Self-manage make sense?

Question

We are looking at a 6-unit property that is located about 1.5 hours away from us. We want to manage it ourselves and pay a gardener and a handyman to take care of everything on that end.

We understand that there may be instances when the handyman isn't available and we'll need to head to the property - not a problem since my work schedule is very flexible.

Is there a reason that I should not manage it myself from that distance? What about rent collection - is it reasonable to ask tenants to pay by mail, or what other option would you give? (Probably not a computer type renter for online payments)

On your properties, what is the average number of visits you need to make per month/year, etc? I don't want to get into this and find out I have to go down there for something several times a month.

Any comments or suggestions on how you handle things and what works for you would be greatly appreciated! Thanks.

Eric Wang · Answer

In California, you have to give tenants a physical business address to drop-off rent. Most people have it mailed to a P.O Box, etc... or pickup personally which is fine. This is where it can get sticky, let's say your in court to collect past rent, the tenant is going to tell the judge it was mailed. Now, it's a "hear-say." The judge will take the tenant side. If you give the tenant the option to drop-off check at a business location with hours and they choose to mail, then that's the risk the tenants take and the judge will take your side. Just remember we live in a liberal state, we have too many laws protecting tenants.

Douglas Christian · Answer

No, you create a account just for the sake of the apartments. They are given deposit slips and they go and deposit the cash into the acct that you created. They never have access to your personal acct info. Also, many of my tenants love this it saves them time and effort. You are sending someone else to collect and then mail to many things could go wrong with that situation.

Been doing this for a while and I have some colleagues that are doing the same thing and we have no problems with the method.

Shane Wilson · Answer

Do you know anyone in the area over there?

I would just pay a few bucks to a friend if they had to go over there for some reason such as putting up signs and notices. If the tenant doesn't mail the money in on time have your contact collect the rent and mail it to you. If they fail to do so charge your tenants a collection fee to cover the cost of your friend going to collect it from them.

Question to Douglas: Isn't it a risk having your tenants knowing your account number?

Douglas Christian · Answer

What are the numbers on the property? What is the condition of the property? What are the rents? Taxes and insurance other fees?

If it Cash flows enough or any at all I would hire a management company. If your schedule allows you the flexibility then you should start off trying it for yourself.

I would never let the tenants know that I am the owner. I am working on behalf of the owner as a manager.

Also, I get my tenants to deposit the rent in my account right at the bank and I can see it on line.

I go by my properties once or twice a month just for GP because I am in the area. Many times I do not stop I just drive by to see what is going on and what is happening. Keep the neighbors involved by giving them your card and letting them know that if they see anything out of order to give you a call.

I would really love to see the numbers on this place because you might be wasting your time if it does not CASH FLOW.

K W · Answer

Here's a link to the topic about my numbers: http://www.biggerpockets.com/topics/30818-6-units-looks-good-to-me-?forum_id=88&page=1#posts-149986

The property was built in 1982, exterior looks clean, haven't seen interior yet however it has new tile floors in all units and some new windows. Hope to see the inside this week, but don't want to waste my realtor's time if the numbers or PM doesn't make sense.

Self-manage make sense?

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