Landlord Full Or Part Time & How Many Units?
Do you landlord/PM full time or do you do it and hold a a full time job? How many properties/rental units do you own and manage at one time.
What do you think is the most you could comfortable handle yourself along with your full time job?
I started REI less then a year ago. I own three duplexs and one SFH currently and a few weeks ago thought it was too much for me to manage without help. I had a vacency, maintenance problems, late payments and etc. all at one time. I was pulling my hair out getting everything under control and felt I did not have enough hours in the day. My wife also ran out of patience with me for spending so much time working.
This month I collected rent on the first (all paid on time) and have not heard from a tenant since. 9knock on wood) ~ Easy sailing for now.
Problems seem to come in waves!
Really, everyone will have different answers to your questions because they are all personal choices, and what works for someone else may not work for you. Some landlords do it part-time, some full. Others, it's all they do, but you can't really call it "fulltime" as they have a property manager handle everything for them. About the only thing fulltime they do is play golf.
As far as how many units you can handle, either with or without a fulltime job, is completely a personal choice. I know some that hire a property management company on their first unit as well as others that not only manage 50-100 of their on, but started a property management company themselves.
It really is all in what you, personally, can and want to deal with in real estate.
Roger
I think it was more of a survey...
I have 5 units that I manage on my own. It keeps me busy. My job takes 50-60 hours of my time, i do property management, etc. on the side. Just as an FYI, SFH are usually alot less work, as the density of the units goes up, so does your workload (generally speaking)
I have heard that people with full time jobs are limited to about 5 properties. There is a difference between managing SFRs and multiunit buildings. The multis are far more management intensive.
I have a mix. I manage 6 myself (in CA) and have property managers for the rest (out of state). The ones that I have take up a great deal of my time.
One thing I have learned is that it pays big time to find an individual or small management company for your management. One company was going to charge me $75 just to put out for rent signs with a $12 surcharge if the property is more than 20 miles from their office and an additional $15 per vacancy. There were other conditions that are just as egregious. Their agreement makes it very profitable for them if my units are vacant. To me this creates a financially adversarial conflict of interest--they want my units empty, I want them filled.
My wife and I work as a team here in Hotlanta. We have 6 properties, 3 of which have in-law suites for a total of 9 units(we live in one). My wife manages the properties full time and I have a full time job at at a Kodak subsidiary. It works out well for us. We are trying our first flips this year, and if they are as successful as we are estimating I could theoretically retire.
[addsig]
I have to disagree with the "multi-units are more labor intensive" point of view. The most units I ever ran at one time was something over 500 units. It was a full time job. I also had a full time secreatary/bookeeper and a part time secretary. And about 8 janitors/maintenance men some full time some part time. All of those units were in multi-family buildings with 30 or more units. I do not believe that it would be possible to run 500 SFR's with the same staff.
The easiest-to manage residential building I ever had had 35 renovated apartments. I had a part time janitor and me. I think I worked about 20 minutes a day. I'm sure that wouldn't be true if you had 35 SFR's.
My partner and I are part-time REI, fulltime in the IT industry and have 25 units. It can be hectic at times but with the help of both our wives we are managing.
Hi Mark (commercialking),
It sounds like you had a "management staff" when you were handling all of those buildings. I would categorize these as "professionally managed" by your staff (and you). My interpretation is that the essence of the post was captured in the question, "What do you think is the most you could comfortable handle yourself along with your full time job?"
Also, I was referring to a property to property comparison, not a door to door comparison (a triplex is more management intensive than an SFR, not a triplex is more management intensive than 3 SFRs). That being said, I do think that 3 SFRs are easier than one triplex.
My experience has been that tenants in SFRs are a cut above those in multis and can be trained to look after most of the minor repairs themselves. With larger number of units there are common area issues that usually require my attention.
So I am sticking to my guns. I believe it is easier for me to manage one of my SFRs (myself) than it would be for you to manage one of your 30 unit buildings (yourself)!
Next year I will be looking to trade into some larger buildings. I am hoping for an opportunity to talk with you on acquisition and management of such properties.
