A good rental property can be an investment that pays off for many years to come and remains in your family for generations. Additionally, while multi-family properties generally rake in higher profits than single-family ones, a lot more effort goes into managing them. So, if you’ve never owned or managed a multi-family rental, you’d do well to brush up on some of the basics before proceeding to make an offer on one. To help ensure that you don’t become overwhelmed when managing your first multi-family rental property, take the following tips to heart.
Seek Out the Right Investment Opportunities
Unsurprisingly, multi-family rentals can be very expensive to maintain. The more units a property contains, the more money you can expect to spend on monthly maintenance costs. As such, it stands to reason that you’d want any multi-family rental you invest in to generate robust returns. So, when seeking out potential investment opportunities, pay special attention to rentals that are located in profitable areas.
To give yourself a solid idea of what kinds of returns a multi-family rental will generate, you’ll need to do some location research. This entails taking a close look at an area’s population size, rate of growth, local economy, property values, and rent prices. Should an area’s property values and rental rates be particularly low, investing in a rental there may not generate the desired profits. So, if profitable multi-family development investment opportunities are what you’re after, make sure to never skimp on-location research.
Have Dependable Maintenance Personnel on Hand
When it comes to single-family rentals, property maintenance is often fairly simple. In fact, depending on how experienced you are in various handyman disciplines, you may even be able to undertake the majority of maintenance tasks yourself. However, this is far from the case with a lot of multi-family rentals, especially ones that contain large numbers of units.
The more units a rental has, the more maintenance requests you’re going to receive. Regardless of how new or well-maintained a property is, maintenance issues are likely to spring up on a consistent basis, and you’d better be prepared to address them. The longer maintenance requests are placed on the back burner, the angrier tenants are liable to become – and the angrier tenants become, the more likely they are to post complaints online and leave once their respective leases are up.
To help ensure that maintenance requests are addressed in a timely manner, make a point of recruiting knowledgeable, friendly maintenance personnel. Staying on top of problems in large rental properties often requires landlords to hire full-time maintenance professionals, so if you’re unprepared to make this financial commitment, it may be best to abstain from investing in multi-family rentals. Just remember – making money frequently entails spending money, and good maintenance is a tenet of good property management.
Place Rental Applicants Through a Screening Process
If rent isn’t being paid, you’re not making money. And if you’re not making money, you’re likely to have trouble maintaining a multi-family rental. That being the case, it’s in your best interest to minimize your chances of taking on tenants who are unable to pay rent on time – or at all. To do this, you’ll need to place all rental applicants through a rigorous screening process. Even if an applicant creates an extremely favorable first impression in person or over the phone, this should not preclude them from said process.
With each applicant’s permission, have a look at their employment situation and criminal background. Furthermore, confirm that they make enough each month to comfortably afford rent. For good measure, you should ask that applicants provide you with references. When it comes to references, employers and former landlords are liable to provide you with better information than friends and family members. Additionally, since some applicants bank on landlords not contacting the references they list, make a point of getting in touch with every reference an applicant provides.
Although managing a rental property of any size is going to require a fair level of commitment, multi-family rentals are guaranteed to eat up a much higher percentage of your time and resources than single-family properties. However, given how profitable a good multi-family property can prove, your efforts are liable to be well-rewarded. Fledgling landlords looking to approach their first multi-family properties with the appropriate degree of knowledge and professionalism would do well to heed the pointers discussed above.