Who Manages Your Management Company?

For years, financial and real estate experts have touted multifamily real estate as one of the most stable and efficient ways to grow wealth. However, mismanagement of such properties can lead to major financial disasters for owners. In Tampa, over 50% of multifamily real estate properties can be classified as asset type D and below due to various signs of financial stress such as rent below market, low occupancy, low rent collection performance, bad tenant management relations, high turnover expenses, bad reputation and online reviews, and lack of capital improvements.

While some multifamily property owners may choose to be hands-on and manage their properties themselves, many others are passive investors who rely on property management companies to handle the day-to-day operations of their properties. This can be a smart choice, as property management companies have the ability and resources to handle tasks such as rent collection, maintenance, and marketing, which can be timeconsuming and challenging for individual property owners to handle on their own. However, it is still up to the owner to make important financial decisions that will affect the overall success and profitability of the property.

As a passive multifamily property owner, you need to have access to key financial information to make sound financial decisions. This information includes:

• Rent Roll: A document that shows the total rent charged for each unit and the total rent collected, as well as any delinquencies or vacancies.

• Profit and Loss Statement: A statement that shows the revenue, expenses, and net income or loss for a given period.

• Bank Reconciliation: A process that ensures that the balance on the bank statement matches the balance in the accounting records.

• Key Performance Indicators (KPIs): such as occupancy rate, rent growth, revenue per unit, and operating expenses.

• Market Analysis: An analysis of the Market and Submarket multifamily real estate market, including market rental rates, vacancy rates, and market trends, to help inform decisions on pricing and marketing.

• Capital Expenditure Plan: A plan that outlines the expected costs of major repairs or upgrades to the property, such as roof replacement or HVAC upgrades, turnover costs.

• Budget: A detailed plan that outlines expected revenues and expenses for a given period.

Having access to this financial information will help you make informed decisions about your multifamily property and ensure that it is running efficiently and profitably.