How to Manage and Maintain Your Rental Property

Managing and maintaining commercial rental properties can be challenging. We asked Keagan Finley, Senior Vice President of Multifamily Sales with ELIFIN®, to break down some of these challenges and give his advice on when and how to handle them. 

Small vs. Large Rental Properties

Size is one of the biggest factors on the personal effort required to care for the property. For instance, Finley points out that managing an eight-unit multifamily property yourself might be practical. “Whereas, with a 50-unit apartment building,” Finley says, “it might be smart to have a third-party management service. When you get to 100 or 150+ units, you’ll likely have an on-site manager that runs the show.”

The trick is to figure out the right time to switch from self-managing to hiring a property manager. When it comes to smaller properties, the decision to self-manage or hire third-party comes down to cost. Finley explains, “For smaller properties, if you hire third-party management, you might get a lower return on your investment because you’re paying people to manage your properties. It doesn’t really make sense to do this until you scale up.” 

Commercial Buildings and Lease Types

The complexity of managing commercial properties can vary by type, whether it’s multi-family, retail, industrial, or office. For example, some lease types dictate that the tenant is responsible for maintenance. “If they’re on triple net leases, everything is on the tenant. If it’s full-service, everything is on you,” Finley notes.

You should also consider how the tenants pay rent. “Sometimes, if it’s a Class C property, tenants may pay cash for the rent instead of using checks or ACH. There are systems for managing this, but you pay money for them.”  When these and other factors delegate more responsibility to the owner, you might prefer to outsource management and maintenance of your property.

How to Choose the Right Property Management Company

Selecting the right property management company is a good path to stress-free ownership. According to Finley, a good property manager will have great communication and be reliable. “You need someone you can trust. If you’re hiring a company, they usually follow rules and regulations and are generally trustworthy. You can hire an individual to manage your property, but you need to trust them big time.” When shopping for property managers, Finley says a good rule of thumb is to consider their reputation, as well as their rates. “It’s similar to brokerage,” Finley says. “If you hire someone who charges 4% versus someone who charges 6%, there’s a reason for the difference in rates.”

Common Challenges in Maintaining Rental Properties

One of the most significant challenges in maintaining rental properties is finding good tenants. “I’m in investment sales now,” Finley shares, “but when I started, I was a generalist doing leasing for commercial properties. The biggest thing then was vetting the tenants upfront before they occupy the space.” Doing so can prevent stressful property management situations before they happen.

“You need to know if that tenant is going to take care of the property as if it were their own,” says Finley. “Are they going to pay rent on time? If not, you’re taking on the risk that they may destroy the property. The same goes for multifamily assets. If a tenant doesn’t take care of the unit, when it’s time for them to leave, the whole unit could be destroyed. You might have to spend five or ten grand, or whatever it takes, to get it back up and running and rent-ready.”

How Stressful Is It to Manage or Maintain a Rental Property?

Managing rental properties can take a lot of effort and requires a strategic approach. By understanding the specific circumstances of your property type, lease agreements, and your management options, owners can make informed decisions to minimize stress and maximize returns.

Elifin Realty
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