Getting into apartment management can be a challenging yet rewarding path. There’s a lot to know before jumping into it. You can either take over the apartment complex yourself or outsource to a third party. This all depends on what you are looking to get out of your investment. In this article, we will highlight the two paths you can take when getting into apartment management so you can make the choice that is right for you. 

What Does an Apartment Manager Do?

An apartment manager oversees the day-to-day duties of the apartment complex. They make sure the property looks good and take care of any tenant needs. If there are any vacancies in the building, the apartment manager will market the openings and show them to potential tenants. Apartment managers are the first point of contact for tenants. They are the ones to respond to their issues, whether it be personally or calling the maintenance staff to handle situations. Managers also track the property’s expenses, insurance, payroll, rent, mortgages, and taxes. There is so much more that apartment managers do, but this is just the general overview. 

Option 1: Get into Apartment Management – Tips You Should Know

Start Small

Being an apartment manager is a very demanding job. To be the best apartment manager you can be when you begin, you will need to start small. This way, you can get a feel for everything before scaling up to something larger. Once you get the hang of everything and feel comfortable, you can start expanding to larger properties. Do not try to start big, as you will burn out and get a bad reputation as an apartment manager. 

Stay Organized

There is a lot to keep track of as an apartment manager, and you will need to stay organized. For your apartment complex to run smoothly, nothing can be unorganized or out of place. Unless you hire a landlord or manager to do this for you, you will be personally responsible for the following: collecting rent, following up with late fees and potentially eviction notices, hiring maintenance, fulfilling maintenance requests, adjusting rent based on pricing trends, showing properties, etc. There’s a lot going on at a time, and if you are disorganized, you will be burnt out almost immediately. 

Create a System for Notes

You are going to be hit with a lot of little things throughout the day. Whether you are a sticky note person, a mental note person, or someone who writes things digitally, you need to create a system. As things come in, put them in the notes app on your phone or Google Keep. Before leaving for the day, check off anything you did from your notes. The rest should be written down in your calendar for the next day, so you don’t forget anything. This will help you avoid letting things you were told throughout the day slip your mind. 

Require Renter’s Insurance

The more tenants you have, the greater the risk of something happening. Requiring your tenants to have renter’s insurance helps you avoid liability. If something happens to the building, you will not be legally required to pay for them to stay somewhere if they have their insurance. On top of this, if anything or anyone inside their apartment gets hurt or damaged, they will claim that through their own insurance instead of through you. This keeps your premiums low.

Research Your State’s Landlord-Tenant Laws

No landlord wants to evict a tenant, but sometimes that’s what the circumstances call for. Before you begin the process of evicting a tenant, make sure you fully understand your state’s landlord-tenant laws. These laws differ from state-to-state, so it’s important not to assume based on any past experiences. If this is your first time evicting a tenant, you should consider calling a real estate attorney to help with the process. While it’s more expensive, having a professional help walk you through your first eviction will make it go smoothly and keep you out of potential legal trouble. 

Hire an Accountant or Bookkeeper

Make sure to get an accountant or bookkeeper who has experience in real estate. Have them keep all expense reports up to date and reconcile all accounts every single month. This means that they compare the bank and credit card statements with their bookkeeping, make sure everything lines up, and track down things that do not. When you have many moving parts and various accounts and expenses, having someone explicitly focusing on your finances is a huge benefit. 

Invest in a Real Estate Financial Software

Look into setting up a real estate financial software. AppFolio, Yardie, and Buildium are some examples of what is available. This software allows tenants to log in and pay their rent online. Ideally, you want around 90% of your tenants paying online. It minimizes paperwork and time and may even reduce late payments. Schedule an email to go out every month a few days before the rent is due to remind everyone to pay online. 

Create a Pre-Screening Survey

One of the most time-consuming tasks as an apartment manager is screening tenants. Even if you noted all of the criteria in the listing, they applied without reading it. Despite not matching the salary requirements, they still applied and had you call them. Instead, you can create a pre-screening survey that you can add to all of your listings. Require any potential tenants to take this survey before they are eligible to be considered. This will help you avoid applicants who are not qualified but still apply anyway. 

Include Rental Criteria in Listing Photos

This is a great tip that helps anyone who doesn’t take the time to read the description and just looks at the apartment photos. This means many people miss your minimum criteria in the listing. An easy way to draw attention to it is to include it in a photo in the listing. Make sure it’s toward the front so it can’t be missed. This will help comb out some of the unqualified candidates who apply because they don’t read the listings. 

