5 Steps To Take After Buying Income Property
You bought the income property, now it’s time to crack the whip and get it into shape. The sooner this is done, the sooner you can put things on auto pilot. First things first:
Notify tenants of ownership change & meet with them
This seems pretty obvious but it goes overlooked many times. Tenants are your customers. Happy customers pay on time, respect the property, and stay longer. As the new owner, existing tenants will view you much like the previous landlord. Regardless of the previous owner’s management style and tenant relations, it’s important to come in right away and set the tone. Your goal is simple, gain the tenants’ trust, find out what outstanding issues or deferred maintenance might need immediate attention and resign or extend leases.
Change the locks and master key the building
Maybe you got lucky and the building already has a master key system. Odds are good that the previous owner handed you a bag of unmarked keys at the closing table. Eliminate this hassle day one. A great time to change the locks is when you meet with your tenants. The tenants will know you mean business and will appreciate the added sense of security.
Service heating/cooling systems
If you inspected the property prior to purchasing you probably have a decent idea of the condition of the heating and cooling systems. If there is a central heating system, it’s a good idea to have the system serviced, even if you are in the dead of winter and it looks to be working properly. If the building has individual heat, set up a schedule for routine maintenance of the individual units. The only time tenants check on heating/cooling units is when they don’t work. Don’t let it get to that point. Preventative maintenance = lower overall operating costs.
Put up a management/ownership sign and include info for rentals
This is a requirement in many cities and in general it makes good business sense to have a sign with your name/company name, phone number and even some rental info. If there is a problem at the building, everyone will know how to reach you, including neighbors and the authorities. This is also a good source for future tenant inquiries and you will probably field calls from prospective buyers from time to time.
Start thinking of ways to add value and increase rents
Owning investment property is a business even if you only operate a few units. Remember, tenants are your customers and eventually you will sell this property. Think of creative ways to add value that justify higher rents and a higher sale price down the road.
Here are a few simple ideas: add common laundry or laundry in the units, keep the kitchens and baths updated, provide storage units if space allows, create an appealing outdoor community area, be meticulous about cleaning the common areas of the building and maintaining an appealing exterior, provide basic cable or internet and include it in the rent.
The list goes on and is only limited by how much you want to invest in the property. The best thing you can do if you don’t want to invest money in capital improvements is provide a clean, safe and comfortable environment and be responsive to tenants needs.
Brent Hall is a Broker Associate with Jameson Sotheby's International Realty, Chicago. Contact Brent Hall to discuss buying or selling real estate in Chicago.