Multifamily rental properties are an excellent real estate investment, and experts agree that as investment properties, multi-family real estate is a really good idea, especially compared to multiple single-family properties.
However, if your real estate investments are now large enough to include an apartment building or more, it’s time you seriously consider engaging a good property management services company, Managing multifamily properties is a full-time job – in fact, large enough properties may require an entire property maintenance and management team.
Hiring a good property management company can make a significant difference to your property value, peace of mind, and bottom line. That said, there are several mistakes you should avoid while shopping for a property manager.
1. Not hiring one
Managing multifamily properties is significantly more complex than managing one or two rental properties. Even if you have experience managing a few rental properties, more units and more tenants will increase the complications and workload exponentially.
Think of the customer service you had to give your previous tenants, and multiply it by the number of units. If you used to get one call in the middle of the night because a pipe burst or a smoke detector malfunctioned, now they will be four, five, or a dozen. Not to mention that now there can be friction between tenants, which you may have to mediate.
2. Hiring someone without the right qualifications
Not only is multi-family property management time-consuming, it is also complicated. The person in charge should be familiar with many varied topics and fields, such as:
- Local rental markets and how to set the right price
- How to create a marketing plan and attract the right tenants
- How to run background checks and screen applicants
- Property laws and landlord-tenant laws, including privacy and non-discrimination aspects of the law
- Conflict management and public relations
- Enough financial savvy to generate at least a yearly budget, monthly reports, and balance sheet
Managing an apartment complex is not a low-skill job that you can give a family member you wish to help. There is a lot of money and responsibility on the line, and savvy property owners prefer to hire carefully and find someone who is properly qualified to look after their real estate investment.
3. Hiring someone without access to a team
However handy you are, odds are that you don’t have experience with the large mechanical systems that are part of a larger multi-family property, such as electrical installation, ductwork, or large-scale HVAC systems. The same goes for the person you choose to manage your property.
A good property management company has a repair and maintenance team composed of trusted experts, whom they have worked with and who they can rely on for all aspects of upkeep, preventative maintenance, and repairs.
If your property manager does not have this team already established, they may find themselves frantically calling all the plumbers in the area trying to find one who will fix an emergency… and potentially being overcharged or receiving a sub-par job. A good property management company has already vetted and tested everything from landscaping companies to pool services, and they know they have a team they can rely on for good service and fair prices, which means you don’t pay more than you have to.
4. Not asking for references and a previous success record
A property manager or management company will be looking after one of your largest assets, and essentially be in charge of a good chunk of your income. Ask for references and follow up on them.
You want to hire someone who can prove that they have managed apartment facilities or similar properties in a profitable manner, with no controversy or major incidents. Run very thorough background checks and get in touch with previous customers and tenants – remember this person will be managing your property, but you may be liable in case one of your tenants sues for a good cause.
Once more, do not think of this as an entry-level position, a mix of security guard, receptionist, and handyman that “anyone could do”. It isn’t.
The right property manager can keep your rental units occupied with good tenants who pay in time, stay for a long time, and feel safe and cared for. They can also keep a monthly preventative maintenance schedule to keep your property in great shape and retaining its value year after year, while saving you money on repairs and unexpected emergencies.
An unqualified manager or an inexperienced company can leave you with a high tenant rotation, which will cut into your income, and with plenty of expensive emergency repair bills that could have been prevented.
Remember, a good property management company is an investment that will increase your profits and maintain your property in good condition.