8 Ways to Manage Your Apartment Building for Maximum Profits
Book: Financial Freedom with Real Estate Investing | Author: Michael Blank
Previous: How to Close Your First Apartment Deal and Cash Your Acquisition Fee
Milestone #8 is where apartment investing starts to feel like what you signed up for. You closed the deal. You cashed your acquisition fee check if you built one into the deal. Now your property manager takes over, stabilizes the building, and you execute the business plan to squeeze out every dollar of cash flow and profit.
Blank’s whole message in Chapter 20: small improvements multiplied across many units create massive value. This is why he loves multifamily over almost any other business.
The Math That Changes Everything
Say you own a 24-unit building. You raise rents by $50 per unit and cut expenses by $50 per unit. That’s $100 per unit per month, or $2,400 monthly. Over a year, that’s $28,800 in additional income.
Sounds modest, right? But apply an 8.5% cap rate and that “small” bump added roughly $339,000 to your building’s value. Not bad for tweaks that cost far less than that to implement.
That’s the power of commercial real estate. Income drives value. And with apartments, you control a lot of what drives income.
8 Tips to Increase Income and Building Value
Blank lays out eight practical ways to add value:
1. Cut the water bill. If you’re paying tenant water, leaks and drips are your enemy. Encourage tenants to report problems, inspect units regularly, and install low-flow toilets, faucets, and showerheads. The upfront cost pays back in months.
2. Control heating costs. If you pay for heat, tenants will blast it with windows open in January. Blank’s advice: avoid buildings where you pay heat if you can. If you’re stuck with it, programmable thermostats set to EPA standards help. Most tenants won’t bother overriding them.
3. Swap to energy-saving bulbs. Simple electric bill reduction across common areas and units.
4. Appeal your property taxes. Bought below assessed value? Fight the assessment. Blank bought a building assessed at $650,000 for $475,000, appealed, got the assessment dropped to $525,000, and saved over $1,300 a year in taxes.
5. Rebid vendor contracts annually. Insurance, trash, landscaping, janitorial. Every year, shop around.
6. Raise rents strategically. Always know if your rents are below market and why. Maybe you need cosmetic upgrades, better landscaping, or amenities that match competitors. In rent-controlled areas, increases are limited unless you use Section 8 voucher tenants, who often pay above-market rents. In non-rent-controlled areas, raise rents when leases expire. Even small annual increases train tenants to expect them.
7. Add laundry or vending. Two loads per week per unit at $2.50 total per load is $260 per year per unit. At a 10-cap, ten units with laundry adds $26,000 in value. Plus it’s an amenity that supports higher rents.
8. Use RUBS (Ratio Utility Billing System). When you can’t submeter units, RUBS allocates utility costs to tenants using industry formulas. No big capital expense. But only do it if the local market supports tenants paying utilities. If every other landlord includes water and you’re the only one billing separately, you’ll have vacancy problems.
Managing Your Property Manager
Here’s where a lot of new owners mess up. They hire a manager and disappear. Blank says that’s a mistake. You need oversight, but not micromanagement. His system:
Weekly:
- Monitor income: vacancies, rent-ready dates, showings, applications, delinquencies
- Review every bill the manager paid: what, why, which unit, could it have been cheaper?
- Short weekly call after reviewing the manager’s online portal
Monthly:
- Build your P&L (add mortgage, taxes, insurance the manager might not track)
- Review work orders: any problem units? How fast are orders getting closed?
Quarterly:
- Make investor distributions (keep a reserve for upcoming bills)
- Analyze turnovers: why did tenants leave? Could you have prevented it?
Yearly:
- Rebid all service contracts
- Write an end-of-year report (even without investors, do this for yourself)
- Build next year’s budget with your manager’s input and commitment
Blank shares a real example from DC where bulk trash pickups were costing him $65 each, three times a week. He caught it in weekly reviews and upgraded to a larger bin. That’s the point. Catch problems early.
The Time Commitment
If your manager is solid and the property is stabilized, running this “business” can take about an hour a week. Sometimes less. That’s one of the main reasons Blank prefers multifamily. Closing is stressful, but day-to-day ownership can be genuinely passive compared to most businesses.
What Comes Next
Once you’ve closed and you’re managing the manager consistently, something interesting kicks in. The Law of the First Deal. Deals and money start finding you. Your second and third acquisitions can follow much faster than the first.
That’s the subject of the next chapter. But first, make sure you’re actually doing the weekly reviews. The building won’t improve itself.