Hey guys! Me and my husband are pretty new at the whole real estate investing shindig. It took a us years of research and planning to finally pull the trigger. We bought a few 4 unit properties and decided to move out of state to manage them ourselves. Our contract with our PMC is up in July and I’m looking for some of your best advice on going from using a property management company to self managing. Currently we have 12 units that a property management company helps us with but we feel like we can get more bang for our buck and much higher profits if we self manage. My husband is super handy so we can do most of the repairs ourselves and I’ll manage the requests and filling vacancies/ tenant issues. Just looking for your best advice for newbies and the best way we can set ourselves up for success since I do have a little over six months to plan accordingly.￼￼
Just to clarify on your post. You said that you are moving out of state...are the properties located in the state that you are leaving?
I would add up all this time you are going to spend making repairs, doing clerical work, doing showings, chasing for rent, taking tenant phone calls etc
Time = money. If you spent 3 hours to repair a faucet because you had to make 2 trips to Home Depot did you really save money?
@Maile Clancy , property management firms typically charge between 6.5%-12% of gross rents to do what they do. They can pay their teams based on this because of overall volume they handle.
If your rent is $1k/month per unit, and you have 12 units, you're talking about an extra $1,200 a month...to handle all the calls, screening, maintenance, travel, insurance, inspections, lawyers, etc. At 2AM when a hot water tank bursts, who is going to answer the call and drive over there to stop the damage from getting worse?
When it's time to turn a unit, you will have to choose to either 1) hire out help to complete it within 2-3 weeks or 2) to lose rents from that unit until your husband can complete the work solo. On the surface, this sounds like someone will be working for below minimum wage to make this work - unless everything in all 12 units is brand new and you have good tenants locked in and paying for the next 5 years.
Maybe leaving California taxes behind will add enough income for you to make this work. Maybe not.
Do you have a team in place in this location? A good lawyer, an accountant, and an insurance provider who knows the business? If you're serious about taking this over, you need a team that understands the business and your local market first.
@Maile Clancy when things are going well it makes no difference where you are relative to your properties. The minute stuff starts to unravel distance becomes critical. When we lived in Ca we managed our nearby properties there, and we had a PM for our OOS properties.
It is foolishness to think you can manage a property that is more than an hour(total travel time) from where you live, your quality of life will really suffer, and in the end it will cost you money.
A few things to have in place to help you with the transition. To get places rented: Know the rules about fair housing, Know how and where to run peoples credit and background checks. Have a written policy on what credit and income criteria your require and stick to it. Be able to look up who owns the homes to verify prior rental history- to make sure you are speaking with the owner or PM, not someones friend... Do a thorough job checking applicants out online. Fair housing- due your research on accepting service animals, even if you say no pets. Know all the rules about applications, online vs paper, and have a thorough lease in place which states who is responsible for what- gardening, pest control, repairs, snow removal, rules on trampolines above ground pools. Have a tenant handbook with all the rules you require.
Allow online rent payments. - several online places allow this for free for landlords- cozy.com is one.
Just a few thoughts - I've done my own and now own a PM company. Lots to learn, but you can do it. Just make sure you treat it as a business. no need to have the tenants be your friends, treat them professionally/and have a good contract in place.
@Maile Clancy it requires organization and attention more so in the beginning. Prepare for ‘heavy lifting’ upfront and document everything. Especially conversations with your tenants.
A lot of the technical details like Fair Housing, leases, applications, etc. can be learned quickly with the right research/education. It’s the soft skills and business administration elements that often cause head aches, blind spots, and liability.
Remember this: a property manager’s biggest mistake is assuming no news is good news. Lead your operation and you will be fine!
@Jeffrey Edwards we just moved from California to Texas and our properties are about 30 minutes away in Texas.
@Peter T. Well we are trying to semi retire and leave our 9-5 job. My husband currently works about 70 hours a week as a sales manager for a mortgage company so there’s no life balance. If we can live off the rental income and just do this maintenance when it needs to be done it’s worth it. I’ll take the time freedom.
@Bjorn Ahlblad thanks for the input we are now only 30 minutes away and is why we moved here in the first place.
@Andy McQuade thanks for the great info! $1200 a month plus what we are paying for repairs will cover our whole cost of living in Texas! It’s a whole different world here versus California. We came here to not work 70 hour work weeks and have more freedom with our time.
We do have a great team out here that’s we’ve found through our realtor.
I’m get it’s a pain but when my PM is taking 3-4 weeks to turn over a property I just think we can do a better/faster job. No one is going to care for our properties the way we are. Maybe I’m being ambitious but I am not impressed with the best PMs out here.
@Christine Kankowski omg thank you for the amazing information I really appreciate it!! Taking notes and getting to work. 🤗
@Peter Anderson thank you!!
Your doing the right thing...get away from the property management companies...they suck up profit. You can do it...its not that hard or time consuming...I self manage 51 doors and work a full time job...home by 4pm everyday, weekends off.
You just create some systems and find a few handyman for the stuff your husband cannot get to.
@Mark Fries thank you so much for the positive post!! I’m definitely going to set up systems and check lists and make sure I find some good vendors in the area just in case I can’t make it there myself. Appreciate the feedback!!
"At 2AM when a hot water tank bursts, who is going to answer the call and drive over there to stop the damage from getting worse?"
12 years and 23 SFHs, I've never had a 2AM call. Certainly doesn't mean it can't happen but it is surely overly dramatic. No way I am paying someone $2,400 a month for 5 hours work. I get a maintenance call, I have the resident contact a trusted contractor. I've found self PM to chiefly be about good tenant selection and efficient, repeatable processes.
