How to get out of mom and pop landlording?

Question

So me and my wife have been Mom and pop landlords for about 3 years now. We have 6 SFH"S and a duplex so 8 units. Just bought a 9th but most likely will sell not sure yet though. So my Question here is how do we streamline everything and move to bigger and better? We have a good system i think in place but want to get to point of just finding and analyzing and purchasing the deals. We do it all now and seems to be alot to keep up with. But all good for now because i think we have saved alot of money doing it this way but wanna grow and get very big just dont know where to start? Any help would be great on how to get out of mom and pop land lording and still making good money.

Steven Knudsen · Answer

Managed my own for 22 years. I now have 3 different prop managers handling my properties due to different markets. I'll never manage again. check with several different investor agents and get recommendactions  for a good pm

Thomas S. · Answer

If you really want to ramp it up get out of the SFH investment market. SFH investing is driven by irrational home buyers not investors.

A PM would help but your best path is  to scale up the properties not the number of properties. Sell your 8 units and convert the money into a professional purpose built rental property. The greater the number of doors per property the better.

Mom and pop don't own apartment buildings.

Ray Lai · Answer

@Cody L.

Were you self managing those 100 units remotely? That is impressive systematization of processes. Didn't know you could send out evictions in an automated fashion!

What softwares were you using? That sounds complicated. I'd be surprised if one software could do all that.

Joshua D. · Answer

@Matt Faix Thanks for the response, we pretty much do everything you do besides we have the tenants go directly to bank and deposit Rent amount. Also are maintenance calls go directly to are guy.

Joshua D. · Answer

@Andrew Johnson  Thanks for the response, are current situation is i find and manage everything for the most part. My wife does the bills and keeps up with taxes and paperwork. We also have a full time construction,maitinence guy, a storage unit built into one of are houses with all of construction materials. Thats how we pretty much operate and i wanna get to the point of buying alot more properties and having everything managed in place. I thought property management only does tenant placing? I want everything we do in place to do it all.How do we get to that point? if that makes sense? Just quit my job and ready to take off with this and keep it together and grow. Help please

Matt Faix · Answer

@Joshua D. My wife and I are in a very similar situation with 7 units, and over on the other side of Pittsburgh.  As far as systems and streamlining, we found that adding online pay saved us a ton of time and creating a website for tenants/applications/maintenance requests/etc helped as well. We also use a weekly schedule for certain repeatable tasks such as bills/finances on Mondays, mailers on Tuesdays, etc.

We've also been focusing a lot on building our network and marketing to larger properties. We've been meeting a lot of people in the commercial space or people that have apartment buildings which is where we want to take our business. So it's only fitting to start seeking those people out and learn from them. We haven't closed on any larger deals yet, but have had some luck uncovering potential ones through our network or by marketing to larger multiunit properties.

Andrew Johnson · Answer

@Joshua D. I must be missing an aspect of the question because the obvious answer is: hire a property manager.  They'll take (ballpark) 10% of the gross rents and that will free you up.  You might even be able to negotiate a slightly lower fee if they're handling 10+ units.  If your deals don't have enough margin in them to absorb the cost of property management, well, you should probably rethink you're underwriting.  Really it comes down a simple equation around the time-value of money: "Is it worth your time to manage your own properties?"

(10% Gross Rents) / (Hours Per Month Spent Managing) = Hourly Rate

Then look at the opposite, if you assume you can do 1 deal per month:

(Monthly Cash-Flow Per Deal) / (Hours Sourcing/Underwriting/Negotiating Deals Per Month) = Hourly Rate

This is probably some horribly simplistic math but you have to look at the trade-off in hours when it comes to increased cost versus lost-revenue.

How to get out of mom and pop landlording?

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