Investing in multi-family rental properties comes with a different set of requirements and responsibilities than you have when you own single-family rental homes. One question that we’re often asked is: do I need an on-site manager for my building?
The answer is pretty simple - it depends on how many units you’re renting.
Before you
invest in a multi-family California City rental property, it’s important to understand California law and how it differs when we’re talking about larger buildings.
On-Site Property Management Requirements in California
Legally, you will need an on-site property manager for an apartment building or rental property with more than 16 units. You can work with an off-site management company when you have an investment of this size, but you’ll also need a residential manager who lives in one of your building’s units.
Buildings with fewer than 16 units do not have this requirement, although sometimes a property owner will want to hire an on-site manager or maintenance expert to keep an eye on things and respond to any repair needs that might come up. With smaller buildings, the decision is completely up to you.
Employing On-Site Management Staff
When you have an on-site property manager, you’re essentially hiring staff. California law requires that the property manager at your property be classified as an employee. This can create some extra expenses for you that you need to be aware of and prepared for.
Because your on-site property manager is an employee, you are legally required to provide workers compensation insurance. You also have to withhold all required federal and state income taxes from their salary and contribute to social security.
Creating an On-Site Manager Job Description
Typically, the on-site property manager will be tasked with taking care of the day-to-day operations of the building, the individual units, and needs of the tenants who live there. These responsibilities may include:
- Rent collection
- Showings and tours
- Tenant screening
- Serving notices when rent is late
- Responding to questions from tenants
- Overseeing maintenance
- Providing reports to property owners
Sometimes, an on-site property manager will provide these services in exchange for a reduction of rent since they live in the building. If, as a condition of employment, the on-site property manager must live at the place of employment or occupy quarters owned or under the control of the property owner, then that property owner is not allowed to charge rent in excess of the values set forth under California law.
How to Decide: Pros and Cons of On-Site Management
If your investment property has more than 16 units, you know you are required to hire an on-site manager for the property. If you’re not legally required to an on-site property, is it something you should consider?
This will largely depend on the property itself, the tenants you have, and whether or not you’re working with a
full-service California City property management company already. If you’re renting out six apartments in a smaller building and you’re already working with a reliable property manager, you probably won’t need an on-site person responding to maintenance and tenant issues. It would only take up one of your available rental properties.
