Next Level with RE Portfolio - When to bring on employees?

Question

I have been investing for 10 yrs part time, have built up a decent portfolio of SFH, Duplexes, Fourplexes, Senior Living Complexes and a few Commercial Buildings...the returns are solid but my maintenance and repairs are eating at me - not only money wise but activity wise (calls, complaints, etc.)

Up to this point, I typically hire out to local contractors (plumber and electrician) and do the light maintenance myself, when I can along with a few individuals who help with light painting, fixtures, etc.  I have a very part time asst to help with leases, renewals, paperwork, etc but is pretty limited...

I operate another full time business that is the breadwinner and have a young family ---- so it is becoming more difficult for me to maintain focus with all the action going on and maintain a solid work/life balance.  Basically, I'm looking to duplicate myself!

My question is for those who have built their portfolio/business to a point where they now have their own employees:

- At what point did you hire Part Time or Full Time Handyman? Manager?

- How about part or full time in house Property Manager to take care of all paperwork, showings, etc? *I feel hiring an employee to assist with portfolio is a better option as I still want to be involved, have some control and continue to develop/build assets...

- What processes or systems had a dramatic impact or that you'd suggest to improve the efficiency of your daily monitoring, maintenance and performance of your portfolio?

- Other silver bullet suggestions that made a difference to your business?

My goal is to scale this portfolio/business to a level where it will crank along without me and become the well oiled machine I set out for 10 yrs ago.

Thanks in advance for your advice/suggestions.

Wes S. · Answer

@Grant Francke  I'm in the midst of my solution!  2 yrs out from this post and hindsight being 20/20, I have learned so much and still executing.  Few big takeaways that I would relay on to you:

1) System:  I've hired a gal full time to manage properties and do quickbooks, pay bills, showings, complaints/maintenance issues, leases, renewals, etc.  I also have another business that she helps me with on research and bills.  I pay her a fair wage and offer a very flexible schedule but she makes things happen, has brought my vacancy to almost zero, people are happier b/c of maintenance calls and she is like the glue keeping all things in place. I also hired a maintenance guy who I'm spreading costs out on as well...but while this hire isn't showing a huge profit right now, my tenants are happy, things are being fixed up and taken care of and he's increasing my net worth by improving or remodeling fixer uppers I'm bringing into the portfolio as well.  I'm in the midst of scaling this business so knowing long term, my costs will be spread out further and margin will be greater.  I started in late '07/early '08, we're running about 100 units and expanding.

2) Leverage: Don't hire someone who can do things well, that you do well. Get humble and hire for your fumbles. You need have a conversation with yourself, find out what you suck at or what you don't get paid much to do, find someone who enjoys those things to fill the gaps or the holes in the barrel.  If you want to grow, your focus needs to be on high ROI activities.  Why would you give up deal running time to do a $15/hr activity?

3) Stomach, Balls & Gut:  With growth comes pressure...and balls...and a gut feeling.  There is risk in taking it to the next level and you have to be able to stomach the stress and risk involved....grow a pair and risk time/money/ego on doing it.  Can you fall on your face, sure.  Can you waste a lot of money, yes, but you still maintain control and it has to feel right in the gut.  I continue to work on my mental game but in the midst of growth, I can see where my employees are paying for themselves, which is where I spend my thinking.  And you have to work with people who make you feel good in the gut when you hire them, just like a deal.  It has to feel good and you have to create a culture where everyone is striving to get better.  All this takes risk but it goes back to my question and thinking of 'How can I remove myself from the business for 30-45 days and things still run?'  You need to make investments in leveraging yourself and free your time up for growth.

4) More Deals; This is what I love.  The visioning, the planting seeds aspect and putting deals together.  This is where I shine, what I enjoy most and where I maximize my return on time.  Everything else is mostly taken care of (you still have to monitor and maintain the day to day) and it is because of the system.

That is my two cents brother.  I wish you luck in taking it to the next level!

Account Closed · Answer

Have you thought of getting a virtual assistant (VA) to handle all the maintenance, etc? You could set up a "virtual hotline" and/or a website where your tenants could leave maintenance requests, and your VA would check that and send the appropriate handyman/professional (this assumes that you prepare a list of your go-to people for each trade or type of issue). I believe in most states a real PM needs to be a real estate broker, but if you have a set of protocols (a "system") an employee could easily implement them. You would then only handle the financial side so you don't need a PM.

Pat L. · Answer

We did hire a new maintenance guy after we had to evict the resident, inherited nightmare barelyhandyman. When meeting with applicants I could not believe how many middled 50's guys have nothing to their name but a few tools, a beat up truck & a minimum wage JOB & no retirement plan.

The guy we hired turned out to be amazing & he has helped in many projects at the 6-plex & many other properties we have.

The guy we hired turned out to be amazing & he has helped in many projects at the 6-plex & many other properties we have.

Denis F. · Answer

@Wes S.  Great to hear your story and advice. I really appreciate you following up after 2 years. Please give us an update in another 2 years... you may be on the podcast by then :-)

Jassem A. · Answer

My suggestion is simply to find ways to simplify your processes so that you can do what you do more efficiently.  You can find people to work for less but it can be a chore retaining them.  I'd focus on the business that is the breadwinner and you could also try buying properties that cash flow more to balance out the ones that do not. Ideally you want to collect twice as much rent as your total mortgage payments in order to be able to afford the easier-to-retain professionals.

Grant Francke · Answer

@Wes S. I’m in this same spot and struggling with a resolution. Did you ever find a solution?

Next Level with RE Portfolio - When to bring on employees?

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