Investing in a multifamily property is a daunting task, but with the right property management team in place, it can be a hugely rewarding addition to your portfolio. While great multifamily property managers are hard to find, knowing how to set expectations out of the gate will ensure you’ll find the right fit. Ultimately, the property management team you choose will dictate the return on your investment.
Remember: You decide the management protocol and best practices, not your management team. Although they bring expertise and experience to the table, it’s important to let them know how often they should communicate with you and what kind of relationship you expect to have with them going forward. While that may look different depending on the size of your property, there are a few fundamentals you should be addressing.
There’s no shortage of property management software programs for your team to utilize, but the key here is that your team actually knows how to use whatever tool you choose. The software can have features that make it practically hands-off, but accurate reporting is still crucial — especially when it comes to accounting. As a property owner, you should have access to this reporting 24/7. Regularly check cash flow statements, balance sheets, general ledgers, and rent roll.
This is perhaps the most important report to understand. Check rent rolls at least bi-monthly; it should be kept current at all times and available to owners at any time, from anywhere. It should quickly show you vacancies and collections — both of which impact your bottom line. Other info on rent rolls should include unit numbers, type, and square footage, resident’s names and move in/out dates, lease terms, rent amount, any additional fees as related to amenities, and balances due.
Leasing and Marketing
Leasing reports correlate directly with your property’s revenue, so this is another crucial number to track on a weekly basis, especially when you own a property with high vacancies. It’s not enough for your property manager to report new leases; they need to be detailed in the rent roll report. Other stats you need to watch are comparable property rent averages, collection issues, and what’s being done to market your property and decrease vacancies.
Maintenance and Renovation
Work closely with your property management team to develop a workflow for handling maintenance requests. Think about who your residents will contact with requests and who will follow up (and when). This should also be something that can be addressed 24/7 and deadlines should be clear to everyone. While your property management team should have the autonomy to get bids for renovations, owners should approve any bids over a certain amount.
Because your property management team is a liaison between you and your residents, they need to carefully manage these relationships. Events like community barbecues help neighbors get to know each other, and can also boost referrals to help fill vacancies. The property management team should also stay on top of online reviews to identify issues that residents may be hesitant to report directly. Also, stay on top of any activity that may involve law enforcement when property managers aren’t on site.
Income and Expenses
The right property management team will have the expertise to offer insight on how to increase income and cut operating costs. They can suggest improvements that will raise property value, suggest vendors and service providers that will help expand profit margins, and know how to read and review vendor/provider contracts to identify opportunities for cost switching. Look for property managers who have both management and investment experience to contribute a multi-faceted approach.
Owning multifamily properties is not without legal risk. Your property management team needs to have attorneys on hand who have worked in real estate — both residential and commercial. Handling issues like evictions and inspections are particularly fraught with complexities, and not following compliance guidelines could cost you dearly as an owner. Procedures should also be in place for collections and fair housing regulations.
Even if you’re not planning to sell your multifamily property any time soon, it’s important to have a plan in place in case you do choose to sell your property. Top-quality teams should understand how top-quality property management can maintain property value so you know that you can get top dollar when a buyer comes along. A great relationship with your property manager could go a long way towards protecting your investment.