The ecosystem of a healthy apartment building
Updated: Mar 2, 2019
One of the things I love about apartment buildings is how strong of an economic ecosystem it creates.
Many people talk about and teach the merits of an apartment as an investment. That is true, but the positive impact goes much deeper.
The residents of the building are the next obvious people to benefit after the landlord from this ecosystem. The property owner cares for the property and keeps it a desirable place to live. The tenant has a monthly fee and a deposit, but does not need to have capital saved or invested beyond that.
The lender for the mortgage thrives on the ongoing commitment of an expected stable payment that is not affected by the fluctuations of a rental market or building values.
Diving a little deeper, the city the building is in relies on timely tax payments just like the building relies on timely rent payments. Apartment owners have the foresight to ensure these taxes are paid at the intervals needed.
A CPA or tax professional ends up more likely involved with an apartment owner than an individual when tax time rolls around.
Now we get to the more active people around the building outside of tenants. Property management, handymen services, landscapers, cleaning services, and occasionally contractors are all part of this.
These relationships can both serve the building with reasonable pricing for the services and allow the service provider's small business grow and thrive. Both the apartment and service provider need to act with integrity for this relationship to be long lasting and beneficial to both parties. The apartment building will end up with someone that responds quickly, knows the quirks of the building, and is a trusted face or name for both the residents and property owner.
The building also has a place in the neighborhood. The exterior facade and care of the presentation of the property is not only what residents see, but also neighbors and people passing.
Recognizing that all of these relationships intertwine and benefit each other can set a property owner up for much better success. Recognizing and ending the relationships that are not beneficial is also important.
People often say real estate is a relationship business. This is more often related to buying and selling, but is even more true over the course of ownership of an apartment.