Property management is one of the vital aspects of investing in real estate. However, when it comes to multi family real estate management, is it compatible with part-time real estate investing?
Investing in real estate part time might be one of the best features of the real estate business. It enables a person to become a real estate investor while having his/her own career and make extra money on the side. But, the problem arises when it comes to managing your real estate investment business. In fact, it is easy to manage one or a couple of single family homes as it does not require more than a couple of hours a month to do so. However, when you are investing in multi family properties, is it reasonable? You have to keep in mind that owning multi family homes is like owning multiple investment properties. The only difference is that they are all in the same place. So, you will have to expect all different kinds of tasks and operations that will take longer to manage.
Therefore, in order for you to decide for yourself whether managing multi family homes is compatible with part-time real estate investing, ask yourself the following questions:
#1. Do you have the nerves to deal with multiple tenants?
One thing is certain when you are dealing with a single investment property: it does not require much time considering the fact that you have one property and one tenant. If the faucet breaks, tenants will call you as the landlord, and you won’t mind it because it won’t take much of your time. However, with multi family real estate management, you are dealing with several rental units and several tenants. You will have to be on the call 24/7 in case they have any complaints. After all, you are the landlord, and you are the only one they are going to call.
#2. Do you have the right connections?
The real estate business requires that you have the right connections. These connections will enable you to operate better in terms of buying property, repairing it, and renting it out. In the case of multi family real estate management, you will need these connections in order to be able to rent your property and to apply required repairs to it. Remember, as a part-time real estate investor, you have limited time that you can dedicate to your investment property. Therefore, connecting with the right people will save you the needed time and energy.
#3. Do you know how to market your rental property?
A big part of multi family real estate management is marketing. Proper marketing plays a major role in maintaining a high occupancy rate. With single family homes, you won’t have to worry about that. You post an ad, and all you need is one tenant. However, with multi family homes, you have multiple rental units that you need to occupy with tenants. Therefore, marketing your rental property needs to be done on a larger scale, which takes more time to do.
#4. Do you know how to manage rental property expenses?
Another task that comes with property management is budgeting and finances. A successful real estate investor knows exactly how to operate the rental property’s finances. Therefore, he/she always makes sure to do proper budgeting. This includes keeping track of all the money that comes in and out. With multi family real estate management, you are dealing with multiple rental units from which you are receiving multiple incomes. Moreover, you will have to deal with each rental unit separately when setting your budget and property expenses. This also means that you will have to set separate records in order for you to be on track with your investment property.
What can you do as a part-time real estate investor?
In this case, you have two options: being a DIY property manager and hiring professional real estate property management services.
Professional real estate property management services for multi family real estate management
Professional property management company is simply a company that provides you with professional services in managing your investment properties. Now, as a part-time real estate investor, this would be the best option if you have multiple investment properties. It will save you the time and effort to run your real estate business. However, keep in mind the professional property management fees. Sure enough, you will have to pay them a portion of your monthly rental income. Moreover, there are companies that charge the first month’s rental income and then a percentage each month.
In return for the management fees you pay, you will have real estate professionals handling your rental properties. In other words, they will take care of the tenants, the rent collection, handling expenses, and so on. As for the expenses, a real estate property management firm will make sure to minimize your monthly rental expenses as much as possible. This serves your rental income as it maximizes; therefore, you will have the maximum return on investment.
Do-it-yourself property management for multi family real estate management
A DIY property manager is basically you doing the property management yourself. The great thing about this is the money you get to save on property management fees. Still, in this case, you will have to take into consideration two things:
First, real estate education
Of course, real estate property management requires proper real estate education. Unless you know exactly what it takes to manage a rental property, multi family real estate management is not possible without hiring a professional property management company.
Second, time and effort
Multi family real estate management requires time and effort. First of all, you should get to know your rental property inside out. The last thing you want is a problem that occurs due to negligence. Learn all about your property and have an idea of what to expect from tenants in terms of complaints and so on. Second, you will have to set a financial plan. This includes estimating the annual return on investment as well as checking the amenities and the possibility of extra charges. It will not only help you estimate the rental potential but also generate extra rental income.
Set aside a couple of hours a week or a few hours a month to keep track of your investment property. Communicate with your tenants and do regular check-ups on your rental property. If you are worried about your tenants’ privacy, then it’s easy: let them know beforehand that you are visiting. If you want, you can set a day each month to check on your rental property that your tenants know about. In this way you can make sure to do your part without intruding their privacy.
Multi family real estate management is not a big deal for a full-time real estate investor. However, if you are a part-time real estate investor, it would take you a little more effort to do proper management. There is no need to panic though. As we said before, there are professional property management services that you could hire. They will always do their best to minimize your rental expenses while maximizing the profit, which leaves you with the most amount of money.
Check out Mashisor for rental properties for sale with the maximum rental potential. You can use our real estate comps to estimate the potential in terms of cap rate and cash on cash return. Not only that, but also it will give you the opportunity to analyze the location and compare your rental property to others that are similar to it.