Fewest number of units to have a Property Manager

[Alex Schukin]

Hi BP!

I'm a bit on the fence between the residential classification of 4 unit multi family investment property and jumping over to the commercial side of 5+ units. Ultimately, I am trying to stay within the 4 - 8 range and not going into the institutional-size portfolios.

Assuming that a property manager charges ~10% gross rent, net of vacancy and 50% of 1-month rent for placing a tenant (please correct me if I am way off), what would be the smallest number of doors that a good quality property manager would be willing to take on for that price?

To offer some context, I am looking in the Philadelphia market and also focusing on being hands off since this would be an out-of-state investment for me. Hence, good quality property management is a key deciding factor for the type of property I am looking for.

Cheers,

Alex

[Louis A.]

Hi Alex -- I hate to disappoint, but I would be amazed if you found a property manager worth their weight in salt. Not to say that there aren't some out there, but I've found most to be just sub-par. 

I live in San Diego and own/manage 13 units in the Chicago area without a PM. 
Some suggestions I've found helpful:

1) Find a rock-solid agent to partner with and stick with them -- Not only does mine assist me with finding deals, he also takes the lead to list and show all of my apartments right before they become vacant. He also does all of the screening and lease paperwork via 
Docusign.
2) Become intimately familiar with the neighborhoods you invest in. I try to visit periodically and when that is not possible, I will do a google street view drive by. How are the lawns and yard maintained? Condition and age of vehicles on road? Also, use Yelp to understand the types of businesses in the area. What type of clientele do they cater to? What are their price points?  
3) Have go-to person / handyman who can tackle most repairs. It took a few attempts to find one that is reliable. Your realtor can most likely refer you to someone.
4) Collect all rents electronically via Quickpay -- I make that a requirement in the lease.
5) Take the time to visit once in a while.  I personally make it a point to meet and shake hands with every tenant at some point -- It helps humanize you and combats the perception of some out of state "rich guy". Also, take a stroll and talk to neighbors. You'd be surprised at what they will tell you about your tenants.
6) I mentioned it briefly in #1, but I cant overstate how important it is to screen your applicants. I use Transunion SmartMove -- $35 / application and is paid by the applicant. I pass on anyone who has either a judgment or bad-credit. Make certain to verify their income too -- I require 3x's rent.

That's all I can think of for the moment -- But do seriously think twice about using a PM. I've managed in this fashion for the past 2 years with no more than 2 hours / week.

Best of luck.