Are you looking to get into the multi-family rental market or do you currently own a multi-family property? Multi-family properties can be a great investment, but more isn’t always better or easier: More homes can mean more hassle. If you’re trying to decide whether you should purchase a multi-family property, it’s important to consider some of the associated challenges before you buy. But don’t despair, there are hassle-free ways to meet those challenges.
The Rose-Colored Glasses of Multi-Family Rental Property Management
On the surface, multi-family rental properties can be an excellent deal. In one building you have multiple opportunities to rent a property. You don’t need to drive around between properties: they’re all in a single location. The properties share a roof and walls, so some of your repair issues look like they’ll be easier to manage. However, multi-family properties come with many challenges as well.
More Tenants Equals More of Everything
Consider all the work that you do to bring in a tenant, and the work you do with individual tenants. You need to create an application process, conduct screenings, organize move-in inspections, and set up regular maintenance. The list goes on and on. When you manage a multi-family building, you may only have a single building, but you have multiple tenants. Since you have more units and you have more renters, you will have more move-in and move outs and often more maintenance.
There’s More Building to Manage
You’re only investing in a single building when you purchase a multi-family building, right? Wrong. You’re investing in multiple units within the same walls. While you don’t need to arrange lawn care for 20 units, you still need to ensure that the plumbing and electrical are working and that any damage to floors and walls is repaired. What’s more, you can have troubles that are building-wide. If someone installed cheap flooring when they renovated the units, you are stuck with the repairs. If there’s a problem with the plumbing on one floor, it can leak to the floor below. An insect infestation can spread from one unit to another. Multi-family properties may only have a single building envelope, but they can be full of repair and maintenance challenges.
You Have More Eggs in One Rental Basket
If you have multiple single family properties, they’ll likely be scattered in different neighborhoods. This diversity gives you an advantage in a market that’s changing. If one neighborhood becomes less desirable or suffers from a disaster such as flooding, you still have many rental properties that are not in that neighborhood. With a larger commercial multi-family property, you have multiple homes in a single location. If something happens to your building, the land around it, or your neighborhood, all of your tenants experience the same problem.
There’s More Competition
There are many single-family homes on the market. There are fewer commercial rental properties. This means that wherever you invest, you’re going to have more competition from those who enjoy investing in this type of rental housing. Also, since you’re working with a larger property, you may need to get creative in raising money to pay for it. This can lead to short and long-term financial challenges.
Are you investing in multi-family properties? Make your life simpler. Hire a property manager to help you coordinate everything from tenant screening to ongoing maintenance and home repairs. If you’re feeling swamped or you’re uncertain whether to dive into the multi-family rental market, know that Lori Gill and Associates is here to help. You can enjoy the advantages of owning a multi-family property while we take care of the property management details. Connect with us today and move forward with your adventure!
