Keys to Multifamily Asset Management for Investors
How do you balance how hands on or how hands off you should be with that and kind of letting the manager do their job? Not micromanaging, but also not stepping back too far.
Yeah. Great question. You know, it really comes down to whether or not they’re performing. And we do speak to our managers. If things are going well, we do have a conversation with the managers once a month at least. There’s other emails that might go back and forth, but we generally have a scheduled conference call or webinar at least once a month just to make sure that everything is on track. Because I don’t want to just read in a report what’s going on. I want them to tell me that they had to overspend on something that particular month for a reason, maybe show me pictures of it, so I can get an idea of it. If it happens every so often. It’s not a big deal. Things do come up that aren’t in the budget that have to be taken into account. But I want to hear that directly from them.
If things aren’t going well or when we first buy a property, we’re going to have a lot more communications with the manager. We might meet with them every couple of days or once a week, just to make sure things are going well and things are on track. And what kind of feedback are you getting from the residents because of the changeover? It’s amazing how many people in a C Class property when the ownership changes people just leave. They just vanish. And we’ve always thought the reason was because they thought the rent was going to go up. But we actually on a different property that we bought down in Texas. That’s actually what happened. The residents came up to the manager that we left on site and we left her because she has a really great rapport. As a matter of fact, I think it’s like five or six years now. She’s still the manager, she’s doing a great job. And a couple of residents came up to her and said “Yeah, well, we’re leaving.” And she she looked at them and said “Well, you still have time left on your lease. What do you mean you’re leaving?” “Well, the ownership changed.” “Okay. So the ownership changed. So why are you leaving?” “Well, because the rent is going to go up.” Well, she had to explain to them “Well, I don’t know if the rent’s going to go up or not, but even if the rent did go up, it can’t go up until your lease renews.” And two of the residents looked at her and said “Oh. Well, okay.” Right.
So they might have had six or eight or ten months left on their lease and they’re ready to go now because they think the rent’s going to go up. She had to explain to them, even though it’s in the lease, that the rent can’t be raised until their current lease expires or reduce. And so two of them said “Oh, okay, we’ll stay.” And the other two said “Yeah, we don’t care. It’s going to go up, so we’re just going to leave now.” Amazing what people will do.
Yeah, just assuming.