When investing in a multifamily property, choosing the right property manager can be crucial to the success of your investment. But in an area like the Triangle, where there are so many options available, how do you know which property manager is right for you? To find out what to look for in a multifamily property manager, we went to West & Woodall Property Management President Chris Hawkes.
His division oversees property management for Pickett Sprouse Commercial Real Estate.
What Does a MultiFamily Property Manager Do?
A multifamily property manager is responsible for overseeing the management and maintenance of apartment buildings and other residential units. According to Chris, their tasks include the following:
1. Rent collection. Collecting and depositing rent from tenants.
2. Leasing apartments. Advertising vacancies, screening, and qualifying prospective tenants, and preparing leases.
3. Property maintenance and repairs. A property manager can take care of the inspection of units and make repairs as necessary. They also coordinate maintenance work with vendors and contractors and respond to tenant complaints and requests.
4. Tenant relations. Maintaining positive relationships with tenants, responding to inquiries and concerns, and resolving disputes.
5. Budgeting and financial reporting. Preparing and managing budgets, ensuring timely payment of bills and expenses, and generating reports for property owners.
6. Compliance. Ensuring compliance with relevant laws and regulations, such as fair housing laws and building codes.
7. Marketing. Developing marketing strategies to attract and retain tenants, and promoting the property through social media, advertising, and other channels.
Why is Having a Multifamily Property Manager Important?
Chris says that if your goal is to look at multifamily real estate as an investment property and not to be tied down by it, hiring a property management company is a must. Here are some of the most important reasons why that's the case.
1. Efficient management of operations. A property manager can efficiently handle all of the day-to-day tasks involved with managing a property including maintenance, repair, billing, and rent collection.
2. Improved tenant relations. A property manager can help create and maintain good relationships with tenants by handling their questions, complaints, and even disputes. This ensures that tenants remain satisfied and that occupancy rates remain high.
3. Reduced legal hassles. A property manager deals with the legal aspects of property management, including drafting lease agreements and complying with state and federal laws. This can help prevent legal disputes with tenants and other parties, saving owners the time and money spent on legal fees.
4. Better financial management. A property manager can help maintain the cash flow and profitability of the property by ensuring timely rent collection, keeping expenses under control, and preparing accurate financial reports.
5. Increased property value. A skilled property manager can help enhance the value of the property by suggesting and implementing value-adding upgrades, ensuring that the property is well maintained and attractive to tenants, and keeping occupancy rates high.
Top Qualities to Look for in a Multifamily Property Management Company
There's no doubt that the process of hiring a property manager can be a bit overwhelming. That's why Chris is offering an overview of the top qualities that you'll want to look for in a property management team.
Experience in successfully managing multifamily properties
Since there are different classes of commercial real estate, you want a firm that specifically has multifamily property management experience. This experience is critical because you need a property management firm that can run your property as a business and provide on-site oversight for your multifamily asset. They need to be able to do this while also helping to create a welcoming and homelike environment for tenants.
Chris explains that gaining insight into how well a management company does these things will take some initial legwork on your part. You'll need to reach out to some of the company's current clients to get their feedback. This will let you know how well the firm performs its day-to-day responsibilities in managing a multifamily property as well as giving you a sense of overall tenant satisfaction and history of turnover rates.
Understands the Local Market
It is important that your property manager understand the local market for rental properties. This will help them to market to the right audience and set competitive pricing. If your property's rents are too high, it may be difficult to attract tenants, and if they're too low, the company may be losing potential earnings.
Understanding local market trends and demographics is also crucial in making decisions about property improvements and amenities. That is especially true for multifamily property management in Durham and the Triangle overall because we have a lot of young professionals and families who may be looking for specific amenities and property characteristics.
In addition, property management companies need to comply with local regulations when managing their properties. Understanding the local market can help them navigate any specific regulations, which can save time and money.
A property management company must be able to effectively communicate with tenants, you as the owner, and any other stakeholders. This is especially important in dealing with tenants. Expectations for landlord and tenant responsibilities must be clearly communicated and concerns must be addressed. Since concerns will come up at some point, a property manager who is quick to respond and communicates thoughtfully and compassionately can resolve potential disputes before they escalate.
Effective communication can also help maintain operational efficiency. Poor communication can negatively impact the processes and systems that the property manager uses for maintenance, repairs, and other operational tasks. Clear communication channels between contractors, vendors, and staff can improve overall efficiency and streamline the workflow.
Marketing and Advertising
Effective marketing and advertising strategies are important to attract qualified tenants and to make sure that the vacancy rate remains consistently low. This includes advertising online and in print, creating professional rental listings, and hosting open houses and property tours. In addition to these traditional strategies, a good property management team will look for ways to think outside the box in coming up with creative and unique ways to attract new tenants to fill vacancies.
Ability to Screen Tenants
Property management companies should have a strong tenant screening process in place to assess the financial and rental history of potential tenants. This includes conducting credit checks, verifying employment history, and checking references.
As part of this, property management companies must have a thorough understanding of fair housing laws and work to ensure compliance with all local, state, and federal regulations. They must also be committed to ethical practices and treating all tenants equally.
Once tenants are approved, it's important for the property management staff to be skilled at effectively managing the leasing process. This includes drafting and executing leases, collecting rent payments, and enforcing lease terms.
Maintain the Property and Make Repairs
The ability of your management company to keep the property up and make repairs helps to limit overall maintenance costs. Performing regular and preventative maintenance and making repairs as quickly as possible ensures that the property is in good shape and operating efficiently. This, in turn, makes it attractive to future tenants and helps to keep current tenants satisfied. Tenants are more likely to renew their leases if they feel like their homes and common areas are well-maintained and in good working order.
Quick and efficient repairs and the ability to respond to maintenance requests can also prevent more significant and costly damages and repairs down the line. For example, a small leak that is not addressed promptly can lead to water damage and mold growth. Both of these can be expensive to remediate.
Meeting regulatory requirements is another important maintenance task that property managers handle. For example, failure to maintain proper fire alarm systems, fire sprinklers, elevators, and other crucial systems can lead to fines, or even legal trouble if a serious incident occurs.
Add Value to Your Investment
Any multifamily management firm that you're considering should be able to increase the value of your property. Chris gives an example. "We have an apartment building that we took over in 2019, and it was averaging 15 to 18 evictions a month. Their rents were really low. It's taken us a couple of years, but we currently don't have any evictions there. Our rent totals at that property are currently $35,000 a month where we were probably at $24,000 when we took over. So we really increased the value of that property from probably under $2 million to about $6 million right now."
In-House Commercial Brokerage
If, like Pickett Sprouse, your property manager is part of a company that also has an in-house commercial brokerage, it gives you an advantage if you ever want to expand your portfolio of properties. That's because your property management company can help put you in contact with commercial real estate professionals that they know and trust to help you with your real estate investments. After all, their success depends on your commercial property success, so they are only going to put you in the best of hands.
Ability For You to View Property Performance
When you are looking for someone to manage your multifamily property, it's important to ask about how you will be able to view and stay on top of your investment's performance. This may mean asking about what type of property management software is used so that you can gain real-time access to financial data, maintenance requests, and tenant communications. The main thing is that it is easy for you to monitor the performance of your property from anywhere.
Bottom Line on What to Look for in a Multifamily Property Manager
The bottom line is that there are many management firms out there. That's why it's important to be aware of what to look for to hire the right property management company for you. Knowing this information can mean the difference between success and failure.
For more information about the professional property management services that we provide and to see if we might be a good fit for your needs, contact us at firstname.lastname@example.org.