To be a landlord—a good one—, you must be a tough cookie, standing your ground and enforcing the rules of your building. Having a meek personality will not benefit you in this authoritative role. Besides being tough, you must also be organized to handle and accommodate multiple tenants in a multi-family building.
If you think managing a multi-family building is similar to a single family investment property, you’re somewhat right; the same issues and problems can present themselves. However, instead of dealing with one tenant only, you’re now multiplying their one problem by 50 or maybe even 100. Yes, their problems may be the same, but there’s a whole lot more of them.
What You Need to Know About Management Before Buying a Multi-Family Property
1. When you’re a landlord, you’re in the people business: Tenants are what makes your multi-family building profitable. Therefore, you need to keep them happy to stay where they are. They need to have good service, amenities, timely maintenance, etc. A good rule of thumb for landlords is to respond to all tenant requests within 24 hours including questions about maintenance, leasing, showings, etc. When they feel taken care of, they won’t leave.
In reality, tenants can also be hard to deal with, especially when it comes time to pay rent. This role will require you to put pressure on non-paying tenants and evict ones who can’t pay or are causing damage to your units. No matter the situation, you still need to keep your cool. To be viewed as professional, you must act in such a manner all the time.
2. Have systems in place: When you’re a landlord, there are a lot of balls in the air you must juggle. If one falls to the ground, your rhythm is broken, and others are sure to follow. When managing a multi-family property, you need to have several systems in place to ensure something doesn’t fall to the wayside. Landlords need to track income, capital and operating expenses, maintenance requests, security deposits, showings, etc. That sounds like a lot to keep track of, right? Well, there are several software solutions one can use to help keep everything straight. Although they may require significant upfront capital investment, they will surely help with the success of your multi-family property.
3. Know what you can and can’t do legally: Multi-family building management comes with a number of rules and regulations a landlord must know and abide by. Failure to meet these standards can garner legal action from tenants as well as fines. First, make sure all your leases are concrete. They should include all the provisions you want, as well as what is required from multi-family buildings according to provincial law. If a lease doesn’t meet provincial requirements, it can be found to be unenforceable by a court if contested by a tenant. Therefore, avoid using generic lease forms.
When it comes to the condition of the property, landlords can’t ignore maintenance issues and dangerous conditions. Provincial laws require housing to meet basic health and safety standards that must comply with health ordinances, building codes, and tenant-landlord laws. When unsafe conditions aren’t repaired promptly, tenants can break their leases and can be entitled to a financial award.
Landlords of multi-family buildings aren’t pushovers. They are smart, diligent, fair, and honest, some of which comes with practice. Failing to know what you are getting into, though, can be a recipe for failure. Before purchasing a multi-family building, investors must be prepared to interact with all types of people, have systems in place to help them manage the property, and know the legalities of managing a building of this size.