Owners spend most of their energy on the deal itself: the price, the location, the financing, the projected returns. Teddy Abdelmalek, SVP of Business Development at HH Red Stone, says that focus is misplaced. In his experience, the single biggest variable in whether a student housing property actually performs is not the deal. It is who operates it.
Two owners can buy the same type of property in the same market at the same basis and end up with completely different outcomes. The difference is rarely the asset. It is almost always the operator.
A Vendor Manages Tasks. An Operating Partner Manages Outcomes.
Abdelmalek draws a hard line between a vendor and an operating partner, and argues most owners are still hiring vendors without realizing it. A vendor completes tasks. An operating partner thinks about the asset.
A vendor sends reports. An operating partner explains what the reports mean, what needs to change, and where the owner should be paying attention. A vendor follows the budget. An operating partner challenges the budget when performance, market conditions, or resident behavior suggests a better path. A vendor reports problems after they happen. An operating partner identifies problems early and shows up with options, not excuses.
The earliest warning sign an owner is dealing with a vendor rather than a partner is reactive communication. If the owner is the one constantly asking why leasing is behind, why expenses moved, or why a maintenance issue escalated, the manager is not operating as a partner. Another warning sign is when every conversation turns into an explanation instead of a plan. The market was slow. The students were difficult. The prior manager left issues behind. Some of that may be true, but a real operating partner does not stop at the explanation.
Why Incentive Alignment Changes The Whole Relationship
Most management agreements charge a fee based on collected revenue alone. Under that structure, a manager gets paid the same percentage whether the property is fully occupied or bleeding vacancy, and expenses are not factored into the equation at all. Abdelmalek argues that model creates a dangerous misalignment. The owner absorbs all of the downside risk, and the manager has little direct incentive to control costs or fight for every occupied bed.
HH Red Stone structures its own fee around net operating income rather than top line revenue, so a higher fee is only earned through outperformance. The owner sets the NOI target, the operator manages toward outperforming it, and the fee reflects the actual result rather than the amount of rent collected. That structure gives the operator a direct financial reason to reduce vacancy, manage expenses carefully, and treat the property as if they had equity in it, even when they do not.
The point is not that every owner needs this exact fee model. It is that the incentive structure behind a management agreement says more about future performance than almost anything else in the deal.
The Discipline Has To Show Up At The Property Level
None of this matters if it does not translate to what happens on site every day. Abdelmalek describes student housing as one of the purest operational stress tests in real estate, because the leasing cycle is so compressed that there is nowhere to hide. Miss a leasing window, mishandle a turn, or lose control of a property’s reputation, and the impact shows up immediately, not months later.
That is why HH Red Stone hires for what Abdelmalek calls composed urgency, the ability to move fast under pressure without panicking or transferring that pressure onto residents and staff. A resume will not show whether someone notices trash before being told, walks a model unit like a prospect would, or can build trust with a 19-year-old living away from home for the first time. Those traits show up in daily execution, and daily execution is what separates a property that performs from one that simply exists.
This is the operating philosophy behind HH Red Stone’s property management approach: treating every property as if the operator owned it, not just as an asset to collect a fee from.
What Owners Should Actually Be Evaluating
Owners tend to underwrite the deal carefully and underwrite the operator loosely. Abdelmalek’s view is that this priority should be reversed, or at least made equal. A strong asset with a disengaged operator will underperform a weaker asset with a disciplined one. Before signing a management agreement, owners should ask how the fee is structured, how problems get communicated, and whether the operator can point to a specific plan rather than a general explanation when something goes wrong.
The deal gets a property in the door. The operator determines what happens to it after that.
HH Red Stone is the property management arm of HH Group, managing approximately 10,000 beds across multiple asset classes, including student housing, multifamily, affordable, and mixed-use properties nationwide. After a decade of exclusively managing HH Group’s owned portfolio, the company launched its third-party management vertical to serve other owners with the same institutional-grade approach it applies to its own assets. HH Red Stone’s operating philosophy centers on “functional hospitality” – treating residents as CEOs and maintaining operations with the discipline and consistency that drives sustainable success.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
Disclosure: Individuals or companies mentioned may have a commercial relationship with KeyCrew.