How many units?

Question

Hello BP,

What's your threshold for the number of units  in an apartment building before you need an onsite manager (vs. an offsite management company)?  Just trying to get a good gauge.

Thanks in advance your your replies.

Jeff

Nik S. · Answer

all depends. You can buy a 50 unit and handle in yourself. It requires time and dedication however you can save thousands of dollars. It gets easier with the type of asset you purchase. Example, buy a class a property (newer building & higher quality tenants), rent will most likely be direct deposited to you and or all checks will be there by the 1st. maintenance costs lower and tenant calls will remain lower. Class C (older building & blue collar tenants n lower quality), you will be chasing rents, picking it up, hearing stories on why rent is late etc....older building meana more maintenance, regardless who ever is doing it, it's time consuming to do and or to arrange.

Buying a 4 unit, it's not worth it to get a PM as cash flow is tight in most cases, If a mortgage is involved. Rule of thumb suggests minimum of 20. However it all depends on the deal you get. I know people who have PM for 1 or 2 single family home rentals. Numbers play a huge factor in determining, what's on the table. Sometimes, if you want something done right, do it yourself. Most cases it's true however in RE you have to give a little to grow in most cases. Managing 50 units can occupy a lot of time but say a 4 or 8 unit can be much more manageable. Save the 10% instead of paying a mediocre PM.

Jeff Greenberg · Answer

California does have a regulation for that.  Not sure, but I believe it is 16 units.  I also believe that you can just have one of your tenants handle those onsite duties for a small discount on the rents.  I don't buy in CA so I am not sure.

Himanshu Jain · Answer

I think it would depend on the what kind of manager you are looking for and what would the cost be of having such an onsite person, will they be doing any support/maintenance activity too or would need  supporting staff. I have seen people working with as low as 20 units with an onsite manager/maintenance person, I think you can be pretty creative with who you use for this and how you compensate them.

I have read that many a times state has a guideline on how many units should have an onsite manager.

Rusty Thompson · Answer

You could work backwards. Figure out how much a PM would charge per unit in you area then determine how much it would cost for onsite managment. When the cost of onsite management approaches offsite, then the convenience of onsite becomes affordable. Another aspect you can consider is that you onsite could also manage any offsite properties you have.