Thinking about investing in multifamily property? Have you just made your first big purchase as a landlord? When it comes to making the most of your investment property, there are some considerations to keep in mind.
Start With a Plan
While your investment may not look like a traditional business, you still need to treat it like one. Create a business plan, set goals and benchmarks, and make sure everything you do is in compliance with local and federal housing laws. To attract and retain tenants, your property needs a stellar reputation.
This includes researching and securing the right insurance to cover yourself as a landlord. Multifamily housing can present a range of challenges in this area, and it’s smart to protect yourself and your tenants.
Get Right with Rent
There’s more that goes into setting rent prices than just how much money you want to make. Do your research on market prices for rental units like yours and create a fair range that gives you a profit margin and a competitive edge.
Don’t forget to dive deep into both your fixed and variable costs as a landlord when setting rent prices. You’ll need to account for property taxes, repair costs, labor and payroll, and a number of other landlord-related expenses.
Find the Right Tenants
The ideal tenant pays rent on time and treats your property as if it is their own. To do that, you’ll need to create an ironclad tenant screening process that’s both effective and legal. A thorough rental application will help provide you with essential information about how trustworthy potential tenants can be.
In addition to an application, you should also require background and criminal checks. Extensive criminal histories and immense debt could indicate that the tenant is not currently in a place in their lives to be able to be responsible.
Require Lease Agreements and Insurance
As much as we wish the world would work on handshakes alone, that’s simply not the case. Requiring written lease agreements not only protects your property, but it also helps to set expectations for tenants — think of it as a code of conduct. Any violation on either side can easily be cleared up with proper, solid documentation.
Additionally, you should also require tenants to maintain a renter’s insurance policy, especially if your property is pet-friendly. It’s a small fee for them but it offers huge peace of mind, and it can add an extra layer of protection should a tenant move out and leave a mess behind.
Get Digital — With Everything
There’s no longer any excuse for you to take your processes online — from end to end. There are software solutions for virtual property tours, online applications, lease agreements, maintenance requests, etc. By digitizing your documentation, you streamline so much of your accounting.
On that note, don’t underestimate the convenience of taking tenant payments online either. Most tools offer instantaneous, digital payments and take all credit cards, along with digital cash transfers (like PayPal or Venmo). Offering this option makes things much easier for tenants, increasing their satisfaction and your retention rate.
Hire a Property Manager
Even with all of the research you’ve done, you’re not going to know everything about being a landlord your first time around. Protect your investment by hiring a team that does have the experience to find you a return on your investment. When you‘re ready to grow your portfolio and buy more multifamily properties, this relationship will serve you well.
If you’re a first-time landlord or thinking about becoming one, get in touch. We are a St. Louis-based commercial real estate investment firm specializing in buying, renovating, maintaining, and selling greatly improved multi-family properties. We seek multi-family properties for our investment portfolio, specifically affordable, mid-density, and high-density developments as well as government-subsidized projects working with local, state, and federal financing.
Our process entails appraising multi-family residential projects to determine their best use and conducting market analyses and fractional interest appraisals for estate valuation purposes. We collaborate with investors interested in buying properties and property owners looking to either sell their assets or have them professionally developed and managed.