Not to mention an outsourced PM will place the first person that can fog a mirror in your property. Later, you find out they used your living room to change their Harley oil.
@Maile Clancy You can do it yourself but it will be a lot of work. I think there is a balance between many of these replies. It is not roll out of bed at 10 and done by 2 everyday. On the converse it is not all 2am calls from the tenant. It is just like anything else. When it is smooth all is great. When you have a problem with one unit is seems like there is a problem with several and it can be overwhelming. Make sure you truly treat it like a business. Get a good software and have the tenants putting in ALL work orders and paying rents online. PROTECT your cell phone number. If you don't they will abuse it and call you at odd times. It may not be late but they get off work the same time everyone else does. That is why they always call during family dinner time! Remember you are saving money by not having a PM so spend some of that money on technology and systems that will make your life easier. Start the transition with the PM company right now. Sit down and tell them your plan. Much easier for everyone with a long runway. If something goes vacant between now and then take it over immediately. Most PM's don't mind turning it back over when vacant. This lets you wade in slowly rather than all at once. Good Luck.
@Tracy Streich thank you so much!! Great input!! I’m planning on using buildium I think do you have a referral for a good software to use?
@Maile Clancy Buildium is a good one for that sized portfolio.
@Maile Clancy Self-managing is the way to go but don’t do repairs yourself. You’ll get good at it and it should only take a few hours every month. It will make you a better investor and keep you on top
of your properties. It’s worth it to pay an experienced handyman. But you should be in charge ordering materials. You can order materials from Home Depot or Lowes online and send pickup link to handyman. He parks curbside and the store loads him up. Since he’s not going into the store, you don’t have to worry about him throwing a new impact driver, diamond blade for his grinder, tshirts or extras like Monster drinks, snickers bars and M and Ms into the cart. (yes, handymen have tried to get away with adding these items to the cart). Just tell him to check all items from receipt before driving off bc sometimes items are missing.
Home Depot let’s you save lists in Pro account so it’s easy to pull up SKUs for commonly ordered materials and things like fans, smoke detectors, lights, blinds etc. Ordering yourself helps you learn prices which comes in handy when you evaluate a new property. It also helps you make better decisions in repairs.
Rent collection and repair requests are easily managed with a portal. For smaller portfolios, eRentPayment.com is a good option. It’s a lot cheaper than Buildium and easy to use. Some negatives but outweighed by lower price. For example, books require manual entry if you accept cash deposits to your bank acct or Western Union.
As tenants move out, install keyless smart locks for easy access by handymen and showings. I don’t recommend the wifi enabled ones because of potential to get hacked, higher cost and need to have a WiFi account for the property. I like kwikset smartcode 913. Not perfect and you can’t keep changing physical key but good solution for $119
and 4-5 lock changes.
Turbo Tenant is fantastic for advertising vacancies. You enter property details and photos and it blasts everywhere- FB marketplace, Zillow, Realtor, Zumper. It’s free for landlords. Applicant pays $45 for credit and background check. Manage all leads from their site, send electronic lease ($9 for DocuSign)
For showings, tell the applicant to call you when they get to property. When they call, tell them to text front and back of DL and then stand directly in front of keypad and you’ll send code. They will think that the lock/Bldg has a camera. If you screen before showing, you should lease up after 1-2 showings. Knowing your target tenant is essential.
When you get a property ready to rent, check for the usual problems. Its a lot cheaper to change the guts in the toilet tank, replace faucets, corroded valves, and angle stops than to pay a handyman to go out the property to fix leaks or running toilets. Do preventative maintenance. It will save you time, money and make your tenants happier.
As for leases, join the local Apartment Owners Assoc and use their forms. Fair Housing has a lot of rules but basically treat everyone equally and don’t discriminate. Look up issues like ESAs as needed.
Technology has made it easy to manage properties. Use software and systems and it will only take you a few hours every month. Give tenants your handyman’s number for after hour emergencies.
Good luck and build that portfolio!
Screen every tenant. Set up your minimum requirements for renters then approve those who meet requirements. Be fair but firm. Do not let tenants walk over you, but also do not make decisions based on ego. There are times when a problem tenant requests something. My first instinct is to say no, but if I would give to another tenant then I should give to this tenant. Also, do not out off issues as they only get larger.
Hi @Maile Clancy Congratulations on your new property management business. My husband and I own and manage 59 units in Akron. I enjoy managing our properties. My advice is:
1) lease a full featured property managment software system. We use and like Buildium.
2) Find a good reasonably priced plumbing company in your area.
3) Find a good reasonably priced HVAC company.
4) Install Kwikset control key smart locks.
@Christine Kankowski great info! Thx.
Great detailed advice!
Y'all can do this @Maile Clancy ! 12 units is 100% doable for a power couple. With the right systems in place, there is no reason that one person can't handle 100-125 units on their own (assuming they aren't doing the repairs themselves).
Whatever you did to transition TO a property management is the same thing you should be doing to transition FROM a property management company. Make sure you have a clear understanding of what the status is on tenants who are late, security deposits, lease information, Etc.
It would also be beneficial for you to have a list of contractors who have service you're probably in the last six months as they will be the ones most familiar with any recent issues.
Be sure to set up systems as to how tenants pay rent, where they pay rent to, and who they should call and in which scenarios they should call certain people. Potty train your tenants so that they understand what is an emergency and what isn't. I also recommend establishing a separate phone number for tenants so that you can separate your new Property Management side hustle from your main life. It will also give you the option of transferring that number to another phone should you on vacation.
Property management is a luxury, not a necessity, for most people in the 0-25 unit range!