For many investors, owning multi-family apartment buildings is a fast and safe way to build wealth through real estate. Investing in multi-family rental homes comes with unique challenges. It’s not the same as managing a single-family home, and the tenants, maintenance issues, and requirements are extremely complex.
San Diego property management
is a valuable tool to support the needs ofyour investments.
Higher Turnover in Multi-Family Units
Losing a tenant isn’t quite as alarming with multi-family units because you have rents coming in from other residents. However, you do have to be prepared for the potential of higher turnover with multi-family homes. Single-family tenants often stay in place longer, but your multi-family tenants rarely reside in the unit for five to ten years.
Higher turnover rates will require that you keep your properties well-maintained to quickly attract new tenants when needed.
Utility Management in a San Diego Apartment Complex
Another challenge to multi-family investing is the utilities. In a single-family home, it’s reasonable to expect your tenants to set up their own accounts and pay the monthly bills. But with several residences within a single building, this can get more complicated.
You shouldn’t be responsible for paying utilities for all of the units in your building. You’ll need a plan to split those costs, and there are a few different ways to handle that. The process of separating utilities depends on whether you're dealing with an apartment complex or a smaller multi-family residence, like a duplex. One way is to have submeters for each unit, which will ensure that your tenants are responsible for what they use.
Another option is to divide the utility bill among all your tenants. Unfortunately, that can be seen as unfair since some tenants tend to use more water or heat than others. Including utilities in the rent is another method to recover these costs.However, you could end up losing money if you don’t charge enough for heat, water, etc.
Keep in mind that new California laws require water meters and submeters to be installed in apartment buildings constructed after Jan. 1, 2018. This is meant to encourage responsible water conservation given California’s history of multi-year droughts.
Managing San Diego Tenants
Tenant relationships are always important, but with multi-family properties you can often find yourself dealing with conflicts and disputes among your tenants. Examples of such disagreements could be due to noise complaints, trash issues or parking problems.
The key is a strong lease agreement. When tenants violate that lease agreement, you can give them notice to comply or take the appropriate
steps to evict them. Document everything and do your best to keep problems from escalating. Good tenant screening, including eviction history and landlord references can help you avoid excessive tenant issues in San Diego multi-family apartment buildings.
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