This is a great question and I’d like to give my 2 cents – (also, ignore the smiley faces, they are supposed to be close-parens.)
We don’t do things exactly the way Jefferson does them. One big difference is we have full-time, salaried managers who make a reasonable living wage. (no offense to Jefferson or others – my point is that this is expected to be our manager’s full-time, only job). It’s still not a large amount – about $2k per month plus free housing (a tax-free benefit because it is for the “convenience of the employer”). There is a reason we do this. We used to pay less. We had an (equity) partner who lived in Texas (where our parks are) and he managed the low-paid managers. It was a hassle. He needed to micro-manage them and was on the phone with one or another of them dozens of times a day. He was really the “expert” and they didn’t know anything, so they had to ask him how to deal with every situation that came up. He was visiting the parks at least monthly or more often.
And situations come up a lot more if you are renting and/or rehabbing homes, which we (unfortunately) have to do because that’s how you get the lots filled up. Does the roof need to be replaced or just repaired? Metal or shingle? Do we need to re-lay the sewer line that keeps backing up or will another Roto-Rooter visit suffice? Is it the tenant’s fault for flushing something stupid or not? Who ran over the standpipe in the lawnmower?
When that partner decided it was too much hassle for him, we managed long-distance for a while, but we found that bumping the pay we offered made a huge, huge difference in the quality of manager we could expect.
Now we expect our manager to deal with most things on a daily basis, and we hire (and pay) based on the premise that we shouldn’t need to visit more than a couple times a year. We have systems in place to deal with fraud and theft, and aside from that we try to trust the manager a lot (but visit to make sure that trust is well-placed). Speaking of fraud and theft, we have found that bumping the manager’s salaries by a certain amount reduced the incidence of firing offenses (usually theft). So we pay more, but we have less turnover than before, which cuts some of our costs and makes up for the higher cost of payroll.
We are still sending emails dozens of times a day but they are sent at our convenience and we’ve trained our managers not to expect a response for 24-48 hours in most cases. If there’s something that needs immediate advice, they still call of course, but most things we handle in the evening and the message is waiting for the manager the next morning when they come into the office.
That said, my wife and I treat this as our full-time job (with 4 parks and a total of 600 spaces). You could probably do it in the evenings and weekends, though, with one park and fewer spaces, assuming you have a decent on-site manager.
We do all the screening here at headquarters – we tell our managers that turnaround is 48 hours. We rely on the manager’s judgment about on-site problems, but we make the decisions (“go ahead with the more expensive bid because it seems like they’ll do a better job” or “get some more bids” or “do you think the leak can be patched?”) Sometimes we’re disappointed with their judgment but there’s a trade-off in efficiency. We definitely have higher expenses and there’s certainly some waste but on the other hand we live our lives in another state and we don’t worry so much about what things are going on that we don’t know about.
Going on some of your specific questions,
We would expect an email explaining a sewer backup, but the manager should call the usual plumber (previously approved) and get it taken care of on their own without our “go-ahead.” We can always go back and see how many times that particular section has backed up because we have the record in our email. Occasionally we will criticize the manager’s response (“I wish you had done XX instead,” or “Next time call us about this before you do XX,”) but over time they learn what we expect.
We handle bidding and paying for homes from our home office. But the manager is the one who calls the moving company and has the home moved and installed. (A reputable moving company will know the procedure, which in Texas requires various permits and proof of taxes paid, etc). A lot of the homes on our property were installed encroaching on various things (easements, public rights of way, other lots, etc). This is not something that I would know how to do any better than the manager, so you should have the manager MEASURE the lot and figure out where the home should be placed so that it complies with all the setback ordinances, etc. You should have a survey from your purchase that will show you where all the easements and public rights of way are, and hopefully you can figure out where the home should go and explain to the manager. If the lot is not a boundary lot, it may not be such a problem (it may not matter, or it may be obvious).
I mention this because it’s too late to be pro-active about it for our homes but there are quite a few that the city and/or utilities could ask us to move later, and I would save you the hassle.
In Texas, we file evictions with a JP (Justice of the Peace). The manager does it and there’s no need for a lawyer. When the court date arrives, if the tenant hasn’t skipped out already and/or paid up (at this point we would only accept payment in full), we email our manager a transaction listing (showing what was charged and what was paid) and she brings it to court. There is no defense to non-payment in Texas, so it’s usually open-and-shut. With a judgment, the manager can go get a “writ of possession” and the sheriff will do the actual eviction.
