Dealing With Difficult Residents in Multifamily Properties

As an experienced multifamily syndicator and investor, I have had encountered a lot of challenges. What stands out as the most critical challenge, for me, is dealing with difficult residents.

In a podcast last year, my good friend Elijah Artman asked me how to operate apartment complexes in the State of California. Residents there tend to have more power than the property managers. One thing’s for sure, states such as California have laws that favor residents. This creates challenges for investors and syndications to address. This becomes critical as certain issues arise and the needs of residents become more important.

In our company, we manage our property assets ourselves. And we have had our share of these challenges from time to time. In fact, we have had this experience with one resident who trashed our rental house. She decided to leave the property, so we were required to give back her deposit of $900 within a three-week period. We decided to send her a letter stating the reason we shouldn’t return her money, the reason being she trashed her unit.

To cut to the chase, our property managers were unable to give her the letter. That being said, she had to bring the issue to a small claims court. Instead of giving her a check for $900, we ended paying $2700 as a settlement. Oh my gosh! We paid three times the amount we should have given in the first place.

So, this experience has enabled us to learn how to deal with residents more effectively, especially in states where there are laws that give them a lot of power - even they are making property management more difficult.

Indeed, there are a lot of ways to address difficult residents and avoid a great deal of risk to your cash flow.

Enhanced communication

Similar to the relationship you share with investors in your multifamily syndication, effective communication enables you to prevent serious problems from arising later on. It’s important to get your property managers to have a hands-on approach in dealing with residents. It’s also essential to take the time to visit the property and talk to the residents themselves. This will definitely build rapport and enable you to identify and resolve issues early on.

In turn, your residents will feel more empowered to cooperate with you. They won’t become a burden, and they will make things work properly. It’s only a matter of showing your openness in communication and making sure your residents’ needs are met.

Understand local laws

In many cases, multifamily syndicators have had difficulties with local ordinances and laws. The best way they can get around these difficulties is to find emerging markets in states with laws that are great for real estate investing, such as Texas, Georgia, and Florida. You can focus on resources on these states since they provide greater leverage.

Moreover, it’s important to spend time learning about the laws and ordinances in the markets you invest. It’s the only way you can ensure compliance and avoid complicating the relationship with your residents.

Hire a great real estate and syndication attorney

Still, in order to understand laws completely and respond effectively to any legal complaints or issues, it’s essential to have a great lawyer in your team. A legal professional can help you solve problems and allow you to address problems in the most efficient way that saves you time and money.

I would suggest getting a lawyer on a prepaid basis in order to scale down legal costs. It’s also important to find a lawyer that specializes in property management and settling disputes with difficult residents.

Apparently, it’s easy to engage difficult residents. You only need to have an amazing team composed of talented property managers and real estate, litigation and syndication attorneys that can help you create positive experiences for your residents.