What to do when having an "in house" maintenance guy for 18 units

Question

Hello Fellow BP-ians

One of the tenants I inherited with the property is supposed to be a handy man/maintenance guy. I am in talks with him to see if he could be a full time maintenance guy living on the property. I know many of you will have their hair rising when you hear this strategy, but this is one of the options I am trying to see if it will work.

My question is have any any of you gentlemen/ladies have done this before? if so, what pit falls should I be looking for? I scanned through the forums and could not really find an answer to this question.

Here are my plan of action.

• Background check
• Get references from previous maintenance related job
• Make him take an insurance? or do I take it for him?
• Provide him with one of the apartment units with half the rent
• Set out a price chart for each type of work order and then pay him monthly based on the work orders my management team receives.

The job description would include

• All "non-license" based maintenance work which includes, changing bulbs, paint, cleaning, toilet clogs etc.
• Landscape maintenance (May be snow removal, not sure yet)
• On site human security camera (just look out for any unusual stuff and report).

What am I missing? or would most advice me from staying away from such setup? Please advice.

Thanks for your time

Dhanush

Brian G. · Answer

@Dhanush Kondoth, my wife has managed properties for a very large REIT for nearly a decade and they do something similar with their assets for both supers and employees. The lead super gets a free apartment and also paid a salary. The lease is month to month and the "discount" given of full rent is conditional of employment. If they are no longer employed by the company, their rent reverts to full market value within 5 days and they'll owe full rent. This would likely address what @Michael Le was warning against, although he does have a very good point about making sure your maintenance guy and you are on the same page when it comes to expectations.

It gets more complicated, too, as they're technically only allowed to receive 20% (or 30%, I honestly can't remember off the top of my head and she's not available to verify right now) of a discount tax-free. Anything over that is, technically, supposed to be included as salary and taxes. Anyway, check with a CPA to be sure, if you go that route.

YMMV depending on the state, depending on their employment laws and what you can write in the leases, so maybe cruise some Ohio forums. It sounds like @Ian Tudor has a pretty good setup.

Michael Le · Answer

I don't know the pros and cons too much of doing something like this but I would caution against having his lease for half of the rent. What if he decides to not do the work you agreed upon? You can't evict the guy because he didn't violate his lease, only his employment agreement. And if you sell the property and they decide to not use him, the buyer will be stuck with a half-rent lease that will reflect in the purchase price.

Just pay him a salary instead or treat him as a contractor and pay him on a flat rate.

Darrin Carey · Answer

@Dhanush Kondoth The best thing I can say is this. Keep any agreement you have with him doing work as a maintenance person, clearly separated from his being there as a tenant.

It'll seem silly to some people to have you give him a check for work, then have him give you a check for rent. However, it clearly separates the two activities.

Ian Tudor · Answer

@Dhanush Kondoth - I do this in my mobile home park.

One of the tenants is a maintenance man and property manager. He is an independent contractor since he can work on his own schedule. Have a contract for the work for he is to complete. If he doesn't perform, then you can fire him and hire someone else. He carries his own insurance, which covers me from liability. I spoke with my insurance company to make sure I was covered.

He sends pictures of the mobile home before and after. The fire marshal went in behind him and clear a unit so I felt comfortable going forward.

Sometimes you have to take a risk for part time work. The perfect worker who works for low wages is hard to find. If it requires a permit for plumbing or electricity, I call a professional in.

Brian G. · Answer

@Dhanush Kondoth, feel free to reach out to me if you do end up stuck and looking for more ideas. I am half owner of a handful of properties in Dayton (South Park) and my business partner lives in Columbus, so we have some of the same issues you face. He just had to go in last weekend to check on a tenant that had gone dark, which is certainly a travel hassle. We've been doing this for over 4 years, so we feel like we've kinda sifted through the bad ones (there were plenty of them) and we've found some good people, but you never know what happens going forward.

Anyway, most of our tenants are pretty handy and we're fortunate enough to not receive minor calls, but we still have a group of people that handle whatever pops up; both tenants and non-tenants. We have one of our other tenants show vacant units and pay her for doing so, another will handle carpentry fixes for an hourly rate, then we have a very reasonable lawn service that goes out weekly (on contract) and bills monthly, and we have professionals that we trust to handle the bigger stuff like plumbing and HVAC. So, if you do end up wanting to piece-meal it out, I can pass along a few names that have worked for us. They're in no way connected to us and I can't vouch for them 100%, but they've done well thus far and we continue to use them.

Jeff Kehl · Answer

@Dhanush Kondoth If you're using a management company, I don't see any advantage to this. They already probably have maintenance people they use. This particular tenant could be tried out by them to be added to their list of contractors but I don't understand why this would entitle him to lowered rent? He is just like any other contractor unless he will charge you less.

Also as mentioned above, there shouldn't be enough work in a property that size to justify even a part-time 'maintenance man'. You may find that by having one your maintenance costs will be higher because he will do stuff like changing light bulbs or furnace filters that the tenants should be doing themselves.

If he's one of those great and rare handy man types that can seem to fix anything, take pride in their work and only charge you $20/hour for what they actually work it may work out,otherwise I think you're borrowing trouble.

Dhanush Kondoth · Answer

Thanks @Darrin Carey that is the route I plan to take.

Dhanush Kondoth · Answer

@Jeff B. good point, I am in the process of looking at all those hassles along with the workers comp and liability situations.

Jeff B. · Answer

"in-house" implies an employee.  That takes you into State Employment regulations, workman's comp and ssi withholding.

If you elect to also grant an apartment as compensation, you need to verify the limitations allowed by the State.

Dhanush Kondoth · Answer

@Ken P. That is correct. He will not be on my payroll. My management will receive a work order, if it is something that does not require a license or permit and is something he is capable of doing (based on the evaluation that me and my contractor is doing on him), he will go and perform that job. Each job will have a preset price written into the contract. example- Toilet clog = $10 (not real numbers), lawn maintenance = $40/month. He has his own other income to pay rent etc.

There will be before and after picture of every job that will need to be sent with in 24hrs of completion of the job.

The main reason I am considering this route is because I live in Columbus Ohio and the property is in Dayton and at the moment I am running it via my trusted management team from Columbus (yes which means for every work order, a maintenance guy drives 3 hrs round trip) I am doing this to not have too much variables during my transition period. I just bought the property and am going through the whole renovation/eviction etc. I just did not want to deal with evaluating a whole new management team.

once the property is stabilized, i will eventually move it to a local company to run it and may be if I am not satisfied with this guy, I will switch to the property management companies crew.

What to do when having an "in house" maintenance guy for 18 units

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