BiggerPockets

I have not outsourced my property management, but in listening to the experiences of others, I know of very few very few investors who are satisfied with the quality and value they are receiving.

On the other hand, many investors don't have the time or inclination to manage their properties themselves.

Isn't there a middle ground?

Hire and train your own property manager who works for you. Pay her/him as an employee or contractor and set up the relationship to align your interests. Pay them for their time, and not a PM company's overhead, profit, and marked up third party services. Define your own level of quality and service with your new assistant. Mentor and grow that person into a possible partner in the future.

Anyone doing this? What have you learned?

P, I think you have hit on the main issues with hiring your own PM.

"You would have to have a lot of rentals to make it worthwhile."

Yes some critical mass, that would vary depending on your PM. Could they be on call full-time and work several hours a month? You wouldn't need many rentals in this case. Do they need full-time work? That would take at least 40? doors to beat a real PM company.

"Most of the property management employee types I've seen don't seem to be too sharp. Smart motivated people can make more money doing something else."

Yes, unless they are young and the job market is poor and if it is a stepping stone.... Yes I agree, it is very hard to get someone as interested as you. Kind of like outsourcing your kids' education vs. doing it yourself.

"But maybe a college student who is studying business might be interested in some cash. You'd have to re-train someone new every couple of years as your manager graduated and moved away."

I think you are right on, but many positions have relatively high turnover, but if you can help build a career path you can extend the tenure.

"The trouble is that tenants are too much trouble unless you are getting paid a lot to deal with them, or else you are dealing with them because they are in your investments and you are going to make a lot of money."

As an investor you feel this way because of your bent, and you have other options. I mowed lawns for a living for 3 years after college. It was fine, just not a career. And I got a lot of good thinking, planning, and dreaming done while I was knocling out 40-50 ;lawns a week. Managing 40-50 rentals takes less work than 40-50 lawns. And builds wealth much faster.

"I manage my own becasue I can't find anybody else who will do a good job of it. I am good at what I do. I have good tenants, well repaired properties, and zero evictions. However, you couldn't pay me enough to deal with your tenants as well as my own. If I could invest in real estate and not deal with any tenants, not ever, I would be sooooo happy"

So far I am in a similar position as you, but I don't plan to be managing SFRs in a few years. Looking for scalable, quality help, hence this thread.

To deal less with tenants, why not look into commercial, or even better yet, NNN commercial properties?

As one of the more experienced landlords on here, I've come to believe the following. 99.9% of the property managers absolutely SUCK!! They're lazy, undermanned, and only open certain hours. They don't have much inititive.
To you, the owner, a vacancy means $800, and you might have a mortgage to pay. To the mgmt company, it means 80 bucks, and he has enuff money coming in, it doesn't matter to him. Here are some other problems.
1. No one will EVER take as good care of your money as you.
2. You'll go out on a moments notice to show a vacancy, while the mgmt company will say"come in and pick up a key".
3.They may have properties of their own to compete with yours.
4.Their motivation is much lower level than yours.

Here is another problem with some of the ideas above. In some state, you must have a real estate licensee for management. Rules vary. I wish there was a magic bullet, but like finding a GREAT accountant, managers are few and far between,imo. Rich.

Peter- great comments!! I voted for your comment. If you find comments or posts of interest, vote them up. That halps direct others to worthwhile posts. Rich in FL.

Do they need full-time work? That would take at least 40? doors to beat a real PM company.

You certainly couldn't afford to hire a full time property manager for only 40 doors!!! Here in Ohio, a full time property manager typically manages 150 units or more.

I agree with Rich and Peter, no-one is going to manage your property as well as you can! Most property managers are terrible and they are a major reason that people lose money with rentals.

Jon- I'm not Mike oh, but I'll give my view. When I left so. Texas, I turned mgmt over to a professional mgmt co. I also added a SECOND person to assist. I pay that person directly.She takes care of the minor things. Co-ordinating repairs, showings, signage, and errands. The co. does the advertising, apps, leasing, paperwork, bills, etc.
The second person receives 25% of total fee. This allows me to have "eyes" on the things that fall through the cracks, quick turnover, serving delinquent , etc.
The jury is still out on this method, but I figured after dealing with ding a ling companies, I'd try something new. I'll be in S. Tx tomorrow to review the first 2 months of this program. Rich.

Sounds like a good idea. I'm sure you could find a good management company. I'm in St Louis and there are hundreds of companies. I have been through tons of them but found 3 or 4 really great ones I recommend. Try finding a smaller company that will customize their service for you. it may be easier.

Brian Haskins

My wife is a Real Estate agent and we don't use a Property Manager if that tells you anything. She can even get us a discount if she used her employer. According to her, they don't always follow up on all the leads, and they could care less who they put in your property. Plus, when there is a problem, they aren't going to find the cheapest repair person.

I think you use a Property Manager only when you have no other choice (like you have a property out of state or something). I manage my properties myself and have never had any major problems and my vacancies are rare. I'm certain that a Property Manager wouldn't find a tenant faster than I would, nor be as selective. Most of the ones I talked to were rude and lazy as some have mentioned here.

For what its worth. We have property in a few different states. Hawaii, California, Oregon and Nevada. Managing the property iis a full time job and we manage (for the most part) all our properties, from Hawaii. Based on that experience I will say that you need to have a PM for residential on the ground near the property. Is it a pain to find quality? of course. Do you have an option? I do not think so... unless of course you have some sort of density to justify hiring a person who can focus specifically on your property.

Commercial on the other hand allows you a little bit more lee way.

As for, when we are retired and out of the business, we will hire a property manager. We will research to the best of our ability to source one that meets our needs. If you are not going to handle your properties personally their is little other choice then to hire a PM and deal with it. There are good PM's out there.

I know this is old, but I'll revive it because the topic is important to me personally.

I used a PM in the past and was frustrated at their lack of communication, poor tenant selection, etc. She was also an agent for Prudential, the biggest company in our area, and a personal friend. However, I lived outside of the country and couldn't do it myself at the time. As soon as I moved back I took it over and things are great.

I am in the process of purchasing the top PM company in my area. It's pretty well run, but I still see ways to improve it and increase clientèle. I set a goal of a 25% increase in three years, which is tough to do in less populated areas but I'm sticking with it. I know what it's like to be an owner with a bad PM, so my plan is to prove myself ensuring top dollar for my clients, professional behavior in all I do, good tenants, etc. The way I run the business is my best advertisement and I expect owners to spread the word and bring me more properties.

Everyone using a PM needs to understand you are losing 8-10% of your income every month! If a rental is giving you a 30% return, you're actually only getting a 20% return because of PM fees. Is this in line with your goals of building wealth? I got into RE and PM because I want to build wealth and RE is my vehicle. I use my license to purchase properties and my PM company will manage them. I save on commissions, I save on PM costs, and I increase my bottom line. Oh, and while I'm managing my own properties, I'm also managing properties for others and bringing in a steady $5,000 a month! On top of that, I can buy/sell RE for others and earn commissions. On top of that, my company employs two other agents and I earn commissions off everything they buy/sell. And there's room to grow!

I don't know how much time it takes others, but I'm managing 120 properties and 40 owners in less than 30 hours a week. No late-night calls unless there's an emergency, no work at night or on weekends, etc. Sit down and consider how much time it will actually take you to manage your own and then look at how much you're paying a PM. You might find you would build more wealth (and experience/knowledge) by managing on your own.