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6 Excuses for Managing Your Own Rental Properties

by Ali Boone on June 7, 2014 · 80 comments

  
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I am a big fan of “to each their own” and you won’t hear me knock someone who prefers to be a landlord versus using a property manager, but for those of you convinced you need to be a landlord for whatever reason or you on the fence about it, hopefully some of these realities will help you out.

Excuses People Use For Managing Their Own Rental Properties

The most famous excuses I hear about why someone ‘needs’ to landlord their rental properties:

1. I’ll Save 10% a Month by Not Paying a Property Manager

On the surface, this seems legit.

This may actually be legit if you have a perfect tenant who always pays on time, rarely has maintenance issues, doesn’t cause damage, stays in the house for a fairly long term, and never gives you any run around about anything. I’ve had tenants like this in the past and they are great! One of them I was able to easily manage (i.e. landlord) myself from over 2,000 miles away and never had a problem. The unfortunate reality, however, is most tenants aren’t that good. Property managers aren’t usually in place to handle perfect tenants, they are in place to handle less-than-perfect tenants.

As soon as a less-than-perfect tenant or situation comes up, it’s going to require time and effort to deal with it. As soon as that happens, you need to understand what your time is worth if you are landlording your own property. For a detailed breakdown of the true cost of landlording your own property (including both the financial cost and the cost on your sanity), check out Are You Really Saving Money by Being a Landlord? In short though, think about a property that collects $1,000/month in rent. A 10% property management fee would cost you then $100/month.

For a mere $100/month, is it really worth it to take on constant stress over a property? You can’t possible tell me it is (unless you really do have that perfect tenant).  In case you doubt me, here is one more article to check out a time when not landlording came in really handy for me- When I Prefer Property Managers over Being a Landlord. I’ll spare you the additional argument of active vs. passive income and whether landlording is really that passive, but if you are interested, I have articles on that too!

Related: Tenant Screening: The Ultimate Guide

2. I’ll Take Care of My Property Better Than Anyone Else Ever Would…

That may be true…

But good news! A rental property doesn’t have to be taken care of at pristine levels, which I’m sure is where your bar is for how one should be taken care of.

If your bar is only at minimal care for a property, just for that maybe you should probably hire a property manager. I’m a huge perfectionist, no doubt. I won’t even drive by my rental properties when I’m in town because if I so much as see a scuff on a garage door, I’ll freak out and get totally stressed about getting that scuff off. I know this about me. But does a scuff on a garage door really matter?

Not at all (unless it’s so severe it’s just tacky and violates HOA regulations). The standard I have for a property is incredibly high. If I were to maintain every rental property I own at that level, I’d be wasting time and money. I don’t condone minimal care on rental properties, they need to be comfortable and pleasant for tenants, but a scuff on a garage door isn’t going to hurt anything. But if I were in charge? I’d have to cover up the scuff because it would drive me crazy. So yes, I would take better care of a rental property than any property manager would, but it would be wasted effort.

3. There’s No Way for Me to Know My Property is Actually Being Taken Care Of!

Yes there is.

You’ll have a real good idea that it’s being taken care of if you are collecting the full rent every month. That’s the first sign that things fine. Your property manager regularly communicating with you is another one. My property manager is very forthcoming with any pertinent updates and issues, so why would I think there are any issues he isn’t taking care of? You can always give your tenant your personal contact information and I’m certain they’ll call you if your property manager isn’t taking care of something. I guess the worst case situation here would be if the tenant is horrible and despite paying every month, they continue to destroy the house and/or steal things from the property and either your property manager doesn’t know about it or they don’t tell you.

I guess if a manager wanted to lie to me about something like that, they could, but why would they? A lot of managers do monthly or periodic drive-by inspections on properties and can give you reports on what they find. The reality is, a property manager could hide all of that or not be diligent enough to know about it, but what would their incentive be for that? Not a lot. I also think it’s a rare case that you have tenants who destroy the house but still pay full rent every month. Worst case, your insurance covers the tenant destruction and you fire that property manager.

