Now that you’ve purchased that wonderful apartment property it’s time to develop an effective asset management plan. In this series, I’ll provide 5 steps apartment owners can follow as an asset management guide for success.
Know your numbers! One of the first tasks you should complete post purchase is to thoroughly audit your new revenue generating business. Make sure your numbers are accurate and valid.
Examine your anticipated rental income each month, and compare this with your monthly expenses. These expenses may range from taxes to utilities or insurance fees. Also, be sure to calculate potential costs related to upkeep and preventive maintenance. Plan for, and have adequate cash reserves set aside for emergency expenses or vacant unit coverage. Lastly, if you choose to do so, include the cost of employing a third-party property manager to oversee your apartment property.
In my opinion, a major contributor to any successful apartment business is the property manager. If you don’t want the responsibility of vetting and sign on new tenants, maintaining the units and grounds, executing leases, managing the budget for the property, and handle the variety of tenant issues that come up, then hiring a qualified third-party property manager company. In return, each month, you’ll pay a negotiated percentage of the collected rent. Lastly, including pay incentives or a reward system will ensure your property manager and asset operates at peak performance.
In your apartment business, your tenants are your customers. Your job is to make sure our customers are happy, love where they live, and pay their rent on time. Choosing the right tenants for your apartment property is essential. Be sure to create a system that properly vets each potential tenant. Aside from the obvious, verifying whether they can afford to pay their rent each month, check their refences, both personal and from former landlords. You want to discover if they have a history of being a good or bad renter. Lastly, be sure not to base your choice of tenants discriminately. The Fair Housing Act prohibits discrimination on the basis of seven protected classes; color, disability, familial status, national origin, race, religion and sex.
You’ve probably heard the term, “slum lord” before. This is a slang term for a landlord who is generally an absentee landlord who attempts to maximize profit by minimizing spending on property maintenance. As a serious apartment investor and business owner you never want to categorized as such. In my opinion, curb appeal is one of the most critical steps you can take when it comes to managing your real estate investment. Nobody looks forward to going to or living at a property that’s run-down. Investing in landscape maintenance and appropriate outdoor lighting can go a long way in making your apartment property look cared for as well as desirable to other apartment investors.
It is important to remember your apartment property is an asset. One that can be bought and sold. Aside from providing quality housing for your tenants, you should also have a goal of improving your property’s value long term. Renovations and updates can increase revenue or decrease expenses, both add to the bottom line, which ultimate creates a successful apartment business. Additionally, owning a property in a desirable area with a lot of rental demand attracts renters looking for what your property has to offer. Be sure to advertise your unit availability in places or on platforms where your desired tenant frequent. Make it easy for potential renters to contact you for more information, submit applications or view units virtually or in-person.
Are you interested in learning more about creating turnkey passive income and generational wealth through multifamily apartment investing? Visit www.syndicationcapital.net for more information, resources, frequently asked investor questions and our free e-book: How to Passively Invest In Multifamily Apartment Syndications.