Purchasing a multi-family rental property can be an excellent investment for individuals looking to start a real estate portfolio, expand an existing one, or save for retirement. In times when the economy is booming, a multi-family property can be quite profitable and sustain a satisfying cash flow.
When the economy has taken a turn for the worst, investors may find themselves swimming in problems—rent collection issues, high vacancy rates, cash flow challenges, etc. Investors can swim themselves to the point of exhaustion trying to solve their problems and keep their multi-family rental afloat. This situation is where employing a property management company can be an enormous benefit to investors. A property management company can offer several advantageous services to clients to assist them with managing and maintaining their valuable investment.
What Property Management Services Can Help Investors in a Recession?
A property management company offers multiple services to help investors with their multi-family building. These services can include overseeing tenant move in, taking care of evictions, ensuring legal compliance, and setting appropriate rental rates for your units. Some services offered are quite helpful when a bad economy rears its ugly head. Here's how they can help improve your situation.
- Find tenants to fill your units: The process of finding a prospective tenant isn't a short one; in fact, it can sometimes draw out much longer than you anticipated or have liked it to. Like empty seats, it can be hard to find tenants to fill vacant units. Starting with advertising, a property management company can use their experience to determine which advertising methods will best attract your ideal renters. They will show the unit to interested individuals, possibly negotiating prices to make you more money. They also have an efficient screening system in place, ensuring only credit-worthy tenants with satisfactory references receive keys to a unit. Hiring a property management company can help reduce your vacancy rate and fill your units faster.
- Assist with administrative and financial details: In a downturn, it's common to scrutinize financials to identify cost-saving avenues. Investors may not know where to start, but a property management company can help you determine how to reduce operational costs. Property managers usually handle the financial operations of the building they manage, ensuring bills and rent are collected on time; they can analyze income statements to verify you are getting top value for the money that has been spent. They will keep your records and expenses in order and try to make your multi-family building less expensive to operate.
- Increase cash flow: When in a recession, it's all about generating and maintaining sufficient cash flow. Again, property managers can use their expertise to implement new methods of generating revenue. Even during economic distress, multi-family rentals can still be profitable if they explore alternative income methods such as selling advertising space, installing vending machines, or installing a coin-operated laundry service.
- Control expenses: This service may be the most valuable one a property management company can offer in a recession. Property managers can implement immediate cost-savings benefits to investors by inserting energy efficient light bulbs and tweaking maintenance procedures. Making the decision to replace inefficient mechanical systems can further reduce operational expenses and add value to the building. Putting their business savvy and negotiating skills to use, property managers can also use the opportunity presented by a downturn to rebid contracts and reduce labour costs for work around the building.
A recession grabs hold of everyone, changing their attitudes, perspectives, and actions. As an investor, you want to ensure your multi-family building has enough good-quality tenants to see you through this turbulent period. Hiring a property management company such as Braden Equities Inc. will reduce your operational expenses while increasing your total revenue and cash flow.