Key Takeaways
- Common areas include both leisure (e.g., gyms, pools) and functional spaces (e.g., stairwells, hallways), and are key to tenant satisfaction and retention.
- Landlords are legally responsible for maintaining these shared spaces to ensure they are clean, safe, and accessible, which directly impacts habitability and tenant rights.
- Tools like property management software can simplify tracking maintenance costs and tenant payments tied to common areas.
- By investing in and properly managing common areas, landlords can increase tenant interest, raise property value, and boost long-term profitability.
A Landlord's Guide To A Common Area
When managing multifamily properties, it’s important to understand the basics of common areas—what they are, why they’re desirable, and what purpose they serve for you and your tenants. Common areas are often viewed as gray areas since their exact definition is difficult to pin down and every building adheres to different sets of rules regarding their usage; however, managing and maintaining them is a vital task for a property manager or real estate investor. Common areas, when managed well, can not only help build community but can help increase your profit as a landlord. In this article, we’ll walk you through all the common area basics as well as your responsibilities for maintaining them.What is A Common Area?
Let’s start at the beginning: What is a common area? Common areas are, generally, exactly what they sound like. They’re shared spaces provided within an apartment building, neighborhood, or cooperative residential facility for your tenants to use. Common areas for residential properties include amenities you’d expect, such as a pool or gym, but also some that you wouldn’t typically think of as common spaces, such as stairwells and hallways. Commercial property common areas include these functional spaces as well. There are exceptions for certain spaces, but generally, common areas should be accessible during reasonable hours and should be available for all the tenants in that building.Types of Common Areas
Here are some categories and examples of common areas you may find in a housing development or apartment complex:- Leisure areas – These areas are for your tenants to relax and socialize in and are what comes to mind when you imagine a common area. Think of lobbies, swimming pools, gymnasiums, shared kitchens, and outdoor spaces where residents can take advantage of amenities and activities for enjoyment.
- Functional areas – This kind of area is a shared space that you may not think of as a common area but is used by your tenants every day. These serve functional purposes rather than leisurely ones and still need to be well-maintained for daily use. These include elevators, entrances and exits, stairwells, hallways, laundry room facilities, and even parking lots.
- Limited areas – Some areas are limited in use for tenants, such as fire escapes for emergencies or staff areas for employees to access. These areas may not normally be accessible to tenants but are available in specific circumstances. Limited areas include spaces such as fire escapes, basements, staff areas, and rooftops.
What a Common Area Offers Tenants
As a multifamily property owner, you may have just a handful of these common areas, or you may have many of them. But what purpose do they serve? How do they impact tenants? There’s no doubt that tenants want shared spaces to connect with others. In a 2024 survey, Forbes found that 21% of renters listed shared spaces as one of the most important factors in choosing a rental property. The survey also indicated that popular amenities were fitness centers/gyms (with 24% of renters reporting that the amenity is important to them), laundry facilities, parking, and pools. Not only are common spaces functional, allowing tenants a space to park, wash their clothes, or cook, but they also provide a sense of community to tenants. When tenants socialize with friends, family, and neighbors in shared common spaces, it fosters a sense of belonging that makes tenants feel at home in their homes—increasing their likelihood of renewing their lease in your unit. The more common areas you can offer tenants (especially desirable ones), the more interested they’ll be in renting your property. This interest can help you fill your units faster and may present you with the opportunity to increase rent prices.Maintaining Your Common Areas
By now, you hopefully have an understanding of why common areas are obviously beneficial for your tenants and your profits. The next step is learning about how to properly maintain your common areas so they can offer the most value and be enjoyed by everyone in your building. Legally speaking, responsibility falls on the landlord to keep common areas clean, operable, and safe for tenant use because of the implied warranty of habitability, a legal principle stating that tenants have the right to a safe, livable home. The specific rules in relation to safety, building codes, and accessibility vary from state to state, but common areas generally fall under this legislation. While the landlord retains control over what rules tenants must follow within common areas, they also have the responsibility to maintain them well. For example, if your building has a shared kitchenette for tenants to use, but it’s crawling with gnats, roaches, or other pests, tenants will be unable to safely cook and otherwise utilize the space. This violates that tenant’s right to a safe, livable home. You must keep common areas in working order so every tenant can comfortably use and enjoy the spaces. In this situation, it would fall on you to hire pest control services and ensure all common areas in the apartment complex are up to code. While maintenance is your undertaking as a landlord, the cost is not your sole responsibility. Since common areas add value to your property, a reasonable increase in rent corresponding to the additional value you’re offering can help cover maintenance and improvement costs. If you provide amenities at an extra charge, such as covered parking spaces or on-site storage, that income can also be put toward maintenance. Maintenance can be handled by whoever you like, such as an outside vendor or full-time property management staff, but whoever you choose, ensure they’re trustworthy and reliable when taking on the safety and cleanliness of your property’s common areas.Utilizing Property Management Software
When maintaining your common areas, you’ll have income and expenses to track and organize in order to properly manage your finances and your units. One of the easiest ways to do this is to implement property management software like Innago. Property management software comes with many features and benefits, but it allows you to track payments from tenants for common areas and track costs to maintenance companies who work for you. Software can also help you make maintenance information available to more than one person, so everyone working on a job has access to a system that tracks its progress. Being able to track payments from individual tenants and charges to maintenance companies helps keep your rental business organized and your books accurate. This tool is vital not only for rental property owners and property managers but also benefits tenants who are offered transparency with their charges and can easily view and pay them.Conclusion
Although common areas require extra upkeep and expenses, they can significantly impact your return on investment and the overall success of your rental business. With a new understanding of what common areas renters enjoy and how they should be maintained, you can better plan for proper rent prices and proper maintenance practices, increasing both your profit and the quality of your units.
