Overwhelmed trying to purchase your first apartment complex that contains 20, 30, or even 40 and more units? If so, do not worry. Everyone has to start somewhere, and even if you are a newbie to all of this, it does not mean you should set aside this opportunity and ignore it completely. With plenty of time, patience, and persistence without being too stubborn, you can ensure that your purchase is successful.
With all of that said, where do you begin when buying a large apartment complex while ensuring success? Here are our tips:
1. Reposition the tenant base
Unfamiliar with what the term “reposition” means? It is just a fancy word that means to fix a property for the purpose of creating value. In this case, you will want to reposition the tenant base. Doing so means fixing any tenant-related problems such as high turnover rates that can seriously hurt your possible income.
Take your time when scanning the property and learning of its tenant history. If you find that the tenants that come and go generally stay only for a few months, you can set up a system to screen for tenants that will stay for the long term. This can dramatically reduce your turnover rates, meaning fewer vacant units and more money being made.
Plus, better tenants mean less cost on your end overall. Things like tenant-related property damage and even evictions are problems you minimize by making this type of effort. Over time, as your apartment slowly gains a better reputation due, you will continue to attract better and better tenants that also contribute to a better community.
2. Take control of the expenses
Once you have your tenant situation under control, the next is to look at the expense side of things. It is not only just energy bills, maintenance costs, and the likes. It is on other costs such as phone bills and even garbage collection costs that need to be accounted for. In other words, you need to take note of everything that costs money. You can then contact the relevant service providers for better deals without sacrificing too much of their services to ensure you are wasting as little money as possible.
Apart from those types of expenses, you can also make agreements with your tenants on things like utility cost caps. For instance, you may agree to pay for the first $50 or $100 of the utility cost, where the remaining portion would be the tenant’s responsibility.
3. Set in place penalties and fees
As much as you would like to believe that you are working with the best tenants around, understand that no one is perfect. Some tenants may pay their rent late, some may want to bring in pets in a no-pet zone, and some may decide to smoke in a no-smoking area. Other fees may also include application fees, move-in fees, and more that may be dumped onto your shoulders.
What should you do about this? Set the appropriate penalties and fees. Any tenant that found these rules to be disruptive can simply leave, meaning that you replace them with new tenants that can follow your rules better, adding to the reputation and improving living conditions for everyone.
Conclusion
Owning a large apartment complex is no easy task. There are many things to be done, especially if you have purchased one with a shoddy history. However, all of these efforts will pay off, and after some time, you will be able to simply sit back and relax while enjoying plenty of cash streaming to your pocket. That being said, Rome was not built in a day, and your apartment will certainly need plenty of time to be worked on to turn it into a reliable source of money!
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