This is a follow-up post to previous entry on underwriting for a ~120 pad park. We will be putting an offer on the asset this week. We’ve been able to true up most of our expenses and lowered our proforma expenses to about 34% of EGI.
So thank you for your insight!
However, we are still having issues with how to structure management. Current expenses are about 81% of EGI - payroll is insanely high (about 25% of total expenses). We have a pretty good story painted, i.e., owner lives far away, inherited park, and doesn’t really manage park hands-on, so he has essentially hired a whole team (4 salaried professional) to manage the park, and those individuals are not managing the park in the most efficient way possible.
Wanted to see if anyone had any guidelines or suggestions as they pertain to management of the park. Our main questions are centered around the # of managers required to run the park efficiently AND the best way to provide compensation.
To give you an idea of park breakdown, we have about 10 park-owned pads + 90 owner-occupied pads. We plan on lowering the # of owner-occupied pads.
Questions:
Do you hire a property manager?
Is there a minimum number of pads required before hiring a property manager? (i.e., hire a salaried property manager if park is 100+ pads)
Do you salary said property manager? If not, how do you compensate him or her?
In addition to property manager, does it make sense to hire full-time maintenance professional, or should property manager simply contract out necessary work?
Thank you for any help you guys might be able to provide!
-valueadd
For a 100 pad park with 90% TOH, you should have a PT manager and a PT maintenance man, that’s it. I can’t see needing more than this. Unless you’re on private utilities, your biggest maintenance task will be cutting the grass and maintaining a stable environment. Set rules and stick by them.Give your maintenance personnel free rent and maybe $100/wk. Pay your manager (if you don’t own local) 4 - 5 % of gross, including late fees, etc. If they know bookkeeping, all the better. If they can fill a space, pay them a bonus after 6 mos.
With 90% TOH, you have a desirable asset. If utilities are public and direct billed, your expenses should run no more than 25%. Sit back and collect.
Curious what you ended up doing about Managment for this park?
We are in a very similar situation and wanted to get an idea on the payroll/1099 structure amount and how many people were required @ what rate?
We plan to handle all accounting/bookkeeping with electronic rent collection (cc or ebt or through bill pay at Walmart) and late notices etc…which all integrate nicely into rent manager.
Wondering in the “greeter“ model for $10/lot/month + free lot rent works for - being our the eyes and ears and coordination of repairs and services and the occasional odd task?
Also do you find you can effectively contract all necessary R&M needs from local trades or do you need a dedicated “maintenance” tech?
Any insight from an experienced operator would be greatly appreciated
Multi-Family Innovations has a full-service property management Division, We manage Multi-Family Properties Mainly throughout the Midwest.
Our Property Management Division is based on the core beliefs of integrity, honesty and hard work. We offer our clients a level of service, response time and open communication seldom encountered in today’s business world. Our clients can count on consistent communication, accurate financials and an unparalleled level of service. Our licensed professional managers, accountants and support staff, we will provide what you have been looking for in a management company.
Our function as a management company is to maximize the true potential of the property, stay on top of collections, keep expenses down, add value- get homes & lots occupied. Unfortunately there are management companies out there looking to be check writers (just paying the bills) and not looking to get the most out of the properties they manage for the best interest of their clients.
I believe I commented on this last year at this time, and man, have I learned a thing or two (or more) since then.
I must first say, we “flipped” our ownership structure last year from 80% POH to 80% TOH. How? We basically sold them for salvage value at a self-monitored auction. It totally transforms the park make-up and, thus, the headaches inherent in tenancy.
One of our biggest challenges has been the managerial function under an absentee model. I’m just now ending a nine month process of separating reality from BS. I now pay an eager young girl to run my operation. She doesn’t come with certifications or licenses, just a determination to right the wrongs that she’s witnessed for a year. I pay her well, probably more than what’s prudent. But in a small market, you have to take what you can get (and trust). While she is busy getting things straight, there will come a time, I hope, where the 110 pad park will quiet down, and we can realize the numbers we have expected since Day 1. I do plan on leveraging her skills into another nearby park at that point, but nothing’s certain.
Ive also adopted a PMS that’s robust and scalable, so hopefully it will be a worthwhile investment as we can scale the biz model across several parks.
My park has had infrastructure issues and deferred maintenance from Day One. There are many items that rear their ugly head when you least expect them. For the majority of work, I believe contracting it out serves us best. Over time, your needs and word of mouth around your park will work to your benefit: usually, cheap quality labor can be had, as long as you’re flexible with getting it done (i.e. moonlight contractors).
I have generally contracted out my managers, but in my particular instance, she requests a w2 for establishing credit for her future.
Bottom line, these things can be beasts and everyone of them comes with its own challenges
It’s truly a case of determination and grit that wins the day.