If you have been following this blog for a while, you know I self manage my rental portfolio and for the “full-time” investor I am a big proponent of doing it yourself versus hiring a property management company. You may also know that one of our goals was to hire an assistant to do be in charge of this process once we got to 60 houses.
To update you, we broke 60 early this year and on May 1st we hired a full-time property manager.
What we put him in charge of immediately:
What we still do:
After 3-months we have been pretty happy with the results and really think we achieved the best of both worlds.
The Hiring Process:
We were looking for some specific items: property management experience, bilingual and someone who is relatively self sufficient (we have enough tenants to babysit). We put an ad up CraigsList and got about 30 applicants. We did a phone interview with 5 or 6 candidates that we felt best fit our style and requirements. From there we did an interview with the top two applicants and discussed many tenant issues we deal with on a daily basis and asked them how they would handle it.
We decided to provide a base salary and a bonus per house that he rented. I would eventually prefer to tie his bonus to our overall loss rent/vacancy rate but that is a lot harder to track so we wanted to keep it simple.
What we provided him:
It is still pretty early, but we are very happy with the results. The goal was to save time so my partner and I. I estimate we managed our portfolio of 70+ houses in 10 hours a week each, so it’s not like it was a full-time job for us, but it really affects your mood. Dealing with 10+ tenant inquiry phone calls a day is not fun at all. Now we can figure out how to buy more properties to keep our manager busy, instead of spending 1.5 hours round-trip to drive and meet a tenant.
Now if we compare this option to hiring a professional property management company, I think we are way ahead! We could hire a second manager and it still would be cheaper than a 7% management fee. We also get to train him on our requirements, aren’t worried he is steering the best applicants to another landlords properties and we can easily replace this position with a different employee.
Can you tell I’m glad not be taking all those phone calls?!?
Hi Steve, first off thanks for this site, It is very helpful to go through your different deals and watch them accumulate. I look forward to the day when the less glorious tasks can be delegated to a good employee. We have decided to start in Ma. and with all things the first step needs to be taken. What financing should I be looking at? Whats the procedure a newbie would do? I have bought houses before but as my primary residence. ( our group consists of a real estate appraiser,contractor,and myself.)
Thanks,
Brian.
Congratulations Steve! That is a huge step to be able to hire someone to self-manage the rentals.
Thanks for sharing a lot of great information on your blog with us. I really enjoy reading it, and am learning something new every time I stop by.
Steve,
Congrats on the PM. We self manage our few properties, but can’t imagine doing it with 60 properties. Everyone who does it swears by it…and I like the way you did it.
Keep us posted on how this goes…
Chuck
Hi Steve – I was suggested to read this article from http://www.biggerpockets.com/renewsblog/2012/07/31/owning-rental-property-tenants-property-manager/
I am new to your blog but really love this discussion as we are moving toward this method of PM. Although we are about 1/3rd the size of portfolio. We do outsource the tenant location services through a local PM, to free up time for me as I do much of the PM work.
What would you pay the PM? Do you have them work on a location that you designate or at their own home? How dis you setup the cell phone allowance – prepaid cellphone?
Thanks
Q
Q, thanks for the comment.
My partner and I have really had a lot of discussion about our growth. Neither of us want an office or to feel the obligation to go to an office on a regular basis.
Our PM works from home. He actually wants an office as he has some family distractions but we told him not right now. He meets most tenants at the house or at the bank.
We use Line2 / Toktumi for our phone service. I just forward the number to his phone and we pay him a flat fee monthly to cover phone charges. It takes text messages.
I can email you what we pay him, as that is private. I grew up in Vancouver and I know the pay required there is much higher then Southern California.
Congratulations and thanks for sharing your thought process.
This may not be the best place to ask this, but I’d like to find out if I can have a higher priced rental and I can’t figure out how to find a professional listing property management firm… have you ever heard of this company? They’re listed in the city of Sacramento, CA 15 minutes from my home and I can’t find reviews on them – Sacramento Property Management Consultants, 600 H St Sacramento, CA 95814 (916) 282-3103.