The 5 C's of Effective Property Management
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I’ve spent more than two decades in multifamily property management. And, for the most part, I’ve been successful. Here’s how...
23 years ago I founded Multihousing.com. I’ve transacted on more than 120 affordable housing properties. Our success in the space has been driven by passion, perseverance, and by following five rules when managing a multifamily property. We call them the 5 C’s and it’s how we at Multihousing.com approach our properties each and every day.
#1: Curb Appeal
Curb appeal refers to the overall visual attractiveness of a property. Most people think of curb appeal as a property’s exterior elements such as the landscaping, architecture, paint color, and overall condition of the property. However, curb appeal can and should also include the interior common areas and units themselves. Curb appeal is intended to create a positive overall impression for potential renters that draws them to your property.
When we acquire a property our renovations are comprehensive with a distinct aim of improving a property's overall curb appeal. While our focus is on affordable properties our renovations leverage upgrades typically only seen in higher-end or luxury units. Examples include highly-durable wood vinyl plank flooring, extra large 5 ¼” baseboards, and glass mosaics or stone backsplashes in the kitchens. On their own, each of these upgrades is impressive, but in combination, these elements create a truly distinct home that is differentiated in the market.
Keeping a property at capacity is critical to its overall success. Aside from the financial benefits, capacity is important for several reasons:
Maintenance: Keeping a property at capacity ensures the majority of units are in use, which helps to maintain the overall condition of the property and reduces the need for costly repairs typically seen from neglect.
Market Competitiveness: A full property is more attractive to prospective tenants than one that is only partially occupied, and can command higher rents and better terms in a competitive market.
Community Atmosphere: When a property is at capacity, it can foster a sense of community and a positive living experience for residents, which can lead to higher retention rates and positive word-of-mouth recommendations.
Great curb appeal can help your property stand out which in turn can drive leasing velocity and ensure you stay at high capacity levels.
We see our properties as communities and our tenants are our partners, working together to ensure they are set up for success and we, as a company, maintain great collections. Having great collections begins with the leasing pre-screen process. We conduct a thorough income screening of all our applicants to ensure they are able to afford the home. However, the ability to pay one's rent is not the only factor we consider. We also look at the applicant’s leasing past to ensure they have a strong historical financial record and have made historical payments on time and at the target levels.
Our goal is to ensure our tenants feel at home in our properties and are not struggling to make their payments.
For your property to thrive, your rents must be competitive. While our properties are significantly nicer than most affordable housing communities, we work hard to ensure that our costs are comparable. We do this by controlling our own operating costs, focusing on maintaining and continuously reinvesting in our properties. Doing so has helped us keep our properties in top shape and has avoided costly repairs that are often seen when properties are neglected.
Our property management teams are intimately involved in the day-to-day of each community. This provides them with an intimate knowledge of the properties and enables them to identify areas for improvement as well as efficiencies that ultimately help us control costs.
#5 Cash Flow
Positive cash flow is the ultimate benefit of a well-managed property, providing financial stability and the capital required to maintain properties. Additionally, positive cash flow provides the opportunity to service any mortgages on the property, strengthen our financial position and provide a strong return on investment and higher yield. It also provides the resources needed to make additional real estate investments in the future, expanding our portfolio. If the first four C’s are in place the benefit will almost always be a strong cash flow.
While the 5 C’s won’t guarantee your success, they will provide a foundation for it. Combined with passion, hard work, a great team, and a bit of good fortune, you’ll be on the road to becoming a successful property manager as well.