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Managing several multifamily properties in close proximity to one another can offer several efficiencies and benefits. At JP Acquisitions, we employ a strategy in which we seek to purchase neighboring properties to take advantage of the synergies. In this post, we will dive into some of the ways property management can be more efficient when dealing with neighboring properties.
1. Shared Resources and Economies of Scale: Neighboring properties can pool resources for common services like landscaping, waste management, and security. This can result in cost savings for both properties by negotiating better contracts or sharing the costs of specialized equipment. For example, by bundling our properties under the same insurance provider, we’ve been able to take advantage of cost savings. More so, property management tasks such as maintenance, repairs, and renovations can be more cost-effective when carried out in bulk. Coordinating with neighboring properties can help achieve economies of scale, as contractors or maintenance personnel can work on multiple properties in the same area. In addition, they can buy supplies, equipment, and services in bulk which can result in cost savings. Neighboring properties can negotiate better deals when purchasing items together, such as appliances, maintenance supplies, and landscaping materials. Lastly, sharing certain staff members, such as maintenance personnel or administrative staff, can reduce overhead costs. Cross-trained staff can handle tasks across properties, optimizing their time and skills.
2. Streamlined Communication and Knowledge Sharing: When properties are managed together, it becomes easier to coordinate and communicate with shared vendors, contractors, and service providers. This can help avoid duplication of efforts and streamline processes. On top of that, property managers can exchange valuable information and insights about the local market, tenant behavior, and best practices. This knowledge sharing can lead to better decision-making and more effective property management strategies.
3. Security, Safety, and Emergency Responses: Collaborative security measures can be implemented across neighboring properties, enhancing overall safety. Shared security personnel, CCTV systems, and access control measures can be more cost-effective when spread across multiple properties. In the event of emergencies, neighboring properties can collaborate on disaster preparedness and response plans. This can include sharing resources, information, and support during crisis situations. For example, if there is a fire at one property which temporarily displaces several tenants, the vacancies at one of the neighboring properties could temporarily house them.
Conclusion
While there are clear benefits to managing neighboring multifamily properties together, it’s important to note that effective communication, clear agreements, and a well-defined management structure are essential to making this collaborative approach successful. Legal and logistical considerations should also be taken into account to ensure that any joint efforts are executed smoothly and in compliance with local regulations. Another critical thing to note is that scale needs to be achieved in order to take the most advantage of the synergies having neighboring properties offers. Nevertheless, having properties in close proximity to one another is usually more effective than not. Looking at the bigger picture, down the road there is always the option to sell the properties as a portfolio and therefore further increasing the value. I trust this post helped understand how the strategy of having neighboring properties can create property management efficiencies and provide value to investors.
If you have any questions regarding the terms and concepts in this post or previous ones, don’t hesitate to reach out to either me (tedi.nati@jpacq.com) or someone on our team so we can help explain what is causing the confusion. If you’re interested in investing with us at JP Acquisitions, you can contact us via email (contact@jpacq.com), LinkedIn, Instagram, or our investor portal to set up a meeting.
As always, I hope you enjoyed reading this post as much as I have writing it. Best of luck!
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About the Author
Tedi Nati is the Managing Partner of JP Acquisitions. In his role he is responsible for broker outreach, establishing deal flow, underwriting, marketing, and assisting in the closing process. In addition to his role at JP Acquisitions, he is an Assistant Equity Underwriter at Cinnaire, a non-profit Community Development Financial Institution (CFDI). In his role at Cinnaire, he is responsible for assisting the underwriting team in evaluating and structuring real estate equity investments and assessing the risks and mitigants associated with such. Tedi earned his Bachelor of Science in Finance from DePaul University, where he graduated Summa Cum Laude. In his free time he enjoys reading, looking for multifamily deals, and working out.
Make sure to always do your own research before making any final decisions on buying/investing real estate, stocks, or other securities. I am not a CPA, attorney, insurance, or financial adviser and the information in this blog post shall not be construed as tax, legal, insurance, construction, engineering, health and safety, electrical or financial advice. If stocks or companies are mentioned, I sometimes have an ownership interest in them – DO NOT make buying or selling decisions based on my posts alone. If you need such advice, please contact a qualified CPA, attorney, insurance agent, contractor/electrician/engineer/etc. or financial adviser.
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