Investing in multifamily units is a great way to diversify your portfolio, reduce your vacancy risk, and earn some great cash flow and appreciation as a property owner. If you’re going to buy an entire apartment building, you’ll need to understand some key requirements and some potential challenges.
For example, California law requires that you hire an on-site property manager if you own an apartment building with more than 16 units. If you’re not prepared to hire an on-site employee for your rental property, consider looking for a smaller building where you won’t have to worry about on-site management.
Renting out apartments will likely require that you spend more time with tenants and more time on maintenance. You’ll benefit from a partnership with a Visalia property management company.
Here are some of the things to think about when you rent out units in an apartment building.
Parking and Parking Policies
You’re going to have multiple tenants with multiple cars at your apartment building, and you’ll need parking space that accommodates both residents and guests.
Landlords who want to keep their tenants happy and reduce conflict between neighbors should have a clearly defined parking plan for their building. This should be included in your lease agreement. You might want to assign parking spaces or you might want to keep the parking area open. Make sure your new and existing tenants know what to expect and how many cars they’re allowed to park there. Consider parking decals. What will you do about parking security? Who is responsible for the theft or damage of cars parked at your property?
Address all these questions in your lease agreement.
As with most rental rules and regulations, a lot of miscommunication and confusion can be eliminated with a comprehensive lease agreement that has a section about parking. If every tenant in your building receives the same parking policy, there can be no conflicts and no disputes.
Make sure your parking policy includes:
- Where to park.
- How many spaces are assigned to each unit.
- Guest parking rules.
- Towing procedures for any unauthorized vehicles.
Follow all fair housing laws and provide spaces for people with disabilities to park. Enforce the use of those spaces by towing or ticketing any cars that aren’t identified as eligible for the parking spot.
Visalia Apartment Building Common Areas
Depending on your apartment building, common areas could be a central lobby, an outdoor courtyard, or modern amenities like clubhouses, fitness centers, and pools. Make sure you address how these common areas are to be used, maintained, and cleaned.
You can require your tenants to keep common areas clean and well-maintained, but ultimately it’s your responsibility to keep those common areas in good shape. You’ll need to respond to any maintenance issues, particularly if there’s a safety concern. A broken elevator, for example, needs a Do Not Use sign right away and an immediate service call.
Your lease agreement should detail who is permitted in the common areas and what kind of activities are allowed there. Maybe you don’t want smoking in the shared outdoor space. You can prohibit parties from being held in community kitchens. Be clear about those common areas and your expectations for them. Otherwise, tenants will have no way to follow the rules that they don’t understand.
Deciding Who is Responsible for Utilities
Typically, landlords in Visalia will keep the water, sewer, and trash accounts in their own name and then bill tenants for usage or a flat fee to cover those services from month to month.
Other utilities, such as electric and gas services, can be set up in the tenant’s own name. Tenants will have their own accounts and pay their own bills, separate from their rent every month.
This is standard practice when it comes to Visalia rental management, but it doesn’t mean you can’t choose another way to manage utilities in your apartment building. Maybe you want to include all utilities and then charge the tenants every month with the rental payment. Or, perhaps you want everything separate, including water and trash bills.
It’s up to you. The best course of action will likely depend on the size of your property and the number of units you’re renting out.
Vacancy Issues with Visalia Apartment Buildings
One of the benefits to renting out units in an apartment building rather than a single-family home is that the vacancy risk is lower. When a tenant moves out of your single-family residents, you lose rent entirely. But, when a tenant moves out of one of your apartments, you still have other residents in that building paying rent. You aren’t completely out of pocket for things like maintenance and landscaping.
That doesn’t mean you should be complacent about vacancy. It’s still a loss, and you need to work hard to keep every unit occupied. That can mean you’re constantly marketing your property, showing units, and managing things like screenings, lease agreements, and move-in inspections.
Focus on tenant retention so the turnovers are lower. Use strategic marketing practices that will attract good tenants quickly to your property. Make sure your units are move-in ready before you begin showing them. You want to attract a large tenant pool by offering a property that’s in excellent condition. Pay attention to landscaping and curb appeal. Don’t let the building’s exterior look dirty and worn out.
Managing Tenant Relationships and Noisy Neighbors
With a multifamily investment, you have tenants sharing space. They’re sharing walls and doors and parking lots and common areas. This is likely to bring on tenants complaining about each other. They might complain about pet messes, noise, and other inconsiderate behaviors.
Have some strong language in your lease agreement that reflects quiet hours. Include a pet policy to address pet messes and behavior. Communicate with tenants and document complaints. Don’t be afraid to enforce the lease and hold tenants accountable when they are causing disturbances for other tenants.
This isn’t always easy. Working with a Visalia property management can take a lot of the burden off your plate. When you’re managing an apartment building on your own, you can be stressed for time and resources. Professional help will allow you to have a better and more profitable rental experience. Contact us at The Equity Group to learn more.