Multi family real estate investing is a very rewarding business. Thus, there is more to it than buying a profitable property. As a matter of fact, multi family real estate management is as important as buying the investment property.
Making money in real estate is far from being rocket science. Regardless of what types of real estate you decide to invest in, the one thing you must pay attention to is proper management of the property. However, rental property management could get a bit tricky. This, of course, depends on the property type as well as the number of properties you own.
As for multi family properties, it sometimes gets overwhelming as opposed to other property types such as single-family homes. Because multi family real estate properties consist of more than one rented unit. Therefore, it requires more effort when managing it.
Before we talk about the responsibilities associated with multi family real estate management, there are two options that you have in terms of property management styles. Real estate investors could choose to manage their own properties or they could choose to hire a professional property management company. However, in order for you to decide what option to go with, there are a few determinant factors that might have an influence on your choice:
Level of real estate education:
Being a beginner real estate investor with no prior knowledge or experience in the field makes it convenient to go with professional property management services. On the other hand, being an experienced real estate investor makes DIY property management a reasonable option.
The reason we say that is due to the delicate nature of responsibilities and tasks associated with multi family real estate management. Therefore, it is easier for experienced real estate investors to manage their multi family properties by themselves.
Real estate investing style:
Here, we are referring to full-time and part-time investing styles. A full-time real estate investor has more time to dedicate to his/her business. Thus, making it easier to devote the time and effort towards business management. On the other hand, it gets more challenging for a part-time real estate investor. A part-time investor usually has very limited time that he/she can devote to the business. In this case, it is only logical to turn to professional multi family real estate management services.
Oh, believe us that you WANT to pay close attention to this one! Bottom line: professional property management costs money. They are called property management fees and you want to be aware of that. These fees are a part of your property expenses that you will pay from your rental income. As a result, your cash flow will decline. Therefore, becoming a DIY property manager is a great way to cut down on property expenses.
Knowing the above facts leaves the matter up to you to make a choice. Now, let’s dig into the duties that are part of multi family real estate management:
Duties and tasks of multi family real estate management:
Here is a list of tasks that are important in the case of multi family real estate management:
Keeping up with the multi family real estate properties’ performance
Keeping up with the performance of an investment property is very important. It is never enough to just calculate the profitability before buying an investment property. Therefore, calculating the profitability metrics on an annual basis is essential. These include cap rate as well as the cash on cash return.
However, calculating the cash on cash return is a more precise measure for the residential real estate. This is because the CoC return takes into account only the actual cash that was invested. While the cap rate is a more common measure of the commercial real estate as it calculates profitability based on the price of the investments. It includes the amount of money a real estate investor paid from his/her own pocket as well as the amount of money they have borrowed for that matter.
Increasing your rental income
Finding ways to boost your rental income is another aspect of multi family real estate management. It takes a keen eye to be able to find the means to increase your income. Of course, this includes analyzing the surrounding facilities and their potential in bringing about more profits.
Many real estate investors choose to add more services or facilities that contribute to bettering their income. One way they do so is to add vending machines, washing machines, or even provide cleaning services. Even though these are not the only ways you can achieve that, still you can always analyze your tenants and find out what you can add to your business that they would appreciate and pay extra fees for.
Collecting the rent
Well, obviously, multi family real estate management involves rent collections. There are many ways you can do that, in fact. Some landlords go with the traditional approach which is going door to door and collecting it personally. While others do it through bank transfers or cheques. Whatever you choose, make sure your tenants are paying on time.
Taking care of legalities
The legal aspect is, perhaps, the most challenging task of multi family real estate management. This includes 1) registering the property as a business and 2) taking care of any legal situations that might occur. One of the most common troubling situations is rent arrears. That is when your tenants fall behind on paying the rent which requires legal action.
Just like any business, part of multi family real estate management is to keep records of all the transactions associated with the property. First of all, you want to have records that back you up in case of any legal issues that may arise. Second, these records are an outstanding way to keep up with the performance of your business. They are of great help in improving your existing business and your decision to further grow it.
Sure enough, these are not the only aspects to take into account. However, we sense that these are the ones that make all the difference between a successful business and one that is not.
To learn more about the real estate investing business, make sure you check out Mashvisor’s blog!