The Capital Stack
Efficient property management is crucial for the success of any multifamily property. Harrisburg Property Management Group uses the list below to outline the many tasks property managers encounter. You can read the full article here https://www.564rent.com/blog/property-vs-self-management.
- Advertising your property
- Determining rental rates
- Preparing the lease
- Tenant screening
- Collecting rent
- Doing preventative maintenance
- Making repairs as needed
- Fielding complaints
- Moderating issues between tenants
- Checking in with tenants at least once a quarter
- Enforcing the lease
- Evicting a tenant when necessary
- Finding new tenants when vacancies occur
Property Management or Self-Management
Property Owners have two choices when it comes to managing their multifamily assets. They can choose to manage the property on their own (self-manage) or they can choose to hire a property management company (third party management). There are advantages and disadvantages associated with both options. We choose to hire a property management company. Keep reading for why this makes the most sense for us.
A important attribute to consider is time. Nothing will teach you more about your property than managing it yourself and allocating time to deal with tenants, leasing inquiries, maintenance requests, etc. This is great for a small one-off landlord, but when a certain scale is reached one must decide to be a property manager or an asset manager. We choose to be asset managers and by hiring third party management can scale quicker than if we took on the daily property level tasks.
When hiring a property management company, you choose to give up an element of control. Often property managers will do small tasks differently than we would. Whether it’s hiring a more expensive contractor then necessary or denying a tenant request we may be okay accepting. While we would like the full level of control, it comes at a cost of time. We are better off looking at big picture items for the property and letting the property managers do their job. We have daily contact with our property management team and weekly calls outlining the updates for each property. We keep a close eye on how the property is being managed and we would end the contract with our manager if we were consistently unhappy (we have done this before).
We pay between 4-6% of gross revenue plus payroll to our property managers. If we self-managed we could collect that ourselves and have a very solid salary. However, the time we would spend managing our properties would take away from our ability to acquire more quality assets.
The goal is to have freedom to spend time how we choose. Once I received a call from our property manager on Christmas Eve at 11:00pm. Temperatures were below freezing, and the heat went out in a unit at Creekside. Fortunately, we have an individual who is responsible for handling maintenance emergencies. He was able to get the tenant a plug-in heater to keep their unit warm until the HVAC tech could fix the furnace. If we didn’t hire an individual to address these matters that Christmas Eve night with family would have turned into running an electric heater 30+ minutes away while taking away from valuable family time.
Major Market News
|Is Renting Cheaper than Buying?|
There is an interesting article by the RealDeal that analysis the cost difference between renting a single-family home and owning a single-family home. The article says, “Owning a home in April cost $839 more per month than renting”. The article makes the point that renting a home is more appealing now than it has been in the last “2 decades”. More details here.
|Tips and Tricks|
|Check out these popular terms:|
Asset Manager: This is the role we take on a property after closing. The role of the asset manager is to make high level decisions such as, Renovation Plan, Revenue Targets, Occupancy targets, Refinance vs Sale vs Hold and much more. How we approach asset management is by scheduling recurring calls with our property manager for every week after we acquire a property. Once our renovation plan is in progress and moving smoothly we can move to bi-weekly or monthly. We also make a point to visit our properties in person on a consistent basis. I’m writing this from South Carolina where I spent the day touring our 30 unit Piney Grove with the property manager discussing some alterations to our renovation plan. It may not always be convenient and hands off, but we like to keep a “hands on” approach with the property to make sure the management company understands and is executing our vision for the property.