Multifamily apartments require day-to-day management. If you have the time and skills to manage your property yourself instead of hiring a professional property management company, you can realize an additional return on your investment. The amount and complexity of the work involved shouldn’t be underestimated, however. At times, you will need to be an accountant, project manager, and maybe even a psychologist.
This article addresses three key areas to pay attention to, in order to make your life as a property manager as easy as possible.
- Tenant Selection
Careful selection of tenants is one of the cornerstones of good property management—choose the wrong ones, and you could spend all day trying to collect rent or watching while your property degrades in value.
- Tenants should ideally earn between two and a half to three times the rent they will be paying. Request proof in the form of pay slips or bank statements—the most recent three months of either should be sufficient.
- Always perform background and credit checks. Of course, you will need to ask permission from the prospective tenant, but you are entitled to have a “no checks, no keys” policy.
Previous evictions and a poor credit record are generally warning signs of trouble to come, but in the end, it’s your call who you lease to. Just remember giving someone the benefit of the doubt might mean your own family suffers in the long run.
- Property Maintenance
As a landlord, it’s your job to ensure your tenants live in habitable conditions and that you comply with prevailing laws. Structural features, roofs, and appliances need to be repaired when damaged, and any toxins and pests must be eradicated. When a rental property is adequately maintained, it preserves its value and helps to keep tenant turnover and vacancies to a minimum.
In addition to being available to your tenants when they report a problem, you should perform the following routine inspections on a proactive basis:
- Move-in Inspection
This is a critical inspection often performed with the tenant to document the property’s condition before tenancy.
- Move-out Inspection
When a tenant moves out, an inspection must be performed to ensure they have left the property similar to when they took occupation, excluding normal wear and tear. This inspection must be done before you return their deposit and after their possessions have been removed, so that furniture or other goods aren’t positioned to hide damage.
- Rental Visits
During a tenant’s occupation, scheduling bi-yearly walkthroughs can help keep maintenance costs down by allowing you to note issues before they become major problems. They are also an excellent way to keep the communication channels with tenants active. In addition, knowing the landlord will visit can deter tenants from damaging their units or breaking occupancy rules. Tenants should be notified in writing well in advance before visits, however.
- Seasonal Inspections
The change of seasons is ideal for performing routine appliance checks—for example, ensuring that the air conditioning unit, heaters, and water heaters are working. It’s also important to prepare the exterior of the property for the coming season. Make sure the roof is repaired and the gutters are clear of leaves before winter snow and rain, for example.
- Drive-by Inspections
These are cursory but critical inspections of the exterior of the property that allow you to spot any obvious issues quickly.
It’s a good idea to make use of vacancies to perform necessary maintenance. This will prevent inconveniencing tenants and maintain rental income. If you have major repairs that require tenants to relocate temporarily, you may be responsible for accommodating them elsewhere. Speak to your insurance broker to make sure you have adequate coverage in such an instance.
Keep a separate maintenance fund and maintain a list of reliable contractors’ contact details for easy reference. Where warranties accompany appliances or repair work, make sure the details are filed to be easily accessible when needed.
- Property Management Software
Technology has made it a lot easier for landlords to manage their properties on their own. Property management software platforms can assist with nearly everything a property manager needs to do. When shopping around for such software, look for the following features:
- Lease management functionality will keep track of when your leases are due for renewal.
- Property management accounting will allow you to track expenses related to your property and produce the reporting you will need for your tax returns and when applying for financing.
- Rent collection software will assist you in billing tenants and keeping track of payments and outstanding monies.
- Marketing and lead management will help you advertise your property and follow up with prospective tenants.
- Tenant communication functionality will make it easy for you to communicate professionally with your tenants, either individually or in groups. Look for software that includes an online portal for tenants to register problems and queries.
- Amenity and facility management software can help you keep manage facilities like laundry rooms and keep on top of maintenance and repairs.
Most property management software is hosted in the cloud these days, meaning they are available on a subscription basis and you can access them from your PC, smartphone, or tablet. If you have fewer than 50 rental units, one of these free multifamily property management platforms may suit your purposes.
Getting to grips with these three areas of managing multifamily apartments will set you up for success. However, many landlords who start off trying to manage their properties find it overwhelming. It can be especially difficult if you are simultaneously working a conventional job, or if you have several tenants at multiple properties. If that turns out to be the situation in your case, it’s often wiser to employ a professional property manager.