Good Investments V. Bad Investments
Real estate investing can be very lucrative when performed by a skilled operator. Unfortunately, as rental ownership has become more popular, more and more novice investors are getting into the market with potentially catastrophic results. Multi-family residential property management is an often overlooked aspect of real estate investing as many investors underestimate the importance of effective professional property management on their bottom line.
In order to truly see the value of professional property management, we must assess the possible pitfalls of poor residential property management. For starters, poor property management can leave a property in a state of duress. If the grounds are not clean or the buildings are not kept up, then it will negatively impact the curb appeal of a property. Lackluster curb appeal can affect the time it takes to rent an apartment as well as the rental rate that can be charged, which can easily dig into an investor’s bottom line.
Multi-family Residential Property Management
However, property management isn’t just about the maintaining condition of the building, rather it is also about properly servicing the tenants that reside within the dwelling. In our experience, we’ve seen many investors cut corners on management by using subpar contractors that do subpar work. Subpar work and long wait times for repairs will often upset a tenant, which increases the likelihood of losing that tenant and incurring unnecessary turnover costs. Apartment turnovers can easily cost thousands of dollars as you must factor in the cost to make the apartment rent ready, the cost associated with paying a rental commission, and the carrying cost of having the apartment sit vacant.
At the end of the day, however, vacancies are a part of life as a landlord. Many investors will rush to fill a vacancy without properly screening the applicant. This is a major mistake we seen novice investors make time and time again with grave consequences. Poor tenant selection can cost a property owner thousands of dollars as bad tenants will often fall behind on rent and force an eviction. In addition, many bad tenants will damage the apartment and will force the landlord to incur costly repairs to make the unit rent ready.
Additionally, not carrying the proper insurances that minimize liability is a major oversight we’ve seen among many novice investors. One slip and fall can cost an investor tens of thousands of dollars if the property is not properly insured.
The issues stated above are just some of the pitfalls that come with a mismanaged asset. As you can see, a poorly managed property can, and most likely will, sink the profitability of an investment. Do not fret, however, in incoming newsletters we will be addressing all of these issues (and more!) in depth along with solutions so that you can keep more of your hard-earned money where it should be: your pocket.
Interested in quality multi-family residential property management? Contact DNS Property Management. Our staff consists of quality, detail-oriented individuals with years of experience and insight to offer your investment property. We currently offer mult-family residential property management services as well as community association management and investment management services for Broward County, Florida. We’re here to help you optimize your wealth. Contact us today.