture as much upside in the investment possibilities you can, and you’re trying to take away as much of the downside as you can, right? For us our starting process is we look at, I call it the MVP, but it’s the mission, vision, and plan. So, every project needs a mission, right? If you don’t know where your destination is with your project, you don’t know how you’re gonna get there. [00:31] Intro: Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we’ll teach you how to scale your real estate investing business into something big. [00:43] Sam Willson: Sean Thomson has 13 years of experience. He moved from single family residential to multi-family residential three years ago, and has since then created an asset management company for independent owners. He also works alongside in the business with his daughter. Sean, welcome to the show. [01:00] Sean Thomson: Thanks, Sam. Thanks for having me on. Appreciate it. [01:01] Sam Willson: Absolutely. The pleasure’s mine. Sean, there are three questions I ask every guest who comes in the show. In 90 seconds or less, can you tell me where did you start? Where are you now? And how did you get? [01:09] Sean Thomson: Uh, so I started single family. I always wanted to be something more than just a worker in my whole life. And I thought real estate was a way to do that and I did. Just never knew how to kind of get that as a business. And I started single Family with the home Veteran franchise. The We Boley Houses guys. [01:24] Sam Willson: Wow. [01:25] Sean Thomson: And you know, single family was great. I had a small little business. I’ve never cared about being the biggest, you know, the doing the 150 wholesale a year, whatever, things like that. [01:33] I wanna do a good job, right? For me it’s about quality, not quantity. And my single-family business just wasn’t scaling to the level I needed it to at, you know, on a pace that I wanted. And so, I thought: “Well, there’s gotta be a better way to do this”. And I always thought apartments were outside of my reach. You know, I didn’t think a guy like me could do it. And I met someone who was into syndications and was a regular guy like me and was doing it, right? So, I learned that, hey: “It’s possible for him, that means I could do it. So, I convinced him to teach me how to do it and then took a year or so to decide on whether or not to shut down my single family and move into multi-family. And then that was the case. Joint forces with my daughter as she was coming outta college. And now we have a small family business that does multifamily syndications. We just launched our asset management business as a third-party service. We thought that asset management was a critical, you know, pivot point in success or failure in multifamily. [02:22] It’s where everything comes together and the critical decisions are made. So, we wanted to build for ourselves and our business a best-in-class asset management program for us. And it turns out that there’s a lot of people that need this help, right? They need it on some level. [02:36] And so we thought: “Well, we built this out. Our business looks pretty efficient. It looks really good. We think we’re doing a good job. Maybe we can help other people”. And so that’s what we launched. That was the genesis of launching our asset management business. [02:46] Sam Willson: Gotcha. Yeah. That’s really interesting. It sounds like there was a pain point or there was something along the way that you experienced either personally or you watched others experiencing that said. “Hey, we’re onto something here. We need to launch this asset management business. [03:01] Sean Thomson: Yeah. Well, for us it was just a matter of wanting to be good, right? We just wanted to be really good at what we do. And, I talked to investors that I respected that have been in this business a long time. I mean, when I say investors, I mean people that put capital into these deals. And their first question to me every time was: “Who’s your asset manager?” And I would say: “Well, we are. We’re of new multifamily operation, right? So, they would always say: “Okay, well, who else is on the team, right?” And so, I said: “I’m gonna be the best I can at this because this is critically important to investors. I wanna have this locked down”. And so, we started researching what are the best practices in asset management? What’s the best operations? You know how this works? We called in experts, we talked to people that we know. We talked to other syndicators. And through this research I discovered that there’s a lot of syndicators that are just, you know… Like, I’m not a great asset manager. I’m, personality wise, the worst asset manager you could probably have. I’m great at Big Picture. I can make big decisions really quickly and rapidly, but a true asset manager is a very detailed in the spreadsheets, on the phone calls every week. You know, it’s a grind type job, right? And so, someone like me who’s good at syndications, buying deals, finding deals, get talking to investors, things like that. I’m not a great asset manager. So, by nature syndicators just don’t make great asset managers, and a lot of them are trying to do the job, right? So, they just need help doing it, I think. And then there’s people that are great at it, but they wanna focus on finding more deals or finding more capital to raise their business level. Right? And outsourcing that to somebody else is important to them. So, we