Exciting news! I hired my first employee for my property management business. It’s been interesting experiencing a whole new set of opportunities and challenges, but on the whole, I’m loving it.
Why I Hire An Employee (Not a Contractor)
For starters, I need help. As my units under management have grown, it’s simply more than I can handle on my own.
Interestingly, this happens a lot in the property management space. Someone new enters the market and quickly gets 50-100 units almost exclusively from referrals. Somewhere in that range is when you need to hire help, and 90% stop growing because their service suffers (and referrals stop), or they decide they’re big enough to support themselves without the people management complications.
I wasn’t willing to stall, so I brought on an operations coordinator: someone to schedule and coordinate contractors and tenants. And they’re an employee instead of a contractor because of the [economic realities test](https://www.oregon.gov/boli/employers/Pages/employee-or-independent-contractor.aspx/1000):
- Is the worker’s task essential to your core operations? Carpenters vs. software developers for a construction firm, for instance.
- Who determines schedules, methods, tools, and wages? More control means they’re an employee.
- Is it an ongoing/indefinite engagement? Project-based work may indicate a contractor.
- Contractor status favors those exercising business skills, not just technical delivery.
- Contractors typically bear profit risk; employees don’t.
- Contractors typically have more than one client they work for; employees don’t.
For me, the answers were clear: the job is essential. I’m determining the methods, tools, and wages. It’s an ongoing engagement that’s only with me. And they’re not bearing any profit risk (though it is a skilled position).
It’s exciting, but it’s a significant amount of work to set up!
Hiring Is More Than Payroll
I’m using Gusto for my payroll, which has been solid. I think their biggest problem is that they slightly overpromise by making it sound like it’s a 1-click setup. I’m sure it’s significantly easier than doing it manually, but it’s not a 1-click setup.
I do appreciate that Gusto keeps bringing up compliance requirements. For example, they reminded me: to:
- Register for a business identification number (BIN)
- Get workers’ compensation
- Provide employment posters
- Set up a retirement account
- Submit an I-9 form
- Create an employee handbook
Technically, Gusto (and their partners) will handle all of this for me, but it’s significantly more expensive!
- Their workers’ comp partner was 4X the cost of Oregon’s SAIF. Though perhaps their coverage is better?
- They’ll provide posters for $12-25/month vs downloading them for free off the state BOLI website. I guess it’s nice not to have to check for updates?
- Their retirement account partner is $90/month vs OregonSaves’ free plan. Perhaps they offer more options?
- They have a partner who will register your BIN for ~$150 vs doing it on Oregon’s Department of Revenue website for free. I suppose it’s nice not having to navigate it on your own?
I get it, I’m trading my time to do it on my own, but those are not negligible costs! That, and I like knowing about the process.
Why It’s Worth It
Despite the compliance rabbit hole, the rest of it has been great! I love that important things that kept getting bumped because of urgent things are now getting done. Plus, there’s an accountability benefit to me, too. Since I know I’m asking others to get this done, I feel the (good) pressure to get my stuff done too.
I’m already planning my next hire, which will likely happen during Q4. I think it’ll be a maintenance person because there seems to be a never-ending list of small jobs that need to be done. Hiring someone will help me get to problems sooner and save my owners’ money. I’m in the process of getting my CCB (a requirement for another project), so we’ll be appropriately licensed and insured.
I think with a team of four — a receptionist, bookkeeper, handyman, and leasing & tenant coordinator — we can scale up to 500 units. Like I said, I’m excited and am seeing what it looks like to scale to the next level.