Practicing good multi-family property management principles can save you time, money and lower your liability risk. LandLordStation.com offers information and discussions that will maximize your profit and minimize your liability. In addition, we offer property management tools from "how-to articles" and advice to services such as tenant screening, rent collectionand document storage.
When you are managing a multi-family home rental always remember the following important facts:
• Do your research to develop a lease form which includes all the provisions you want, as well as the provisions that specifically pertaining to multi-family dwellings as required by state and local laws.
• Use a lease form that is specific to the state in which the property is located. Standard forms, which are available for sale, are generic forms that don't always conform to local and state laws.
• A lease that does not conform to the federal, state and local laws can be found to be unenforceable by a court if contested by a tenant.
• With multi-family dwellings, the rules must be the same for all tenants.
Laws pertaining to multi-family dwellings can differ in a variety of ways from the laws that govern single-family dwellings. One example of a difference in law is lawn maintenance and snow removal. With a multi-family unit that is larger than 4 units, it is usually the responsibility of the landlord to make sure the lawn is maintained and that snow is removed from walkways and driveways. Also, maintenance of parking areas, common areas, lighting, and even in some states, security, is the responsibility of the landlord. A benefit of managing a multi-family unit is that regular maintenance can all be done at the same time which usually saves money.
There are other advantages of buying a multi-unit complex. There is usually a lower price per unit because construction costs are less and property tax is adjusted accordingly. In many markets, home prices have gone up, making the majority of single-family rental properties too expensive for investment purposes. The single unit rental is sometimes not enough to cover the property mortgage needed to purchase a unit. Also, the loss of income due to vacancy for multi-family units tends to be fairly low since there is a multiple income stream, so cash-flow is better. If one unit is vacant, there is still income being generated by the other units. Small multifamily investors are aware that properties with 2 to 4 units usually have rent rolls that are 2-3 times greater than single family homes.
Our article on Lease Agreementsincludes some information about leases in general that would also apply to multi-unit dwellings. This information may seem basic, but it is often overlooked by inexperienced landlords of multi-family home dwellings. For instance, just like in a single family rental lease, if a request that falls under your responsibilities is made by a tenant, make sure the request is fulfilled in a timely fashion. In a multi-family rental situation, you have to make sure to treat all tenants within the complex or unit in the same manner. Also, if you offer any tenant an option, like cable service or a reserved parking space, make sure those things are also offered to all tenants.
To delay on a responsibility to a tenant as a landlord can cause a tenant to legally break his or her lease. This mistake can cost you both time and money (see our article about Landlord Responsibilities for more information). Keep in mind that tenants get together and compare notes about property managers, and there have been cases where tenants have actually recovered money from landlords because one tenant’s repairs were made and another tenant’s repairs were not.
As with any rental, single-family or multi-family, always be careful about the questions you ask when you are talking to potential tenants. There are limits to what you can ask applicants in an interview. Even well-meaning questions can be illegal. For example, don’t ask a disabled person about his or her disability or ask if a couple is married. If you decide not to rent to an applicant, even though your rejection has nothing to do with the question you asked, that applicant can file a fair housing complaint and you can be charged. Questions to Ask a Potential Tenant for more information.
Even if you want to limit your tenants to mature adults, excluding families is illegal. Although you're permitted to limit the number of residents in a unit (in most situations, two occupants per bedroom), you may not apply that standard differently when dealing with families and children. The cost of this mistake can be a fair housing complaint and a hefty fine. Be sure to set your policies prior to showing a property and apply those policies in a fair manner for all applicants.
Do not ignore dangerous conditions in and around your rental property. Laws in every state require that housing meet basic health and safety standards that comply with state and local building codes, health ordinances and landlord-tenant laws. If you fail to repair or remedy any unsafe conditions within a timely manner, a tenant can break the lease and, in many courts, be entitled to a monetary award from the landlord.
As you can see, managing multi-family properties requires diligence and effort on your part and does differ from the management of single units in some instances. After allowing them to take possession of your property, it is important to take every action to treat them fairly and honestly. It is easy to learn how to be a good landlord using the property management tips from LandLordStation.com and we hope this multi-family property management information was of some assistance to you in making your property management a profitable venture.
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