Daily work order management

8 Replies

I just bought a 27 unit complex. I am new to complex of this size and looking for recommendation on best practices to manage property of this size. 2 things that i need advice one:

1. Late fees: How to avoid that property manager not collect rent late on purpose and collect late fees taken out of rent. I noticed a clause later in contract that said late fees is taken out before the rent to owner.

2. Work Orders / Maintenance: How do you handle daily / weekly work orders getting generated in the property to optimize costs?  

1. if the Property Manager is consistently collecting late rent, get on him. The lease says rent is due on the first so he has an obligation to abide by that. Late fees are for occasional corrections. If he's allowing them to pay late regularly then he's not doing his job and there should be consequences. I keep late fees in my management company, but it's probably on 5% of the 400 rentals we manage and it's not often that we have problems from the same tenant over and over. My lease states three late payments in a 12-month period without justification may be cause for termination.

2. If you have a property manager, they should have this worked out. You shouldn't be involved in tracking work orders. If you are, you are doing it wrong.

@Nathan G. Thanks for sharing you point of view. For #2: avg cost to address work order is $50-$70. We get like 3-4 work orders a week. I wonder if property management should keep one guy on fixed salary than paying for each trip. Or I keep on guy and pay him fixed monthly and let property manager company send him the WOs. Not sure what insurance consequences will I have if the person works as independent contractor for me.

@Gary B. your PM is incentivized incorrectly.

1. If he wants that late fee, he needs to collect the rent AND the late fee. You should correct that clause moving forward. Those are fertile grounds for a lackluster property manager to take advantage of you. 

2. Our website has a tab where tenants can report maintenance issues. It's a google form that is embedded into the website. It sends the requests to a google sheet and we dispatch contractors accordingly. Your property manager should be tracking these however, not you. 

What kind of issues are you having? 27 units should not be resulting in 3-4 maintenance calls a week. 

Originally posted by @Gary B. :

@Nathan G. Thanks for sharing you point of view. For #2: avg cost to address work order is $50-$70. We get like 3-4 work orders a week. I wonder if property management should keep one guy on fixed salary than paying for each trip. Or I keep on guy and pay him fixed monthly and let property manager company send him the WOs. Not sure what insurance consequences will I have if the person works as independent contractor for me.

Four work orders a week at $75 each is $300 per week or $1,200 per month. Who are you going to hire for $1,200 a month? Will you have him sit on his thumbs for 90% of the time?

27 units at $600 a month would be a total of $16,200. On average, you can expect to spend about 10% of your monthly income on maintenance, which would be $1,620. That varies dramatically based on condition of the property, quality of renters, etc. You're well below that level so I think you're within the norms.

 

@Filipe Pereira - thanks for your suggestion, I will start to process to correct this clause. 

@Nathan G. - thanks for sharing numbers. It makes me feel better. Since the building has some deferred maintenance I need to catch up, hence more work order on weekly basis. 

Hello Gary,

When it comes to your late fees and the payment of the tenant you will want to find out the reasoning behind why the tenant pays late. Is it financial due to work, behavioral, or other circumstances that can be adjusted. 

As for the service requests, do you have an onsite manager that is assisting in maintaining the property? We have our managers on a routine addressing the needs and how they can assist in maintaining the property and reduce the maintenance overhead.  

Definitely address the late fees with your property manager.  What may be happening is that when a tenant pays late, part of it is going to be distributed to pay the old late fee first before the new charge, resulting in a continuous balance. 

Also, when a new owner comes in, there are often a lot of maintenance calls because now the tenants are actually getting taken care of! Congratulate yourself on being a good landlord and staying on top of things! I agree with @Nathan G. - your maintenance numbers are good, and not excessive.

@Gary B.  

1) Late fees are fees, in addition, to rent that the tenant pays. The PM keeps these additional fees for their additional effort in 'chasing' rent. The owner (you) would still get the full rent amount. They should not come out of the original rent amount as your post may imply (unless I read that incorrectly)?

2) Maintenance: Do you know what's worse than being nickel and dimed to death by tenant maintenance requests? Not having tenants report maintenance issues and have a $75 toilet fix to turn into a much costlier backflow issue/flood. If you haven't already you might consider inspections of each property looking to address all issues upfront. You can always incorporate your improvements to the property as a reason for future rent increases.