Regards to you,
Ed [ Edited by edmeyer on Date 11/11/2004 ]
I appreciate the responses so far.
My question was asked mostly out of curiosity about what others are doing. The 7 units that I own right now aren't that tough to mange on my own when things are going as they should be. Last month Mr. Murphy paid me an unwelcomed visit, you know how that goes.
One of my goals is to gradually increase the number of properties that I own until I have enough to quite my full time job and manage my REI rentals full time. Of course, as I get closer to this goal management or the rentals and my job are going to be tough. With my current cash flow there wouldn't be much left if I hired a PM. Of course with time rent will go up while the mortgage stays the same. Maybe then I can hire a PM.
Dumdido
You are spot on with my observations. Last year was a very smooth year. This year I have had ...
1) a turnover where the tenants kept two pit bulls (I allow no pets) that did extensive damage
2) a mold problem that was apparently known to the previous owner (not disclosed in the seller disclosures)
3) an eviction of a drug user who did extensive damage to the unit
4) several additional turnovers (good tenants who enjoyed my landlording but had to move for other reasons)
All of these have consumed a great deal of time (money too). Perhaps in 2005 ...
I'm also not convinced that SFH take less time and effort to manage than do multis. Of course I don't own any SFH other than my own, so this is more supposition than any thing else. But I do own 8 properties with a total of 30 units. It can get pretty hectic at times, but if you're careful about selecting your tenants and manage to get a little preventive maintenance done once in a while, things generally tend to go relatively smoothly and don't amount to anything more than a part time experience. The only tenants I've had problems with were those that I inherited from sellers.
Anyway, this is a great question. I've also been considering quitting my corporate job and doing something on my own. But there isn't enough in 30 units to keep me busy all the time. That's why I've asked a couple of time what everyone else does besides REI. I'm looking for suggestions. Hmm, with so many people here looking for good property managers in the Buffalo area, maybe I should go do that.
Edmeyer,
Well, ok if you use this definition I guess you are right, a 6 unit is more work that a SFR, but not anywhere near 6 times as much work.
I think the reality of this is that the easiest size building to manage is somewhere between 30 and 50 units. Thats big enough to keep a maintenance guy around, if only on a part-time basis which means that the physical maintenance becomes much easier to handle leaving the "manager" free to deal with tenants and marketing.
I guess that even if I was trying to manage SFR's I would want to have a maintenance guy around. Here in Chicago you can hire a pretty good maintenance guy for $10 or $12 an hour (although his english is likely to be limited). Quite frankly, I wouldn't be willing to work for that wage so when I go out and mow grass (or whatever) I am, in effect, paying myself $10 an hour to be a lawnmower. I'm in the real estate biz to make money and at $10 an hour I'm not making much.
This is a point I frequently try to make with people. Often you can participate in the profits of real estate by partnering with people who will do the day-to-day work, leaving you free to concentrate on the things you do best-- that is, your primary job. Especially for people who make pretty good money at the primary job this is actually a much better choice than becoming property managers.
Mark,
I agree with you on not working for $10/ hr. I live 100 miles away from my CA properties and do not do any labor myself (I am allergic to physical work!). I do deal with tenant phone calls and arrange for others to do the consequent work.
For me managing these properties is a preamble to finding others to manage and from what I am learning, hopefully, I will be more effective in selecting and managing the property managers. Within a few months someone I know well will manage my properties leaving me with more time for strategic planning and acquisitions. My current plans include acquiring a property in the size range you say is easier to manage.
With commlkings formula of 10 times net, it wouldn't take many smaller buildings to give you a comfortable living. Say 3 20s. Good screening always make the job go easier, so you can do less work than a full time job. Always have those rough years, tho. I'm in the process of eliminating the previous owner's tenants myself.
Course everyone has a different idea of comfortable...
When I mentioned SFR are less work than multis, I was talking more along the lines of 2-6 plexes, as I thought we were talking about how much you manage yourself, entirely. Yes, when you get into larger complexes, you gain efficiencies. For example, a full-time maintenance person. That isn't possible for most small time landlords. But yes, I'd take 3 SFRs spread across the city versus a three-plex. The type of tenant you are getting is different.