How does a property manager work? you pay them for when you need them? 8 hrs a day 5 days a week? or what?
the guys i’ve talked to basically charge a flat per-unit monthly fee for collecting rents, screening tenants, etc. either that, or a percentage of the rents.
on top of that, he charges an hourly fee for any maintenance calls. (plus materials of course)
dun-deel, think about what REO, Raj and cecsix are suggesting.
Ask yourself, “What is the best use of my time?”
When you are painting, your time is worth what a painter is worth.
When you are cleaning up a rental, your time is worth what a maid makes.
When you are negotiating a discount purchase and making offers,
your time can be worth thousands of dollars per hour.
Wagging your tongue can be the highest paid skill you can ever acquire.
Focus on the activities that bring you the highest return, and delegate everything else.
Ron LeGrand puts it this way, “The less I do, the more I make!”
OK cool. What is an average pricing scheme for this sort of thing. We talkign thousands? hundreds?
Hey propertymanager!! You started this thread but didn't give your thoughts on the topic. Let's hear it. - Raj
In my opinion, a person must have a goal, a plan, and a timeline if he or she is to succeed. With a goal, a plan, and a timeline, you can judge how you’re doing and make corrections as necessary.
My initial goal was to acquire 50 rental properties in 5 years, each with a $200 positive cash flow and approximately 30% equity. This would result in a positive cash flow of $10,000 per month and over $1,000,000 in equity. Currently, I’m about 20 months into my plan and have about 25 rentals. For the first year, I was right on plan doing about 1 house per month. Then, things started accelerating and I have had to change my goal. My goal is now to have acquired the 50 rentals by next summer!
As to the management issue, I agree with Dun-Deel and manage my own properties (hence the propertymanager username). I believe that I can manage the properties far better than a paid manager because I care about my properties. Also, I don’t have the financing, cash, or willingness to do an unlimited number of deals. It has been a lot of work to acquire, rehab, and rent 25 rentals in 20 months and I like the pace that I’m on. I’ve also flipped a few properties this year for extra cash. Once I reach my initial goal, then I’ll re-evaluate my decision regarding a paid propertymanager. Eventually, I’d like to buy the Island next to REO and not have to worry about management, but I’m not there yet.
Mike
Mike, you are on fire!
That’s a lot of deals in a short time, I don’t care who you are! ~ (Larry the Cable Guy)
I started out managing all my stuff. It’s a great teacher, and in the beginning, I didn’t have the cash flow to share with a property manager.
I managed properties for other landlords who hated property management to earn the cash flow from properties that I didn’t own. I got paid before they did. Occasionally, this lead to me buying the property from the investor, so it was a source of deals as well.
Also, I didn’t think that anyone could do it as well as I wanted it done.
Nobody cares about your money as much as you do.
There comes a point when you realize that property management is not the best use of your time.
At first, I got my wife to take over the management of our stuff. She is better on the telephone, and she is a great negotiator. She is tougher to deal with than I am, so this worked out well for us.
I got to spend all my time working on finding the deals, which was my highest paying activity, by far.
Today, we have trained people in our system of property management, and they do all the daily management activities. We still check on them and and assist with unusual situations, but we are free from the daily routines of management. This has cost us some of the cash flow, but it is a choice that has worked out very well for us. We took back control of our time.
Plus, we eliminated one of the main reasons that people give up on this business.
We will never become burned out landlords because of dealing with tenants and toilets.
Now Propertymanager do you really think for one minute we would be good neighbors???
LMAO
Wow Propertymanager,
How did you get started finding and closing a house a month, or more! How did you get financing for all of them?
Cheers 
Jason
Re: self managing:
When I was a newbie I paid Rooter man 200.00 to unclog a bathtub on a Saturday. Sunday I bought a 15.00 snake at Lowes and now I save 200.00 (less my time) when a tub clogs.
Everyone’s strategy is different. My motto is quality apartments, rented to quality people served by a quality landlord. When I show up at the door myself I thinkit makes a huge difference to tenants. They aren’t just sending a check to a faceless company and they take a little more interest in the property.
Fortunately my first 6 units were within walking distance to my home. That really helped. My tenants would get a kick out of it when I showed up 2 minutes after they hung up the phone.
Don’t sass me for being a compassionalte landlord ok? I like my tenants.
