Apartment units can be a steady source of rental income, but they also come with the burden of property management. You might decide to handle this yourself as a property owner, or it might be your career path as a service to others. In either case, apartment management is more than just collecting rent and handling occasional tenant issues. There are a number of internal assessments that should take place on a regular basis so you can be sure that your property is running as efficiently as possible.
1- Competitive Rent
Regular internal assessments are necessary to make sure that you are charging competitive rent for your apartments. While this is an internal assessment, it will involve some external research as you look at your local market to see what units are going for. You want to balance charging enough to be profitable with staying competitive enough to keep your vacancy rate low. Also, look internally at what rates engender long-term tenants so you can avoid the turnover costs involved with replacing tenants who leave. This assessment is also the time to look for ways to add value to your units that make your apartments alluring to tenants in the local market.
2- Maintenance Matters
A second internal assessment that you should have performed on a regular basis is how well your property is managing maintenance costs. Depending on the size of your property, maintenance costs might range very differently. Smaller properties might easily hit 10% or more of rental income on maintenance costs, but larger properties might get as low as 4%. For the most part, you should anticipate your maintenance costs for apartments to fall between 8% to 12% of the overall monthly rent that you collect. Lower is better, but it might indicate you’re not spending enough on maintenance. Higher isn’t always an indication of spending too much, however, as you might have unique costs, including garbage collection, leaf blowing, and snow removal that your location needs.
3- Property Value
While rental income is a big reason to own apartments, you always want to keep an eye on resale value as well. Investment properties such as apartments can both serve as immediate income streams while preserving or even growing wealth over time. Effective property management is crucial to this but only if you are taking the right steps. Specific adjustments that prevent future issues save a lot more money later on, and regular internal assessments can identify the opportunities and challenges that lie ahead. Organized and detailed financial recordkeeping shows you when inspectors did the last round of work in specific areas ranging from roofing to termites.
When you own or manage an apartment complex, you need to have internal assessments happen regularly. These help you protect your assets, explore new opportunities, and correct problems that might happen along the way. It’s a great idea to use third-party professionals for such matters. They can provide your property with an objective view and conduct such assessments with a level of proficiency that’s hard to pass up. The information and analysis they can provide you can help you manage your apartments better than ever, but that only happens if you make these internal assessments happen in the first place.