just found a need for it through our kind of desire to be good at what we do. And we thought. “Well, you know, we’ve built this business. We think it’s gonna be just substantial. So, let’s see if we can help other people”. [04:44] Sam Willson: Talk to me about, normally I would think of an asset manager as one of the key team members. Especially on a syndication team. Obviously, you got your investor relations people, you got your acquisitions, but asset managers a key seat on the bus. How do you guys as a company integrate into those existing teams? I guess just talking about that process, cuz I would imagine that’s an interesting and kind of tricky interface, making sure that you’re serving the other members. I don’t know, does that question even make sense or am I just stumbling all over my words? Like I feel like [05:13] Sean Thomson: No, it does completely. And that’s the first question I get from most guys. Cause they don’t understand how we would fit in because, we’re not a stakeholder. Right? And so, the decision-making process is still in place with a stakeholder. We don’t make big decisions for the sponsored group or the stakeholders in the deal. We just do the day-to-day operations. So, we take the tedious and the tedium away from the sponsors, right? So, you don’t have to be on the weekly call. We’ll take care of the weekly calls. We’ll make sure the property manager’s hitting their KPIs. We’ll establish the KPIs for the property management team. We’ll monitor, you know, CapEx, you know how that’s going. We’ll make sure lease up are happening. We’ll make sure turns are happening. We’ll make sure all that sort of tedious work is happening. Take all those things off the plate of someone that can go out and now find deals, right? So instead of being on phone calls and dealing with property management issues that are below 2,500 bucks or whatever it is that don’t really need to be in the ownership seat, those decisions can be made downstream. So, we’re taking that sort of in between property management and ownership and those tasks, those daily sort of tedium tasks. We’re taking those off the lap or the desk of the ownership group. So, it’s, but the decision making and the strategy is all still in the ownership’s hands, the responsibility to do a good job with the project is still part of the ownership’s decision-making process, their sponsor group or whatever they are structured. We’re just taking the day-to-day grind stuff off their responsibility. And I think, that is a hard concept because I think most sponsors are just accustomed to being the asset manager, or bringing someone in on the sponsor team to be the asset manager. And that role still has to be filled in terms of like decision making, but it doesn’t have to be filled on the day to day. So, like that you can outsource, and that’s what we’re providing. [06:55] Sam Willson: Got it. Tell me, you’ve hit on a few things there, just maybe there’s some listeners that don’t necessarily understand everything an asset manager may do. So aside from the things you’ve already mentioned, what are some other pieces of the puzzle that you guys pick up in this process? [07:10] Sean Thomson: The two basic functions of an asset manager. If you wanted to boil it down to like the essence of what an asset manager should be doing, it’s to optimize outcomes for the investment and to mitigate risk, right? So, you’re trying to capture as much upside in the investment possibilities you can, and you’re trying to take away as much of the downside as you can, right? For us our starting process is we look at, I call it the mvp, but it’s the mission, vision, and plan. So, every project needs a mission, right? If you don’t know where your destination is with your project, you don’t know how you’re gonna get there. So, we start off with establishing mission. What do you want to create here with this community? And then we create a plan or a vision to kind of get on that path, right? So, the vision for us is the journey we’re gonna take. I’ll give you an example. Let’s say one of our core missions with the property is to create a safe environment. Well, how do you do that? So, your vision would be to increase security, increase lighting, increase amenities around the courtyard or whatever. And then the plan would be: How many lights do we need to put in or how many security systems do we need to put in? And so, we break it down to all that.
And if you start with that, those three steps, and infuse that with communication with your property management group all the way through to your investors, and everybody’s on that same mission, vision plan, and then you drop in some accountability with KPIs on your financials, on your property management group, on everybody involved that’s trying to accomplish a goal. And then you layer in communication to make sure everybody’s on the same page throughout the whole process. I think you’re doing those two functions, right? You’re giving yourself the best opportunity for upside and you’re mitigating your risk on the downside. And then, so some of the things we’ll do on the risk side, we’ll do insurance assessments, tax assessments, all those things that can get you on the financial side unexpectedly with tax increases. We’ll fight taxes, you know, when those come up, we’ll make sure our insurances are optimized. You know, just things like that you don’t always think about. But those things need to be done.
