Hi everyone! I’ve been presented with an opportunity of a lifetime today and need some advice from you amazing people! My grandfather has been working out his will and apparently, I’m going to be the recipient of his 12-bedroom apartment complex. This is the opportunity of a lifetime but I’m a little nervous owning and managing this property at such a young age (22). The complex needs a lot of work, it’s currently on the lower end for rent for my area, $750 a month 2 bedroom 1 bath units.
I have a few questions and am looking for advise here on how to proceed. I’ve reviewed his lease (which is about 10 years outdated) and have noticed that a newly rewritten one will probably be the first action I take. It is located across the street from a private university, but no university student has ever stayed there. My goal is to turn it into more of a college student housing hopefully, but I know that opens up a whole other can of worms. The college has also presented an offer to buy the property so they can level it and build a parking lot there ($100,000).
I’ve just graduated college and selling the property would be a great short-term option, but my finance side is ready to take this head on and hang on for the long run. How do I manage a property? How do I proceed to meet all my tenants and know if they are good people?
How do I reinforce my soon to be written lease agreement? How do I evict people? How do I handle frequent late payments? If I wanted to get a whole new set of residents, how would I go about getting all the current residents out?
Should I sell now and not take on this project? I will be owning my family business within the next 10 years when my dad retires and I’m unsure how over worked I will be. Thank you all!
The value that the University offered for the property seems low to me. I know that you are young and probably feeling a bit overwhelmed but the reason you went to school is to learn how to think. I think you can manage this property and make money doing so. First of all, if you have some money available, I would have a contractor that your dad and trusts come and do an inspection of the property to find out what the problems are. Some common ones are old and leaky plumbing, asbestos in walls or in popcorn ceilings, mold, rotten wood in joist near bathrooms or kitchen, water leaking under the foundation, sinking or cracked foundation. Once you have that report you will have a better idea if this is something you want to take on.
Second, I am going to recommend that you invest in software for your property management. I own a property management software company, Smart Property Systems and know that we can help guide you all the way as well as provide affordable tools that will keep you on track to be successful.
Once you have done that, you can go to rentometer.com to compare your rents with the rents in the neighborhood that are similar units. Now review the tenant files to see who pays rent on time and who does not. Look at inspection reports to find out how they take care of the property. If there is no data, you will need to ask your grandfather.
Now schedule inspections for each unit. You are required to give notice before you inspect the units and I would recommend at least several days’ notice. Smart Property Systems customer service can provide you with a document to use for inspection. Be sure to fill it out as you go through and have the tenant sign and date it when you finish. You can then make a copy for them and give it to them when you speak to them next. Now you can make a decision about who will stay and who will have their tenancy terminated if month to month and not extended if on a lease.