Tips for Managing a Multifamily Property

Managing a multifamily property is by no means an easy job. At JP Acquisitions, we manage our own properties and I’ve seen firsthand how time-consuming the property management business can be. What’s important to note is that with multifamily properties investors have the ability to hire a property management (PM) company. However, hiring a property management company really only makes sense at a certain deal size. The reason for that is because PM companies charge a percentage of the effective gross income (rental income – vacancy). Given the economics of the deal, that percentage charge can seriously eat into the returns of the deal. Nevertheless, prior to writing this post I spoke to our property manager to get his input so as to provide you insight into managing a property. That being said, in this post we will touch on 3 tips for managing a multifamily property.

Communication

Communication is essential for managing a multifamily property. It is important to communicate with tenants to ensure that the property is running smoothly. Our property manager regularly reaches out to tenants to make sure that all their needs are met. Strong communication increases tenant satisfaction which in turn leads to lower turnover and increased rent collection. Communication is especially important if tenants have an unordinary situation. For example, one of our tenants gets paid late in the month which means that he cannot pay the rent at the beginning of the month. Our property manager understood his situation and as a result, accommodated him. This example also goes to show how important it is to respect the tenants. Respect and communication are two-way streets and as the bible states, “do unto others what you would have them do to you.” Strong communication also makes managing a property much easier and is at the very core of good property management. You cannot expect tenants to want to stay at a property if their needs aren’t met and if the property manager is poor at responding to tenants. When managing a property it’s important to put yourself in the shoes of the tenant and ask yourself a set of questions from their perspective regarding communication. Some questions to as yourself from the perspective of the tenant are:

1. Is the property manager responding to my maintenance requests?
2. Does the property manager communicate with me when things (inspections, construction, etc.) are happening at the property?
3. Has the property manager ignored my complaints regarding disruptions at the property?

If it happens to be that the answers to these questions are negative, you know you (or whoever the property manager is) need to step up your communication. You need to be clear and concise when communicating. Stated differently, don’t beat around the bush and be upfront. One final thing to note and this is almost needless to say, you need to establish clear boundaries between you as a property manager and the tenants. While you should be friendly with tenants if you get too close they can take advantage of you and for example, end up paying rent late and thinking you’re fine with that. At the end of the day, if you or the property manager are on top of communication, you can expect turnover to be low and tenant satisfaction to be happy.

Maintenance

Maintenance is an important part of managing a multifamily property. It helps to keep the property in good condition and prevent major problems from occurring. Similar to being on top of communication with tenants, if a property is well-maintained then the chances that you will have higher tenant turnover are lower. No one, regardless of if you’re a tenant or not, likes to have broken appliances, live at a dirty property, have broken HVAC, etc. More so, staying on top of maintenance increases the value of the property. Having the property in good condition comes into play especially when you go to sell an asset. At JP Acquisitions, we always pay for a property inspector to check out the property from top to bottom before acquiring it. If we happen to find something that is seriously wrong (e.g. a roof in bad condition, broken HVAC, etc.) we negotiate with the seller for a credit. When you go to sell a property, having things in disrepair can cost you serious money, and as investors we’re in commercial real estate to generate a profit. Addressing maintenance issues as they occur can save you from having to issue a credit on the back end which means more money in your pocket. Of course no one likes to have to pay to repair things but that is simply a part of owning a multifamily property. It pays to be able to do the work yourself but certainly there are things that require contracting out work (e.g. repairing a roof or structural issues). Another benefit of keeping up with maintenance is the potential for increased energy efficiency. maintained properties are often more energy-efficient than neglected properties and can save you money on bills. The first example that comes to mind is regarding windows. If the windows at a property are properly insulated and not old, their is less heat that will escape and thus save you (or your tenants) money on the heating bill.

While their are many different types of maintenance, some of the most common types to keep an eye out for are the following:

1. HVAC (heating and cooling systems)
2. Plumbing (plumbing fixtures and pipes)
3. Electrical (wiring and fixtures)
4. Roofing
5. Siding
6. Windows and doors
7. Landscaping (mowing the lawn, trimming bushes, and removing debris)

In summary, keeping track of maintenance requests and having a property in good condition leads to less tenant turnover, higher property value, and increased energy efficiency.

Presentation

The last tip I want cover has to do with the presentation of a property and the manager. Presentation is important when managing a multifamily property because it can help to create a positive impression on tenants, property owners, and others. A well-presented property is more likely to be rented, can command higher rent, and helps to improve the overall value of a property. In terms of property presentation, you should regularly clean the common areas, repair any damages, and keep the grounds tidy. More so, your property should be well-lit because it makes the property feel more inviting/friendly and helps to stop any criminal activity that may occur. The timing of this post worked out well because our property manager and I just did a deep clean at our property by mopping and vacuuming the common areas, removing trash on the property, and mowed the lawn. Nevertheless, maintaining the presentation of a property also includes decorating a property in a way that is appealing to potential tenants and making sure the property is well organized. This includes painting the walls, adding new or nice furniture (if the property is large enough), planting flowers, having the laundry room in well order, etc. Potential tenants love seeing these little touches and existing tenants appreciate a good looking and organized property.

In terms of the presentation of the property manager, they should make sure that they are dressed appropriately and cleaned up. It’s simple human psychology that people who are presentable are more respected and therefore more likely to be taken seriously. Depending on the property, the manager might want to dress in business casual attire or perhaps wear clothes that indicate the property management company they represent. It just so happens that our property manager ordered shirts with our logo so he can be more professional. While the idea that a property manager should be presentable is simple, I think we’d be surprised by how often property managers don’t present themselves well. Nonetheless, I want to tell you a story that shows why presentation is important in property management. We recently toured a property that we happen to be under contract for. When my partners and I got to the property, we made some small talk with the broker, who was accompanied by the property manager (we’ll call him Tommy in this example). Tommy was dressed professionally, with a tucked-in dress shirt, dress pants, and business shoes. His attire alone hinted at the fact that he ran the property well, and that turned out to be true. The building was clean, organized, and had very little deferred maintenance. I’m telling you this story because the way you dress is a representation of how you perceive yourself and do business. As a property manager, you are a representative of your company and the properties you manage. Your appearance can make a big impression on tenants, property owners, and others. Dressing well shows that you are professional, competent, and trustworthy. It can also help to build rapport and trust with tenants. To recap this section, the presentation of your property and the property manager are important because they make lasting impressions. A property that presents itself well is one that potential tenants are more likely to want to live in, and in turn is likely to be close to full occupancy, which means more money in your pocket. Being presentable as a property manager shows that you take your job seriously and makes it easier to build rapport with others.

Conclusion

In summary, managing a property is no easy task. What makes a good property manager is someone who is on top of communication, maintains the property well, and is presentable. Communication is key because it increases tenant satisfaction and lets them know they are respected. Maintaining a property is important because it leads to less tenant turnover, a higher property value, and increased energy efficiency. Being presentable as a property manager helps build rapport with existing and potential tenants, shows your competent, and represents your brand well. That being said, I trust this blog post will help you better manage your properties, identify strong PM companies, and gain an insight into what it is a property manager does.

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!