But again, no real incentive for that situation to have happened in the first place. It’s all possible though, but trust me, I can’t explain why but you’ll know if you have reason to distrust the care for your property.

4. Property Managers Will Make Up Maintenance Requests So They Can Upcharge Me and Make More Money

I hear this one a lot and justifiably so.

I think this may be one of the most common things a shady property manager will do. They will be overzealous on maintenance requests because they can upcharge the work being done to you, which lets them pocket more money than what you pay for the standard fee each month. There is some mitigation for this. First, if you are getting an absurd number of maintenance requests, question the property manager as to what is really going on and determine if those are legit requests or not. Second, request the work invoices from whatever handyman or contractor the manager had do the work and compare that to what you are being charged. My property manager doesn’t upcharge maintenance at all and he always sends over the actual invoices for the work done so I know he isn’t upcharging.

If you don’t trust your property manager, call the company who did the work and verify what they charged. But really, if you have so little distrust for your property manager to feel the need to do that, you should just hire a new one. This sounds crazy, but if you have any reason to question your property manager as to whether they are screwing you on extra fees, or putting in bogus maintenance requests, you should just get a new manager. I trust mine enough where I wouldn’t even think once that he would try to take advantage to me with bogus fees.

Related: 1 Question Every Landlord Forgets to Ask a Potential Property Manager

5. I Need to Understand How to Landlord Properties so I Know How a Property Manager Should Manage Them

Really? You do? I disagree.

Unless you are trying to become a professional landlord or property manager yourself, I completely disagree. Do you want to know how to landlord or do you want to know how to own rental properties? I would argue that there is no reason for you to know how to respond to a maintenance call if your ultimate goal is to have a portfolio of rental properties to help supplement your income and/or get you out of the rat race.

You need to learn how to manage managers, not learn how to fix wonky toilets. When I started out as an investor, I had the same mythical idea in my head but I woke up one day and realized that fixing toilets, learning how to screen tenants, and whatever other fun things come with landlording would help me zero in learning how to build a rental property empire. But what would help me was learning how to hire and fire managers, learn what qualifications those managers should have, and learning how to maintain them so that they can maintain my properties. I manage the managers, the managers manage the properties. See how that works? You are trying to be a professional investor, not a professional handyman. Leave the toilet fixings to the maintenance guys.

6. I’m a Control Freak so I Need to Manage Them Myself

I left this one for last because this one has a bit of a two-part response: one response against the argument and another response for the argument.

Against the argument, you are talking to a pilot here (yes I fly airplanes, in case you didn’t know). Pilots are a notoriously controlling species of people. We have to be, our entire job is to control something- the airplane. Under no circumstances is that airplane supposed to do its own thing. We have checklists for everything and just when a deviation to a checklist happens, say an emergency, never fear… we have another checklist to handle that deviation. Not only do we have to control the airplane, we have to control ourselves no matter the situation. I tell you all of that to say, I get it. I’m of the controlling species myself. However, there is a way around being a control nut and letting someone else manage your rental properties. I am of the mindset, ‘out of sight, out of mind’. I don’t know that even if my local area made sense to buy rental properties in that I necessarily would.

Remember the issue of the scuff on the garage door?

If I owned a rental property near me, I wouldn’t be able to resist driving by it, and that scuff would eat me alive. I would end up micro-managing the property or the property manager and it would be a disaster. But owning properties on the other side of the country from where I live? It’s great! I don’t see the properties, I don’t micro-manage anything unless I have a bad property manager, and all I care about is whether the check shows up in my account every month. The only thing I have to control is the property manager, but even then if I have a good one, I don’t even have to control that much. I don’t see the properties, I don’t know who the tenants are, I wouldn’t know how to fix plumbing if I wanted to… it’s great! Then I have plenty of time to leave my controlling-ness to other things.