Jeff
Valgolas,
I’m looking forward to the day when I am at the point of being able to have a paid staff (or assistant) to take care of things like management. My business has more growing to do before that will be feasible. I think that about 100 rentals would be the right point to start with an assistant and that will probably be another 2 or 3 years. In the mean time, I’m learning all that I can about management.
Jason,
I got started by finding a great realtor and having her hunt for desperate sellers. She would network with other realtors and let me know when someone HAD to sell quickly. I gave her my parameters (such as only looking at houses that could be bought at least 30% below market and monthly gross rents AT LEAST 1% of the purchase price.
I use small local banks for financing and have had no significant problems to date. Small local banks are very flexible and very cooperative if they have confidence that you will repay. Personal relationships, history of business with the bank, and referrals are key to working with banks.
REO,
We’ll make great neighbors - after all the ocean will be between us. Better than any fence!
Jeff,
It’s great to have tenants you like. I like some of mine, but others… Anyway, I believe the key to property management is to insist that the lease is strictly followed. The key is to be able to smile and be polite while you’re evicting the deadbeats! (I’m still working on that.)
Mike
Wow thanks for the advice. I will have to talk to my realtors that I have looking for me and hopefully they can do the same. I am 21 years old and I really want this to be a future for me.
I am really taking everyoens advice to heart.
Mike (propertymanager),
I have been reading your posts, and I continue to be impressed with the things you have accomplished. You have the game figured out, my friend.
If you can handle 100 rentals, or even half of that number, without any assistance, you are a better property manager than I ever was. You must have a really good system in place.
I found that, even with a good system, when I got to over thirty units, property management started to become a full time job in itself. This is not so bad, but I wasn’t looking for a job, nor did I like the full time part. It got to a point where I started to dread it when the telephone rang.
I had to make a change.
That’s when we restructured things. We tried the professional managers who charge a fee, but this never worked out well for us. Maybe we were too picky, but they all had shortcomings.
I need to clarify one thing, though. I don’t have a paid staff of property managers or assistants. In fact, I don’t have any employees. (Occasionally, we hire some kid we like in order to give them some earned income to fund a self-directed Roth IRA.)
We have trained some people with the right skills and attitude to be propertry managers for us, but they have limited liability companies and work for their own company. Their companies lease our properties, and in turn sub-lease them to the tenants. They are in a sandwich lease position.
There are a number of advantages to using this arrangement.
Basically, we use Dave Tilney’s system.
Find out more about it at:
Hi Mike, (PropertyManager)
A question for you…
When you state your goal for a positive cash flow of $200 per unit…have you found that this type of return is more achievable with SFH as opposed to units in an apartment?
I think that $200 figure is a good number to shoot for…and my guess is that it might be more achievable with the rental amount a SFH could get.
Can you shed some light on this?
Right now I’m at the research stage of things…and deciding between going with SFH’s or the smaller apartment type units is one of the big things I’ve been debating.
Thanks for your consideration.
-Mike (in Niagara Falls)
Hi Mike,
I think what I said in another post was that my average cash flow per property was $200 per month. Just to be clear, that is not my goal or objective and should not be yours either. To be profitable, your cash flow should be based on your mortgage payment or the price of the house - something that takes into account your investment and risk.
My GOAL is for the positive cash flow to be 1/2 of the mortgage payment. I will not buy any property unless the positive cash flow is AT LEAST 1/3 of the mortgage payment. It just so happens that following this rule results in a positive cash flow averaging $200 in my little corner of the world. This may be quite different in your area.
I treat apartments and SFHs exactly the same as far as cash flow. I use the 1/3 rule for both and usually buy with the cash flow closer to 1/2 of the mortgage payment. The BIG difference in SFHs vs apartments is the quality of the tenants. In my experience, apartment dwellers are a big step below SFH renters and the problems managing apartments are greater than those of SFHs by at least a factor of 5. So, I always recommend that new investors start out with several SFHs and then gradually add apartments later on. I’M GLAD THAT I DID!!!
Mike
Hi Mike,
Again…as with the other post…thanks for taking the time to get back to me on this.
-Mike
It’s benchmark postings like this…(at least 1% of purchase price)…that keep me coming back to this site.
Thanks for the info…
-Mike