Owning a multi-family investment in a down turned economy may be cause for concern for some investors. Individuals may have less money to put towards rent and will, therefore, turn away from higher priced units.
Maintaining your investment's profitability is of the utmost importance during this hard time for investors such as yourself. You need to ensure your investment isn't bleeding revenue and that operational costs are minimized. Doing so will keep a consistent cash flow arriving in your bank account. Below are three tips to help keep your multi-family investment profitable.
Control Your Vacancy Rate
Controlling your vacancy rate is huge when it comes to maintaining profits. A high vacancy rate means less money for you. A balanced rental market usually sees an average vacancy rate of 3%. According to Open Performance Data, Edmonton's vacancy rate was tipping 4.2% as of October 2016. In some neighbourhoods, it was as high as 12%. If you find your multi-family investment property close to this number, you're going to want to do something about it.
If your vacancy rate is high, there's a lot of action you can take to reduce it. If your multi-family property is a bit of an eyesore, that influences your vacancy rate. No one wants to live in a dump. Put a new coat of paint on the exterior and plant a few flowerbeds and shrubs. Doing so will make your property feel more homey to renters. Ensuring the snow is shovelled also makes a big difference. Soggy boots and wet feet can ruin a good day fast. Take the time to budget properly for these appealing items. Your bank account will thank you later. Keeping it clean also helps. When showing a potential renter around the building and unit, nothing will scare them off faster than a dirty property. Trash shouldn't be sitting in hallways or any common areas. Doing research can pay off too. It doesn't hurt to poke around and see what your nearby competitors are charging. Figuring out their prices can help you determine a better deal for interested individuals.
Minimize Tenant Turnover
If you already have great tenants that pay on time and take care of their unit, you're going to want to do anything to keep them around. How do you do that? The answer is providing them with exceptional customer service. You need these renters to stay, so you need to go above and beyond the call of duty. This idea applies to maintenance. Ensure maintenance repairs are timely. A renter doesn't want to be living with a broken fridge for three days. Although you aren't living there, they are. Make sure their needs are consistently met. If you find yourself in a position where multiple renters are thinking of moving, consider offering them incentives to stay. Offering to pay a utility or a reduction in one month's rent if they re-sign their lease is a small price to pay compared to the cost of tenant turnover. The last way to minimize turnover is to get to know your renters. Don't sit high on your perch and watch from above. Say hi in the halls and make small talk. Become their friend and make them feel at home. It's a lot harder to leave a friend's house than a building owned by someone you don't know.
Create Revenue Streams
You can easily make your investment property more profitable by capitalizing on wasted space and sweet tooths. Consider installing vending machines in common areas. It's not hard for individuals to drop a buck or two on sweets and pop when they're watching television with friends or playing pool. You can also install coin operated laundry units to make some extra dough. Many quality tenants won't consider a unit if it doesn't have laundry services. Installing these can also help you charge more for your rental units. You can also capitalize on man's best friend. So many people have pets now and look for pet-friendly apartments. Consider charging a one-time pet fee per animal to generate some additional money. A one-time fee isn't unreasonable. Lastly, you can turn wasted space into a money-maker by selling advertising space. Common areas, laundry rooms, elevators, and even the sides of your building are blank canvases to use. However, you don't want to annoy your renters by going overboard.
There're so many ways to ensure your multi-family investment property remains profitable in a time of economic uncertainty. If you keep your vacancy rates and tenant turnover low while creating rental property revenue streams, your cash flow shouldn't be disturbed.