Managing rental Properties for father in law

62 Replies

So my father in law came to me and my wife asking us to manage his rental properties which are around 15 of them. He saw we were doing are rental properties and liked how we handle them. Well im second guessing it now and wondering if i wanna mix family and business together. I met with his secretary about everything and everything really is messy. But he wants to pay me first months rent putting people in his properties and 10% for managing them. So trying to set it all up to manage his places. Is there a good way to do this? Hardest part is getting everything transferred over and getting tenants in place with the way we do things. I never thought about getting into the buy and hold business to manage other people properties. He's my father in law and hard to say no but having anxiety thinking about it all. He is a huge business man in the area and honestly the 15 properties he has is literally pocket change to him. He has so many businesses and stuff. Just not sure how to structure this and handle it all or if i should do it. Please any advice would be greatly appreciated? Alot to think about for me. 

Hey @Joshua D. On one hand, it's a great way to get deep into the rental real estate world, but on the other, do you even really want to be a property manager, especially not even pertaining to your own properties? If not, just be honest with him about your own goals and help him find the BEST property manager around.

@Jake Stuttgen I feel this will only hold me back to be honest and keep me from reaching my own goals and feel my time is better off finding deals and managing my own stuff. There are no Management companies around. Im stressing here and dont know what to tell him. 

@Joshua D. Have you tried reaching out to everyone here on BP about management companies? Are their really no other ones?

I think you need to sit down with him and maybe have a prewritten note of what you want to say. Let him know that you are very grateful for this opportunity but you have your vision set on your own goals right now (perhaps list out the goals) and feel this will only distract from it.

@Jake Stuttgen There really isnt any management companies.  Im thinking this isnt the route you should take is being a property manager but finding the deals and doing your own thing is. Im not sure about mixing the family and business together also and everyone is making comments well who else will manage them one day. I just dont know which way to go with it. Seems like such a pain starting out also 

Is he attempting to tell you how to manage them? Or is he giving you the opportunity to take them over because the current way of doing things is a mess? Personally I manage my own, along with my families properties and just have been explicitly clear that they must do things as I would with my own properties or I'm not interested in handling the mgmt. If he is a successful businessman he will appreciate the honesty. If you have solid performing assets and think you can increase rents, or lessen the vacancy window with technology or just plain attention he can't add I think you will be able to structure it exactly how you want. 

Yep-it sounds like a decent opportunity honestly. Of course its all your choice but 10% in your market is great. Once you get the properties operating like yours it should be "easy" money. 15 is a lot to take on at once, but if you put the right software or processes in place and are diligent about sticking to it you'll be dedicating a small amount of time to them within 2-4 months I imagine. 

Looks like gross rents are around $12,000 but i need to look further. so maybe making $1,200 a month where with my house buying and renting holding im gaining so so much more in my time finding deals and renting them. 

@Joshua D. Are you set up as a formal property management company? If there really arent any PM companies around, it may be a good opportunity for you to be the one to fill that need, especially if you can kickstart it with a 15+ property portfolio right out of the gate. You could always treat it as a kickstarter business to fund your real estate investing!

@Joshua D.

It sounds like a great opportunity. First months rent plus 10% ongoing feels like decent money.

The benefits after that could be stronger... if your father-in-law is a high yielding business man it could lead to private loans and lucrative partnerships and help ramp your business. The more projects i have, the higher priority I can be with my subs. Sounds like the kickstart of your empire.

@Justin V.

Thanks for the replies everyone! I’ve been having a lot of anxiety about it and he found out about that and he called me earlier and said don’t worry about it. Which I’m happy about in a way and In another way I feel bad like letting him down. I really didn’t wanna bring his on because lately been stressing about are stuff. Don’t wanna mix family with business and alot of factors honestly. Hope I made right decision

@Joshua D. You’re in a tough spot. There are things you do for family that go far beyond “business”. I’ve taken over my folks rentals, i manage one sister’s and my wife and I manage ours too.

