SS27: What Does A Property Manager Do? Do I Really Need One?

Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing my thoughts on property management and what a property manager’s role is in your property.

Watch The Episode Here:

Listen To The Podcast Here:

Talking Points:

Thought you could handle managing your multi-family rental property on your own or with the help of a resident manager but are feeling overwhelmed?

Here are a few different ways a professional property manager could help and exactly what they will do for you.

What Does a Property Manager Do?
A management company will deal with everything so you can passively own your property and collect income from it, this includes:

– Marketing the property to prospective tenants
– Handling inquiries, showings, and screening new prospective tenants
– Responding to existing tenant issues, collecting rent, and handling most maintenance problems that may arise
– Contracting third parties for approved maintenance/upgrades after getting your final approval

Overall, a good property manager will save you both time and money over the long term, depending on the scale of your property empire.

Should I Hire a Property Management Company?
If you answer yes to all or most of the next points, then you know you need to hire a property manager:

You own multiple rental units or multi-family properties

As the work required may be beyond the scope of a single individual and professional property management companies with the systems and structure already in place can comfortably manage even over 100 properties.

You can afford the cost

Managers traditionally charge a fee that averages between 4%-10% of the monthly gross income of the property. The typical fee for a single-family rental property is closer to 10%.

Your properties are geographically dispersed

Unless you own the entire block, issues can and often do arise for multiple property owners, which requires someone that is local.

You are not a full-time landlord

If you operate another business(s) or have a full-time day job and your time is limited, then you probably don’t want to spend your free time dealing with minutiae tasks and issues.

You have no expertise or interest in active property management

If you view your properties strictly as an investment rather than an active business to oversee and manage, then a property manager will be worth the investment just from a peace of mind standpoint.

The property you own qualifies as affordable housing

If you participate in an affordable housing program, then you receive financial assistance, which might come in the form of a grant, low-interest loan, or tax credits, in return for agreeing to rent part of your property to tenants earning below a certain income level.

Of course, as with any state or federal government program, these come with a complicated set of rules to which you must adhere to. Given this, it may make more sense to hire a property manager with specialized expertise in such programs rather than tackle it yourself.

Transcript:

Charles:
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing what does a property manager do? And do I really need one? So if you thought you could handle managing your multi-family rental property on your own, or with the help of a resident manager, but maybe you’re feeling a little overwhelmed. Here are a few different ways of professional property manager can help you and exactly what they’re going to do for you. So, first off, what does a property manager actually do? Well, a management company will deal with everything so you can semi passively own your property and collect income from it. Now I say semi passively, because when you hire a property manager, you need to manage the manager. And this is what we call asset management. But here are a few tasks that they’ll take off your plate and be able to perform with your properties.

Charles:
They’ll save you time marketing the property to prospective tenants, handling inquiries, showings, and screening of new prospective tenants, responding to tenant issues, collecting rent, and handling most maintenance problems that arise. That’s the biggest one for me, because that is very time consuming. Next would be con contracting third parties for approved maintenance upgrades after getting your final approval. So you’re going to have an amount that’s going to, you’re going to set when you start with the property manager that they’re going to have to contact you for approval over. Usually that might be $500 to start as your relationship grows. You can keep on increasing that. I think I have I have one property manager that I’ve had for over a decade and it’s like 1500 or $2,000. So anything under that amount that they’re going to kind of let me know anything over that amount, which is usually larger cap ex items like kitchens or roofs.

Charles:
This is something that they’re going to reach out to me, not has to be done tomorrow. They’re going to give me time and let me know, Hey, this is going to have, this is something that needs to be done and I can then speak to different general contractors and I’ll maybe take some of the ones that they think I should use or that they’ve used before. And I’ll take also the ones in my CRM and figure out which one is best for the project. And then what the property manager is going to do is they’re going to really review the project when it’s done. And then cut the final check to that contractor. So overall a good property manager is going to save you both time and money over the long-term depending on the scale of your property portfolio. So the big question is, should you hire a property management company?

