SS176: Renting Out Your Multifamily Property: What You Need to Know

SS176: Renting Out Your Multifamily Property: What You Need to Know

When renting out your multifamily property, many details exist to make it successful. In this episode, Charles discusses making your multifamily property a profitable investment.

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Talking Points:

  • When renting out a multifamily property, there are several considerations and responsibilities for the property owner.
  • Legal Considerations
    • Knowing your local laws. Review local property owner-tenant laws, as they can vary widely. Does your market have rent control regulations? What are the eviction laws and fair housing practices? Even if you are not self-managing the property and have an attorney who is assisting you, you need to know the local landlord laws and regulations.
    • Tenant screening. Tenant screening is one of the most important parts of renting multifamily properties. If you get tenant screening right, you have avoided most landlord issues.
      • What are the tenant requirements you are setting? Minimum credit score, minimum income requirement, will applicants with criminal records be considered?
      • What program are you using to verify the validity of the applicant’s information? Since COVID, there has been a huge spike in fraudulent rental applications, and several programs and services will verify the applicant, their information, and their employment.
    • Creating a lease agreement. You can find lease agreements online, but it is always important to have your attorney review them beforehand. We sell state-specific property management forms in our store at Syndication Superstars.com.
    • Security deposits. How much of a security deposit can you collect? How are you going to handle your tenant’s security deposits? Where are you allowed to store those security deposits? How soon do you need to return the security deposit after a tenant moves? States have specific rules regarding security deposits, and you must understand and follow these laws when handling them.
  • Financial Considerations
    • How much are you renting the units for? How are you arriving at this rental amount? Are the rent comparables you are reviewing from nearby properties of the same vintage and condition?
    • Who is renting the units? Will you be renting units yourself, or will someone else be renting them for you?
    • How are you marketing the units for rent? There are several good free and low-cost paid options online. When inquiries come in, ask them how they found out about the unit for rent.
    • If you are not renting the units yourself, how will that person or company be compensated? Are they only paid when the unit is rented or if/when the tenant renews?
  • Property Management
    • After you have rented the units, how are you collecting rent? How are you handling tenant issues and inquiries?
    • Having a system to collect rent and respond quickly to tenant issues is paramount to being a successful multifamily property owner. I would find an online portal to streamline the rent collection process. There are some very technical ones, but if you only have one property, try finding a simple one that will help with rent collection.
    • Now that rent collection is automated. How are you handling tenant issues and emergencies?
    • Handling emergencies is important. Possibly, in the online portal, they can submit issues, or maybe they will text you (I would try to avoid texting), but you need to have at least one phone number for emergencies. This is for them but also you. If a pipe bursts, you want to know as soon as possible. I don’t want them to submit a ticket online. You can have one number that rings your number and possibly your handyman’s number that is only for emergencies.
    • It is important to always respond to tenants promptly, 7 days a week. If there is an issue, respond and let them know you received their message. If it is not urgent, you can tell them you will reach out on the next business day.
    • Open lines of communication with your tenants and fast responses while quickly resolving issues are key to keeping good tenants in your property and becoming a successful landlord.

Transcript:

Charles:
Welcome to Strategy Saturday; I’m Charles Carillo, and today we’re going to be discussing, renting out your multi-family property what you need to know.

Charles:
When renting out a multi-family property, there were several considerations and responsibilities for the property owner. Number one, are the legal considerations. Knowing your local laws, review local property owner tenant laws as they can vary widely. And does your market have rent control regulations? What are the eviction laws and fair housing practices? Even if you’re not self-managing the property and you have an attorney who is assisting you, you need to know the local landlord laws and regulations. Next is tenant screening. Now, tenant screening is the most important parts of renting multifamily properties. If you get the right tenants in and your screening is correct, you’ve avoided most landlord issues. What are the tenant requirements you are setting? What is the minimum credit score you’re accepting?

