While the likelihood of a multifamily property falling into your lap may not have as high a probability as a single family rental doing so, there’s always a chance. This could happen for a number of reasons, but it happens most frequently in cases of inheritance. The result is an accidental landlord.

If you happen to find yourself in such a situation, the following steps will help you get where you need to be, both mentally and physically, to handle such a challenge.

1.       Never settle for status quo. It doesn’t matter if the best and brightest mind you know handed this property down to you in a will. You should always perform full due diligence to ensure the business is structured correctly and maximizing revenue opportunities. Never take something like a multifamily property on its appearances.

2.       Get emotions in check. When faced with such a situation, it’s easy to feel as though you “owe” something to the previous owner. But, as is the case with any business, you should never allow emotions to cloud your judgment. Are you able to assume such an asset? Do you want to own a multifamily property? These are questions that need to be asked and answered honestly. And, if it comes down to it, there is no shame in hiring a realtor to find the right investor.

3.       Consider a property management firm. If you find that you are ready to take on this opportunity, the next major and highly critical decision you must make is about management. Are you going to live on the property and manage the day-to-day operations? Do you have the time, training, and ability to do so? Hiring a management company could and should assume the daily operations while still allowing you to benefit from revenue. You will pay a fee for the service; but, if done correctly, such an arrangement could result in higher occupancy rates and larger revenue streams than if managed independently (given there is no personal experience).

4.       Evaluate the competition. Whether you’re managing independently or with a professional provider, there will need to be a formal review of the competition. Who are they? What are their best features? How do they reach prospective tenants? How do you compare to each one? Are you priced comparably…too low or too high? Be thorough and take notes.

5.       Revisit the lease. Don’t take the lease as it was handed down to you. It is recommended that you seek legal counsel for assistance on writing your own lease. If you are using the services of a professional manager, this may be offered as a service. You’ll just want to ensure that all language is current, accurate, and reflects the style of your management preferences on your new multifamily property.

Becoming an accidental landlord may seem overwhelming, especially if it’s something you never considered. But with the right planning and the right professionals on your side, it could be a blessing in disguise.

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