financial

Broadening Your Financial Perspective

How financial tools can change the way you look at investment real estate
Monday, August 15, 2016

As a property manager, you know what it’s like to be in charge of everything from building security and maintenance to tenant communications and marketing. However, another aspect of being a property manager is to work with the property’s finances to achieve a goal that is determined by the owner. If the owner of the property puts you in charge of the complicated task of increasing earnings, you have to know what you’re doing. If you’re interested in becoming a Certified Property Manager® (CPM®), you’re in luck – learning about the financial tools involved with investment real estate is on the agenda.

What will I learn?

The Investment Real Estate – Financial Tools course (FIN402) offered by the Real Estate Institute of Canada (REIC) is the financial cornerstone of becoming a CPM. This course focuses on investment real estate and the financial tools and skills required to succeed in meeting the building owner’s specifications. Crucial tools include spreadsheets and a financial calculator, which together help develop calculations that will tell you how much the building is valued at, giving you an idea of how to increase that value.

Other tools include lessons that students are taught. “We’re dealing with tools that relate to loans, and we’re looking at tools as a borrower and calculating mortgages,” says Jean-François Bigras, course instructor. “The other side is looking at things as a lender: What calculations do they do to lend us money? We also look at leverage positions: Should we always be borrowing money? These are calculations or tools that we’re building and teaching the students.”

Among the skills taught by the course, and perhaps the most important, is transitioning from having an operating perspective to something broader, and not just looking at a property in terms of expenses and revenues. That means understanding the owners’ ultimate objectives and trying to meet those goals and objectives.

The course also teaches how any decisions made as a property manager affect the net offering income and consequently, the value. That means you will have to learn how to cultivate an analytic perspective of the financials of the property to ensure your decisions are making the right impact.

Why should I (want to) take this course?

If you’re earning your CPM designation, you are required to complete the Investment Real Estate course as a prerequisite. But if you’re smart, you’ll also want to complete this course.

FIN402 will give you, as a property manager, the means to increase the return on investment, or ROI, of the property, which is a huge advantage. That means you’ll be achieving the building owner’s goals without having to outsource to another firm to do the financial legwork. Because of this, leading firms have started to demand that property management professionals have real-world financial analytical skills when hiring.

FIN402 looks at the core issues that impact fiscal planning and gives students the knowledge to calculate important financial components and take control of their property’s financial outlook. This course teaches how and when to apply the correct financial tools in order to meet the property owner’s goals and promote the success of the property.

“I think CPMs need to show that they have that broader perspective. They have a designation and through all the courses they take, they don’t just learn about the operations,” explains Bigras. “This course leads to more advancement. If you’re a CPM and you have this knowledge and follow an ethics code, you’ll be advanced into better positions in your firm.”

When asked what he liked most about teaching this course, Bigras replied, “I’m giving but also getting. As I teach the class, sometimes students seem a little worried about what they’re about to learn,” he explained. “What I see throughout the two days of the course is it builds their confidence in dealing with these issues because we’re demystifying everything, we do exercises and they get good at it. They don’t see it as a mountain to climb anymore.”

And according to Bigras, that confidence is crucial to your success. “We’ll take you step by step through the course to build your confidence and feel at ease with the calculations and results,” he says. “You’ll go back to your job and have that broader perspective and be a better manager because you won’t see real estate the same way you did before.”

What more can you ask for from a course?

To learn more about FIN402, please visit http://www.reic.com/COURSES/FIN402-Investment-Real-Estate-Financial-Tools.

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