Charles:
Minimum income requirements, will applicants with criminal records be considered? And what program are you using to verify the validity of the applicant’s information? Now, many years back, we never used any type of program for verifying the applicant’s information, but since covid, there’s been a huge spike in fraudulent rental applications and several programs and services. We’ll verify the applicant, their information and their employment. We used to just run a credit check and a background check, but now you have to go really in depth and verify that the income is correct, creating a lease agreement. Now, you can find lease agreements online. We sell state specific property management forms in our store@syndicationsuperstars.com, but it’s always important to have your attorney review them beforehand going forward. Security deposits, how much of a security deposit can you collect and how are you going to handle your tenant security deposits?

Charles:
Where are you allowed to store those security deposits? And how soon do you need to return the security deposit after a tenant moves? Now, states have very specific rules regarding security deposits and you must understand and follow these laws when you’re handling them. Number two is financial considerations. How much are you renting the units for and how are you arriving at this rental amount? Are the rent comparables you’re reviewing from nearby properties at the same vintage and condition? And who is gonna be renting the units? Will you be renting the units yourself or will someone else be renting them for you? And how are you marketing the units for rent? There are several good free and low cost paid options online, and when inquiries come in, ask them how they found out about the unit for rent. Now, I found this varies widely between region and region.

Charles:
So in one area, one state, we one property we have, we use a, we use Zillow a lot. It’s huge. And we don’t really use, we don’t really get anything on apartments.com and literally a state away in a different market. It is the opposite. So you really have to try where your property is and you have to really experiment with what’s gonna work best. And then when you’re renting, again, you take this information and you’ll know exactly where you’re gonna spend your time and your money to rent that property as soon as possible. Now, if you’re not renting the unit yourself, how will that person or company be compensated? And are they only paid when the unit is rented or also when the tenant renews? Third is property management. So you have the unit, it’s been rented, how are you collecting rent and how are you handling tenant issues and inquiries?

Charles:
Having a system to collect rent and respond quickly to tenant issues is paramount to being a successful multifamily property owner. I would find an online portal to streamline the rent collection process. That’s number one. And there are some very technical ones out there, but if you can find, if you just have a small portfolio and you can find one that’s a simple one, that’ll just help with rent collection. That’s really what you need at this point. Now that rent collection is automated, how are you handling tenant issues and emergencies, possibly in the same portal, but handling emergencies is really important. I really wanna talk about this because yes, you might be able to find a portal, have a portal that’s going to, you know, submit in inquiries, and you’re gonna get these inquiries out the other side that say something is broken in someone’s apartment and it needs to be looked at.

Charles:
But when you’re dealing with emergencies you really want to have, and you really need to have a phone number. And I try to avoid any kind of texting. So if people are putting in inquiries, have them put it through the portal, okay? But when you having emergencies, you wanna let people know that there is a phone number available twenty four seven for emergencies, and this is for them, but it’s really for you. I mean, if a pipe burst at one of my properties, I want to know as soon as possible. I don’t want them to submit a ticket online. I don’t want them to text me. I want them to call the number that’s gonna ring possibly my handyman’s number at the same time as mine, which is the best situation, and maybe another third person if I had a partner or something. But I want someone to know immediately that there’s an issue at that property.

Charles:
Now, it’s important that you always respond to tenants promptly seven days a week. If there’s an issue, respond and let them know you’ve received their message. If it’s not urgent, you can tell them that you’ll reach out in the next business day. Open lines of communication with your tenants and fast responses while quickly resolving issues are key to keeping your good tenants in your property and becoming a successful landlord. Now, I hope you enjoyed. Please remember to rate, review, subscribe, submit comments and potential show topics@globalinvestorspodcast.com. If you’re interested in actively investing in real estate, please check out our courses and mentoring programs@syndicationsuperstars.com. That is syndication superstars.com. Look forward to two more episodes next week. See you then.

Charles:
Have you always wanted to invest in real estate, but didn’t have the time, didn’t know where to find the deals, couldn’t get the funding and didn’t want tenants calling you. Since 2006, I’ve been buying income producing properties and great locations that provide us with consistent passive income. While we wait for appreciation in the future and take advantage of tax laws while we’re waiting and unlike your financial advisor, we invest alongside our investors in every property we purchase. Check out to investwithharborside.com. If you like the idea of investing real estate, if you like the idea of passive income partner with us at investwithharborside.com, that’s investwithharborside.com.

Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.

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