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Whether you have two units or twenty, leasing out multiple apartments means there are more tenants to deal with, more appliances that will need repairs and more time to be spent on managing your properties. Not to mention the time spent researching where to invest in your second property. Despite all of this, in some cases, it is worth the extra effort required to look after multiple units and multiple sets of tenants.
In this article, we’ll explore both the benefits and the costs of maintaining multiple units, as well as some simple tips to make your life easier should you decide to pursue this form of landlording.
What Are the Benefits of Buying Multiple Properties?
Buying multiple properties come with tons of advantages to consider. Here are the top five benefits of buying more than one rental property.
1. Increase Monthly Income
The more property you rent, the more money you can make. If you want to make landlording a larger portion of your income, consider adding another unit. If you’ve already been a landlord for at least two years, you’re more likely to get a bank to see your rental income as an actual revenue stream to help justify a mortgage on additional properties.
2. Cheaper Repair Service
If you end up renting out multiple units and use the same repair services for each of the units, there is a high possibility that the service workers or agency will offer you a discount for your repeat customer status.
Even if they don’t offer this, they may consider a discount if you simply ask. The more units you have, the more your rental business can scale and share maintenance across units.
3. Vacancy Diversification
The more properties you have, the less you have to worry about a vacancy having a devastating impact on your incoming cash. With just one unit, when a vacancy lasts more than a month it could put you into arrears with your mortgage. Additional properties help diversify against any one unit being vacant for an extended period of time.
4. No Starting Costs
Because you’ve already started your rental business, you’ve already paid for a number of the starting costs involved. The marginal cost for adding a second, third, and fourth unit will mean that the most fundamental costs to running your business will be spread out over all of them, with the exception of the purchase price of the new property.
5. No Learning Curve
You’re already familiar with what it takes to be a landlord. You know how to prepare a lease, you know how to advertise your unit, you know how to find quality tenants, and you know how to maintain a well-run apartment.
Adding another unit to your already existing one will be much easier than it was to start from scratch. They always say the first one is the hardest.
Are You Ready for Another Unit?
Owning more than one property comes with lots of responsibilities. Before expanding your portfolio, you must first ask yourself if you’re ready to take on another unit.
1. Making More Repairs
Of course, the more units you have the more problems you have. You’ll be having to pay for more repairs (or make more yourself) and will be all the more likely to have to make these repairs at inopportune times.
Overall, taking care of multiple units will, of course, take up a larger amount of time and make a bigger imposition on your life than simply one unit. Depending on the number of units and tenants you have to take care of, landlording could become similar to a full-time job.
2. More Problems With Tenants
Simply because you’re dealing with more people, you’re going to have more landlord-tenant disputes. While the non-personal aspects of being a landlord will be easier the more units you have, the chances of having a tenant with a unique or especially difficult circumstance are increased. It’s hard enough to find one high-quality tenant, let alone two or three.
If headaches involved with problem tenants, such as chasing after rent or dealing with evictions, isn’t worth it to you, strongly reconsider taking on even more units.
3. Finding Another Rentable Property
If you would have to buy another unit in order to rent it out, you’re going to have to look into just how much money you would make, and the time it would take to pay off your purchase through renting it out.
There is potential for money to be wasted if you invest in a property that doesn’t rent quickly or has long non-rental times between different tenants. Any costs then have to be covered by the money made from your other property, which means less income for you.
Remember that being a landlord involves investment and real estate, so you have to be willing to deal with the fluctuations of the market accordingly. But, again, if you have the financial flexibility to do so, you could have a lot to gain.
4. More Time Devoted to the Business
Unless you delegate the responsibility of running your units out to a building manager, having several means that you need to take enough time to ensure that each is run well and given attention.
Even if you do have a manager, there are some aspects of the business that you will always have to handle. Because of this, we highly recommend having an uncomplicated system where you can view all your rentals in one place and deal with issues systematically.
Avail can help you set up an online portal for tenants to pay rent, help you create customized leases that can be signed online and more.
Tips for Managing Multiple Properties
To help you manage more than one rental property, we share three tips to consider as a landlord.
1. Use The Same Repair Companies
Always use the same repairs companies for each of your units. This will help you to build up a relationship with the workers and the company. And because you’re a loyal customer who provides a lot of business, they may be inclined to help you out as early as they can, and may even throw in a discount. As mentioned earlier, this can be incredibly important and helpful for people who are running multiple units.
However, don’t sacrifice quality of service for any of these benefits. If a service is unreliable, expensive, or doesn’t value your business, look for a better one. Only once you are satisfied with the service should you become a repeat customer.
2. Stay Organized
It’s important to keep all of your documents organized when you’re dealing with different tenants in different properties. Keeping all your documents in one place not only makes things more convenient but will make your business more professional and prepared.
Avail can help you establish an online portal on which to store all of your important documents, and can even provide copies of different forms that need to be signed when the lease is signed.
3. Personalize Each Property
Don’t just make a copy of the lease from your first rental property for your second and third. These units may have unique characteristics that the other unit did not, and you will need to specify them in the lease. Don’t just assume that all properties are created equal.
The issues may range from a difference in amenities to health and safety problems. You don’t want to get in trouble with your tenants because you forgot to put a mold clause in for your second unit because the first didn’t have it.
