Landlords with 10+ Properties
Real Estate Investor · Mobile, AL · Member since 2010 · 46 posts · 2 votes
I wanted to ask all of the landlords that own more than 10 rentals.
Do you manage them all yourself and if so how much time do you spend a week doing it? Do any of you have a property manager and if so how involved are you in the process? Do you live within 30 minutes of all of your properties or do you not find it as important to be so close?
I feel once you get past 5 or 6 properties your time commitment is going to be pretty significant. Of course it all depends on what kind of tenants you have in the properties because 1 bad tenant for someone with 1 property can be more time than 5 properties with good tenants.
Thanks
Scaling management is a lot easier then many people think. Up until recently my partner and I managed 65ish SFHs with maybe 10-15 hrs a week between both of us. I'd probably spent another 5 hrs a week leasing up the new acquisitions.
We decided to hire someone full-time after we broke 60 units, so we can can concentrate on acquisitions and flips. He probably does management 75% of time and other tasks for us with the rest of his time.
The factors that I think save a landlord time and money are:
- Tenant selection and related to that the type of product you buy is key. If you pick the wrong tenant, get rid of them as soon as possible.
- Provide a product in average or better condition and fix legitimate repairs quickly. You don't want to give tenants any excuses not to do their job (pay rent).
- Train the tenant from day 1. We give them a "Welcome Letter" that has very specific requirements on how to pay rent, how to report maintenance, etc.
- Get emails and an online management system: Buildium and Appfolio are both great.
- Your length of occupancy and turn time/cost is what is going to make or break your business. Do what you can to keep the good tenants and fill your vacancies as fast as possible.
That's a good question. Tenants and unit condition will determine time required. It also depends on the market you are serving, a single family home as an executive rental or a low income rental. While either can be easy or difficult to manage, differnt kinds of problems, it's the personality of the tenant, IMO.
IMO you should spend no more than a couple hours a month on actual management per unit, a phone call, collection and bookkeeping and coordinating maintenance. There is an economy to scale of you being directly involved. We had 4 4plexes at one location that were basically hands off, a triplex that only took a couple hours a month and several single family, a couple of them were management intensive about 5 hours each a month. I also had some help so giving a specific time is hard to estimate.
IMO, you should hold decent properties in good condition and stay on top of them maintenance wise, tenant screening is key as good tenants are golden, I have had many I never really heard from and who took care of the property.
Keeping things close by is the only way to go IMO as a DIY landlord. You can drive by when going other places for those drive by checks. If something does go really wrong, you can get there in minutes, to me that's important. I don't really understand having a management company and maintenance types a hundred or more miles away but I know some do it. Good luck
I definitely agree than having all of your rentals fairly close to each other is the way to go. When you say your 4plex's were hands off do you mean you had a management company for those. In addition, I think having rentals that are not low income if you screen fairly well is going to be less headaches
We own 11 SFR properties and 3 commercial properties. Everyone has there own magic formula that works for them. My wife and I manage our own properties plus another 40sfr for different investors. We do stay 30mins from all of our properties as well. We have a full time residents manager along with my two daughters working part time age 16 &17. I run the maintenance & construction crew consisting of five guys and my wife does the leasing and new property acquisition. We operate like any other business from 9 to 5, and by appointment on the weekends. Its a full time job and management is not easy, but we love every minute of it. Having a good online management system was a must and has helped us out tremendously.
The 4s were not under management and were about 8 years old when acquired, so there was nothing to do really. SOme were Sec. 8 and had no problems. I learned quickly that my time was more valuable than a plumer's, a handyman's and a lawn guy, so a phone call was all it took really. I cut rents on one unit for a semi peace keeper, but she didn't really manage anything, just a point of contact for me, she worked at a local bank and was very good with the public, so lucky there I guess.
I have done more in low income housing than anything else and if you start out running a tight ship, it's no more trouble than some executive rental, ($1,200 rent) who thinks he gets a private gardner and talks to his attorney all the time. Stay away from pure idiots and self centered high achievers, either can be difficult to argue with IMO.
I'm like Bill...
Your time commitment will really depend on how much you do yourself and how much you contract out. If I get a call from a tenant, I simply call a plumber, handyman, HVAC guy and send them over. For me, it's an hour drive each way ($55 bucks of IRS write-off on miles). It's generally as cheap, a heck of a lot easier, and faster just to have someone do it.
As for bookkeeping, collecting rent checks from my P.O. box, answering phone calls... those are all relatively little time with big rewards.
I also outsource the tenant placing... 1/2 months rent ($200 - 300) is much easier than driving up 3 - 10 times to show the apartment. Money well spent!
I second Bill and Nathan's comments. Part of being a landlord is learning to delegate and figuring out what is worth it for you to do yourself and what is worth having someone else do. (In my opinion, everyone has to figure out a dollar figure for their hourly time.) I also firmly believe that the time commitment is highly dependent on where your rentals are located, how well you maintain them, and your screening procedures. I work full time but self-manage 7 sfrs and a fourplex, and it is a very small time commitment.