Yes it does take up time. Time you don’t get back and if you look at it purely from a business perspective, it’s a drain. But I’ve never looked at it like that (but you will have your moments). As my parents got older, I realized this is much more than just having things. Helping them has enabled them to keep the rentals, so they never had to reach the point where they felt like they were losing control of a major part of their life and a substantial source of their income. Long-term, you’re helping preserve something much greater than these “things”. You’re helping him hold on to his sense of purpose and control. Ask yourself why he worked so hard to accumulate these things, these businesses- it’s likely he did that to provide for his family and provide legacy. He built something to take care of generations.

From my parents, I’ve learned that at least for them, they want each of their kids to have safety, freedom, and lastly comfort. Knowing they are leaving that behind will allow them to leave this world in peace when that time comes.

If his intentions are anything like those of my folks, What you're doing goes far, far beyond preserving the ownership of his 15 rentals, hell if that was the case, he can sell and buy into a DST and just roll them until death to get the step up in basis. It is likely that this has more to do with preserving his soul, his autonomy, etc. Sometimes you've got to slow yourself down to care for those you love.

I will say that my experience caring for our properties- specifically theirs has made me a better broker for my clients and manager to our tenants.

Originally posted by @Dante Feria :

I think if you accepted and did good your wife will inherit it. 

This was my thought.  Is there any other family member that can take on the rentals?   Ask him what his long term goals are for the properties?  

You could use the extra income as a springboard to buy more properties.  I assume these are all relatively close to one another (within 10 miles).  It would give you a great way to find deals driving around. 

He’s a businessman and as such thinks that way.  He have any other mixed family and business dealings?  If not then this is just a test for you to take them after he passes on. 
 

I once got involved with in-laws on business but not RE. Either way you work for your father in-law. I didnt like it and rather work for a stranger.  With a stranger there is no family emotions or getting into your relationship.

 There will be disagreements and times where sides will be picked causing more problems. Family dinners turn into meetings.  Im not saying it won't work but for me it didn't work.

@Joshua D. Tell him that lol. If he is a business man he will understand. No reason a direct conversation explaining your position wouldn't work. Honestly your post reads like your affraid to say no to the guy.

I see this as an opportunity and a way to help family at the same time.

Once you have systems in place it is easy to manage multiple properties.

Make sure you are not collecting rent. Have them pay you. Use ACH, Zelle, deposit into your bank account etc, but don't chase rent.

Then make sure you have a handyman and a good HVAC person/company.

I work via txt msg. Tenants text me with any issues and I text my handyman or HVAC person and it took my 30 seconds to deal with. I followup later to make sure item was fixed and pay my handyman.

I manage my properties with minimal time.

Once you have systems in place it is smooth sailing.

Don't forget you are generating extra income from this too!

Offer to buy his portfolio; either one at a time via bank loans or ask him to hold the loans.  If he held the loan you both prosper and use your strengths (you managing and his capital ability).  View his ask to manage as a complement that he would want to work with you and then see if you want to work together in some kind of manner.  

Side note: if this is toughest item you face in the RE world (understand the family dynamic) feel blessed.

@Joshua D.

I don’t make the rules bud I just do my best to follow them. Probably many of the same reasons for needing a license to broker the purchase and sale of real estate.

@Joshua D. I would stablize them for him and prove yourself because that could lead to more opportunities down the line. Maybe he will sell or even gift the properties to you and your wife after you stabilize them? Who knows where it will lead, but I wouldn't take for granted that you have the inside track to work for and by proxy learn from someone who sounds like they are a very accomplished business man. Not many people have access like that.

@Erez Toker He is a great guy and i know hes looking at it like who would take them over one day. But at the same time. To be completely honest the money is not there compared to what we are currently doing with buying discounted properties and renting them. Like a time drain for the little money back in the day i would have been jumping in excitement to make any extra income but are rentals and business really keep us busy and want to concentrate on building and managing are places. Its a tough spot, im thinking one day we will definetly manage them. But idk about right now he called me last night and said dont worry about it not a big deal. I really appreciate every ones input and help been a tough one being i say me and my father in law are somewhat close.