Victor’s Insider Scoop on What Questions Do You Need to Ask a Multi-Family Property Management Company Before You Hire Them to Operate Your Apartment Complex?
April 5th, 2013 | top of page
Multi-family property investing and ownership can be highly lucrative providing a steady stream of cash flow, asset appreciation, and countless tax incentives. However, these ownership benefits do not just happen.
The difference between properties that are:
well-occupied high vacancy rate
cash-flowing vs. mediocre cash flow
with healthy operating statement with negative operations
reserve balances no reserve balances
is almost entirely dependent on:
On-Site Staff Executing Their Requisite Day-to-Day Tasks
The Senior Management Team Overseeing That Staff.
In order for you to successfully navigate the daily onslaught that is multi-family property ownership, selecting the best management company possible is paramount.
Here are eight critical components you must consider before selecting the most capable and proactive management company for your apartment (presented in no particular order—all items being equally important).
I hope these 8 insights and questions will help guide your selection.
1. EXPERIENCED SENIOR MANAGEMENT
What other apartment complexes do you manage that are similar to mine and how did you “Turn Them Around” since being hired as manager?
The company charged with perfecting your property’s operations should be a seasoned industry veteran with a focus on multi-family management and a background and expertise encompassing all aspects of the life cycle of your apartment from acquisition through disposition.
Their team should be well versed from years of oversight of thousands of units ranging from new and adaptive reuse product through luxury and affordable housing, as well as office, retail, and industrial properties. While having a background that includes other property types may seem counter-intuitive, a well-rounded management team will have a breadth of networking opportunities on the vendor side that a highly focused management team will not. The ability to network with multiple vendors can lead to better/cheaper maintenance alternatives.
Ideally, this group should bring expertise in acquisition and development across all product types allowing for a differentiated level of service and sophistication that can effectively guide you through any decisions you need to make regarding your apartment.
2. LOCALIZED MARKET EXPERTISE
What are the attributes and challenges of the trade area my apartment is located in?
In order to formulate, implement, and execute an effective property management strategy, the team assembled must have critical and intimate knowledge of the local fundamentals based on previous experience and a deep understanding of established dynamics of market rents, occupancies, etc. as they ebb and flow within your demographic trade area.
Make sure your candidate property management companies have demonstrable success with the same class of property as yours. A property management company that focuses on operating Class A properties with a number of high-end amenities that caters to well-heeled tenants is probably not as adept at handling Class C properties in blue collar parts of town.
3. A FOCUS ON SERVICE AND TRAINING
Tell me about the training you provide to your on-site employees.
The main difference between providing average service to both yourself and your residents and the superior service your asset deserves lies in the quality and training of the on-site employees.
In order to achieve top performance in customer service, maintenance, and other facets of property operations, your management company should consider only the most experienced and capable candidates available. Then they must invest heavily in their staff through constant and rigorous training programs.
4. UP-TO-THE-MINUTE PROPERTY MANAGEMENT TECHNOLOGIES & TECHNIQUES
What property management technologies and techniques do you employ and how and when do you decide to implement changes?
Any management company worthy of consideration should recognize and embrace the direct correlation between leveraging cutting edge technologies for greater operational efficiency, improved service to residents, and increased value to the owner. Your management company should always explore new software platforms including accounting, leasing, and operational applications in their early stages of development.
Utilizing the latest industry applications like
- Yardi Voyager
to manage day-to-day operations is paramount.
5. PROACTIVE RISK MANAGEMENT PROTECTION PROGRAM
How does your proactive risk management protection program work?
Attention to risk management results in
- Reduced Exposure to Financial Loss
- Lower Insurance Costs
- Less Time Spent by On-site Staff Dealing with Problems
- Lower Legal Costs
- Higher Resident Satisfaction
- More Time Focusing on Operations
Ask your potential management company how they address and document their PROACTIVE risk management.
6. AN ASSET MANAGEMENT FOCUS
How will your asset management program integrate with my ownership objectives?
Some third-party property management companies often find it difficult to look past day-to-day operations.
Choose a management company that also keeps ownership decisions and value creation objectives in mind. Try to understand their knowledge of and ability to provide attention to asset preservation, capitalization strategies, managing depreciation, tax appeals, and cost segregation in a way that optimizes your long-term returns.
7. LEASING, LEASING, AND (MORE) LEASING
What are the challenges my apartment faces with respect to your ability to obtain (and maintain) 90+% occupancy and how are you going to get me there?
Whether executing a lease-up campaign or maintaining current market occupancies, it’s critical for the manager to be both creative and aggressive while adjusting to changing market conditions and both capital and operational budgets.
Your manager should train its staff rigorously throughout the year with quarterly, monthly, weekly, and even daily training exercises in order to hone their skills to effectively lease units to prospective tenants.
8. FINANCIAL AND INVESTOR REPORTING ACUMEN
Will your monthly reports show me what I need to know to make informed decisions about operations?
As an owner your decision-making process is based on understanding the financial health of your property.
- What data is being presented on a consistent basis?
- Which metrics of your property does your manager seem to focus on?
- Do his metrics match your idea of a healthy property?
- Can you glean operating trends on your own based on information provided?
You’ll need to so make sure you’re able to do so from the information presented in their reports. Make sure the information you need is part of their report.
Dedicated To Multiplying Your Income
PS – If you are ready to begin to thrive again by getting off the sidelines and putting your money to work give me a call at 602-320-6200. I see lots of deals and may have just what you are looking for.