How to grow/scale up?

[Robert Carl]

Im trying to grow my rental business. My question is how to move to the next level. My first goal is to have my properties operating with 2 full time maintenance men and 2 managers when I hit 20 rentals. Is it better to hire in house or from a management company?

I want to scale up where I can just check the financials. How do you scale up? Currently at three and renovating number 4. Have a couple others to start also.

[Duncan Taylor]

Originally posted by Robert Carl:

Im trying to grow my rental business. My question is how to move to the next level. My first goal is to have my properties operating with 2 full time maintenance men and 2 managers when I hit 20 rentals. Is it better to hire in house or from a management company?
I want to scale up where I can just check the financials. How do you scale up? Currently at three and renovating number 4. Have a couple others to start also.

Early on we made the decision to hire in house rather than use a management company.

Over the years, all of the partners would sit down from time and time and we would discuss, debate, argue and evaluate using external management companies verses keeping it all in the family. We even did two tests using outside management but abandoned them both after a short period of time.

Two managers and two maintenance types is way too much for 20 units unless there is some geographic factor in play. A property manager will spend approximately 15 to 20% of their time on overhead type tasks. That means they will have about 32 or so hours each week available to everything most people think of as managing a property. The maintenance types will have less average overhead, somewhere in the 10% to 15% range but it could be more due to travel time as they go from unit to unit.

Given that, for 20 units, one part-time manager and one part time maintenance resource is more than enough. It could be the same person.

Also, you definitely want them to record their time each and every week. You want it to be specific showing what they did, yes even the overhead time, and on what property the time was spent. You should start this now because you intend to grow and as you do this type of data is a must to manage your investments as you transition from working in your rental business, which is where you are now, to investing in and monitoring your rental businesses, which is where you want to be in the future.

You will know you have made the transition when your income from your 'investments' is passive instead of active.