What do you think the most important thing is in terms of success of an Apartment property?Did you mentally answer? I know your answer was one of the following:
- Tenant Mix.
- Being Able To Raise Rent.
- Being Able To Reduce Expenses.
- Buying At A Discount.
- Have 1, 2 or 3 bedroom units, or larger
I could go on – but my guess is that your answer was probably around one of these seven correct?
Well, if you did answer one of these seven you would be wrong! The most important success factor to any apartment property is: MANAGEMENT!
This is really what makes or breaks a property.
Management – What makes a property produce a lot of cash flow OR a lot of headaches.
Management – What makes a rental property a total success or a total pain in the you know what.
Property Management – What grows the financial success of every apartment property.
I have seen more properties that were dynamite at the time of sale turn into a real dog that ends up losing money and losing value over time. The funny thing then is the owner, when it comes time to sell, is shocked that the value of the property is less than what he or she thought because of mismanagement.
Many investors do not even consciously know they are mis-managing their properties and their properties are not really “what they thought they were”. Too often they find this out when it comes time to sell or cash out…finding that the value they thought was there…isn't.
So, avoid a nasty financial surprise by staying on top of the management, even if you are not managing the property yourself.
The best advice I can give you is this, “Think Like The CEO of Your Apartment Investment Business.”
Do not think like the maintenance guy, or the bookkeeper, or the leasing agent. Think like the CEO. Take a high-level view of your investment, and what needs to be addressed. I have found this is especially challenging for those that manage properties themselves – but take some time to look at WHAT needs to be done from a STRATEGIC standpoint. Remove yourself from how difficult or easy those things might be but – what are the payoffs?
By keeping this at the forefront you will avoid any nasty surprises and be in a position that if some mismanagement is going on you can proactively take care of it. Apartments can provide you a ton of wealth building and cash flow BUT you need to make sure you got THIS step right!