Time and Cost required to manage multiple properties

This question is for the experienced investors...some of which have 5+ properties (including interstate). Just wondering, particularly for those who buy houses what is the time and cost involved in managing your portfolio each year? I am re-considering my long term strategy of holding multiple properties given strong time constraints (soon 2 kids under 2). I'd also like to get a better estimate in particular of "maintenance" costs for holding a house, particularly interstate where someone else has to attend to every blocked drain, roof leak etc. Thanks!

 

I'm assuming you are after an answer from a self managing viewpoint and I can't provide that, some tips I can give you through my experience in managing hundreds of properties over the years are;
Check rent every day so that you can be quick to act on arrears problems.
Enter the rent into some kind of spreadsheet or database that shows paid to date for each tenant.
I would estimate less than half an hour a day for 5 properties including handing calls from tenants.
Maintenance is a huge part of property managent and needs to be acted on quickly to reduce compensation claims from tenants.
Get a team of great maintenance people.
If properties are interstate you need to get someone to do the leading, routine inspections and ongoing/ outgoing inspections.

How would you handle interstate tribunals if something goes wrong?

In case of tribunal hearing, accurate records are always a must.

I'm sure others will recommend the software that handles private rentals I only know the professional versions but hope that helps.

 

We own several across 3 states ourselves and its really minimal time / cost to manage and administer them, but depends on the property.

Each month, just enter into a spreadsheet the numbers you get from your property managers - this should be 30 mins a month.

Maintenance costs vary per state and also depend on the property you choose. You could opt for newer properties as part of your strategy if this is an issue for you.

 

It is really really easy once you systemise it.

PMs for all properties, and have the bills directed to them as well.

Electronic bank statements.
Electronic filing in Dropbox and a high speed duplex scanner.

Sometimes major maintenance issues and refinances that take time. If you're worried about maintenance then just buy strata properties.

Interstate means you do have several PMs but it works out ok if you pick good ones.

Even tax returns are easy if you use a good folder structure for each property in your Dropbox or cloud drive. Separate the long term stuff like cost base and depreciation into one folder, then all the rest into a folder per financial year.

Dont let admin hold you back. Just continually improve your processes and outsource everything possible to the PM.

 

Ps on the interstate house maintenance.
For QLD and SA I use PMs that don't mind getting their hands dirty if it's minor issues like door handles, taps and light globes etc. Can minimise call out fees.

 

Agree with @DanW with exception to strata. If you buy into a strata complex you should still spend time monitoring what the SP is doing and sometimes if things are getting lax, you need to step in.

 

Forgive the OT question, a mod can start a new one if need be.

Hi Dan, I need to update my multi function laser as sick of single page at a time when home with old clunky software, what are you using and what is the software like ? Does it scan straight to PDF with a reliable feeder ?

 

Thanks for the responses. I'll definitely use PM's.

Didn't think they would do that. Nice work...

Out of interest, what would you estimate as the "maintenance costs" on a typical 3x1x1 highset timber queenslander in average condition on a 600 sqm block.

 

IMO you still need to manage pms regardless of how good they are because most have a certain mindset from my experience. Start tweaking contracts to reduce costs, do you need inspections every quarter?? every 4 months is adequate, just one way to reduce some costs, all adds up when you have 5+ properties.

If you plan to grow a portfolio and its a buy and hold strategy if you want less headaches then new product would be better. I ditched all the old stock in Australia, other than development sites because they can bleed you dry (maintenance).

MTR

 

We spend very little time really. We had 2 self managed (just sold one) and we very rarely hear from them. I just check the account once a month.
Others- when statements come in by email I do a quick check.
I used to pay most of the bills myself but once the properties added up I switched to agents paying them. All but one agent were great, the other i had to chase up (they're gone now).
I really should enter them in the spreadsheet each month but I get slack. It only takes an hour to do several months worth. I send the occasional Email and rarely need to ring anyone (the one I had to ring and email is gone).
We ask to be rung for all maintenance. We go away often for 6 weeks at a time and leave a message on our phone of who to ring in an emergency. there never has been one. For our whole portfolio hubby would have to go out once-twice a year to do something.
Some of ours had a full reno, others have not been touched in the time we have owned them.
So if things are going well there is very little to do, but of course things don't always go well.
@MTR none of my agents charge for inspections. We always ask for one after 6 weeks to ensure everything is fine. Then if it's good every 6 months is sufficient.

