Posts tagged "great apartment deal"

Want A Great Apartment Deal? Find A Burnt Out Landlord

Property management is such an important part of successful apartment investing. Apartment buildings are income property so their value is derived from the Net Operating Income. The higher the NOI the higher the value of the property.

What determines how high the Net Operating Income is on a property? Right, property management. Keeping the units fully rented to keep the gross rents as high as possible, and minimizing vacancy and other expenses to keep Total Operating Expenses as low as possible. The two of these done together increase the NOI to its highest level.

When an apartment investor purchases a property, he or she has a choice. They can hire the best property management company they can find, and manage the managers, or, they can choose to manage the property themselves and become a landlord.

The problem with becoming a landlord for many apartment investors is they have never had any training in property management. Without this training the landlord struggles to keep tenants in line and control the property.

Instead of treating the property as a business the landlord starts being lax on the rules laid out in the rental agreement (timely payment of rent, keeping quiet at night, tenant paying for repairs up to a certain cost, keeping the property clean) and the tenants, seeing they can get away with this, start treating it as the new normal, “training” the landlord to react to their priorities, not his.

The first place this plays out is with the payment of rent. After a couple of months of owning the property a tenant call on the 5th of the month and tell the landlord the rent will be “a few days late”. The landlord reacts to this by accommodating the tenant and waiting a few days. After playing phone tag and other assorted chasing the landlord manages to recover the rent by the 15th or 20th.

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5 comments - What do you think?
Posted by Benny - May 22, 2012 at 7:58 pm

Categories: Finding Deals   Tags: , , , , ,