For the argument, on the other hand, if I ask you why you insist on being a landlord and you tell me you are just a control freak and can’t stomach the idea of someone else handling your property, end of story, that’s totally fine! I won’t even question you. I’ll probably just laugh with you.

In Conclusion

I completely appreciate when people just own it. The reality is, at the end of the day (with anything in life, not just real estate investing), no matter what arguments for or against something you are given or how much those arguments do or don’t make sense, or whatever… You should always do what makes you happiest.

If you will just flat be happier if you landlord your rental properties on your own, that is perfectly fine. All I want to ensure is that if you are insisting on landlording properties yourself, it’s because you just flat want to (for whatever reason) and not because of some myth you’ve been taught about why you have to.

If you use property managers, what is one time that the property manager came in such handy that you could never think about landlording again? (mine was when I was in Nicaragua and a storm hit my property and I didn’t have to lift a finger from my tropical paradise to do anything about it!)

Be sure to leave your comments below!

 

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{ 80 comments… read them below or add one }

Charles McNelly June 7, 2014 at 7:35 am

There’s no disputing the points made in this article from me. Great post Ali!

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Ali Boone June 9, 2014 at 10:41 pm

Thanks Charles!

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Sharon Tzib June 7, 2014 at 8:02 am

I doubt seriously Lee Iacocca was ever down on the assembly line making cars, so not sure why landlords feel the need to do it all themselves as well.

PM’s are kind of like the used car salesmen of BP – they get such a bad rap – but honestly, just fire and hire until you find a great one, they are out there, and quit wasting energy worrying about the bad ones. Normally a bad PM shows their colors pretty darn quick, and if you’ve done a through interview/screening process in the first place, you may not have to fire one at all! And with the power of the BP forums, you can easily get great referrals.

I see lots of folks say PM’s intentionally place crappy tenants so they can get the lease up fee over and over again and that’s why they don’t use PM’s. Again, if you have a PM doing that, you probably didn’t interview correctly because that’s the surest way to get fired I know of, and a PM who really cares about their business would never do that.

My best story about justifying a PM was when my rental in Indiana got hit by a tornado (I lived in Calif at the time). It was three calls: one to the PM to handle it, one to the insurance company, and one to the tenant to make sure they were ok. Easy peasy.

p.s. I always give my tenants my contact information so that I can verify anything directly with them if I need to, or they can reach me if they need to. This satisfies my control freak nature, but with a good PM, you rarely speak with the tenant.

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James June 7, 2014 at 5:19 pm

Sharon,

With all due respect, I believe Lee Iacocca was, indeed, on the assembly line and that’s why he was able to successfully turn around a company that was circling the drain.

I don’t know why anyone in their right mind would invest hundreds of thousands of dollars in rental properties and then turn them over to PM to see how it goes.

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Sharon Tzib June 7, 2014 at 6:00 pm

Hey James. Iacocca was a student engineer, who yes, went down to the assembly line to see how it worked, but once he knew that, he was not down there day in and day out, performing the labor – that was my point (and btw, he turned Ford around by coming up with the installment plan for purchasing cars and he turned Chrysler around by getting Congress to provide them a bailout).

In any case, I’m not sure who it was that first universally proffered the idea of “working on your business, not in it,” and that is the model I chose to follow. But I’m happy the way you do it is working out for you too.

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Ali Boone June 9, 2014 at 10:46 pm

Same Sharon, I always work on my biz not in it. I’m not interested in all the details, I just like the bottom line.

Ali Boone June 9, 2014 at 10:46 pm

James, anyone who just hires a PM and just “sees how it goes” is not the smartest investor out there. That’s not the point of the PM. Due diligence is required, keeping up with the PM, etc. PM’s can turn your investments upside down in a heartbeat, so it’s not a just ‘turn it over and see what happens’ type of thing.

