How many tenants/properties are feasible while working full-time?

Question

I have a full-time job that I would like to continue working while getting started with real estate investing.

My short-term goal is to replace my currently monthly income of about 3k/month (after taxes) within 5 years. Based on what I'm reading, this should be feasible (but please let me know if this is not the case).

I plan to start with a "house hack" - purchase a multi-family property with an FHA loan and live on the property for x amount of time. Ideally, I will make at least $100 each month after applying the 50/50 rule. After some cursory searches on zillow last night, I almost immediately came across a property (a 4-family property) which is very close to fulfilling this goal.

My questions are as follows:

1. If I'm working an 8-5 job Thursday - Monday (Tues/Wed off), how many tenants can I realistically maintain, if any? Or must I step down from my job in order to pursue this?

2. Along with the first question, do I have to be available 24/7 in case there are issues, or is there an understanding with the tenants that issues might have to be resolved after 5pm each day or on Tues/Wed (when I'm off)? How is this best approached?

3. A bit unrelated - what (if any) are considered "emergency" issues that I absolutely must resolve ASAP or within a certain time frame? For example, I know that if my hot water goes out in my apartment, they will get someone there after hours to fix it. So do I have similar obligations with certain issues? This is one thing that is someone daunting to me (e.g., heater goes out in the middle of winter -- how does this get fixed?) I assume that you hire someone with the knowledge to come in these fix these issues, and I assume there are people that will do this at any time of the day?

In other words, what issues must I pay the most attention to and how do I resolve them (considering I have no HVAC knowledge, as it relates to my above example).

Account Closed · Answer

My wife and I work a full time job and have 7 rented units and 2 in the pipeline.  This question is 100% answer by the systems you put in place.  If you put the right systems in place (think 4 hour work week) and you won't ever get a call and maybe have to put in an hour or two each week making sure the systems are running properly.  I suspect I could easily manage 20+ and do rehabbing while working full time and spending plenty of time with the wife and kids.

2) My lease clearly spells out what is an emergency and what is not.  Put in good products and do regular inspections and twice a year HVAC servicing and you will minimize issues.

3) This is taken directly from my lease. You can also have a 3rd party handle all these calls.  Heaters in winter are a risk to life so have a few spare oil radiator heaters on hand you run over there until the HVAC guy can come on site.

EMERGENCIES: The following conditions shall constitute an emergency for after hours service calls and nothing else.

• When there is an immediate risk to human life
• When there is an immediate risk to real property (principally land and buildings

Account Closed · Answer

Have you read/listened to the 4 hour work week?  If not, you need to.  It goes into detail about these types of system.  If there are HVAC systems, the tenant calls my tech directly.  He also handles plumbing issues.  I don't take the call.  He is authorized up to a certain dollar amount without having to get approval.  Anything over that he does.  He should be able to take care of most issues over the phone.  Put in good quality fixtures so they don't leak.  Use good quality waterproofing (think Red Guard versus a sheet of plastic) when doing tile jobs.  Over engineer your improvements so they won't likely fail.  My HVAC guy goes out twice a year to service the units but also checks the hot water heater, all the sink drains and other hookups.  He also looks for other issues real quick like the furnace filter to ensure it was changed, that smoke and CO2 detectors are not disabled, etc.  You can manage it yourself, but put systems in place and empower your team to handle things on your behalf without you having to be involved.

Account Closed · Answer

Is this really an issue right now?  You can always get of CL and have someone go over if it is an emergency.  Not the best, but can do in a pinch.  You should be cultivating relationships with at least the HVAC guy/company because those are the really big ones.  I rarely (maybe once a year) have an emergency and it is almost exclusively HVAC related.  I did have a leaky hot water heater, but that isn't really an emergency.

Deanna McCormick · Answer

I have a plumber that I know well enough and he has a key that if I have plumbing need all I do is call him  for heat or water problems

Pretty much same with electrician.

Property type depends on who does the exterior grounds,, all depends on your budget and how much you can afford, we do our own, a single family home rental you could have tenant do lawn, but honestly they usually can't keep up with the inside let alone the outside.

Lucas Mills · Answer

These are the things that concern me. I most definitely cannot leave work at the drop of a hat - any issues would have to wait until either after I get off (~5pm) or on my days off (Tues/Wed).

But I'm assuming this isn't good enough for emergency situations, so what then? At this point, am I forced to hire someone who CAN respond to situations at the drop of a hat, or are there alternatives?

As far as mowing, I haven't considered this. I assumed this is something that is determined in the lease agreement. Is there a general rule of thumb as to who should take care of these kinds of basic maintenance tasks?

Deanna McCormick · Answer

kind of like asking how many kids should you have..

Lots of factors, any family or friends to help in emergencies,, how flexible is your current job if you had someone you needed to meet can you leave work for hour or 3.. with short notice...some issues can wait others can't, usually things go well but be prepared for the unexpected.

Do you think you'll be doing the cleaning, painting, lawn mowing,, or are you planning on someone else..

I managed 3 properties 1 br units, total of 15 apartments and had full time job, 2 kids at home, but help from my brother, and knew when to hire help to paint and turn units,, I could leave my job at the drop of a hat so any emergency stuff wasn't a problem for me, and buildings were in decent location so I wasn't more that 15 to 20 min away.

Lucas Mills · Answer

Hi Mark -

Thanks for the answer; there's some good information here. Other than the semi-annual inspections/servicing that you mentioned, would you be able to go into any detail about these systems that you refer to?

Also, if I may ask, what kind of cash flow do you have coming from the 7 rented units after mortgage/expenses? I think that this is close to where I'd like to be in 5'ish years. Does this seem realistic?

How many tenants/properties are feasible while working full-time?

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