Owner and Property Management

[Jerome Jong]

Hello all,

I did a few searches for the topic, but I figured I would post since I might be in a unique situation. My partner and I are owners of a 24-unit apartment building in CO, just west of Denver. We closed on the property back in 12/2021 and hired a Property Management company right off the bat. I have had numerous issues with the company that I won't get into detail here (mainly revolving around overhead and surprise fees), and I wanted to note that they are a part of NARPM. I've decided that I would like to part ways with them after our term ends in November, but I am basically thinking about the plan forward. One option on the table is to take over the property ourselves and to provide the Property Management services between my wife and myself. My wife works part-time 15-20 hours and I work a full-time day job. We also have two young children and one on the way. My wife is also not as gung-ho as I am at this point with this plan. Anyway, I have done a little reading on the topic and got through Heather & Brandon Turner's book "The Book on Managing Rental Properties" and I feel that I would be somewhat comfortable taking it over. The book might be catered more for SFH than a 24-unit building, but I think a lot of it could apply to a multi-family building (setting boundaries & policies, and understanding fair-housing laws). The main motivating factor for us to take over PM services is cash-flow (I read somewhere that anything less than 50 units a landlord could presumably take over these duties for the much-needed additional income, especially early on in ownership). The only pinch that I have is not knowing what I don't know. The building rent is somewhat stabilized - no evictions that I am aware of. Could anyone provide any insight? I'm hoping to hear from someone in similar shoes.

TIA!  

Regards,
Jerome

[Nathan Gesner]

Quote from @Jerome Jong:

I'm sorry to hear about your experience with a NARPM member. All fees should be disclosed up front, in writing.

Managing yourself can be really easy . . . until it's not. Far too many investors get in over their head, get over-worked and over-stressed, let the property decay, place low-quality renters, etc. The fees that you're "saving" by not hiring a manager may quickly be eaten up in lost rent income, damages, vacancies, and other costs.

This is particularly true in a multi-family situation. Just two bad units can sour the entire property and scare away good renters. You'll want to work hard to keep good renters at market rate.

Most private Landlords are easily manipulated by bad applicants/tenants, they never really learn the laws, they don't develop policies and procedures to handle problems quickly and efficiently, and they don't know the market well enough to charge top dollar. Just one bad renter can cost you more than a year of management would cost, plus you have to account for your time and the stress produced.

It can be done and it can be done well, but only if you put the effort into it. Brandon's book is pretty good, but I also recommend you buy "Every Landlord's Legal Guide" by NOLO. Written by attorney investors, it's full of practical advice pertaining to management of investment property, has sample forms that can be edited, and - most importantly - they tell you what your primary state laws are and where you can read them. It's updated every year and is the best $40 you'll spend as a Landlord. There is one book for 49 states and a separate book for California.

You can also purchase the Lease Agreement Package from BiggerPockets for $100 that includes a Lease and other forms. Written by investors, attorney approved for your state, and fully editable.