How to Manage Your New Multifamily Investment Property
“Multifamily origination volume is projected to grow to $317 billion in 2019 driven by solid market fundamentals and strong investor demand for multifamily properties. The 2019 figure will exceed the $305 billion in originations estimated for 2018 by 3.9 percent.”
The multifamily market is one of the strongest assets you can add to your portfolio. But managing one can be one of the most difficult. There are a lot of moving parts, and multiple tenants to worry about when managing a multifamily property.
So what are your options? We’ll discuss them below.
Multifamily Self-Management
The biggest perk of managing a property yourself is the savings you get from not having to hire anyone else to do it. Managing a rental property like a single-family home or any other type of single-tenant type of real estate can be manageable on your own. But multi-tenant properties, especially multifamily can be very challenging to run yourself.
If you manage a small building with only a handful of tenants you might find a sense of ease and security in vetting tenants yourself, attending to tenant needs and collecting rent. Tenants also might appreciate the one-on-one care. But attempting to manage a large multifamily property on your own with dozens of tenants or more, can become nearly impossible to keep up with.
One of the primary reasons people invest in multifamily is to generate passive income. But if you’re constantly answering calls, coordinating maintenance, and making onsite visits, the investment isn’t a passive one. If you’re not experienced in property management, you might not have the same knowledge and access to resources that a professional might.
Onsite Property Manager
Many multifamily properties consider hiring an onsite property manager over managing a property themselves or hiring a company. This type of property manager often becomes a Jack or Jill of all trades. They become property’s mascot and interact with everyone. Prospective and current residents, vendors and the local community all work with them.
Aside from community relations, this type of property manager might also help with market research, marketing efforts, maintenance requests, and other onsite tasks. All of this responsibility can be a good or a bad thing.
If the manager is good with people and hard-working, they have the ability to create a solid community. But it’s also easy for not-so-good property managers with this much authority to take advantage. They often aren’t reporting to someone on a daily basis, so bad behavior can be hard to catch.
This type of manager can work for medium-sized properties where a unit used for the manager to live in won’t impact profit margins. It can also work for teams who are willing to put in the work to hire the right person, and have the systems in place to manage them remotely.
Hiring a Property Management Company
Property managers are usually experienced, with a strong knowledge of the market, its state, and trends. Property managers are also usually very connected with networks of professional service providers that they have strong relationships with. Property managers also have a non-emotional, unbiased approach to managing their properties.
The downside of hiring a company is a lack of control. The company has its own branding and its own system. Property companies also have multiple clients, so your property won’t always be the #1 priority. A property management company also costs the most, but it does minimize stress for investors with large portfolios and properties.
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