[09:05] Sam Willson: Absolutely. Absolutely. How have you taken this role on without creating a new team member? For every new sponsorship group, you work with. [09:20] Sean Thomson: Well, so we are kind of doing that. So that’s the objective, right? So, if you’re a dedicated asset manager and you’re doing the day to day. Property management is critical in all these multifamily operations, everybody knows that. So, if you have a great property manager, and you’re dealing with that property management team and you have good ownership and you have good communication between the two. An asset manager, just operating the day to day should be able to manage about, eight to 10 properties for a good asset manager. Okay. And so, we’re new, so we’re just getting started, but we have a team member in place now that are ready for clients to, you know, manage those clients. And as we grow, we’re bringing in asset managers specifically to do this task, right? And then we’ll just scale those people. So, we have a dedicated person to those accounts. Just like property management does, you have a regional manager for every 10 or eight properties that they’re doing. So, we’re gonna do the same similar model, but on the asset management side… And so that person will be dedicated to those properties and nothing more. That’s all they’ll do. [10:17] Sam Willson: Got it now. That’s really, really fascinating. Tell me about technology, cuz one of the things, like you said, communication’s a big piece of this equation. What are you guys implementing on the technology side, that is really making this probably more seamless. [10:35] Sean Thomson: Well, we’re looking at different tools that are available now. We have, everything’s customized. So, my wife is a wizard with spreadsheets, you know, Excel and stuff. Before she worked with us, she managed about a billion dollars’ worth of inventory for JC Penney’s, and they do a lot of that work in Excel and forecasting and things. She was the person that a buyer would decide: “Hey, I want this blue shirt. And they would come to them and say: “Okay, how many small, medium, largest go to every store in the country? And, you know, how are we gonna allocate all these things?” And her team would figure that stuff out, right? So financial modeling for her in Excel is pretty much second nature. So, we’ve spent the last. Several months, maybe a year, building out our processes and systems to do this job for this business for us. And she’s built all of our sort of internal systems and we’re utilizing that, that we have for other people’s businesses as well. But we’re also in communication with higher technology providers, you know, a prop tech companies that are providing this service to talk about, some synergies there, right? So, there are some prop tech companies that have a software application for like financial auditing and, some of those financial things. They can’t do the people part. But they can do some of the technology part. And so, we’re in communications with them to see if hey, maybe this tool would be a better application for us, that we can optimize the outcomes for our clients. But right now, everything we have, we built. So, maybe it could be a case of where we take our solutions and create a prop tech solution for later on down the road. But that’s what we’re doing, right now. [12:03] Sam Willson: So, Asset management. You optimize outcomes, you mitigate risk. You guys are bringing on somebody that’s gonna manage eight to 10 properties, and that could be a variety of clients. But I mean, that’s a lot of backend, kind of ticky tacky admin stuff that, for guys like you. [12:20] Sean Thomson: Right. [12:20] Sam Willson: I just, I get lost when you, my eyes glaze over. It’s like… I don’t know, let’s go buy something. But I don’t, I can’t, I can’t quite, you know, stay in the weeds that long. I stink at it. So you’re speaking to my heart there… [12:33] Sean Thomson: But that’s the whole point really. [12:34] Sam Willson: It really is. It really is. And I think the interesting part to this is that then it’s one more way for people to scale. Like they could come to you and say: “All right, I’m gonna take down 20 properties next year and it’s up to you to go out and figure out the asset managers, cuz then I don’t have to worry about that piece. I don’t have to find that team member to put on my own team”. How do you guys, if you have already, but how do you guys work out billing? Like how do you work out, like onboarding? I’m really just curious how someone integrates into your system. Like, how does that work? [13:10] Sean Thomson: Well, it’s simple. So, we have to figure out if we can even help somebody, right? So, we don’t want to take on clients that we can’t drive value for, right? If you’re doing a great, and you don’t need me, I’m not gonna take you on as a client, right? If your property’s unsalvageable, I’m definitely not taking you on as a client. I have to be able to drive value for somebody. I have to be able to optimize that upside and mitigate that downside, right? If I think that we can do a great job for somebody then there’s a synergy there and we can work together, right? So, our first step with anybody is we gather information from, you know, someone that contacts us. and we look at their project and say: “Hey, can we provide value here?” And if we can provide value here, then we start to have a conversation about, okay, what would this look like? You know, can you guys provide us the information we need? How does this work? And that’s really the first step for us though, it’s can we provide value? And in terms of onboarding, if we decide to be, you know, take you on as a client, and the client wants to work with us, the first thing we do is create an asset management plan. And we have to have a business plan to operate the property. A lot of operators already have a framework of asset management plan, but we’re gonna build our own more in-depth asset management plan and we’ll look at everything starting with the PSA, the PMA, all the agreements that you have signed already. We’ll look at your insurance, we’ll look at everything and try and figure out how to optimize moving forward. And we’ll create an asset management plan. We’ll get buy in with the property management company. We’ll get buy in with ownership, make sure everybody’s on the same page, and then we’ll start to execute that asset management plan. Was kind of the thing I mapped out in the very beginning. That’s where everything starts, is with your mission, vision, and plan.And we’ll create all, you know, a document, a living document that does that as we move forward into the future. And we’ll revise that as, things change, but that’s kind of the how we structure and get things started. So, first of all, can we drive value for this client? Secondly, let’s gather the information that we need to create the asset management plan. And then third, we just, we get buy-in from everybody and start executing. In terms of like fees everybody sort of underwrites a 2% management fee into their structure almost every time, right? We’ve got it figured out. I think that we can make that a 2% asset management fee of work our business as well. So, we have underwriting and we can provide some due diligence, oversight, things like that, that are sort of additional services. But if you wanted us to just do the two the day-to-day operation, you know, admin stuff that, that we’ve discussed that 2% fee would be sent to us.
