How to scale the landlording business
I originally was going to send this as an email to a couple of investors I know that may be encountering the same issues or have already overcome them, but I realized I would be missing out on some potentially great advice from the BP network so I decided to post here also.
I've been thinking about this for a while, mostly for a way to free up more of my time. Since both my wife and I still work full time jobs, it would be nice to have someone handle the day to day operations of the business. Additionally:
- If we ever want to go on a vacation, somewhere without phone & internet is not an option, and even with those things it is still tough.
- Donald Trump, or any other big time investor, doesn't answer phone calls from tenants and coordinate with vendors. If you want to get that big you have to find a way to remove yourself as the bottleneck and have systems in place so that things run without you in the picture.
The things that I find bogging us down, preventing us from doing the important things like finding money and deals, and that I plan to hire out are:
-Day to day phone calls about Maintenance, Rent payments, Lease questions
-Listing and showing properties
-Drafting & signing leases
-Generating and mailing/delivering 7 day notices
-Entering bookkeeping into Buildium
-Water billing
-Occasional Bank Deposits
-Occasional other errands like dropping off checks or materials to contractors
I think the first one will be the toughest, as I never know what will be on the other end of the phone line and many questions I get require discretion and careful handling. The rest should be pretty easy to document procedures and train.
Next comes the issue of implementation. We are managing 50 units currently and growing a few a year, which I hope to increase. I don't feel that the above listed duties require a full time person, or justify full time pay. Unfortunately the business hours require availability much beyond 40 hours per week, most of that is sporadic.
As for location, even if we had an actual office, I can't see having someone sit behind a desk all day waiting for a couple phone calls to come in. Also, we need someone to be responsible for answering phones from 8am-8pm 7 days a week (this can be done from almost anywhere).
This is what I have come up with:
We will hire someone to be responsible for the above duties. Allow them to work from wherever they like as they go about their day, just try to answer most of the phone calls and promptly return messages for the occasional missed call. Showings, lease signings and errands will be able to be scheduled around their own schedule at their discretion. Bookkeeping can be done weekly, possibly from our home office? (Still trying to figure out if that is reasonable/professional enough) basically this person will be able to set their own schedule for almost everything as long as they have a reasonable amount of availability. We plan to pay $1,000 per month (about 3% of gross rent) to start. I realize that doesn't sound like much, but there is probably less than 10 hours per week of work on a busy week.
What are your thoughts? I would appreciate any honest feedback.
Thank you,
-Josh