 

I fit your category and have 3 kids under 7.
This is how I'm managing...
1. 1/2 of our IPs are newish (5-15 years old)
2. Leverage PM services
- let them make all payments (council, water)
- let them fix any small items without asking me (eg: Anything less $100)
3. Make everything online ( all notifications)
4. Act on any request/work immediately. Leaving for later always leads more work. For example, if you open an email with a request then solve that issue on the spot.
5. Mails - Spent 5-10 min after coming from work to sort out anything needs attention. Leave all paper stuff (records) in a large box. File them properly twice a year (Dec holidays and in July for tax purpose)
6.don't sweat on small costs

 

Back when I was organised - I'd update a spreadsheet once a month. It would take 10 minutes.....now I tend to spend a few hours at the EOFY gathering up all the data and inputting it in. It's not too difficult as long as you're organised. You can download interest payments for the last FY using most lenders online banking, the PM's annual statement shows a summary of rent/expenses and if you've used the one account for paying for IP related stuff...it should be easy enough to identify those costs too.

Cheers

Jamie

 

We've got a reasonable size portfolio of well into the double digits. We use PMs for all the day to day stuff and rarely hear anything. Biggest time cost is the bookkeeping. As for maintenance, we allow around $1k for each property, but have never spent anywhere near that much.

 

I highly recommend using a property manager as that saves a lot of time, it's a relatively small cost that is tax deductible. I spend about 30mins a month on updating the financial information and at the end of Fin Year spend about an hour or two collating it all and summarising for the accountant.
I budget $800 a property for maintenance issues, and I find it comes and goes, one property might need $1000 of repairs and another property $0.I try and plan my maintenance close to the EOFY so it's included in your refund and you're not out of pocket for too long.

 

You will need to allocate some time each month to do a rent review. In my experience, it is rare for PMs to keep up with market value of rents. My parent's property manager in Melbourne let the property get $150 pw under market. This is a killer for cashflow.

The other is not keeping on top of rent arrears. You may need to push your PM to be pro-active on this.

 

I did suggest to my PM's business development manager ( via their survey ) that they file all information in a dropbox for me. I need to follow this up as it would be a bit of a time-saver for me.

I have one IP so far and this is my first year preparing all the info for my accountant. Will see just how time-consuming it is to extract info out of e-mails from the PM.

I highly recommend the EPSON DS560. Smart, compact and wi-fi enabled. It is fast and does single or double-sided scanning. You can setup rules to scan files to certain folders or do other actions.

 

Looks like I have no excuse

I am the hubby who is totally useless with handyman work. Maybe interstate (forced outsourcing of work) would actually be a relief for me.

 

Even if you have just 1, what you will find is periods where everything is good/smooth, then periods where you have things to fix & if you get a troublesome tenant, or a poor PM, you will be busy and it is a distraction and energy drain.

 

I have 2 highsets in Brisbane which are brick with a timber upper level, I prefer all brick for investments generally although I wouldn't rule out a timber highset.
External painting to protect the timber is something that I would rather not have to worry about, internal painting is enough. Brick properties are lower maintenance IMO.
I don't get PMs to pay water and rates etc as I like to control when and from where they are paid.
I also don't do any maintenance myself as nearly all of our places are not local but even if they were you need to be appropriately qualified and have insurance to carry out any maintenance work.
Its important to follow up required maintenance promptly and even if you make a call to a PM follow it up with an email.

 

I would say, take the time to invest in a good PM - that will save you alot of time in the future. Then systemise the admin side of things as described by DanW .

When people ask how much time it takes me, I say how much time does it take to copy the rental statements into a folder and check your bank balance, twice a month. Then every quarter read the inspection report and liaise with the PM on any repairs that's required.

It takes a bit to setup but after that doesn't require much time.

Cheers,
Michael