[15:32] Sam Willson: Got it. Got it. That makes a lot of sense. Very cool. I love that. Last question for you on this is where in the process should someone reach out to you? And you mentioned the word PSA and things like that, so it sounds like fairly early on, but just curious what you would recommend to somebody if they’re looking to acquire an asset and they’re like: “Hey, you know what? Sean’s group might be a great fit for asset management”. When is ideal for them to reach out to you? [15:58] Sean Thomson: Anytime, really. If you have properties under management, we can help you probably. If you’re trying to acquire properties, we can provide some sort of guidance to get there and then take over once you’ve closed. So really kind of anywhere you are in that process, even if you have several properties that you may be struggling with. Asset management, you know, I know a bunch of guys that have six, eight properties and they’re just like: “Man, I just can’t keep up. I have a person in the office that’s managing the assets and I just can’t keep up”. You know, for us, we’re scalable. Right? So, the idea for us is to be able to take on 10 properties with an asset team. And then if you buy five more, we can just bolt on another asset manager, get them trained, get everything going in our systems. So, we really, our systems and processes are the strength that we have. And our training, our new asset manager, just making sure they’re on track is really all we have to do, right? Because we have, you know, systems and processes that function throughout the system. So, for us it’s scalable. So, it really kind of, wherever you are in your portfolio life cycle, we should be able to step in and give you some assistance and we can, you know, go through all that on the onboarding and see where we are. [17:04] Sam Willson: Right. I love the idea of implementing a scalable solution. That of course is the key to what we’re doing here, name of the show, which is doing things that we can scale, that we can grow and have an infinite horizon or trajectory of growth there. And also, I think what you said there was great, we said, you know, the systems and processes are your strength, and that’s true for any business. And no less in multifamily and asset management. So that’s very cool. Sean, I have certainly enjoyed our conversation today. Thank you for taking the time to come on and really break down the nuts and bolts of asset management and just the opportunity to build an asset management company and how you’re gonna use that company to then serve your clients here in the future, both inside of your own business. And like I said, with other syndications and other deal sponsors. So, very, very cool. If our listeners wanna get in touch with you and learn more about you, Sean, what is the best way to do? [17:51] Sean Thomson: Well, there’s two locations. So, you can go to our thomsonmultifamilygroup.com website for our acquisitions business. Thomson’s spelled a little bit uniquely as T H O M S O N, but it’s a thomsonmultifamilygroup.com there. And then if you are curious about our asset management business, you can go to unionassetadvisors.com [18:10] Sam Willson: Union Asset Advisors. We’ll make sure we include both of those: Thomson Multifamily Group and Union Asset Advisors there in the show notes. Sean, thank you again for coming on the show today. I do appreciate it. [18:20] Sean Thomson: Yeah, thanks, Sam. I appreciate you having me on it. [18:22] Outro: Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can, do me a favor and subscribe and leave us a review on Apple Podcast, Spotify, Google Podcast, whatever platform it is you use to listen. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank hire on those directories.So, appreciate you listening. Thanks so much and hope to catch you on the next episode.
