Managing a rental property requires more effort and dedication than many investors realize. So, if you think you can simply sit back and allow the rent checks to come rolling in, you may find that you’re in for a rude awakening. Furthermore, the more units a property contains, the more effort you’ll need to put into managing it. To help ensure that your first multi-family rental property is properly managed, make an effort to avoid the following problems.
Failure to Seek Out Smart Investment Opportunities
Not every rental property you happen upon constitutes a wise investment. For one thing, no matter how enticing a certain property seems, it may be hindered by its location. Unsurprisingly, rentals that are located in popular, in-demand areas tend to produce much higher returns than properties found in areas in which housing demand is on the wane. So, before committing to investing in a multi-family rental, make sure to engage in some basic location research.
In an effort to determine how much of a return you’ll see on a prospective investment, look into an area’s population size, local economy, rate of growth, home prices, and rental rates. This info should provide you with a clear picture of how desirable a certain locale is, enabling you to make an informed investment decision and/or alter any offers accordingly. So, when seeking out multi-family development investment opportunities, you’d do well to make location research a priority.
You should also have any multi-family rental you’re thinking about purchasing thoroughly inspected by certified professionals. Even if you’ve personally looked the property over from top to bottom, there are certain issues that non-professionals are likely to miss – and discovering outstanding issues with a rental property long after a purchase has been finalized is the last thing any investor wants.
Failure to Properly Communicate with Tenants
Since your tenants are going to be giving you a large percentage of their respective monthly incomes, it stands to reason that they’ll expect timely and professional responses to any communiques they send your way. Should you develop a habit of ignoring emails, texts, and phone messages from tenants for long periods, you may find yourself facing a variety of negative consequences. For starters, if you routinely ignore maintenance requests, you stand to land yourself in legal trouble and cause damage to your property. Secondly, if tenants become frustrated by your unwillingness to communicate with them, you may very well see your renter retention rates plummet and your professional reputation damaged.
Fortunately, such consequences are easily avoidable – provided, of course, you’re willing to put forth a little bit of effort. To start with, make sure to provide all of your tenants with a phone number and email address at which you can be reached during business hours, as well as an emergency number to call in the event of an after-hours maintenance mishap. Furthermore, take care to respond to all tenant communiques in a timely manner – preferably within the same business day they’re received. Additionally, if you have other properties to manage or a day job that’s completely disconnected from your role as landlord, consider recruiting an experienced property manager. This individual will take point on all matters relating to property management – including maintaining favorable relationships with tenants.
Failure to Carry Out a Screening Process
A thorough screening process is essential to minimizing your chances of taking on tenants who are unable or unwilling to pay rent. To help ensure that you don’t wind up with problematic tenants, you’ll need to look into each rental applicant’s income situation, criminal background, and references – after obtaining proper permission, of course. If you’re unable to personally screen applicants, take care to delegate this task to a dependable property manager or dedicated screening service.
To say that rental property management requires a fair amount of work would be an understatement. Furthermore, this is doubly true in the case of multi-family rentals. The more units – and inhabitants – a property has, the more time and effort you’ll need to put into managing it. Unfortunately, when approaching their first multi-family rentals, many landlords are unaware of how much responsibility they’re truly taking on. In the interest of effectively managing your first multi-family rental, steer clear of the blunders discussed above.