My wife and I manage 18 sfh's and I work full time. Some days we spend an hour or two managing the homes, many days we don't even think about it. I use my realtor to list the rentals and screen the tenants, I have many tenants I have never even met yet I am always at 95-100% occupancy with no significant rent payment issues. The key is screening the tenant. I get credit. Report, bank statements and pay stubs. If anything looks suspect I pass and wait for the right tenant. If you offer a nice product and provide good customer service your homes will stay rented with very few hassles.
Albert thats great. I was going to ask you are your rentals in lower-middle income areas where rents go from $650-$850 or are your properties in the middle class neighborhood where there are many homeowners? Also since your rentals are rented most of the time does your rental income come close to matching your full-time income where you would one day be able to retire off of the rentals? What would your exit strategy be?
I have 26 occupied units plus 5 in the renovation pipeline, they are all 100 yr old buildings in decent areas with mainly young professional tenants. Average rent per unit is $900. I self manage and have a full time job (for now). I'd estimate I spend 75 hrs a month managing and doing bookkeeping, scouting for new properties, etc. For management only I'd say 2 hrs/unit/month is realistic. I live within 5 miles of them all.
I'd agree with a previous post that a good online management tool is key. Also I try to build processes around tasks to make things routine and efficient. Hiring out the cheap time consuming work is important too!
James Martin and Jeremy D.,
What online management tools do you use? Could you explain a bit about what you use and how you use the sites?
Thanks
Joey, my homes are in solid middle/upper middle class neighborhoods. Tenants are all former homeowners. Rents range from $110-1800. No, unfortunately rents do not come close to replacing my work income. When home prices double from where I bought them I would consider selling. In the mean time I will enjoy the monthly income.
Do you manage them all yourself and if so how much time do you spend a week doing it?
I manage all the ones in my home state myself. All out of state properties have managers. I spend no more than 1 hour a week dealing with them unless there is a vacancy. However, the beginning of each month takes up more time because rents come in. All mortgages are on auto pay through the bank. All rent collection is done by an individual bank account assigned to each property. I only have to send a reminder text message to the late payers about not forgetting the late fee when they pay. All maintenance is handled via email from tenant and forwarded over to maintenance. Quite hands off and I have had no issues taking 30+ days vacation.
Do any of you have a property manager and if so how involved are you in the process?
I get a report on who paid, vacancies, and maintenance done. Some managers hold a reserve account (taken from first collected rent) and they make any needed minor repairs out of that account. If the repair exceeds the amount in the account, they have to contact me.
Do you live within 30 minutes of all of your properties or do you not find it as important to be so close?
The closest one is 10 minutes. The majority are about 30 minutes away. I have apartments, houses, and commercial out of state. Some of my apartments are on the opposite coast. Haven't had any issues that couldn't be dealt with from afar.
Scaling management is a lot easier then many people think. Up until recently my partner and I managed 65ish SFHs with maybe 10-15 hrs a week between both of us. I'd probably spent another 5 hrs a week leasing up the new acquisitions.
We decided to hire someone full-time after we broke 60 units, so we can can concentrate on acquisitions and flips. He probably does management 75% of time and other tasks for us with the rest of his time.
The factors that I think save a landlord time and money are:
- Tenant selection and related to that the type of product you buy is key. If you pick the wrong tenant, get rid of them as soon as possible.
- Provide a product in average or better condition and fix legitimate repairs quickly. You don't want to give tenants any excuses not to do their job (pay rent).
- Train the tenant from day 1. We give them a "Welcome Letter" that has very specific requirements on how to pay rent, how to report maintenance, etc.
- Get emails and an online management system: Buildium and Appfolio are both great.
- Your length of occupancy and turn time/cost is what is going to make or break your business. Do what you can to keep the good tenants and fill your vacancies as fast as possible.
Personally, I manage the tenant selection process myself, and that minimizes the time and energy I spend later.
I have few enough units that it is possible, and my units are all about 1/2 hour away from my house. I buy additional units only within that radius, and I don't buy properties that are going to require intensive management by their nature, such as rooming houses.
I have a maintenance man and a good contractor, and a network of tradespeople for other issues. I prefer to make a phone call than to spend any time doing contortionist plumbing repairs under a kitchen sink. Although when I started I did as many repairs myself as possible.
So to summarize, tenant selection is the key, and making legitimate repairs promptly. I prefer to put the time into screening and talking with tenants before a lease is signed, than to try to deal with the bad tenants. I wait for the right tenant. Empty is cheaper than bad tenant.
I have 65 units. 45 are single family houses, mostly low income in low-end blue collar areas. I have 2 apartment buildings, 1 on the University of Toledo Campus and the other in a low-end blue collar area.
I manage all of them myself. I have a full-time maintenance man that handles all repairs. I pay him a flat fee of $400/wk. HVAC, sewers, and roofs are hired out. I spend on average 10 hours a week on my rentals. It varies dramatically, though. When I have a few vacancies, that can quickly shoot up to 40 hours. But there are many weeks where I spend 0 hours.
