One of the best ways of generating passive income is by renting out an apartment. And, as with any other business, for your investment to be successful you need to be a good manager.
Managing multi-family apartments is more than just filling vacancies and checking in on tenants. If you don’t possess the right skills, managing all these aspects can be chaotic and overwhelming.
That’s why in this article, we share with you 6 tips to help you manage your multi-family apartments.
How to Manage a Multi-Family Property
1. Conduct Thorough Research Before Making the Purchase
Research, research, and research! Before acquiring the property that you are interested in, do some thorough background research first. Rental market research can spell the difference between money well spent and money wasted.
When evaluating a multi-family real estate investment, always think objectively and long term.
Make your decision only after you have mapped out the future development of the property, the longevity of the rental agreements, the required improvements and the current shortcomings.
Too many factors can affect the viability of your rentals. One block too far from a new shopping center can make the difference between success and failure.
Aside from doing your homework, asking yourself the following questions can help. Ask yourself:
- What are the current market trends and how do my projections look within the present market and in the future?
- How much capital funding do you need and how much might you need to operate and improve?
- What resources do you have to give you a competitive edge?
- Is what you have to offer a valuable fit in the neighborhood and among competitors?
By answering all these questions, you’ll be in a better position to make a sensible decision.
2. Hire a Good Real Estate Lawyer
There are some situations where hiring a lawyer is the norm. For example, in case of a criminal arrest, battle over custody, or a contentious divorce. However, not everyone hurries to hire a lawyer when it comes to buying an investment property.
Some think that doing copious research, coupled with advice from other investors is all they need to make a wise investment decision. The truth is that real estate lawyers exist for a reason. An experienced real estate attorney can help in:
- Reviewing your contract. Usually, property purchase contracts are packed with legal jargon. If you don’t understand the legal language, you may end up making the wrong investment decision. That’s a where a real estate layer comes in.
- Searching the title and addressing liens. A real estate lawyer will help you find out whether the property has any encumbrances like liens or judgments.
- The closing of the purchase. A lot of things are required during a closing of a real estate purchase. A professional lawyer can prove beneficial in this regard.
3. Get Acquainted with Multi-Family Property Management Software
It goes without saying that property managers have a lot on their plates. From filling vacancies to complying with federal and state laws to handling property maintenance issues.
It seems that the merry-go-round of multi-family property management never comes to a halt.
Thankfully, technology has come to the rescue. Multi-family property management software is one solution that will help keep track of all tasks that come with property management.
Such tasks include rental property advertisement, tenants’ acquisition, rent collection and property maintenance.
Operating the software is simple. You only need to go online and log in to access your information. Since it is online, you can do this remotely, at any time and in any place as long as you have an internet connection.
4. Choose the Right Tenants
So much depends on the tenant selection. Yet, so many property managers get it wrong. A good renter can help you keep the property safe.
Although no tenant screening method is foolproof, there are certain questions to ask potential renters that can help you make the best pick.
- Why are you moving? Look for answers like “We need more space” or “I’m changing jobs.”
- Have you ever been evicted? If yes, it’s a red flag. While extenuating circumstances may exist, you are better off continuing your search.
- What’s your monthly income? You want a renter who earns the equivalent of between two- and a half and three times the price of rent.
- Will you agree to a background/credit check? Stick to a simple policy: no checks, no keys.
5. Regularly Maintain Your Rental Property
Managing a multi-family apartment requires a little more work than simply collecting rent payments, paying operational costs and banking the profit.
As a landlord, you have a responsibility to make sure that your tenants live in habitable conditions. Among other things, this means eliminating mold or other toxins, managing pest infestations, repairing damaged structural features, replacing roofs, and fixing appliances when they break.
Aside from complying with habitability laws, property maintenance also helps keep tenants comfortable and satisfied. And, happy tenants mean fewer vacancies.
Generally speaking, most landlords only conduct four types of property inspections. These are:
- Move-in Inspection. This occurs prior to a tenant moving in. The inspection helps document the property’s condition.
- Move-out Inspection. This occurs immediately the tenant has moved out. It checks whether the tenant has caused damage exceeding normal wear and tear.
- Seasonal Inspection. Examples of seasonal maintenance include gutter cleaning in the fall, and snow removal and tree pruning in the winter.
- Drive-by Inspection. This helps quickly assess the exterior condition of a property. You don’t need to notify your renter about it.
6. Build a Good Landlord-Tenant Relationship
The purpose of investing in real estate is to make money, but success in this venture is pegged on a good landlord-tenant relationship. Nurturing a good relationship can foster tenant retention, and it can mean more references for you down the road.
There you have it. Six tips for managing multi-family apartments. Remember, the first step to becoming a successful real estate investor is by finding the right property! If you feel overwhelmed by the management process, consider hiring a multi-family property management company near you!