Automating Lower-Income Rental Property Management

13 Replies

Hello,

My family owns 105 single family rentals with an average rent of roughly $650-$675. The tenants who generally rent from us are working in low-wage industries or collecting SSI disability checks.  My father has collected this portfolio over the last twenty or so years, and he generally makes up for a lack of a property management company (or even property management software) by having a flexible work schedule and spending three or four hours every afternoon and most weekends collecting rent, meeting contractors, showing houses, collecting applications, signing leases, etc. I believe he genuinely enjoys some aspects of being this "hands-on," but our portfolio size occasionally means that there is too much going on at one time (periods of time with lots of turnover, for example) to feel as if we're being proactive with capital projects, maintenance, tenant screening, etc. Also, going forward with me taking over parts of the portfolio in the long-run, I do not have a flexible work schedule and will inevitably either need to automate much of the business, hire a property management company (we'd like to avoid it), or find some other option.

I feel as if part of the solution may be to invest in good property management software for a portfolio of this size. After researching half a dozen or so, the one that seems the best fit so far is the Rentec Direct software due to its cost and features, but the lack of an Android app is off-putting. We're also skeptical about the ability of any property management software to help us significantly automate the functions of property management for lower-income tenants.  Many of our tenants don't have bank accounts or access to the internet beyond smartphones - the primary benefits of adopting software seem to be to allow ACH rent payments, have a portal for maintenance requests that we can quickly get out to contractors, and avoid the phone ringing off the hook/having to stop by so many properties on a weekly basis. I understand that training the tenants on new systems will be beneficial to long-term compliance, but do any managers of lower-income properties have input (good or bad) on dealing with some of the technological and banking issues that are somewhat unique to this particular demographic when it comes to property management software and automating the business more efficiently?

Thanks.

105 is a full time job for two people. That's the problem, not that you haven't got a property manager.

A property manager is going to be hands off, and personally that's where I think you have problems. It's good to collect rent manually because you get to keep that human touch with the tenant, and you get to see the condition of the property on a regular basis. A property manager will only be called to the property when there is a problem.

I am very much hands on, to the extent that if a lawn needs doing, I will go do it, and not make a charge for it. Annoys the hell out of the wife though. But, it gives me a chance to see the property and make sure things are good. Some tenants may think I'm a sucker for doing it (wife does), but houses are expensive items and tenants are often idiots. If I spot a problem, it can be fixed before it gets worse. A leaking faucet will never fix itself so what does it matter if you fix it now or later.

Being hands on is important, but yes anything that will help you automate and still keep a personal touch is a good thing.

I use Venmo for rent payments; it's a free app and will work on the most basic smartphones; the tenant just has to link it to their bank account and then they can ping you with rent as when they want to.

For those without technology of any kind, the initial investment of time in setting up an automatic draft from their bank will be worth it in the long run.

And of course: get a PM app behind you to reduce the guesswork and help you track the repairs, who owes rent, etc. Again, for those tenants with smartphones, it can & will reduce some of the phone calls, as they can submit a repair to you (and eliminate the initial logging of the issue on your part, at least).

Originally posted by @James DeRoest :

105 is a full time job for two people. That's the problem, not that you haven't got a property manager.

A property manager is going to be hands off, and personally that's where I think you have problems. It's good to collect rent manually because you get to keep that human touch with the tenant, and you get to see the condition of the property on a regular basis. A property manager will only be called to the property when there is a problem.

I am very much hands on, to the extent that if a lawn needs doing, I will go do it, and not make a charge for it. Annoys the hell out of the wife though. But, it gives me a chance to see the property and make sure things are good. Some tenants may think I'm a sucker for doing it (wife does), but houses are expensive items and tenants are often idiots. If I spot a problem, it can be fixed before it gets worse. A leaking faucet will never fix itself so what does it matter if you fix it now or later.

Thank you for your input. Even with automated rent collection and maintenance requests, we'd still conduct inspections every three months and be able to schedule them in advance.  We also live about 15 minutes from the houses, so we can drive by as needed. However, much of the business that takes up the most of our attention and time seem like they can be automated with proper tenant training. I'm just not sure what the best solution would be to achieve that automation, short of only selecting tenants with banking accounts and internet access.

Originally posted by @Jeff Blanchard :

Being hands on is important, but yes anything that will help you automate and still keep a personal touch is a good thing.

I use Venmo for rent payments; it's a free app and will work on the most basic smartphones; the tenant just has to link it to their bank account and then they can ping you with rent as when they want to.

For those without technology of any kind, the initial investment of time in setting up an automatic draft from their bank will be worth it in the long run.

