All Forum Posts by: Gautam Shah

@Jay Hinrichs 

Glad to know this.  How does one find out the state laws for GA, and requirement for on site PM based on unit count?

With respect to the set up you mentioned, is there a contractor full time as well (in addition to the site manager, and offsite PM)?

Thank you 

@Roy N. Roy good points.  In our case, the property management company hired the onsite team too.  A contractor, a site manager, and an assistant to a site manager, managing across an 80 unit and 50 unit.  

In the instance, it runs with just the team on the ground.  The property management team is not required, however, they have the ground team on their payroll, and bill it to our apartment.  How to move away from the property management company, but retain the ground team now becomes the new question.

@Andrew Kniffin agreed with your statement of having an onsite manager being beneficial for 80 unit.  But the site manager is hired by a property management company and on their payroll, but billed to our financials.  

The 8% offsite PM won't work in an 80 unit, or even 50 unit.  In fact, that is what I'm trying to determine, ie that sweet spot where a property will not require an onsite PM.  How many units would that apartment complex or multi-family have when an onsite PM is not an absolute requirement?

@Michael Tempel 

Great response.  Thank you. This is similar the what we currently have set up, where costs for the onsite staff/contractor are reported to the appropriate properties proportionately, eg 80 unit bears 60% of the wages, and 50 unit bears 40% of the labour costs.

However, there is still a property management company charging 5%, and one site manager, one assistant, and one contractor.  

Would you still make this leaner?  If yes, then how?   (I read somewhere else by a note from @ChadCarson, that 80 unit should have only one site manager and one contractor.  ie no property management company in the mix.  Wondering if this will work for 80 unit and 50 unit properties nearby to be managed simultaneously).  Thank you in advance for the input.

The question is in regards to balancing property management costs.  

I've noted, that generally apartment complexes require a property management company that takes between 5-8% of gross rents, and also hires payroll staff to be on site.

Eg a site manager, and an assistant to a site manager, and a contractor for 50+ units. In evitably, this results in reduced NOI, which in turn reduces the cap rates and cash on cash returns for investors.

If one is seeking to pick up another apartment, then what is the threshold level for # of units one can own without having to employ an onsite property manager (but still retain a property management company to handle the leasing, maintenance, etc)?

Is this strategy advisable? Why or why not?

Hey Gretchen, 

Glad you found this list informative.  It's the real deal.

Gautam

Oops that did not come out aligned correctly... let me repost...

Hi All,

for Income the summary shows what you must factor:

Rental Income 

Vacancy 

Concessions 

Lost Rent

Meanwhile, here is a list of Other Income you may have:

Other Income 

Vending Income 

Damage Income 

Utility Income 

Late Fees 

Corporate Furniture 

Rental NSF Fees 

Warrant Fees 

MTM Fees 

Short Term Lease Fee 

 Notice/Termination Fees 

Transfer Fees 

Forfeited Rent and Deposit Application Fees 

Administration Fees 

Utility Reimbursment 

Electric Reimbursement

For Expenses, here is the summary of items you must factor the following:

Payroll & Related 

Utilities 

Marketing Expenses 

Administrative Expenses 

Repairs & Maintenance 

Turnkey Contract Services 

Managements Professional Fees 

Property Taxes 

Payroll with Management (often times management will hire staff, so you can keep this together or separate it, depending on how you wish to track the data)

Insurance

I am expanding some of the expenses category for you to be aware of what kind of expenses you can expect for a 50+ unit...for instance, here is the payroll expanded sub-categories...

Payroll & Related Salaries 

- Management Salaries 

- Leasing Salaries 

- Maintenance Overtime / Inconvenience Wages Bonuses 

- Incentives Leasing Commissions Temporary Help Employer Related Payroll Expense

-ADM

Utilities expanded:

Utilities Electric 

- Occupied Electric 

- Common Area Electric 

- Vacant Water and Sewer Trash Removal Utility Billing / Recovery Service

Marketing expenses expanded:

Marketing Expenses Advertising 

- Signage Internet Advertising Other Advertising & Marketing

Administrative expenses elaborated:

Administrative Expenses 

Training and Education 

Career Apparel 

Postage and Freight 

Telephone 

Bank Charges and Fees 

Office Supplies 

Dispossessory Fees 

Mileage Reimbursement Expense 

Printing & Forms Copier Expense 

Computer Expense 

Answering Service Dues and Subscriptions 

Credit Fees 

Professional / Legal Fees 

Meals and Entertainment 

Travel Expense 

 Employee Screening 

Employee Recognition 

Overhead - Acctg & Admin Fees

Repairs and Maintanance expanded:

Repairs & Maintenance  

Other Interior Maintenance Exterior

- Painting Exterior 

- Doors and Windows Exterior 

- Carpentry Exterior- Lighting Exterior 

- Signage Repair 

Parking Lot Maintenance Tools & Supplies 

Other Exterior Maintenance Interior 

- Carpentry Interior 

- Cleaning Interior 

- Electrical Interior 

- Fixtures Interior 

- Flooring Interior 

- Hardware Interior 

- HVAC Interior 

- Paint Interior 

- Plumbing Interior 

- Window Coverings Interior 

- Appliance Repairs Turnkey Turnkey 

- Carpet Cleaning Turnkey 

- Cleaning Turnkey - Painting

Contracting expenses can include:

Contract Services 

Landscaping Maintenance 

Landscaping Other 

Equipment Rental and Maintenance 

Exterminating / Pest Control

Property taxes are straight forward, and grouped with insurance:

Property Taxes 

Property Taxes Total Property Taxes Insurance Property Insurance

Hope that helps. While this appears like a lot of detail, you will likely run into 90% of these in the first 6-12 months.

From the above, you should then be able to derive the following:

Total Operating Expenses 

Expense per Unit 

Net Operating Income (Loss) 

Net Operating lncome/(Cost) per Unit

Interest & Misc Expense (ie mortgage) 

Capital Expenses 

Net Income (Loss) 

Net lncome/(Cost) per Unit

Pay attention to utilities, it can grow into an alligator instead of a cash cow!

All the best,

Gautam

[email protected]

Hi All,

for income the summary shows what you must factor:

Meanwhile, here is a list of other income you may have:

For expenses, here is the summary of items you must factor the following:

I am expanding some of the expenses category for you to be aware of what kind of expenses you can expect for a 50+ unit...

for instance, here is the payroll expanded sub-categories...

Utilities expanded:

Marketing expenses expanded:

Administrative expenses elaborated:

Repairs and Maintanance expanded:

Contracting expenses can include:

Property taxes are straight forward, and grouped with insurance:

Hope that helps.  

From the above, you should then be able to derive the following:

Pay attention to utilities, it can grow into an alligator instead of a cash cow!

All the best,

Gautam

[email protected]