Topic: Seeking PM perspective on 5-20 unit apartments

New aspiring real estate investor here, looking at 5-20 unit buildings for my first property, so essentially buildings not big enough to warrant a dedicated, on-site PM employee. While I plan to be actively engaged in the business, I also have a full time office job, so covering PM duties is something I will need to find help with.

Advice concerning PM’s from other investors ranges from “can’t live without my PM” to “they are worthless”, so I thought I’d go straight to the source.

PM’s of Reddit: 1. Are there any aspects of property management regarding smaller 5-20 unit buildings an investor should understand? 2. What areas of property management do you feel investors don’t understand or commonly misunderstand? 3. I believe most PM’s are paid as a percentage of gross income? Is this good or bad? 4. Is being paid a percentage of gross income align interests between the PM and investor? Would there be a better comp strategy that made the PM and investor feel they are more on the same team? How could an investor do a better job to incentivize a PM to care more? 5. What separates a good PM from a bad one? How can investors tell? 6. What is the PM perspective on whether to do a cheap/quick fix or spending more to do it right the first time and avoid future issues? What is worth spending more on? What is worth going the cheap / commonly replaced route

I’m excited to find my first building and a great PM to partner with. PM’s do a lot of hard, vital work to keeping a building running and I’m eager to find the right one

Thanks in advance.

1. I got into property management working as a private landlord’s assistant, he had about 35 units between single family homes, duplexes, and small apartment buildings. I could write a book on things you should know- if you’re wanting to do it yourself there is a lot of work involved and you need to be knowledgeable and have contingency plans in place for everything. Hiring a PM or a PM firm will take a lot of extra stress off of you if you don’t feel like dealing with 2am leaks and going to court for evictions.

2. Investors are in it to make money, they don’t know what goes into actually managing the property at the property level.

3. Shop around with multiple firms and have them work up a management plan and see what will align with your goals. Some do flat fees and some want percentages, it depends on the property and what you want out of it.

4. Percentage is great if you want the PM to maximize your income. The more they make for you, the more they get. They’ll want to maximize rents, follow the budget, and drive income. It can be a win-win situation.

5. Ask for referrals. Talk with other property owners in the area and see who they use. Reach out to your local apartment association. Like I said previously, shop around and see who has an established track record for success.

6. If there are any deferred maintenance issues at your properties, take care of them immediately. It will cost so much more in the long run if you don’t. I just left a property where the owners bandaid fixed their boilers for years to avoid spending any money and now they need them completely replaced which will be ridiculously expensive but completely necessary. My perspective is to always fix things 100% so you don’t run into bigger problems down the line. You can cut costs in your fixtures, like towel bars, blinds, curtain rods, etc. I did a whole property renovation for 92 apartments and the biggest part of the reno budget was putting new roofs on all the buildings, which was needed badly but increased the value of the property and stopped all of the roof leaks. We also repaired and repainted the brick exteriors. Inside we put in some nice brushed nickel light fixtures, ceiling fans, framed mirrors- more of a rehab than a renovation but it looked really nice and we increased rents by 40% and had no problem leasing the refreshed property at those prices.

Don’t cheap out on anything structural or with major plumbing, but things like garbage disposals you can get pretty basic.

Good luck and feel free to message me!