I own the Ohio Landlord Association with my good friend Jack Petrick, and after a fantastic meeting recently, I knew that I wanted to share my strategies for managing my multifamily buildings. Skip the mistakes I’ve made and apply these twelve tips to your properties today.
#1 Whether you choose a daily or a weekly report, you need to know what your occupancy rate is. Getting a report from your in-house or out-of-house property manager on the occupancy of your units can give you a quick finger on the pulse of where your properties are at.
#2 What are the actual collection stats? Because while occupancy rate gives you a rough idea of where you’re at, it doesn’t mean that everybody is paying their rent. For us, the rent is due on the first of the month. We have a grace period until the 5th, when we then consider it a late payment. By the 6th, we charge a late fee, and that’s why we check the collection stats after the 6th.
#3 Constantly adjusting your eviction policies confuses your tenants. We are hardcore landlords about late rent, unless you’re a long-term tenant. We charge a late fee by the 6th, on the 10th we’ll post a notice, and then we’ll file for eviction on the 15th. By managing late rent aggressively, our tenants know we mean business about paying on time. Now, long-term tenants who’ve otherwise been reliable, but who’ve bumped up against a rough time we tend to extend grace to them.
#4 Putting signs in the yards of apartment buildings is still an effective way of finding tenants. When people drive through the neighborhood, and see your sign, if they like the neighborhood, then they’re going to call you about renting from you. In addition to basic yard signs, of course websites are also necessary. But don’t forget about sites like Facebook Marketplace and Craigslist. These are still popular sites where tenants are looking for apartment listings.
#5 I don’t want to just pick a number for the size of my crews. I need to know if we really have enough crews to manage the apartment units. As people move out, we want the chance to improve the unit before a new tenant moves in. We may not get another crack at a unit for five years, so we want to update the bathroom while it’s empty. That means that we need a ready crew to head in there when it needs to be done.
#6 Some team members are better at unskilled labor like hauling junk off, while others have the necessary skills to ask for higher pay because they can do electrical work or lay tile. A strategic portfolio manager evaluates the effectiveness of each team member based on the skills they bring to the team.
#7 I used to take some pride in saying that I never visited my properties. Don’t be clueless about your operations like I was. Go watch your team work and stay on site all day long. This is your investment property, and you need to understand what’s going on without relying on your information secondhand.
#8 Don’t fully rely on third party management without verifying the information. For example, we have an in-house manager who checks up on our third party managers. When one of our property managers reported a leaking plumbing stack, they also advised that we rip out the entire plumbing stack and replace it. But when our in-house manager checked in on the project, he saw that it could be fixed without an entire gut job. He saved us a lot of money by being our second pair of eyes on the job.
#9 Make the time for some spontaneous visits. Pop in unannounced and check up on the landscaping, snowplowing, general cleanliness, and even if the garbage is being taken out. When I make my visits, I tend to be an emotionless manager. I’m not there to be chummy with my employees. I need to know if my properties are being taken care of, so I’m in and out for inspections.
#10 Don’t lose track of your controlling costs. If you’re going to own big apartment buildings and multifamily units, then you need to understand what the cost of things are. This is definitely one of my weak spots, so I’m always trying to better understand the cost of renovations. For me, when a contractor says, “Hey, we need to do this”, I want to automatically agree with them. We’ve started charging a flat rate to renovate an entire apartment so that contractors work faster. If it takes them ten days or twenty days, we pay them the same rate. It becomes a powerful motivator to get the work done sooner so that they can increase their hourly wage.
#11 Don’t have broken down relationships between your property managers and your tenants. I’ve heard horror stories of great apartments and great tenants, but the property manager is a jerk and he’s driving off the tenants. Don’t let a property manager ruin your property for you.
#12 And finally, don’t stop marketing during the pandemic. People are still moving in and out of houses and apartments all over the country. Safety measures might make showing a property look a little different, but people are still downsizing, moving for a job, or heading off to college. If you stop marketing because you think you’ll save a little bit of money then you’re going to shut off your tenant pipeline.
Portfolio managers who take an active interest in their properties are prepared for any unexpected issues that are bound to pop up. And because they know their team’s weaknesses and strengths, they know how to deploy the right person to set things right quickly. Take an active interest in your properties and your portfolio will grow.