But to address your wonder of why anyone would invest hundreds of thousands of dollars in rental properties only to turn them over to a PM, I can answer that personally since I’ve done exactly that. I never had a desire to invest hundreds of thousands of dollars to merely create a new job for myself by managing those properties I bought. What would have been the point? I turned mine over to a PM so I don’t have to work on my own properties, easy as that.

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Shaun June 14, 2014 at 1:23 pm
Shaun June 14, 2014 at 1:25 pm

Whoa no idea what happened with the formatting there!

In the quote I had replaced ‘rental properties’ with ‘the stock market’ and ‘PM’ with “A Fund Manager’, not sure what none of that actually showed up.

Ali Boone June 15, 2014 at 6:04 pm

I love it Shaun! And agree. Great comment.

Ali Boone June 9, 2014 at 10:43 pm

Ooh Sharon, same 3 steps I used in getting my property that was hit by the storm fixed while I was in Nicaragua. And that was about 2 more steps than is usually required to fix any issue, and that was only because the insurance company had to be involved. It’s a tough one, I tell ya :)

I agree, I’ve never understood why people have to get so involved. If you enjoy doing that kind of stuff, absolutely go for it, you will learn a ton. But it’s far from required.

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Mike McKinzie June 7, 2014 at 8:13 am

Once again Ali, you are right on. Most investors who want to manage their own property treat their investing as a HOBBY. When you truly want to make it a BUSINESS, you use a Property Manager.

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Sharon Tzib June 7, 2014 at 10:13 am

Nail on the head, Mike! And as a business owner, one must get proficient at interviewing, hiring, training, setting expectations, and firing if necessary – for all team members! Just because you were burned once by a PM doesn’t mean you throw in the towel and start doing it all yourself. Instead you learn from the experience and improve your skills. I’ve had bad CPA’s, contractors, and attorneys before too, but that doesn’t mean I stopped using them altogether.

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James June 7, 2014 at 5:30 pm

Sharon,

“one must get proficient at interviewing, hiring, training, setting expectations, and firing if necessary.”

I do this with my tenants. They are my employees. Firing them would be asking them to leave or evicting them. I rarely ask them to leave and have never had to evict a tenant in the 15+ years that I have owned rental properties. Why would I pay a PM and spend time doing all of the above when I can spend that time doing it with my tenants and have them PAY ME? Either way, I am having to spend the time. My tenants stay and average of 5 years and my turnover costs are minimal.

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Sharon Tzib June 7, 2014 at 6:10 pm

James, I’ve been a rental property owner for 14 years, and I too have never had to evict anyone. My first rental was my former primary residence that I converted to a rental, and while it was close to my home and easy enough to manage, my husband and I hated every minute of it since we were busy running another very successful business.

For my next properties, which were out of state, I made sure to build in a budget for a PM, so paying them does not bother me in the least, as they have earned every penny by performing a valuable service that I could not and did not want to do at the time.

I guess that’s my main gripe about the anti-PM rhetoric. Not so much that people should always use them (even though I think it’s smart to because unless you are going to eventually liquidate your entire portfolio, at some point you will want the freedom to travel or retire without worrying about your rentals, or what if you become incapacitated, then what?), but the whole idea that PM’s are universally, across the board, bad. That is a ridiculous over-generalization, and I can tell you from experience, as Ali can, that there are plenty of good ones out there. I would just prefer to find them before I really need them, and so I budget for them and have become expert and screening for them.

Again, to each their own. I was simply agreeing with Mike’s comment and showing him my support of what he said, and as I said above, I prefer to work on my business, not in it – probably why I’m not a flipper or wholesaler – I prefer a much more passive approach.

Ali Boone June 9, 2014 at 10:50 pm

James, sounds like you have a great handle on how to be a good landlord if you have all those long-term tenants and no evictions and such. If only everyone was that good, tenants would have a much nicer rep!

Not sure how I feel about tenants being seen as employees, but I guess I get the analogy. PMs for sure are like employees.

