Your tenant your manager

[Robert Morris]

Hi,

I am curious what would experience landlords think about the Idea below.

I am a out of state investor and still juggling between property managers. 

One of the options that I was recommended is having one of your tenants as the manager and maintenance guy for all other properties I own.

Anyone experienced with such a concept?

Is it smart to do?

if Yes, what should be the structure, should he live rent free in return of the work and hours of work he provides?

I see a few challenges arising with this type of set-up.

If for example, he/she doesn't do a good job or if you no longer need their services or if a conflict arises between landlord and manger.

Is their a way to structure the managers pay without bumping in to challenges later on?

Looking forward to hearing from you guys.

TIA

[Nathan Gesner]

Quote from @Robert Morris:

I don't recommend it. If they perform poorly, you are out the rent income or their paycheck, and you have to pay to fix the problem. You lose twice. Then you have to deal with getting them out of the rental. It's too messy.

[Theresa Harris]

Nope.  Not unless you have them as two separate things-they pay rent like all of the other tenants and are treated the same way and you then pay them separately for the work they do. Also check if PM need to be licensed in that state as you could run into other problems. Same with them doing repairs-are they qualified to do them.

[Mackaylee Beach]

Definitely do not recommend this. There are numerous ways it could go awry. Maintaining clear boundaries between landlord and tenant is crucial.

[Melanie Thomas]

No. It is wise to keep it completely separate. Not worth the potential issues down the stretch. Good luck & happy investing!

[Adam Bartomeo]

Having a tenant manager or a tenant maintenance person is a terrible idea. It creates a lot of friction with other tenants and normally creates a poor work life balance for the manager. Tenants do want another tenant having access to their home and the manager doesn't want tenants knocking on their door all hours of the day. Put a good PM in place.

[Scott Allen]

@Robert Morris

I have seen this technique done by an older landlord/mom and pop owners of C class properties but it worked well for them because they were in a 20-50 unit range of properties that they were self managing - they were also local to their properties. One of their tenants was one of their maintenance guys but was not their manager (making sure rent was collected), I think he paid either half of what rent should've been for his unit while the unit next to him was a 1bd unit as well renting for $650/700 at the time and that was about market rent still. If you can still afford to pay them at least 2.5-3 times what their normal rent/mo would be - it can work but you have to be able to keep them busy/fed at the same time. You have to know this person somewhat well before even considering it. This is more ideal for a tenant/someone that has a background in doing handyman work but at this point you have to understand that you are now also going to be their employer. 

For the management portion of collecting rents, posting notices, or getting units leased - this same owner had his son/partner do that portion. They did a 1031 into Florida condos (much less units) after owning those 20-50 units in a C class neighborhood of Columbus for about 5-7 years. 

It depends on your situation, amount of units you own, where they're at, and what kind of time you're working with. I would still recommend an actual property manager over this method unless you're well connected or local to where you own/are managing. 

@Robert Morris

[Peter Mckernan]

Quote from @Robert Morris:

Hi,

I am curious what would experience landlords think about the Idea below.

I am a out of state investor and still juggling between property managers. 

One of the options that I was recommended is having one of your tenants as the manager and maintenance guy for all other properties I own.

Anyone experienced with such a concept?

Is it smart to do?

if Yes, what should be the structure, should he live rent free in return of the work and hours of work he provides?

I see a few challenges arising with this type of set-up.

If for example, he/she doesn't do a good job or if you no longer need their services or if a conflict arises between landlord and manger.

Is their a way to structure the managers pay without bumping in to challenges later on?

Looking forward to hearing from you guys.

TIA

 That is a bad move to have the tenant be manager/main person.. The entitlement sets in then you have real problems.. This is different if you own a 100 unit complex and need an onsite manager, you hire the person knowing they are hired as an employee and will have a place to stay while they are there..

[Drew Sygit]

@Robert Morris it can work - until it doesn't via a lawsuit.

Challenges:

1) They are NOT professionals

2) They are not licensed, so may cause you legal headaches

3) They won't have insurance, so what happens when their actions lead to a lawsuit?

4) Due to all of the above, high chance they start playing games with other tenants, leading to bigger problems.

5) What happens if you have to part ways? They will have a LOT OF CONTROL and you're not there. What malicious damage could they do to the building and other tenants?