Does a 55-unit property require on-site staff?

Question

Hi guys,

We own a couple of smaller properties (up to 32 units) that don't need on-site staffing but started to underwrite more significant assets.

We wonder what the minimum property size that would require staff on payroll would be. Is a 57-unit asset too big to be managed off-site?

Thank you

Felipe Stefanoni · Answer

Good question! I follow the below rule of thumb:so in summary yes, I would have someone on-site. But also check with your lender.

20 to 50 units

Manager must come on-site for regular visits or upon request by tenants

100 to 150

1 on-site manager

1 lead maintenance

Part-time maintenance

200 units to 300

1 site manager

1-2 leasing agents

1 lead maintenance

2 maintenance technician

Ben Leybovich · Answer

@Gerardo Waisbaum If you are aiming to implement more or less institutional management, which your lender may require you to do, it will consist of 3%-5% management fee that covers the back office and profit for the PM, and payroll for the on-site people. You will cover the cost of both, even though your on-site people will be employees of the PM. Thus, the question becomes whether or not your 52-unit property can support said payroll.

Continuing in the same vein of institutional management, the property really should have at least 2 employees, the manager in the office, and the maintenance tech. In today's economic environment let's just say that two full-time people, including overhead, will run you no less than $250,000 per year. Can the 52-unit handle this load?

If not, you could look at downsizing the payroll to part-time, implementing an altogether different structure of some sort, or even manage it yourself in Buildium or another software, but the question is how sustainable this is. This is for you to figure out, but you absolutely must peg your management approach prior to getting into the property.

Steven Foster Wilson · Answer

I think it depends. Right now I am already incorporating a maintenance worker to hop around to all my properties for when they need to be fixed. I just pay them hourly though. A lot of the bigger commercial deals I have brokered do have a paid management/staff member.

Gerardo Waisbaum · Answer

Thanks for taking the time to respond but none of the properties are in the same area.

Kelly Mahon · Answer

Hello, My back ground is the Director of a construction firm that builds about 2000 units a year. I over see the quility and the warranty period of every Building and have been doing it for 25 years.

So here is suggestion: If you are not going to have staff on site full time do you have a process in place on how to deal with maintence ?

So what i mean is, Do you have a form that a tenant completes ( online or paper) ?

Who tracks that work order ? what is the time line to complete the fix ?

Do you have subcontracters lined up to do your Fixes- Plumber, Electrician, Handyman carpentry, Cleaners, Restoration company,

Can you dedicate a person to at least once a week to inspect the property? Needs to be more during cold periods because of water line issues.

Can you set up a call system that emergency calls can be taken?

Can you have someone complete a maintence of the building check list monthly( caulking, landscape, windows, magic pacs, sidewalks , salt in the softner ... all the fun stuff.

what i have found is the owner that has a system in place and makes it a priority has the best buildings.

Ben Leybovich · Answer

It's hard to see how a building this size can be managed without on-site presence. I would say, yes. However, the better question is whether the building can absorb the cost. The issue with anything much less than 100 units is that while you really should have management and maintenance on-site, it's hard to pencil this payroll. This requires you to operate on a "square peg in round hole" principle, and cut corners to create a hybrid, but this is never sustainable.

While smaller buildings are managed by ownership, and larger buildings are managed institutionally, this size is sort of a no-man's land.

Chris Seveney · Answer

I would absolutely have someone onsite for 50 units.

Sergey A. Petrov · Answer

I actually prefer on-site but you need to be well north of 100 units. An on-site manager is cheaper than the professional in-office manager (who acts as a supervisor/higher level backup manager to on-site) and issues are dealt with quicker. Haven’t tried part time on-site office (open a few days a week or say only 8am to noon) where you’d split your staff between multiple locations and still have on-site presence

Peter Tverdov · Answer

We have a property management business and stay away from anything where onsite staff is required. For me, it's 30+ units 50 definitely wouldn't feel comfortable. You will have complaints daily at that property.

Justin Winn · Answer

It sounds like several people have Sid 100 is the threshold, and you mention having several other properties in the 30 unit range. Do you have a PM office somewhere near all of these properties already? If not your ideal hybrid situation could be on site for your 55 unit and they manage your other properties as well. Or maybe you get e centrally located PM office. For me the answer to that is if you’re transitioning this larger property into  high end apartments or not? If yes, then I think you absolutely need an on-site manager.

I hope this is useful, and best of luck.

Does a 55-unit property require on-site staff?

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