Keys to Multifamily Asset Management for Investors
Now let’s move into once you’ve hired someone, you’ve decided on them. What kind ofmexpectations you’d have for them and how to basically know whether they’re doing a good job or not. So you mentioned that you typically will keep the existing property manager in place, but let’s say, in a situation where you do need to bring in somebody new.
What kind of effect would that typically have on property and the tenants? It’s really going to depend on why we’re getting rid of the property manager. If the property manager was basically doing an okay job of taking care of the tenants, but they were spending way too much money, which we had one in particular that, even though the the contract that we had with him said he was limited to spending this amount of money for all expenses, one month he spent more than that on just one rehab, for a single or a 1-bedroom unit. And it’s like “You’ve got to be kidding me.” Right? He didn’t even bother to get it in writing. He bothered to talk to us about it. He just did that. Well, the residents, of course, seemed to like him because he was spending money like crazy.
Well, you have to have a balance between income and expenses. It’s not an unlimited checkbook. It’s not a bottomless pit that you could just go to and keep pulling money out of to throw it back into the property. You have to be smart about how you spend your money and when you spend your money. Most of the time, the residents, if the manager is doing okay with the residents and we change them to somebody else, they’re not really going to care or probably even notice it. The biggest is when we do get complaints from the residents because we’ve had managers that were rude, they would treat them poorly. And of course, once you replace them, if somebody else comes in and they’re jovial and they’re really happy to be there, you’re going to get a lot of people that come back and say “Oh my God, I’m so glad you got rid of that other person. It’s so nice to be able to walk into theoffice and they’re actually glad to see you.” So that’s about the only time that the residents are going to be happy about it.
Of course, it could also backfire where you hire somebody because you think they’re great and they are, but then they don’t take care of the residents at all. They might be happy and jovial but somebody starts complaining because they’ve had a clogged toilet for three days and they can’t get the manager to get somebody out there to take care of the toilet. That’s an issue. So you have to be careful. You also have to have open communication with your residents as well. And so occasionally what we’ll do is we’ll send out something like a like a survey monkey thing to the residents and say “Hey, this is anonymous. We’re the ownership. We want to know what’s going on with the property.” So that way we can keep an eye on what’s going on from the residents perspective as well as the managers.
Yeah, that’s a good idea. Have you found things from that maybe you weren’t aware of or anything surprising from those reports?
Yeah, we actually did one one of our managers did one a few years ago on a property that we owned in Texas. And basically one of the questions we asked them is if you could do anything. We actually had some pretty good residents that we had very good occupancy. We were in the 94, 95, 96% range pretty much consistently with the property. So we were really happy with it. But you can always make your residents happier or do something to get them to stay longer. You can have happy residents that just decide to move because they want a newer place or a nicer place or a different location. So the manager sent out a survey to the residents and said “Hey, if there was anything you could change on the property, what would you change?” And we were actually a little bit surprised with that. Actually, with one of the things I was surprised with, with the other two not so much, because I had been trying to get my partner to actually upgrade some of the appliances in the property. This was a B Class property and we still had appliances that were avocado, you know, avocado green and harvest gold. And so these things were 40 years old and it’s like “Look, we need to start replacing some of these things.” Like “Our residents don’t care.” Well, that was the second thing on the list of what they would like to see changed in the property is upgraded appliances or at least newer appliances. The first thing that actually caught us by surprise was this was a property that was near a college. And they specialized in nursing. So we had a higher than normal occupancy of young ladies at the property because they were getting their nursing degrees. And one of the things that came back was that they even though there had never been a problem at the property, they just didn’t feel comfortable walking from their car to their front door at nighttime because there were too many dark areas around where there were shadows or bushes that weren’t lit up. And we’re like, “Wow, never even thought of that!” And so we spent about $2,000 per building and went out. We even the old halogen lights that were up, we took all those down, put up the new LED lights because they use a lot less electricity. They’re not nearly as hot and just lit the place up. And of course, a lot of the ladies came in afterwards and said “Oh my God, thank you so much for doing that. That’s great. Now we can see where we’re going. I don’t feel, you know, I’m not as fearful anymore or nervous trying to get to my front door.” So that was pretty cool. Yeah. And you don’t know? Yeah, you don’t know that unless you ask your residents what they think you should do.