Drugs – if it’s the manager you suspect of drug use, that’s something that would lead to firing (if there is reason to believe it’s true). You can have someone else check in on things for you (local police, if you trust them, or someone who lives within driving distance, even someone you hire off Craigslist). If it’s a tenant, you can either non-renew the lease (we have most of our tenants on month-to-month after an initial period) or if you can get proof (from an arrest, for instance), you can evict for cause. In some states, eviction for cause is harder than eviction for non-payment. Ask the police to drive through the park occasionally. The police want a crime-free community, and if they know you support their enforcement in the park, it can be a win-win situation. On the other hand, I just found out that the patrolman we had working our park was corrupt and actually part of the drug problem. He tried to pin it on our manager. (I only found out after he had been fired from the police force, but you can imagine it would have been a tough situation if the police chief believed him over our manager – I don’t know how that would have played out. You want the police on “your” side).
Legal issues – if we had a dollar for every time a tenant mentioned suing us, we could give our managers a nice bonus. “Real” legal issues are handled from headquarters, but minor legal issues (failure to get a permit, failing inspection of some kind, police responding to a domestic violence case, etc) are handled by the manager, perhaps after consultation with us. ALWAYS DOCUMENT EVERYTHING IN WRITING – this is one of the main reasons we use email. We try to communicate with our vendors via email, etc. I would have a lawyer review all your “standard” documents when you start doing business (leases, park rules, warning letters, eviction procedures (usually there is a need to give a “warning” some period prior to filing, sometimes two warnings, etc).) Also, you can use your state MHA’s documents as a starting place – usually they will have a library which you can adapt to your needs.
Other issues – In the end, your primary concern is about following the money. We have the managers deposit the day’s receipts and send us a recap, which we book into RentManager software. This is pretty much daily whenever there is a check or money order in hand. That account is DEPOSIT ONLY for the manager. We write big checks from the home office. For small stuff, we have a separate “Petty cash” account for the managers and they can write small checks and/or get cash for small purchases. They have to send receipts and recaps periodically and we refill the petty cash account after we know what the money was spent on. We also give our managers credit cards and strongly encourage the managers to use them. (The Spark for Business Visa Card from Capital One provides 2% cash back). I check the online statements daily and compare against what the managers send me. The cards have a relatively low limit, which I pay off and reset as needed. What is “big” and “small” will depend on your trust of the manager, and your loss-tolerance.
We do our own booking, daily, which helps us keep a close eye on what is being spent (and who is delinquent). We ask the managers to get every late-payer’s story and a “promise to pay.” They always have a story. But the important thing is to hold the tenants accountable (and the manager, too). We don’t evict the first month they’re late (in contrast to other operators) and we’ll work with a tenant for a period of time. But if they don’t work with us and/or fall further behind, we’ll encourage them to leave and/or file eviction. We’d rather pay someone to leave with the house in good condition because we’ve treated them fairly, in their view, rather than be going to court all the time and having the higher turnover. Every eviction causes vacancy and that’s more expensive than one month of delayed rent. Plus, the security deposit covers some of such a loss.
The major thing we spend most of our management time and energy on is rehabs. We have a number of empty homes that we’ve purchased from tenants who had to move, or repos, or brought in from the field. We have a full-time crew (of our employees) that works on these homes and that is what the majority of our own and our manager’s time is spent on. (It’s not a big crew, just 2 or 3 guys.) Our employees also handle service calls on occupied rental units. You don’t have to run things this way, and I know many small operators don’t. But this works for us. Our managers are therefore kept busy during the day supervising the rehabs, dealing with vendors, fielding phone calls from prospects, etc. If we ever get to 100% occupancy we could probably cut back to a “greeter” type manager but we have a long way to go.
I know this is a long post, but to answer your general question – what is the week of a park owner like? In our case, I estimate probably an hour or so per day booking income and writing checks, doing accounting (I do ours on my own), and reconciling recaps from the managers to see and control what they are spending money on from their credit cards and petty cash accounts. Maybe another half-hour per day on the phone with managers (on average – maybe 1 longish call per week per manager). Sometimes an hour or so filling out sales paperwork. Maybe a few tens of minutes running an application or two, although they can take longer if you have to track down missing info. Another hour or two per day just reading or writing emails about what to do about a particular situation that is going on (Did the XXX get installed? Why not? or, Did they do a good job? Did you talk to so-and-so about such-and-such? How many of the XXX’s have we YYY’d? Is the XXX problem getting better or worse? What are we going to do about it?). Really, this last thing is where almost all of the hassle, aggravation, and headache come from, and where most of the time goes. The problem is that it’s always something new.
It sounds like a lot of time, but, keep in mind we have a reasonably large operation with a lot of rehabs and my wife and I do this as our full-time jobs.
I’d definitely love to hear any other operators comment or responses to this.
Again, great question and I wish you the best!
Brandon@Sandell
