Acquiring your first multifamily assets doesn’t end with a done deal. Come to think of it, you are just getting started. There’s still a need for you to secure the assets through effective property management. It’s one stage in multifamily investing that is the most critical to the bottom line.
First thing’s first: What is Property Management? For one, it’s a series of activities that enable investors such as yourself to preserve your assets and ensure that they comply with local regulations. Apart from that, a great deal of property management covers tenant disputes and attending to their needs. By keeping tenants happy, you maintain a healthy cash flow since they won’t be vacating the property anytime soon.
Sure enough, effective property management can enhance the value of your assets. You have to agree on one thing though: managing a series of apartment units is a complicated task. It requires a keen eye for detail, micromanagement skills, and a strong understanding of the tenant-landlord relationship. The task is so complex than syndicators would often establish their own property management companies that handle every single detail. That’s the route we chose about 12 years back. We used a large management company in the beginning but soon realized that we can control the day to day decision making and keep a vested interest in the assets we owned by ourselves. Our investors also felt secure by this decision because we were able to develop a proper system for keeping track of our property investment.
At most times, you will be searching for a property manager who can oversee the day-to-day operations of your multifamily assets. It’s rare to find a capable candidate, but if you use the right techniques and ask the right questions, you can find the kind of property manager you are looking for. I have written another blog at vinneychopra.com where you can get the 28 questions to ask the property management company before choosing the right one.
Just like in any hiring process, examining the resume of a possible candidate is tedious enough. Often, you will have to sift through the details of every application that arrives at your desk and select at least three people that qualify for the position. To make the right choices, it’s imperative to look at the experience as a deciding factor. For sure, the number of years a candidate has worked in the real estate industry should be irrelevant. Opt instead to look at whether or not the candidate has had actual property management experience. This should give you a better a view of what an applicant can deliver on the job. This has been the most difficult part of our organizations. Hiring the right team members and keeping their morale up is so essential. We also pay for their ongoing training and certifications; that makes them grow and do a better job also.
Property managers deal with a lot of pressure coming from tenants as well as utility providers. It’s easy to lose your calm when you are in an atmosphere where emotions can run high, especially when it comes to handling difficult tenants (we call them as residents in our Moneil Culture). Apparently, it doesn’t help to ask tenants upfront to reduce the noise they are making. Using the wrong words can cause the situation to escalate, resulting in a vacant unit and, consequently, lost revenue. People skills are just as important as management skills, so choose a property manager who is easy to talk to and stays calm under pressure.
Because they are overwhelmed with preparing financial reports and collecting rent, property managers would sometimes forget to update you regularly on what’s happening. If there’s something you want to avoid as a multifamily investor, it’s the lack of communication. There’s always a need for information about the property, and if you’re kept in the dark about issues that could affect your cash flow, then it’s important to underscore transparency. If you ask a potential manager a question about the nature of the job, you should begin by asking about availability whenever there’s a need for you to ask questions.
I hope these tips will help you find the right person to be your property manager.