5 Unique Challenges of Multi-Family Properties
You want to move beyond single family homes as you become more comfortable in your role as a landlord. A multi-family property, especially an apartment or condo building, is more than just a single family property on a larger scale. You have unique challenges to contend with when you deal with multi-family properties.
You don't want to foot the cost of the entire building's utilities, so it's important to understand how to split the cost between units. The process of separating utilities depends on whether you're dealing with an apartment building or duplex, as well as how your utilities are set up. A common method for handling utility separation is by asking the utility companies to submeter each of your apartments. You don't want to evenly split one utility bill between all the tenants in the building, as one person may have an entire computer network hooked up and another person may only use a single light for their electric usage. Including utilities in the rent may seem like a good workaround instead of going with submetering, but if you lowball the estimate then you're going to be losing money. Depending on the season, you may be losing a significant amount of money from the inclusion.
Scaling Your Property Management Systems
You aren't dealing with one tenant anymore, you're dealing with dozens. That's dozens of potential maintenance requests, rent checks to deposit, and units to inspect throughout the year. Instead of trying to do it all by hand, have a solid property management system in place that is designed to scale with your increasing amount of tenants.
Dealing with Tenant Noise Complaints
Your tenants no longer exist in the vacuum that is a single family home. If you have tenants who don't understand how to control their noise levels, you're going to end up losing out on long-term, quieter tenants who don't want to live in a noisy building. You have a few ways to deal with tenant noise complaints. The first line of defense is setting up your building with soundproofing material and design to cut down on the potential for noise. After that, address the concerns directly with the problem tenant. You may be forced to ask the tenant to leave the property if the disruption is particularly problematic and frequent.
Single-family house tenants may treat the rental unit as their actual house, especially if it's in an area where there isn't a lot of good real estate going up for sale. In multi-family properties, tenants aren't necessarily looking for a place to settle down for the long term. This situation is particularly true if your apartments don't have unique features that set them apart from other apartments on the market. You deal with a higher turnover rate than single-family properties, so you have to stay on top of your marketing to keep your units filled.
You have a significantly higher amount of rental units to show potential tenants once you pick up a multi-family property. You have to be prepared for more marketing and apartment showings, but you do have one distinct advantage for showing a multi-family property: you probably have an empty unit that can be used as a model apartment. You don't have to ask your tenant to rearrange their schedule so you can show the property, and you know the exact condition of the apartment before you open the door for the showing.
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