Option 2: Hire an Apartment Management Company – What You Should Know

Apartment management is a full-time job, and if you are in the business of real estate investment, that might not be something you want to deal with every day. Instead of having to sell the apartment complex that you worked so hard to grow, you can hire an apartment management company to run it instead. While you will have to budget the cost of the management company, this may be a smart move for you if you are feeling burnt out. Based on your building’s income, if hiring an apartment property management company is right for you, there are some things you should consider. 

What Does an Apartment Management Company Do?

Now that you are considering hiring an apartment management company, you need to understand what they do for your business. 

Maintenance Work

Your apartment management company will perform both routine maintenance work based on tenant requests and proactive maintenance work to keep everything running smoothly. By sticking to a regular maintenance schedule, they can help you avoid long repair projects that are disruptive to your tenants. If they cannot personally fix an issue, they will outsource their projects to the proper professionals to get the job done. You should note that this may result in more expenses for you. It’s likely something you may need to do on your end anyway, but keep in mind that they likely have connections with vendors and may be getting a better deal. 

Establishing and Maintaining Good Relationships with Tenants

You want your tenant to have the best possible experience with your apartment complex as a whole. If they enjoy it, they will be more likely to stay and renew their lease, refer friends and family when there are vacancies, and treat the property with respect. Apartment managers are essential for making sure the tenants have a good experience. They need to keep an organized directory of tenants and communicate effectively with them when anything arises. 

Vendor Management

As mentioned before, apartment management companies have lists of contractors and vendors they trust and have a good working relationship. This results in better work for typically better prices. Having such a robust list of vendors they have good relationships with is vital if anything goes wrong. They have someone they trust who they can easily call up and resolve the issue quickly. 

Adherence to State Housing Laws

It can be challenging to keep up with or fully understand all of your state’s housing laws and policies. It is your apartment management company’s job to understand and adhere to the state’s laws fully. This is helpful for things like late fees, access to units, lease termination, and eviction. All of these things are handled differently in every state. Making the wrong step without first checking your state’s laws could put you in a lot of legal trouble. Instead, let your apartment management company handle all of that for you. Most have their own attorneys who will guide them through the process and give unbiased advice. 

Dealing with Vacancies

If an apartment becomes vacant at your property, your apartment management company will take care of advertising the vacancy through both online and printed outlets. Their listings will include photos, apartment details, and contact information.

Tenant Screening

Once there are interested tenants, the apartment management company will screen them and run background checks to ensure they are a good fit for your property. 

Lease Agreements and Security Deposits

After finding a tenant who is a good match for your apartment property, they will move forward with getting the lease agreement and security deposit. They will request, hold, and return security deposits based on federal and housing regulations. 

What to Consider When Paying for an Apartment Management Company

Typically, property management companies will charge anywhere from 8% to 12% of your apartment’s monthly rental value plus expenses. This is something you will need to consider before opting to go with an apartment management company. Take a look at your finances and make sure this is something that you can feasibly do while still personally profiting. 

You should note that some companies will charge additional fees for the following:

• Maintenance: Discuss with the apartment management company whether or not management is covered in the fee. If not, there needs to be a discussion of a maximum fee they can charge.
• New Tenant Acquisition: Some companies will charge you for each new tenant they bring into the property. Make sure they are upfront about these types of fees, so you know what to expect.
• Late Payments: Apartment management companies may try to charge anywhere between 25-50% of all late charges collected on delayed rental payments. This can be very costly for you, so figure out if that is something they do before signing a contract.
• Evictions: Whether you do the eviction or they do, you’re going to pay fees. Just be aware that you will likely be hit with a few hundred dollars for the process, plus the bill for any legal fees. 

Summary

There is a lot to consider when it comes to apartment management and what is right for you. You may be a real estate investor who invested in an apartment complex because you knew it was good money. Now, after a year or so of putting all of your time into it, you are ready to start a new business venture and don’t want to be tied down by apartment management duties. In that case, you would choose an apartment management company. If you manage your apartment complex and are very happy with it, then you have no reason to invest in the management company. It’s whatever is best for you and your business. If you’re ready to grow your business in a new direction, check out our education page.