When investing in multifamily apts., how many units must be aquired before an apt manager makes sense?

In Buying Property - Asked by Ben T. - Jun 10, 2009
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Answer(s)

Hamel P.
Owner/Investor
Houston, TX

minimum 50, but more like 100 and up.

Jun 10, 2009
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Paul S.
Broker/Agent
Glendora, CA

Some states have a number where an onsite manager is required. Otherwise I don't believe there is a difinite number. There are a lot of factors that would dictate when a manager makes sense. I have older clients that have managers because they can"t or don't want to do it. By the same token they have owned the units for a long time and have lots of equity and can afford a manager. If someone new came along and leveraged the purchase the units would make less sense paying a manager. Obviously the greater the number of units the more likely a manager is needed. Some (but not all) other factors might be age of the units, distance from the owner, turnover, vacancy factors, crime (are they in the "hood" where the manager needs to be tougher than the residents?), etc. In looking to buy, factor in a manager if you think a particular investment will require one. It it needs one but can't afford one it probably doesn't make sense? Buy it at a price that will make sense or look for something else.
Paul Sylvester, CCIM

Jun 10, 2009
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George E.
Broker/Agent
Spring Hill, FL

According to Florida Law, if there are more than 10 units and/or annual budget is over $100k requires a CAM (Licensed - Community Association Manager).

Jun 11, 2009
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Merrie T.
Developer
San Francisco, CA

In California an on site manager is required if a residential property has 16 or more units. However, there are no licensing requirements for the on site employee.

Jun 11, 2009
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Navid R.
Property/Asset Manager
Houston, TX

Many factors play into this as mentioned by others, but one of my clients who deals heavily in apartment complexes in Texas is of the opinion that 120-160 units is about the range that a leveraged property can afford a full time on site manager and maintenance help. Economies of scale really kick in at those numbers.

Jun 12, 2009
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Leslie H. C.
Broker/Agent
Austin, TX

From Texas Apartment Brokers – “The Multifamily Experts”
The more units you own, the more efficiently you can operate the property. I have place onsite property managers on properties with as little as 24 units. On small projects, you onsite manager should be a jack of all trades. They should be able to mow the grass, do minor make readies, supervise contractors and act as property manager. Retirees with on a limited income make good candidates due to their life experience and stability.
Once you get into the range of 60 plus units you should consider a full time property manager that can supervise sub contractors. It is more efficient to own 100 units verses the 60 units. Once you break the 100 unit barrier, your expense per unit goes down due to spreading the cost of required service over more units. www.TexasAB.com

Jun 13, 2009
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Leslie H. C.
Broker/Agent
Austin, TX

From Texas Apartment Brokers – “The Multifamily Experts”
The more units you own, the more efficiently you can operate the property. I have place onsite property managers on properties with as little as 24 units. On small projects, you onsite manager should be a jack of all trades. They should be able to mow the grass, do minor make readies, supervise contractors and act as property manager. Retirees with on a limited income make good candidates due to their life experience and stability.
Once you get into the range of 60 plus units you should consider a full time property manager that can supervise sub contractors. It is more efficient to own 100 units verses the 60 units. Once you break the 100 unit barrier, your expense per unit goes down due to spreading the cost of required service over more units. www.TexasAB.com

Jun 13, 2009
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Joshua O.
Broker/Agent
Madison Heights, MI

A mid sized apartment building is where a property manager might start to make sense. If you go to small, the property manager fees cut into the expenses too much and the cash flow can take a strong hit.

Jun 18, 2009
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