If your apartment building is underperforming, something is off within your operations of the property. Losing money on your investment could be a lack of management experience, poor quality tenants, or lackluster amenities. If your property is underperforming, you want to fix it as fast as possible because, in this state, you're losing potential income. When the multi-family building has normalized, you'll see an increase in profits.
Where do You Start When Your Apartment is Underperforming?
If you know you have a problem with your apartment building, it can be difficult to know where to start fixing things or where you should focus your efforts. The first thing you need to do is complete an overall assessment of your building to see where things are falling apart. Take a look at your NOI. Are you currently losing money on the building? Also look at your vacancy rate, tenant turnover, and tenant retention. If your vacancy rate and tenant turnover are high, something is turning your tenants and prospective renters away from your building. It could be because your existing tenants are not of a good quality or your building needs a facelift to make it a bit more attractive. If your tenant retention is low, you need to change things up to keep people in your units.
What You can do to Raise the Performance of Your Multi-Family Property
Once the assessment has been completed and you know exactly what problems you're dealing with, you can get to work. Here's what you can do to fix your issues and raise the performance of your apartment building.
1) Plan, plan, plan: Now that you know where you're going wrong, you can put a plan in place to correct your issues. If it's your vacancy rate that's causing you trouble, your building may need a little extra love and attention to make it look more attractive and improve your tenant profile. If you're going to go the renovation route, you'll need to have some extra money set aside. Seeing as your apartment is underperforming, though, you probably won't have any cash readily available. What you may have to do is put out a cash call to your other investors. Remind them it will pay off when the property starts performing again.
2) Conduct a market study: Market studies are a great way to determine if your apartment is on par or over the mark compared to others in your area. You will be able to see how other buildings are performing and what their vacancy and rent rates are, to make sure your building is in a healthy range. Maybe you didn't know you were competing with lower rents. That could very well be why you have a high vacancy rate. With the information you find in a market study, you can tweak your building in just the right way.
3) Hire a property management company: A good property management company is worth their weight in gold. If our first two points have left you scratching your head or have sent you into panic mode, a property management company like Braden Equities Inc. can assist you with them. We can help you assess your building, identify weaknesses, and create a long-term plan to make your real estate investment successful. We can easily conduct a market study to show you how you compare to other apartments in your area.
Raising the performance of your apartment building isn't hard if you know what your problems are. If you don't, you need to complete a full assessment of your building. Braden Equities Inc. and their property management services can assess your apartment and work with you to make it profitable.