Keys to Multifamily Asset Management for Investors
When it comes to things like repairs and maintenance, things like that, do you ever verify the cost of those repairs? Like make sure that those are reasonable or in line with what it should cost?
Yeah, great question. So one of the things that we require our property managers to do, if we don’t have onsite staff because if we have onsite staff because it’s a large, complex 80 units or more, we don’t really have to worry about a lot of the repairs because the onsite staff usually just takes care of it and then all we pay for materials because we’re already paying them their salary. If we have a smaller property that doesn’t have an onsite staff then we require that property manager to get us three quotes. The same manager we fired that said “Oh, well, there’s no budget. You just give us the money that we tell you we need.” We required him. We told him we want three quotes and he’s like “No, I gave you a quote. Here’s the quote. Just do it.”
Well, one of his quotes was to have a roof replaced. And the interesting part was this roof was only three years old and was still under warranty. And we said we told them it’s like “The roof’s only three years old. Why are we replacing the roof? It’s three years old.” “Well, because my roofer said it needs to be replaced.” “It’s three years old and it’s under warranty. Why aren’t you having the company come back and repair it under warranty?” Well, turned out they were out of business. But we still wanted two additional quotes because we didn’t have another $26,000 to throw in, putting a new roof on because it’s under warranty and the original roofer is now out of business and couldn’t come back and take care of it under warranty. That unfortunately happened. But the student who was in charge of the project, because he couldn’t get the manager to do it, he went out and called a couple of other roofers to come out and give us a quote. And it came back at it was about $2,400 to repair the roof rather than just tear the whole thing off and completely redo it. And since we’d only been in the property, I think about six months, we just didn’t have the cash flow anyway to do a $26,000 roof.
So sometimes you do have to jump in. And of course, that manager didn’t last much longer. But you have to jump in. And those are the things you want to look for, is you want to find out what they’re doing to manage your money. And ultimately what you want them to do is you want them to treat your money as if it was their money and not just assume that it was a bottomless pit that they could just keep taking money out of to line their own pockets, quite frankly.