Ali Boone June 9, 2014 at 10:47 pm

Great one Mike. And absolutely nothing wrong making landlording a hobby or your own job, if it’s something you like to do. I have no desire for it, so it is just a business for me and so I hire the PM, but for others it might be just fine. Great explanation!

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Eric June 7, 2014 at 8:30 am

Good timing! I have a post about property managers coming tomorrow!

I would never use a PM. Best case, I would do the PM from the distance, and have the Realtor do the task I have assigned. There is really NO reason to ever use a PM. If you do not know how to manage property, do not get into the rental game. Once you know how to do it, it’s OL to use a PM, but only under close supervision.

There are more horror stories about PMs than there are Section 8 tenants…

I have known PMs who recycle their problem tenants. That is, rather than evict a tenant, they move them to a different property they manage. Both owners are happy, at least initially.

A PM has the incentive to get subpar tenants. As am owner, you want great tenants.

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Mike McKinzie June 7, 2014 at 9:28 am

Eric
Last year, my wife and I were enjoying the Hermitage in St. Petersburg, Russia when I received an email that one of our rentals did not pass the Section 8 inspection. One email to my Property Manager, one minute of my time, and back to enjoying a Monet and a Rembrant. We own 25 SFR in 6 states and 8 market areas. My investments are not a “ball and chain”, they are my “wings” that allow me to explore the globe! You are correct in that there are bad PMs, which is why I have fired five of them in the past six years. But the freedom is worth the 7% average fee costs me.

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Ali Boone June 9, 2014 at 10:53 pm

Cheers to that Mike! I couldn’t agree more. Maybe it’s the people who don’t travel that are more against PMs since they wouldn’t relate to the scenarios when having a PM is the most amazing thing on the planet. I for one completely understand your side of it :)

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James June 7, 2014 at 9:47 am

Looking forward to your article Eric.

Ali, I’ve been running my own multiple unit rental business myself for most of my 15+ years as a landlord and wouldn’t have it any other way! Even long distance, with good tenants a PM is not needed at all. Now, if you have multiple rentals and have not done a good job of screening your tenants (or your PM hasn’t) or your properties cannot attract high-caliber tenants, then you will probably need a PM to handle all of the problems that come up with lower end tenants.

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Ali Boone June 9, 2014 at 10:54 pm

For sure James. So you’ve never had a bad tenant ever?

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Eric Drenckhahn June 7, 2014 at 11:20 am

I own 25 rentals in one market area, not great, but very good income. I am not quite ready to call it quits from my full-time job yet, when I do I will just manage my properties. At 56 years old, I still call it early retirement.

The secret is great tenants. If I was doing long distance section 8 rentals, I would use a PM, and I would expect to lose money.

When you fire a PM because that brought in a bad tenant, it hurts you a lot more than them. Your batting average i hiring PMs tells me that only a few are decent, which validates my assessment.

Look for my post coming up in the next day(s) or so.

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Ali Boone June 9, 2014 at 10:52 pm

I hear your points Eric but you are making a generalization about all PMs. A lot of them can suck, yes, but certainly not all and not everyone has the skill or time to manage their own properties. I don’t think everyone should use a PM for all their properties, no way. If your property is in your backyard, don’t spend the money. But there are plenty of reasons to use a PM and plenty of ways to make sure you have a good one.

Cool, I’ll check out your article. Fancy that timing! :)

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Mike June 7, 2014 at 9:02 am

Ali,
How many properties do you have and of what kind?
I can see how property manager is beneficial for 50+ unit apartment complex but what about one or two rentals?
If someone is just starting out and bought a first rental wouldn’t it be an overkill to hire a PM right away?

