6 Things to Know About Managing Your Multifamily Real Estate
Managing multifamily real estate is a great way to generate passive income as an investor. Before you begin, here are 6 things to consider.
Most landlords and investors get their start with single-family homes. Learning to invest your money into rental properties or in those that will allow you to flip can be a great way to earn money investing – as well as building your portfolio.
While these present great opportunities, they are just a small portion of what is available for real estate investors. There comes a time when nearly all investors wonder whether or not multifamily real estate should be the next move.
Before you decide to jump head first into multifamily real estate as your next rental property, there are a few things you should consider.
1. Get Your Feet Wet Before You Dive In
You may have the process of managing your single-family home rental properties down to a science. Maybe you have been doing it for years or maybe you just really thought out the process before you went any further. Here’s the thing – it doesn’t matter how well you manage your properties because multifamily property management is entirely different.
Handling multifamily real estate can be a learning process. Buying too big of a property or too many multifamily properties in a short period of time can be overwhelming and stressful. And this could end up costing you big time.
In general, the most successful real estate investors start small.
2. Set Rules for Your Multifamily Real Estate
In any building where you have multiple families living together, you are going to find yourself dealing with some issues. This can result from just about anything. It could be a noisy, disruptive neighbor. A family that has a pet who invades the space of other residents. Parking issues or complaints. And those are just a couple of examples.
Each family is different – and what they expect out of a living space will vary, one from the next. So, to help everyone get along a little better — and help you keep your sanity — you need to have some guidelines and rules in place for the community as a whole.
These rules should be made clear at the lease signing – and should, for best results, be listed within the lease. Making the expectations clear for all who reside at the property can lead to a better experience for everyone. Though, keep in mind, no matter how clear you are about the community guidelines, you may always have a tenant that pushes the limit and there will always be that tenant who wants to let you know about it.
3. Get to Know Your Tenants
As any landlord knows, you want to develop a healthy relationship with your tenants. This is true for multifamily properties, too. Not only does this make your tenants more comfortable coming to you with issues or concerns, but it also helps your tenants to have greater respect for each other.
Why does this matter?
Well, when your tenants are happy with where they are living (and you are happy with them), you will notice that your property vacancy and tenant turnover rates decrease greatly.
4. Make Your Multifamily Property More Enticing
There are those multifamily properties that are cold, dreary and just another stopping ground for renters until they find a more permanent location to call home. And then there are those properties that allow tenants to feel at home. They are welcoming, offer amenities, and feel cozy. You know, the type of places that just entice people to stay a little longer.
When it comes to managing multifamily real estate, you need to make sure your properties are the type that make tenants want to stay. You can do this by offering conveniences, such as offering more than one parking spot, ceiling fans throughout the residence, a dishwasher and garbage disposal, sectioned off dog parks, upgraded club house amenities, or even just a well-cared for landscape or playground for the kids.
5. Make Your Multifamily Real Estate Energy Efficient
It can be expensive to maintain larger properties – especially if you have a large amount of vacancies. Water, lighting, and other utilities can creep up on you if you are footing the bill. By being proactive and including appliances with energy-star, LED light bulbs, low-flow toilets, and the like, you are going to save yourself money down the road. In addition, these things are also able to grab the attention of potential tenants which is always a bonus.
6. Hire a Property Manager
While the ROI and such that you receive from investing in multifamily real estate can be great for you financially, the headache and weight of managing these properties can make you want to run in the other direction.
By hiring a property manager, you get the financial benefits that can come with investing in multifamily real estate without the frustrations that come with managing it. In other words, you are leaving the managing in the hands of those who do it professionally while you get to focus on what you do best – investing.
Property managers handle everything necessary for managing multifamily properties, such as:
- Filling vacancies with high-quality, thoroughly screened tenants
- Maintenance and repairs, both routine and emergency
- Inspections, walk throughs
- Rent collection
- Property management marketing/advertising
- Maintaining records and documentation for the property
- Monthly and annual reporting
If you are a landlord or real estate investor who is considering a multifamily property, know that there is a difference and have a plan. Will you manage the property yourself? Have you assessed various management systems to handle it successfully? Are you willing to deal with the repairs and maintenance on larger properties? Do you have the manpower to get the job done?
There is so much to consider when it comes to managing multifamily properties. Hiring an experienced property manager is the best way to make sure you enter this new phase of investing in the most successful way imaginable.
As a top-ranked property manager in Phoenix area, Real Property Management Evolve has developed streamlined, efficient methods for handling small multifamily real estate with ease. There comes a time in every investor or landlord’s life when it just makes more financial sense to hand over the reins – and this usually always comes with multifamily properties.