Apartment Building Investments - Hire A Property Manager
What deters many would-be apartment building investors is fear that their lives will be run their tenants and the upkeep of their building. However, you can own an investment apartment building without ever having to hire a plumber, painter or janitor. You also never have to talk to tenant. The way to avoid these common property management hassles is to hire a competent property management company. As a buyer of an apartment building, the investor must realize that his primary business role is investor. His primary duties therefore should be managing the property as a cash flow producing investment vehicle rather than trying to get his hands dirty and managing the actual building structure and the tenants. Whenever possible, it is usually advantageous to outsource these duties to a professional management company.
A professional property management company will typically charge between 5% to 6% of the of the gross income that the property generates. For example, if the building generates $50,000.00 in gross income, the management company will charge $3,500.00. This gross income includes rent, laundry machine income and any other ancillary income collected by the building.
The primary advantages of hiring a property management company are:
1) These companies are specialists in this business. They have more experience and also already have access to dependable contractors, leasing agents and maintenance people.
2) The management company will be the people who deal with the tenants.
3) You are not limited to investing in your immediate geographic area. Real estate is a highly localized investment. You can now scope out profitable deals anywhere in the country.
4) The property management company you hire will have a better knowledge of the rules and laws governing the real estate industry.
5) I know from experience that banks and commercial lenders prefer that you hire a professional management company.
A few of the disadvantages of a hiring a property management company are:
1) They may not pay attention to the bottom line
2) They have access to your money
3) They won't treat the property as if they owned it.
It is recommended that the investor interview at least two or three property management companies before he or she decide on the company who is a best fit for the property. The investor should look for a management company that offers some or all of the following services.
1) High tenant retention
2) Attentive customer service
3) Good lines of communication with owners
4) Budget planning
5) An attention to keeping costs low
6) Preventative maintenance
7) Inspection of units and property on a routine basis
8) Good contractor supervision
9) Maintenance of tenant records