Thanks

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Ali Boone June 9, 2014 at 10:57 pm

Mike, mine are SFRs and I’ve always used a PM. I live across the country from them and can’t imagine managing them myself, nor have the desire. I have plenty of other things to do with my day. As far as someone just starting out, it depends on that person’s goals and what they ultimately want to accomplish. If they are like me and have no desire to ever be in the trenches or working on properties or dealing with tenants, I don’t think it’s overkill at all to hire a PM. In fact, hiring a PM can lessen risk (assuming the PM is a good one) because if you leave a brand new person to landlord a property themselves (i.e. find and screen tenants, manage tenants, deal with repairs, possibly evict, etc.), that in itself could be overwhelming. Either route you go, investing is hard for new folks and they are going to have to experience it to learn it to the greater extent. So it depends on what they would rather learn to help them towards their goals.

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Kim June 7, 2014 at 10:39 am

I couldn’t disagree more with the points in the article. If you have done your tenant screening right, and you take some pride of ownership in your rentals so they are not dumps, then you always have good tenants. I have been land-lording myself for 25 years and have only had 2 bad tenants EVER and it was early on when I wasn’t as thorough with my tenant screening. From my point of view, there is no excuse for having bad tenants on any kind of a regular basis.

On the other hand, if you don’t care about having nice properties that nice people want to live in, then sure, you will have bad tenants and it is worth paying someone else to deal with them. Not only will you add expense for property management, but you will also have higher maintenance and repair expenses and more vacancies, with lower cash flow.

I have never heard great stories about property management companies, not one. Plenty of bad ones though. You are gambling trying to find a good one. Then, you are going to spend a fair amount of time overseeing and auditing them to make sure you got it right. It is super unwise to take your eyes off – even good ones will get sloppy if they know no one is paying attention.

If you own so many units that you couldn’t do it all yourself, or if you have a full time job that isn’t easily interrupted or flexible, then you may have no choice. Or if you simply don’t know what you are doing.

When I decide to stop managing my rental properties, I will be selling them with owner financing.

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Ali Boone June 9, 2014 at 11:00 pm

Kim, sounds like you too have a great handle on how to manage rentals and I give you props for that. The only thing I would add to your list of reasons why someone may need to hire a PM would be- ‘if you just don’t want to manage rental properties’, which is the category I fall into personally. Well, that and I travel a lot and live a long ways away and…well, no, it comes down to I just don’t want to. I enjoy my freedom too much.

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Mark Graffagnino June 7, 2014 at 3:00 pm

Great discussion. The problem I have with PM’s is that their goals are the polar opposite of my goals as a landlord.

My goals- retain great tenants for multiple years and minimize maintenance costs. Cash flow to Landlord.
PM goals- turn over tenants every 12 months (at the latest) and mark up or inflate maintenance costs. Cash flow to PM.

I don’t want to hire someone and pay them for doing things that increase their bottom line while shrinking my bottom line. They don’t make their profits off the 8-10% they are making each month, they get it from the one month’s rent they get for turning over the tenants. I also only have 4 properties as of now, so it’s fairly easy to manage. Plus all the landlords I know personally, who own multiple properties, cannot recommend a good PM.

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Ali Boone June 9, 2014 at 11:03 pm

That’s a good perspective Mark. Well good in the sense that it does give people something to think about and even better, a question to ask a PM they might be interviewing- average tenant stay, things like that. I will say, and this is a generic statement to business in itself and is a debated concept for sure, but ultimately there is more value/income to be had in relationship-building that there is in quick income. I totally agree PMs with this stance are hard to find, but I have one. I have a PM who deals mostly with long-term tenants and charges me basically nothing in maintenance. I have referred him so much business because of how awesome he is, I guarantee he’s made more from me than had he duped me out of nickels and dimes every month. That’s all a debate for another day, but I do see your perspective. The counter to it is getting a good PM whose goals are not the above, but I do understand they are harder to find.

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James June 7, 2014 at 4:51 pm

Ali,

I don’t know why you titled your article the way you did, because these are NOT LAME EXCUSES for not taking direct responsibility for rental property, i.e. investments and quite frankly I take offense (just a little, because I am otherwise a big fan of your articles). All of the items that you listed are LEGITIMATE reasons for foregoing a cash flow consuming PM and do it yourself.

