This evening I went to look at a 6 plex with some potential investors. It didn’t go very well. They didn’t like the place. I have to admit that it wasn’t very pretty. One of the apartments smelled like cats. A LOT.
Still I like the numbers on this building, the rest is cosmetics. Ask anyone in property management what the nicest high end place can look like after a few months with a bad tenant in it. And how fast we can clean it up! That place has to be ready to rent by the next month.
If you’re like me, you’ve seen the signs of bad management over and over again.
Signs of Bad Property Management
Rental Units Not Prepared For Renting – In this market there is really no better bad tenant attractor than a dirty, unrenovated place. If the place makes you ask “Who would live here?” then you know it’s bad management underfoot.
Bad Attitude – Claims of bad area, bad tenants it’s all a smoke screen for the real problem…bad management.
Vacancy – Just the inevitable result of more bad property management. Two of six of the apartments we saw were vacant. That’s a 33% vacancy rate.
High Turnover – Well that just goes along with crappy apartments and more bad management.
As an investor, signs of bad management should be a sign of good profits to come. With buildings you can’t change the location, you can’t really change the layouts of the apartments, but you sure can change the management. It’s not rocket science to figure out that your apartments should be clean and painted and livable by decent people’s standards if you want to rent them. Area is not an excuse. A viable strategy I have used in bad areas is to simply have the best place around. That way you’ll get the best people that are available. All I have to do is convince a finite amount of decent people to live in a great place in a metropolitan area with millions of people to choose from.
In today’s market investors are desperate for a return. The facts are that returns are hard to come by, they come in unexpected places and you’ll have to work for them. The numbers don’t lie.