And of course: get a PM app behind you to reduce the guesswork and help you track the repairs, who owes rent, etc. Again, for those tenants with smartphones, it can & will reduce some of the phone calls, as they can submit a repair to you (and eliminate the initial logging of the issue on your part, at least).

 Do you have a recommendation for a good PM app that will allow tenants to submit maintenance requests digitally, preferably sync with some accounting/tracking software on the web, and possibly allow tenants with bank accounts to pay electronically? It seems like Venmo can do the last piece, but I don't think tenants would want to have multiple apps for multiple functions.

Hi David,

Buildium allows maintenance requests to be submitted online, and has accounting/tracking software in the backend as well. You can also set up electronic payments with bank accounts. They offer a CC payment option - I'm not sure if that would allow your tenants without bank accounts to pay online via a prepaid debit card, or BlueBird type card - it's probably a good question for them. 

Another option that may work is setting up specific deposit accounts with a local bank, and requiring tenants to deposit the rent there on their own, instead of mailing the check. I believe BOA and Capital One both offer accounts that accept deposits and provide receipts without disclosing your account #'s and balances.

Another option you could consider is selling some of your properties over time and investing in the next higher tenant base. Not because the tenants you have currently are a problem but because you can purchase more home, increase rents and then have a more savvy tenant base all at once. Plus, if it allows you to use the same overall dollar value of properties but have less roofs and similar or more rent, it would be an equal trade with less work. 

For example say your properties are worth $20,000 each and you sold all 105 properties (slowly!) and purchased say 50 properties worth $42,000 each, and the rent increased to $850, you would increase value and decrease the work. 

For tenants without bank accounts, you can try PayNearMe.  You would send the tenant a code, and they would go to Family Dollar or 7-Eleven and pay with cash using that code.  The code would allow the store to credit the payment to your account.  I'm not sure what the cost would be.

Get software!

We manage over 1300 units and many of our tenants are not tech saavy (pay with check, and still submit hand written maintenance requests, etc.)

But you will still gain a ton of efficiency with tracking the work orders, managing vendors, tenant ledgers, etc.

We have property managers that manage 200+ rentals and never work after 5:00 pm. The automation potential that comes from software (even with non-tech saavy tenants) is HUGE.

With lower income properties, it seems a lot of tenants pay via money order or via cash.  Driving around to all the properties and collecting rent can be a lot of work, especially with 105 properties.  If it takes you even 15 minutes to collect each rent, then you're spending over 26 hours a month just collecting rents.

One easy way to save around 25 hours of that per month is to just have your tenants mail in their rents every month to a PO Box.  To start them off, give them each 3 stamped envelopes so that they can get used to the idea of doing this.  It's going to cost you $154.35 plus envelopes to do this, but that small cost will save you a lot in the long run when you factor in time, plus gas money.  After the 3 envelopes the tenants can start using their own envelopes.

As far as cutting the grass, not sure if you're doing it yourself but that's an easy one to hire out.  You get a small company or a couple of guys to setup a regular schedule every 2-3 weeks in the summer to go around and mow everything.

Getting on schedules with maintenance activities also helps. For example, at the beginning of summer, go around and make a list of all the screens that need replacing and have someone hammer them out all at once.  Then you're not tackling them one by one.  Right before winter change out the furnace filters with a good 3-month one to all the properties then in 3-months set up a schedule to do it again.  (If you have central air then you need to do it in the summer too, but sometimes low income houses don't have central air.)

Change out the toilets to flapper-less models so that you don't get issues with toilets running. They can also save on water costs too.

Get the smoke detectors with the 10-year batteries so you're not running around every year changing batteries.

When you have turn-overs, re-paint always using the same colors.  Get the 5-gallon buckets even if you only need 2-3 gallons; you just use the rest at another property.  I use semi-gloss on the walls so that it wipes down more easily.  Semi-gloss can hold up through 2-3 tenants.

Certain tasks of owning a property require a person on site: Inspections, move-in, move-out and managing contractors. If you can do this yourself, you do not need there services of a full-time property manager. Other office tasks, such as, monitoring leases, processing payments, managing tenant requests and handling the bookkeeping can be automated with your software of choice. You can also outsource these office functions for a few dollars per unit.  It is a question of how much you want to manage yourself and the cost/benefits of automation and/or outsourcing. 

I work a lot with lower income buildings, what we've done in the past is have online payment options then be available on the first Saturday of each month for residents to drop their payments off in person. This also seems to keep monthly payments from being sent late. 

We have a management company but still looking for good software to manage maintenance requests. 

I would also see if your properties might qualify for any government grants for upgrades.