I often find myself commenting on these articles written by BP bloggers feeling like I’m on an island, because I don’t have all of the problems that most other landlords (“rental property owners” is my preferred terminology) have. I think that this means that I am doing A LOT right, but I like reading the articles because I am always open to learning more, especially from the dialogue that the articles ignite.

Having said that, below is an e-mail that I received from one of my tenants about an hour ago:

James,

Good afternoon, we hope this email finds you well! Just wanted to send out a
heads up that we have a friend from Virginia who will be arriving later this
afternoon and will be staying with us until Wednesday. We wanted to make sure
that you knew!

Thank you,

-Brandon & Kate

This is how I manage multiple rental units (some SFRs) by myself without the headache and cost of a PM.

Screen your tenants or at least take an active role in the process and have regular direct communication with your tenants, that’s right, all of the units’ occupants, because you know what, if you do it right, you rarely if ever hear from them other than to get an e-mail like the one I posted above. A simple bi-monthly e-mail to check in with them is really appreciated. If something breaks, for example a water heater, I pick up the phone and call my trusted plumber. Why would I pay a PM to make that phone call? It takes me two minutes and then I go back to whatever I was doing. I have saved, saved and saved a lot of $$$$ by not having a cash flow consuming PM and the headache that goes along with dealing with them.

Some of my monthly cash flow just funded another nice 3 week trip to Costa Rica where I am house hunting for my retirement home.

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Ali Boone June 9, 2014 at 11:11 pm

Well James, only because I feel bad for offending you since you are a claimed fan, I’ll tell you that title was based on suggested titles all of us bloggers have, mostly with the intention of grabbing attention and getting people to read our blogs :) Unfortunately in this case, the way it came across gave a wrong impression of the intention, hence why it’s since been changed. So, hopefully you still like me and keep reading my articles! I’m pretty sure the word “lame” won’t be used on any BP blogs again anytime soon. It didn’t go over as well. Lol.

Back to business, here is the thing. You sound like you have an amazing handle on landlording and if I were you, I wouldn’t pay a PM either. The unfortunate reality though is, not everyone (in fact, most) will never be as good as you as a landlord. People have natural skills in different areas. I’ll tell you, if I dropped my PMs right now and tried to landlord myself, even if I put a full effort into it, it would be a disaster. It’s not in my blood. Nor is it an interest of mine. Because of those two things, I’m way smarter to let someone else run my properties. I do wish everyone was that skilled in landlording and had interest in doing it, but it’s just not how it is. So I agree with you that you should forego a PM, IF you know what you are doing and can see the same success in managing yourself as you have. Otherwise, be smart and understand your weaknesses and seek assistance (I was going to say ‘help’ but that makes it sound like I’m suggesting therapy). Outsource what you aren’t good at. It’s the only way to build anything. You are great at landlording, and that is super cool. Stick with it!

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Abbott Mary June 7, 2014 at 6:10 pm

Ali, could I ask you to play devils advocate and make a case for why you SHOULD you property management? Or do you think there is absolutely no reason for managing your own property?

PS that’s awesome that you’re a pilot!!

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Ali Boone June 9, 2014 at 11:15 pm

Thanks Abbott (or Mary?)! Being a pilot is quite fun, can’t lie.

Absolutely I can play devil’s advocate. I think if you have the time and interest in landlording, I think you should do it. All day long. It’s a really cool skill, it will teach you a ton not only about investing but also people in general as well, you can make a whole business out of doing it, and for a lot it is a really fun hobby even if it is not a business per say. If you own properties close by locally to where you live, if you are available to tend to the properties, absolutely manage them yourself.