Charles:
And I’m going to lay out a few points. And if you find yourself saying yes to more than one of them, it’s probably time that you start looking to hire a property management company. So you own multiple units or multi-family properties as the work required, maybe beyond the scope of a single individual and professional property management companies will have the systems and structure already in place that can manage as many properties as you have. In most instances, if you’re going afford the cost. So in the beginning, when I was self managing my own properties, I didn’t want to pay for melanin management. I also lived inside one of the three family properties. And so I didn’t really want to pay the 10% I was learning the business as I was going pretty much. And in that sense, what I did was I self-managed. And then once I got large enough, I was able to hire a third-party manager.

Charles:
They’re usually going to charge between 4% to 10%. It’s really maybe a little less, if you get up into the hundreds and hundreds of units I know we have one manager that charges us 3%, but we have hundreds of units with them on our management, but 10% is usually what you’re going to be finding. You’ll find that on smaller multi-family and then also on single family rentals, condos as well. Next your properties are geographically disperse. This is a big one because you don’t wanna be driving all over the place. If you’ve got properties say you’re in Florida and you’ve got property in Miami, Orlando, Tampa you’re not going to be driving back and forth doing that. It’s much easier if you’ve strategically purchase your properties close to each other, that’s going to make it much easier for you to, to self manage it or manage it with maybe a handyman that you’ve had on your own.

Charles:
So if you’re not a full-time landlord, this is another thing. If you great another business or your professional or your full-time day job, you know, your W2, this is when I would start bringing on a property manager earlier than later, because there’s going to be a lot of tasks that you’re offloading onto the property manager’s plate that are going to just eat up your time and yeah, your earning income from your W2, and these are tasks and issues that can easily be handled by your property manager and by their handyman next, if you have no expertise or interest inactive property management, this is a big thing. If you don’t like managing properties, don’t do it, but just make sure going in that you have a plan and you know, the cost, because when you’re looking at, especially with smaller properties and you review some of the underwriting, it’s very normal that in these properties and in the underwriting, even if it comes from a broker, they do not include the management fee because it was never self-managed.

Charles:
So make sure that, you know, this, that you’ve spoken to a property manager beforehand, you know, that you’re gonna move forward with them, you know, what their fees are, and they’re gonna assist you in the buying process as well, if they’re a good property management company, but make sure that you’ve really allocated for the expenses of this management. When you get into larger properties, this is normal to have property management. So it’s usually not a line item. That’s going to be much different from what it is actually, but it’s also something that you always double check that, but always make sure it’s even there, especially with smaller properties. Next is if the property you own qualifies as affordable housing, and this is something that a number of affordable housing programs here in the United States financial assistance, and they are earning below the tenants are earning below a certain income level.

Charles:
So there’s a lot of state and federal programs for this. And there’s along with that, there’s a complicated set of rules, which you must adhere to. This is that you want to have a property manager kind of walk you through and manage because there’s going to be a lot of nuances here and facets to it that you might not be a hundred percent aware of that you really want to kind of dive into. It’s something that if you have a manager that’s been doing this for years, then it could be a great time to have the manager property. Now make sure when you’re looking for a property manager, that they fit what you do, right? So if you are owning C class properties, make sure that you’re giving them a C class property at advantage. The best way of finding property managers is by referrals.

Charles:
And that’s like anything, contractors, brokers lenders it’s by referrals. So try to get referrals from someone the best referrals are going to be from someone that’s using them of that has the same business model you have. So if you’re looking at buying a property and next door, there’s a large there’s a, a landlord there and he’s out in front, you ask them, Hey, who manages this for you? If that’s the owner that would be a fantastic way of getting a referral go to local RIAs do some you know, there’s so much groups with social media, you can find, and these are great ways of finding property managers, but bringing on professional property manager was a game changer in the life of my real estate business. I was able to focus more on my other business that really allowed me to buy my rentals. And and I could grow my portfolio by taking off these small tasks that were really sucking all my time during the day seven days a week, really. And I should have offload my properties to a property manager earlier, but I would suggest if you’re really building a portfolio, look at bringing on a property manager sooner than later. So thank you so much for watching. Please remember to rate, review, subscribe, submit comments, and potential show topics at global investors, podcast.com. Look forward to two more episodes next week. See you then

Speaker 3:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar LLC exclusively.