Manage Your Properties With Landlord Software
Just as making the decision to become a landlord is a big one, making the decision to transition from a single-property landlord to a multi-property landlord is just as large. Weighing the pros and cons to decide if it is right for you is an important step.
At the end of the day, it is a personal decision that can only be decided with reflection on your personal financial situation, among the topics listed above.
However, you can reap the most reward from multiple units if you have a system for managing them that allows you to minimize the time, money, and hassle needed to do so. Online rental software like Avail helps do-it-yourself landlords screen tenants, create leases, collect rent, and manage maintenance — all online, free for unlimited rental units.
Learn more about managing your properties with Avail.
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Online rental leases are essential to successfully managing a rental property, but knowing all the moving parts to a legally-binding agreement can be stressful. Not only do you have to ensure it complies to local ordinances, but there are specific clauses your rental agreement needs to be protect yourself from a legal standpoint.
To make the overall process easier, we shared some quick and easy lease tips for every stage of the process. From drafting the lease to knowing what your tenants are looking for, our team of industry experts explain everything you need to know as a DIY landlord.
Key Clauses: How to Prevent Sudden Expenses
When a tenant occupies your rental property, it’s their responsibility to take care of your space and alert you on any damages that require immediate attention. Considering the rental lease you set in place acts as a contract between you and the tenant, it’s advised to include the following clauses to avoid a sudden expense.
- Garbage Removal clause: Specify if you or your tenant is responsible for paying for pickup fees, and how often the garbage has to be removed in order to avoid becoming a serious problem.
- Cleanliness clause: If a tenant doesn’t follow the basic rules of cleanliness in their home, then you have the right as landlord to evict them. However, be sure to establish your standards of cleanliness so your tenant is well-informed.
- Severability clause: This clause states that should one aspect of the lease be found illegal, the rest of the lease will still be held as legally binding. Without a severability clause, the rest of your lease agreement can be null and void due to this one oversight.
- Late Fee clause: If and when you have a tenant who is late on their rent, you will have a set procedure in place to deal with the situation. This establishes a grace period for turning in rent late without penalty, as well as any fines for failing to turn it in within that period.
- Subleasing clause: In some states you have no choice but to allow your tenants to sublease (as long as they meet your typical screening criteria), but in other states, you can specifically dictate whether you allow subletting or not.
Legal Tips: Make Your Rental Lease Stronger
As a DIY landlord, you want to ensure your online rental leases are legally-binding and protects you from any legal issues that can arise. While you can create a state-specific rental lease agreement directly on Avail, here are additional steps you can take to make your rental lease stronger:
- Walk your tenant through the lease: Sit down with your tenant and have them initial every single clause within the lease. Answer any questions they may have. This way, should you ever go to court, they can’t claim that certain clauses were unclear or they didn’t know about them.
- Specify all Items to stay in the unit: If you are offering a furnished or partially furnished unit, be sure to specify what came with the apartment and should stay with the apartment. Don’t be afraid to get specific and include everything down to the curtain rods. Should the tenant leave the apartment with some of your furniture in tow, you will have a degree of legal protection with this clause.
- Keep multiple copies: Keep multiple copies of your lease, preferably both online and offline. If you have your tenants e-sign your lease with Avail, you’ll have 24/7 access to executed leases. If you have a hard copy of your lease for your tenants to sign, be sure to scan it onto your computer after the lease has been signed.
- Have it reviewed by a lawyer: Even before you send it to your tenant to sign, if you are drafting your own lease, be sure to have it reviewed by a lawyer familiar with landlord law in your local area. This will ensure that anything faulty or illegal that you didn’t catch on your own will be changed. However, know that you don’t have to have your lawyer present when the tenant signs the lease. A basic reading beforehand will be totally sufficient.
Rental Lease: What Tenants Look for in a Lease
The rental lease agreement for your property is for both you and your tenants. There’s certain information they’ll be looking for to ensure their renters rights are protected and provides important information such as:
- Emergency contact information: Tenants are going to want to know that they can contact you at any time should there be a maintenance situation or other emergency that needs immediate attention.
- Termination penalties: Although tenants don’t usually go into a lease thinking they will break it early, many tenants want to see that the termination penalties are clearly spelled out. Additionally, they will want to know how many days notice they will need to give before moving out, which should be specified in the lease.
- Extra fees: If you are charging your tenant extra to bring in a pet, or to install a satellite dish, they will want to know what those are.
- Maintenance clauses: Tenants are going to want to know what kinds of maintenance they are responsible for, as well as what they are able to ask you to do.
- Policies on Renter’s insurance: Whether or not you require tenants to get renter’s insurance, savvy tenants will know to look in advance as to whether they will be required to get some or not.
Draft and Sign Rental Leases on Avail
Drafting a rental lease is easier with the right property management software on hand. Whether you’re looking for state-specific lease templates or looking for a platform that allows you to electronically sign agreements for free, Avail works to make renting easier for landlords and tenants.
Create an account today or log in to start drafting your first online rental lease with Avail. For more information on online rental lease, check out the Complete Guide to Rental Leases to get an in-depth view on everything lease agreements and more.
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