When investing in a multifamily real estate fund as a limited partner, the property’s management style should be one of the first details you review.
Why? Because it won’t matter how many investors are involved or how much capital the fund collectively raised: if the properties you’re renting out aren’t desirable to prospective tenants, your fund will struggle to succeed. The team running your fund may know the ins and outs of investment, but do they understand how to manage a property? Are their tenants happy and fulfilled? Is the vacancy rate high?
If the answer is no, we suggest you run, don’t look back, and redirect yourself to a team who gets it—like us!
Here are some of our top tips when it comes to managing a multifamily property—a.k.a., the recipe for the secret sauce to real estate success:
9 tips for successfully managing a multifamily property
1. Do your research
The first step will require your fund’s management team to sit back and observe—a.k.a., research exactly what it takes for a multifamily property to succeed.
A thorough team will explore national, statewide, and regional trends to determine what prospective tenants will be looking for/drawn to. They’ll also understand the importance of property operations, how to utilize it to attract people, and the sort of operational team they should build to conquer the property’s day-to-day.
2. Build your team
A successful operations team is dynamic, flexible, and has a deep understanding of the real estate landscape and the specific region they’re operating in. Key roles include:
- Leasing agents
The salespeople of the real estate world, leasing agents work with the operations team to market the property. Leasing agents conduct competitor research to determine rental rates, advertise units digitally and in–person, manage tours, and negotiate lease terms on your fund’s behalf.
- Property managers
The problem-solvers of the real estate world, property managers handle the day-to-day we’ve been discussing: rent collection, unit repairs, contractor management, and communication with tenants. Property managers are typically your tenants’ first point-of-contact for complaints and requests.
- Asset managers
The Wizards of Oz of the real estate world, asset managers are usually hidden behind the curtain, but still doing important work for your fund. Their role is to maximize the value of the fund’s assets. These managers make crucial business decisions based on the fund’s performance, market analysis, and investor reporting.
3. Incentivize your team to do a great job
Okay, so you’ve built your team. How do you make sure they’re set up for success?
Creating incentives is a powerful way to inspire employees to do better and work hard for that shared goal of fund success.
At Leapfrog Funds, we incentivize our partners not only through monetary motivation but also by encouraging autonomy. The team is free to work with ownership to create and executive a business plan and budget, which gives them a sense of responsibility and creativity they are personally tied to and invested in.
We make sure every person on our team has the tools to know what decisions to make, and why each step is so important for success. We also help teammates identify the specific “number” they need to be successful as a Leapfrog Funds team member, or as a service provider to the fund.
4. Monitor your team’s success with KPIs
Keeping track of your team’s progress is essential for forecasting future success and continued improvement. We recommend using Key Performance Indicators (KPIs) to drive that success, like the property’s vacancy rate, the percentage of on-time rent payments, total collected revenue, maintenance and repair costs, and tenant turnover rate.
5. Check your accounting
Your property’s management team needs to be proficient in various multifamily property management software programs, like RentRedi or Buildium. These types of platforms offer integrated accounting systems and comprehensive reporting that will help your team make better operational decisions.
Your team should regularly review the following:
- Cash Flow Statement
- Balance Sheet
- Profit and Loss Statement
- General Ledger
- Monthly A/R Collection Report
- Rent Roll
These reports provide valuable insights into all property income collected and all invoices and expenses paid, which you’ll want to keep investors regularly informed on.
6. Be proactive with maintenance and renovations
This one’s a no-brainer, as high vacancy rates will destroy any real estate asset. Who wants to live in a unit that is obviously outdated and constantly giving them problems?
That being said, it’s essential to build a team who is proactive about repairs and renovations. This will position your property as a place that cares. When tenants feel their needs are anticipated, recognized, and met, they’re much happier at home—and much more likely to tell other people how fantastic your property is.
7. Focus on community and resident relations
Similarly, focusing on the morale of your property’s community can make or break your success as a management team, and it doesn’t take much!
Implementing fun initiatives like game nights, movie showings, or community gardens is a great way to enable your tenants to feel connected to one another, and therefore connected to the property as a whole.
8. Increase income, lower operating expenses
While all of this is going on in the background, someone on your management team should be constantly seeking out new ways to increase your fund’s income and lower operational expenses. This might look like exploring new smart technologies, searching for new revenue streams, or keeping an eye out for bulk discounts from vendors or insurance companies.
At Leapfrog Funds, we regularly seek new methods for increasing revenue stream while reducing cost. For example, we might offer valet trash services, vending machines in common areas, designated parking spots, laundry machines, storage units, and roof-covered parking. We also try to develop underutilized land or space for an asset that will yield high rents.
Continue the conversation
When it comes to managing a multifamily real estate property, don’t be afraid to dive deep into various operational strategies to find one that works best for you. There is no one-size-fits-all plan for success, but understanding your team, your potential tenants, and the neighborhood you’re working with will give you a huge leg up for making those initial decisions.
Interested in learning more about our tips and tricks for property management? Contact us today to continue the conversation. We’d love to hear from you!
