Multi-family property management can be intimidating. Not only do you need to deal with more tenants, but also more problems. That’s why landlords tend to say no to these properties – and unfortunately, by doing so, they miss out on the opportunity to make more money.
Fortunately, even if managing multi-family homes can be challenging, it is possible. If you’re considering managing a multi-family property, we’ve put together a couple of tips to guide you.
What Is a Multi-Family Property?
A multifamily property is any residential property with more than one rental unit. Examples of multi-family properties are:
- This is a two-story property that houses two families (one on each floor).
- This is one property that’s separated by an interior wall, where one family lives on either side.
- This is a single structure that houses multiple families (typically five or more). Residents share common areas such as the pool, playground, and garage.
#1 Start With a Small Multi-Family Property
Before diving into multi-family property management, you should have some experience managing a single-family home. This will allow you to gain a general understanding of what your responsibilities will be – in short, it’s a way to get your feet wet. You’ll be able to learn (and make mistakes) before you say yes to real estate investments that have more demands.
Even after you’ve managed a single-family home, you still shouldn’t manage a large multi-family property, either. It’s important to start small. A small home, such as a single multi-family home with two families, is a good way to get started with multi-family property management. A large multi-family home will likely overwhelm you, so it’s advisable to start small and then work your way from there.
#2 Invest in Property Management Tools
Managing multiple tenants at the same time isn’t easy. Property owners have a lot on their plates, from screening tenants to scheduling repairs for every property. The good news is that you can leverage certain tools to make your work more convenient.
Multi-family property management tools such as tenant portals can assist you with a variety of day-to-day duties such as property repairs, rent collection, and so on. For example, if you want to collect rent without knocking on your tenants’ doors, you can collect rent via the tenant portal. And as long as you’re connected to the internet, you can access these tools from anywhere in the world. Being a long-distance landlord is a no-brainer!
#3 Make Your Property Stand Out
The multi-family rental market is growing at a rapid rate. To stay ahead of the competition, you need to add a few “perks” to make your property stand out. Examine what your competitors provide in their properties to find out what you can provide that they can’t. Perks like extra parking, an in-unit washer and dryer, and free Wi-Fi can attract more tenants.
You can work with an expert property management company to examine what tenants in your market currently want. You need to provide your potential tenants with what other property owners don’t currently provide.
#4 Set Rules
When more than one tenant unit lives in the same rental home, there are bound to be problems. For example, one tenant may regularly throw parties that disturb the rest of their neighbors. Another tenant may have a pet that poses a risk to the neighbors’ kids. It can be time-consuming to deal with complaints every day, why it is critical to set rules for all residents must follow.
In case of disagreements between tenants, be sure to act as the mediator. Remember to resolve their issues without any biases, and to always encourage both parties to come to a compromise before they resort to legal action. If you resolving tenant issues isn’t your strong suit, a professional property management company can help.
#5 Screen Your Tenants Meticulously
Tenants can make or break your investment. If you don’t screen your potential tenants strictly, you could end up with terrible tenants who will make it impossible to manage the multifamily property. When screening potential tenants, be sure to ask them why they’re moving, as well as whether or not they have the means to pay for their rent promptly. Conduct a background check, but be sure to follow Fair Housing Act (FHA) regulations, otherwise, you could be sued for discrimination.
What Are the Pros and Cons of Managing a Multi-Family Home?
Managing multifamily homes comes with pros and cons. Let’s take a look at the advantages and disadvantages of managing a multi-family investment.
Pros of Managing a Multi-Family Home
- More Money. The obvious advantage of managing a multi-family investment is that it generates more money. The more money you make, the more money you can use to pay for your mortgage, get more properties, etc.
- More Tenants. A multi-family home allows you to rent to more than one tenant at a time. That way, you can recover your initial investment at a much faster rate. And in case one tenant moves out, you’ll still have other tenants whose rent can “cover” for that tenant until you can find a replacement tenant.
- Tax Deductions. Investing in multifamily real estate provides attractive tax advantages. You’ll be able to deduct plenty of – if not all – expenses, such as property management costs, repairs, maintenance, and more.
Cons of Managing a Multi-Family Home
- Purchasing a multi-family home will cost you more than purchasing a single-family home. If you’re starting out as a landlord or don’t have a lot of money to invest, a multi-family home might not be the best option for you.
- Time-Consuming. The more tenants you have, the more demands you’ll have to deal with. At times, more than two tenants will want you to solve their issues ASAP. If you have your hands full, your tenants won’t be happy that you won’t be able to assist them immediately.
- Because multi-family homes are costly, they’re commonly invested by experienced investors. For that reason, you might have a hard time breaking into the market.
Let the Pros Manage Your Multi-Family Home
It can be beneficial to have a team of property management professionals by your side. Your property managers will deal with all delicate matters, as well as the day-to-day demands of your multi-family property.
When you partner with Luxury Property Care, you’ll have an expert who will be your point of contact for all rental-related concerns. They will screen tenants, schedule repairs and inspections, maintain the property, and more so that you don’t have to.