My business partner is on pace to manage 100+ units at some point next year. We are brainstorming our options.. whether to outsource the management.. whether to keep in house and develop good systems.
Any thoughts on the profitability aspect of property management? Bases on experience, is it worth trying to manage 100+ units or consider outsourcing?
Any good management software recommendations?
Any good reads? Figured I'd start with Ken McElroy's ABCs and start from there.
What is the portfolio mix of this 100+ units? SF or MF?
There is allot that goes into Property Management that many people do not take into consideration. Not only are you putting your personal brand behind the property but you are also faced with the actual work itself; managing the physical asset, managing personnel, managing funds and accounts as well as overseeing and managing leasing activities and tenant services. All are equally important and will require a diverse team to effectively undertake the management.
Unless you are either fully equipped to handle these tasks or are able to form a team between now and then I would highly recommend Hiring the Management out. There are many management companies out there but many of them are simply treading water in regards to profitability.
You might just find that you and your partner are better off focusing on generating more investment leads and funneling them to your turn-key management company and washing your hands of the dirty work.
If you are interested in what to look for in a management company feel free to message me. I have worked with several management companies and have seen the good, the bad and the ugly.
Property management is a huge undertaking and a full time business in and of itself. You and your partner should decided what you want to focus on, real estate investment or property management. With 100+ units, you CANNOT DO BOTH. Don't even try. I've been to many such type of apartment buildings and the best ones have a full-time property manager on site.
Also, check your state laws. Many states require property managers to have a broker's license. If you have not managed large numbers of properties before, I'd strongly recommend you leave it to the professionals.
@Marcus: thanks for the info. My partner himself accumulated 30 units in the last 5 years and I have acquired 17 this year in the same area. His own personal property management seems to be better than most local options. We are exploring our options now. Much appreciated!
@Annette Hibbler: thanks for the info. Thats the feeling we are getting with regards to juggling purchases, rehabs, with management. Seems like a lot and trying to identify whether or not its worth it $s wise. My partner recently met with larger management company and has been investigating the broker's license requirements. We'll see. Are you from NJ? Alot of investors here don't outsource their management even at 50+ units. The options for companies seem to be few and far in between.
We'll keep exploring and seems like an outsource with a dependable large scale company. We are getting good investor interest in the area and just reading ahead a bit to make sure we have everything covered.
For a 100 units you should be able to negotiate a discounted rate for management and it would be well worth your time to pay a GOOD company to do it. Management is a headache and every minute you spend on that takes time away from investing which will make you more than what you pay the management company.
Much appreciated for the input Kathryn. Yes, that seems to be the way to go...
What if you created a company that had divisions where management would report quarterly to you on progress? That company would have a property management division and a REI division to grow properties and monthly cashflows. I would assume that would require heavy capital to pay employees, etc. But maybe you can hire someone to answer phones/schedule maintenance for the handyman and another person for showing/renting/signing leases etc. (agents). And then you and your partner work the REI division growing the portfolio, etc.. Totally brainstorming here... I am not a business owner yet but this jumped in my head after reading your post! I am sure you will find the best solution soon though.
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