Posted on April 29, 2012
One of the biggest keys to success investing in apartment buildings is attracting good tenants for your property. You can get good tenants in your building - even if you don't have the best property in the world.
Many landlords and property owners worry that they are missing certain amenities, or that the building is not in the best location, and so on. There is a tenant for every building - and as long as you didn't purchase a property in a *really* bad area (and I hope you did not if you have been following my articles) you should be OK.
It is true that residents do look for certain features and amenities these days, but you can attract good residents even without them. Here are 7 Steps to help you find good tenants for your apartment building:
1. Pre-screening on the phone.
Be sure that whoever answers the phone is friendly and professional. It may sound basic, but I have played the "secret shopper" on my competition and you would be surprised the number of people that sound downright surly on the phone. Be professional, but be friendly to your prospective resident.
Let them know that you do run both a credit and a criminal background check on all of your residents. Just by mentioning this, you will weed out many folks that you don't want in your property anyway. Let them screen themselves out when you mention this.
2. Keep the exterior of the building in great shape.
If your building needs paint, get it painted. If it needs cleaned, get it cleaned. Be sure the windows are washed, the entry is clean, and the building is inviting. Look, you don't have to own the #1 best property, but keep it maintained. This is good not only for the value, but in attracting the right tenants.
3. Keep the landscaping in good shape.
Again, the first thing people notice is the exterior grounds and the building itself. Keep the grass cut and trimmed regularly. Plant some attractive flowers around the entraces and main walking areas. Keep everything neat and well-manicured and your prospective tenants will take notice.
4. Keep the common areas clean.
Be sure that the common areas are cleaned on a regular basis and touch painting is also done on a regular basis. The carpets, the walls, the doors, windows - all should show very well for both prospective and current residents. Make sure your cleaning crew is taking pride in their work because it will show through.
5. Cleanliness and preparation of the unit to show.
If you are showing a rented unit, make the resident aware of showing times in advance. Let them know that you would like things to be clean and ready for a walk-through. It is not too presumptuous to ask them to be sure that things look good for your prospective tenants when you ask in a nice, friendly manner.
6. Application and marketing materials.
Offer your prospective resident an application, and walk them through the document in a helpful manner. Don't go through every single detail, but let them know how easy it is to fill out and that you think they would fit into the property well. Also offer them free reports or other marketing materials. We have had good success with simple materials that you can print yourself. You don't necessarily need a "marketing slick" to get folks excited about your property.
7. Ask & follow-up.
If they seem very interested and ready, ask for a time to have them return the application. Yes, I know. It sounds basic - that you have to ASK, but many landlords or property managers miss this point. Ask for a good time to have them return the application and that will help many folks along in the process.
Posted on April 18, 2012
Frequently during property management training the topic comes up about whether single family or multi family properties make the better investment.
Much of the answer to this is really a question of realty management, your specific real estate investment objectives, and whether or not the individual tasked with managing your rentals has the necessary property management training.
Single and Multi Tenant Properties Realty Management Review
Some of the common discussion about realty management cover these points:
Consider whether or not the market has really bottomed out. Are there too many properties on the market for the available buyers, or are unsophisticated investors bidding up property values while the smart money stays on the sidelines?
Think through the exit strategies available with each investment.
With single family properties you can:
- Sell to your tenant
- Sell to an owner-user who is not your tenant
- Sell your portfolio to another single family investor, although this is the toughest of the three to do and often times easier said than done
With multi tenant properties the exit strategy is more limited, but also more clear cut:
- Sell to another multi tenant investor
- Go condo, split up your multi tenant property into individual units for sale, and sell to either the current tenant, another owner-occupant, or a beginning residential investor
Realty Management Differences
There are big differences in the type of realty management required for each of these product types.
Here's what I see the top three being in each:
Single Family Realty Management
The realty management of a group of single family homes becomes much more difficult if they aren't close to each other.
On the other hand, the amount of ongoing repairs required is probably going to be less, since tenants in single family homes tend to have more of a "pride of ownership" in their property, even though they're renting.
But when repairs are needed, they are probably going to run on the high side, in particular when the property needs to be turned over to another renter. There's simply more of everything that needs to be spruced up or replaced, compared to a small sized multi tenant rental.
Multi Family Realty Management
The realty management of multiple units is almost always easier, since each grouping of units is right next to each other. Even if you have a real estate investment portfolio that's spread across town you've still got multiple units right next to each other.
You may have a higher level of on-going repairs, since tenants in multi family property may take a lower "pride of ownership" view than those in single family properties.
When repairs are needed, the costs are probably going to be lower due to the smaller sized units, when compared to a single family home.
The Impact Of Appreciation
I've seen a lot of real estate investors purchase property with the idea of building a legacy that they can pass onto their kids. Their intent is to never sell.
Sometimes this happens, sometimes it doesn't happen, for various reasons.
My point is that buyers of investment real estate should always think through the potential selling exit strategies of each and every investment they buy, in addition to the ease of realty management.
Here's where to start when you think about selling before buying.
Multi Tenant Investors
With multi tenant properties, you'll most likely be selling to another investor who is driven by financial performance, CAP rates, or cash-on-cash return. There won't be a lot of emotion involved with this type of sale.
So, your type of realty management should be developed with this in mind.
Single Family Buyers
Here you're most likely selling to an owner-occupant, either the existing tenant who wants to own, or an end-user who wants to buy.
With single family, other than the ability to finance the property, emotion is probably the number one driver for most buyers. The color of paint, carpet or flooring, the type of appliances, and much more all come into play.
Posted on April 12, 2012
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