Like others have said, the key is tenant selection. Screen, screen, screen. I always make sure to visit a prospect's current home so I can preview what my unit will look like. If it's a mess, forget it.
I also have a lot of Section 8, which cuts down on time spent on rent collection.
I'd agree with a previous post that a good online management tool is key. Also I try to build processes around tasks to make things routine and efficient. Hiring out the cheap time consuming work is important too!
Where in michigan are 100 year old buildings that you are rehabbing. Can't be in SE MI can it???
Michael X - I use Propertyware. They charge $40/mo for 1-25 units and we just stepped up to 26 occupied units so we're at $75/mo for 26-50. It's a great system and i'm sure it's comparable to buildium, etc. It tracks all apartments, leases, provides financials by building, late rent notices, rent tracking, etc.
Joe Delia - I'm in Grand Rapids. The historic buildings I'm rehabbing are mainly in Heritage Hill and surrounding areas. The Hill buildings are great because we've been utilizing the historic tax credits on our renovations. I try to buy places using the 2% rule based on purchase price+renovations+closing costs. If i put $60k in renovations into a place, I get 20-25% of that back as a credit against my federal and state tax liabilities. When you factor in the tax credit into the purchase price it gets us well over 2%, and we're in fully rehabbed, nearly maintenance free multi's.
I agree with Steve L. - management scales very easily. I couldn't imagine managing only one property, but managing 26 is not bad from a time vs. profit perspective. As you ramp up you tend to see economies of scale in other areas as well...hiring a maintenance guy to save on overall maintenance costs, building relationships with subcontractors to save on costs, etc.
Thanks
We use Landlord Enterprise. This system will allow you to Manage tenants & Properties, collect payments, print receipts, notify you by smart phone & email when their is late rent, lease letters, forms and templates, track income and expenses, track every maintenance issue and work order. Assign vendors, track costs and estimates, manage invoice numbers, assign status and priority, run credit checks, state or federal criminal background reports, link any task or appointment to tenants or units, and get reminders about important events or todo items. It also does other stuff that only my kids and wife knows how to use.
We have 12 units (3 4 plex) in a class A area with professional tenants and low turnover, my wife does most of the management in 10 hours a month. I spend 2-3 hours per month doing tasks she isn't comfortable doing..
I see that the online software charges monthly fees. For bookkeeping wouldn't Quicken or Quick Books be sufficient?
I guess I will be the first one to go the other way. If I had my choice, all my rentals (I have more than 30), would be on another planet. I don't want to see the house, I don't want to see the tenant and I sure as heck don't want to get a 2 AM "my toilet is clogged" phone call. This is not a hobby or past time, this is a business.
Just like when I buy stock, I don't visit the factory or office, I just look at the numbers. So when I buy a property, I don't want to look at it, all I want to see are the numbers.
I was a Broker/Realtor for 16 years and initialed/verified all the documents on over 5,000 Real Estate Transactions. My first two years I ran my father's Property Management Company, handling roughly 100 or so SFR rentals. I have probably walked through north of 10,000 properties. So I think I know the business.
All my properties, except one, have a Property Manager. I spend 5-10 hours a week "managing" my managers, doing book work for the rentals and general oversight.
@ Everyone
This is an excellent thread. It is really good to see so many people able to handle 10+ properties. I've been inspired!
I don't really understand the people who say that their time is worth more than a plumber or electrician and an investor has to "learn to delegate". Maybe it is a regional thing? Those folks are super expensive in Boston. Or maybe those people are lawyers? I can understand hiring one because they would do a better job than you do, but not from an economic standpoint.
If a light switch needs replacing, it takes me less time to do it myself. It is an easy task, and if I do it myself, I do it when it works for me. If I hire someone, I have to find one, talk to them, meet them at the property, wait for them to arrive, let them in, and wait till they finish. Also it is likely they will want to come during the day, when I have to be at my day job.
One thing about real estate though, is everyone has their business model, and I've also found that real estate investors have a hard time relating to other people's business models.
Regarding bookkeeping, I just use QB and Excel. Though I only have 8 units. Specialized software might be useful if I had 25+ units.
Paul, it may take some time to find good help, but when you get someone it's just a phone call. My tenants had the numbers of my maintenance guy and he would call those who did major flubs, they were taken care of, sometimes when I found out that there was a problem. It's great to hear that unit 6 had a ceiling fan go out and that it's been fixed.....well, not that you had to buy another ceiling fan, but that the issue was taken care of.
There is an old saying about not paying for something you can do yourself making you wealthier, like hard work pays, but not if you are really making more money or a more economic benefit is gained by having someone else do something. Time management.....if you have nothing better to do, do it yourself, I have fixed my share of leaky faucets, but someday hope you get to the point where being with the family at the lake (or where ever) is more valuable to you than fixing a rental!