Investing in rental property can be a very rewarding undertaking for those looking to build long-term wealth. However, there are sure to be problems that crop up in the day-to-day management of a long-term rental that get in the way of its profitability. These issues are magnified with multifamily real estate, as it becomes harder to manage large properties that have even more units. While multifamily homes are a great addition to any portfolio, it can be difficult to know how to deal with these issues, especially if you aren’t a seasoned landlord. To help you get a better understanding, we’ve compiled a list of things to keep in mind so you can properly manage a multifamily investment.
Know your local market
The first thing you should do with any rental property is familiarize yourself with the neighborhood it’s in. For starters, it can help you determine appropriate rental pricing so you get the most out of your investment. Keeping an ear to the ground with regards to trends in the area can also help you get ahead of them. For example, if there are plans for future developments in the same area as your property, it’s likely to gain value. And if you had plans to sell, this info would be very useful as you could benefit from selling the property later and for a higher price.
Screen your tenants
While you do want to keep your occupancy rate high, the last thing you want is to end up with a bad tenant. Screening tenants can help ensure they’re able to pay rent on time and leave you with less worries down the road. It’s generally recommended to run a credit report during the screening process, and some landlords will choose to run background checks as well. If possible, it can also be a good idea to contact the tenant’s previous landlords. Most importantly, when conducting a screening it’s important to follow the guidelines of the Fair Housing Act, which prohibit housing discrimination on the basis of race, national origin, religion, sex, or familial status.
Be communicative with tenants
One of the best ways to ensure your tenants will want to keep renting at your home is by keeping in touch with them. They’ll be sure to appreciate that you care about their needs and experience. We would recommend checking in with tenants regularly, at least once a month, and ideally in person so you can be made aware of any issues immediately. Of course, you should always make sure to give notice and confirm before going to see the property in person.
Take care of repairs quickly
With more units in a multifamily property, it’s inevitable that something will need repairs at some point. The sooner you can fix issues and perform these repairs the better. Your tenants will appreciate it, and they’ll be more likely to renew their lease agreement if they know problems are handled in a timely manner. Besides repairs, you will need to keep up with the regular maintenance of the home as well. Tenants will be more inclined to stay at a property that’s in good shape, and it can help prevent the need for future repairs too.
Keep good documentation
Staying organized will prove to be very important when it comes to managing a multifamily home. It’s recommended to keep copies of all lease agreements, rental receipts, and repair bills for any work done. You’ll be grateful that you did when something comes up and you need a specific piece of paperwork. Keeping organized records can come in very handy during tax-season as well.
Work with a tax professional
Speaking of taxes, having a trusted tax professional on your team can be essential to your success strategy with multifamily homes. Filing taxes for a large rental property is an endeavor to begin with, and they will be ones most qualified to maximize the tax savings on your property. On top of this, you can work with them to perform a cost-segregation study to benefit from depreciation. In a cost-segregation study, you deduct the assets on a property over their usable lifespan. Furniture, appliances, and even external upgrades can be included in the study along with the building itself which leads to massive tax-savings for multifamily owners. Consider working with a tax professional to get the most out of your multifamily real estate investment.
The easiest way to save on a multifamily property is to find a trusted lender who can provide you with the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. RCN Capital also has flexible and competitive loan options available. Are you looking to purchase or refinance a multifamily real estate property? Connect with us today.