Milan,
Congratulations on being a multifamily owner and closing on a deal! It means you are playing on the court, not sitting in the stands.
On the surface your numbers look great, but when I looked at your per unit cost your expenses seem very light. Our best run property in GA operates at $2,500/unit and we are using our leverage of managing over 1000 apartments in the same area to get great deals with vendors etc.. Your number is $1,490 which is very, very low. That said your expenses as a % of net revenue is at 37% so not all too bad.
Vacancy seems low if this is a C asset, in a C location. More likely it will be 8-10%. If your 2 non section 8 units are vacant you are already at 86% occupancy!!
I would also factor in concessions, and bad debt. (there is a reason the property is cheap, and that's because you will probably put in a lot of sweat equity collecting rents and dealing with residents)
On to the actual management and what to expect .
As you are discovering that closing on the deal is just the beginning, now starts the real work: Getting the property to perform consistently and provide you with cash flow!
Since you are self-managing I will answer your question from there.
Here is what I would do after taking over a new property (not in any particular order):
0. Join the local landlord association (this is invaluable with access to their documents and services like legal advice etc.)
1. Re-key the office or common areas
2. Conduct lease audit and make sure all documents are there (application, lease, proof of income, proof of payments for security deposit etc.) Make sure that documents are signed by both parties.
3. Market Research (you may have done this already before the purchase, but time to update your information!)
- what are market rents from your comps (call them, use craigslist and whatever other resource you have to get this)
- what is the condition of units for your competitors (shop them!)
- what amenities doe your comps have
- what floor plans does your comps have (size, number of bedrooms and bathrooms)
- do they offer concessions/move in specials
- what term leases do they offer (just 12 months, shorter or longer)
4. Create a Budget with actual numbers not just estimates
- 12 months (plan your work and work your plan!)
- CAPEX (what will be your needs 1,2,3,4,5 years down the road). Get prices now so you know.
- get actual bids from your vendors
5. Accounting
- Complete your acquisition accounting
- setup accounting in quickbooks or apt managment software
- bank accounts (separate for operations and security deposits)
6. Switching Master Utilities (meters) account to new owner
- Will they notify you when residents switch over to their name
7. Establish list of critical vendors/services with summarized contract info and contact details:
- Pest control (termite bonds?)
- Trash Collection (did you assume a contract or will you start a new contract?)
- Insurance company (are you shopping for best rates and coverage)
- Unit Turn Vendors (Paint, Cleaning, Flooring, again are you shopping for best rates and quality?)
- Emergency Maintenance (Plumber, Electrician etc.)
- Lawyer specializing in landlord tenant law (again you can use your landlord association and get familiar with local laws for bad debt collection, evictions etc)
- Police department, do they have community outreach programs that you can join to decrease chances of crime (Cameras and lights are great, but prevention is best!)
- Accountant for tax filings
- Tax appeal lawyer (?)
8. Remove old management information
- Signs, phone numbers, website etc.
9. Establish critical documents for operation:
- what lease agreements you will use
- leasing/screening criteria you will have in place. You can get this from your local landlord association. DO NOT DISCRIMINATE! Have fair standards that you apply to all renters and applicants (income requirements, criminal background checks, identification and document needs, etc.). Charge an application fee if needed to cover your expenses for this.
- rental application
- promise to pay notice for residents that pay late
- notice letters
- eviction letters and legal documentation
- unit inventory sheets
- unit inspection forms
10. Letter to residents for change in management (your landlord association may have a template with information they will need like phone numbers, mailing addresses etc.)
11. Meet and greet all of your residents, (if you haven't done this already, combine it with a complete unit inspection to assess capex needs/maintenance needs/ smoke detector/ leaks etc). (You should walk your units at least twice every year. Or whenever you go to replace filters for HVAC.)
Im sure there is much more you could do, but this is just the basic things that I can think about when taking over the property.
As for management software we use ResMan and we are extremely happy with their software and their customer service. (we use them on everything from duplexes to several hundred unit properties). I cant remember what we pay per unit now, but can find out if you are interested.
I hope this helps.
Please let me know if I have missed something.
Christian
