Duplex/Triplex/Fourplex Renting and Managment in Rural Areas

[Jeremy Dugal]

Good morning.  I am a new investor and purchased my first duplex approx. one year ago in a rural town in Northern Maine (pop. 5000).  Purchase price $60000, 20% down, 4.625% for 15 years.  Two 3 bedroom units.  $1500 per month gross operating income.  

I am interested in purchasing another property in the city in which I live (pop. 9500) and have some concerns regarding the management of this property.  Basically the rental mix in the area is one of either large well managed professional apartment complexes(many for those on fixed incomes ie. over age 62) or older homes that have been converted to apartment units either 2,3,or 4 units.  There are many of these apartment houses in the area however review of the local paper shows maybe 10-12 ads for vacancy per week.  

We live in a culture where I don't think there are very many serious investors.  I think duplex owners are generally doing well but certainly not crunching numbers as they could.  I don't think cap rates are used and comps are minimal.  There are a lot of buy and hold for extended periods of time.  Tenant screening and management seems to be generally lax in the area with maybe references asked for and that's it.  No 3 times income rules, credit checks, or anything like that. Rents are usually month to month and not many leases.  From this I seem to notice quite a bit of turnover.  I can't really comment on credit loss or vacancy rates as I have not looked that far into it.  Basically a lot is done on a friendly handshake and this is an area where everyone knows everyone.

I have been doing a lot of reading and research on management and would like to run my units very systemically in regards to tenant screening, and increasing cash flows systemically. I want to have a good thorough application, no playing around with rates or late payments, implement appropriate fees and rules, and basically use all the processes that lead to a smooth running operation.  I want to run it like a business. I am not trying to get above market rates or anything like that, I just want to be a good landlord.

My question is this.  Do I risk alienating myself by being stringent with my processes when so many other properties around me are not.  Are tenants just not going to want to deal with the process.  Am I delusional to think that I can change the game a little in the area and really attract the best tenants and build a good reputation.  Or do I risk having long term vacancies as not many can meet the standards set forth in much of the reading that I am doing.  Any thoughts or past experiences on this topic would be very helpful.  Thank you and sorry about the length.