Residential vs commercial management
Hello!
I am compiling research on starting a property management company. My personal opinion and investing strategy is that multifamily units are better than single family. But I’d assume when running a property management company multifamilies are a bigger pain to manage than single family homes.
In your experience, is it more profitable to learn how to be an expert multi family manager vs a single family manager? My step mom runs a 300+ management business of all single family homes. She won’t touch multi family. She said it’s too much of a headache… but I’d like to learn because my next investment goal is buying an apartment complex.
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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- Austin, TX
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
It is easier to scale on the multifamily side. You may not get the same amount of rent per door but the volume will make up for it. There is a great need for good property managers.
#3 Innovative Strategies Contributor
- Investor
- Greenville, SC
Apartment community and SFR management are completely different...and apartment management is significantly easier and much more efficient having all units in one location rather than 200 SFR units spread throughout the city. Large multifamily has on site staff to show units, sign leases, collect rent, answer questions, deal with issues, handle maintenance, and manage rehab. It has economies of scale for maintenance, rehabbing units, signing contracts with contractors and suppliers, and marketing. You can get an apartment unit painted for $300, vinyl plank flooring for $1,500, 2 ton heat pump installed for $2k, etc. at apartment communities.
Quote from @Eliott Elias:Yes I agree. 1 of my property managers in Kansas City, Mo is a freakin rock star. My other ones….. well they aren’t great. Lol
It is easier to scale on the multifamily side. You may not get the same amount of rent per door but the volume will make up for it. There is a great need for good property managers.
Quote from @Patrick Flanagan:
There are pros and cons for each. I know many professional property managers that won't touch multi-family.
Multi-family comes with additional problems. Noise complaints, parking complaints, common areas like laundry rooms and hallways that require cleaning and maintenance, parking lots, etc. Tenants in apartments are less stable, meaning they are moving in and out more frequently. Apartments rent for less than a house, so you're making less per unit while often dealing with a higher level of work.
For example, I manage a 16-unit apartment complex that produces more work for my office than 50 single-family homes. That's not an exaggeration. 50 houses with an average rent of $1,400 a month brings me $7,000 a month in management fees. My average rent for the 16 apartments is $700, earning me $1,120 a month. So my workload for the two categories is about the same, but my income for the houses is 7x greater.
Why do I bother with apartments? Because I'm in a small town and the only professional PM operation available. I want to serve the public so I will take on almost anything.
Talk to professionals and they will tell you to build your business correctly from the beginning. Don't take on bad rentals that will eat up your time/energy/sanity and reflect bad on your company. IF you are going to manage multi-family, set high standards and stick to them. And find ways to increase revenue because 10% of rent on a $700 apartment will cost you money rather than make you money.