It all depends on your goals. What do you want to be doing or have accomplished 5, 10, 20 years from now? Me personally, I want to be traveling a lot and have no obligations to anything so I’m free to meander around and do whatever I want with as little stress as possible. Because that is my goal, I don’t need to learn anything about landlording because a) I’ll never be one and b) I need to learn how to create systems so everything I have becomes as passive as possible so I am free to meander. Therefore, I need to be learning how to manage managers, not manage properties. But someone else may be completely different from me and their goals fit more with being a landlord now.

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Mike McKinzie June 7, 2014 at 6:22 pm

I am 54 years old, bought my first rental at age 19, and have owned rentals the entire time. I retired 4 years ago. Of my 25 rentals, 21 are Free and Clear. My average rent is over $1,000.00 a month.

It all really comes down to two simple questions. One, “Is Land Lording a job?” and Two, “Did you invest in Real Estate to get a job?” If you invested in Real Estate so you could quit your current job and land lord full time, more power to you. It is a fun job. I ran a PM company and dealt with it all, from death, murder, suicide, child drowning in a pool, houses burning down, and so much more. I have dug up pot plants in the backyard, thrown furniture out onto the driveway and let the DEA in for inspection. Personally, I have been in over 10,000 houses and initialed sales documents on over 5,000 sales as a Real Estate Broker. In other worlds, IT WAS MY JOB!!!

Here is the real kicker. Of the 25 houses I own, I have only physically seen 3 of them. Why in the world would I want to see one of my rental houses? That is next to the last thing I want to do. (The last thing I want to do is deal with a tenant) Remember, I have done it all already. I have shown more rental houses than I care to count. I have run more credit reports than I want to read. And I don’t want to wait until I am 80 years old to see the world. I want to see it NOW.

I have nothing against those who want to manage their own properties. But as Ali’s blog states, they are all LAME reasons. I pay someone to clean my house even though I could do it. I pay someone to mow my yards even though I could do it. I pay someone to wash my cars even though I could do it. I go out to eat often even though I could fix dinner at home. And the list goes on. I pay someone to manage my properties SO I DON’T HAVE TO, even though I could. And while I stated that I have fired five PMs in the last six years, I could also say that I have fired five PM’s in the last 35 years. When the market went bad in 2008-09, some of my PMs crashed as well. It was a complete shake out of the REI business back then.

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James June 7, 2014 at 7:25 pm

Mike,

More power to you! I think that if my main job was in real estate, I would want to distance myself from it as much as I could if possible too and I probably will in my retirement.

Although my rental property business is not my main job, I still like running and managing it myself for all of the reasons that you said you don’t want to do it. So, I guess the saying, “To each his own” applies. When I start hating my main job, maybe I will just manage my properties. It’s so easy to do right now that I enjoy it, but I do not deal with all of the things that you listed. Yikes!

However, managing my rental property business has never stopped me from traveling for fun. I even handled a tenant question from a hotel lobby in Zambia. With modern technology, most anything is possible. The tenant was so happy that I got back to them so quickly and she had no idea that I was in Zambia getting ready to go on a safari.

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Ali Boone June 9, 2014 at 11:17 pm

Mike, we should be friends. Lol.

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Ali Boone June 9, 2014 at 11:18 pm

James, I want to hear more about the Zambia safari! I hear the safaris are where it’s at for adventure. I’ve heard a ton about them lately for some reason.

I do agree ‘to each their own’ and there is truly no wrong answer. Only because I’ve been in this situation before do I ask, but what if a storm had crashed that house while you were in Zambia. How would you have handled it without being able to get there?

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James June 7, 2014 at 7:01 pm

Sharon,

Thanks for your responses to my posts. From your post above:

” the whole idea that PM’s are universally, across the board, bad. That is a ridiculous over-generalization, and I can tell you from experience, as Ali can, that there are plenty of good ones out there. I would just prefer to find them before I really need them, and so I budget for them and have become expert and screening for them.”

I totally agree with you not to over-generalize and to find a PM BEFORE you need him/her. However, I am a believer in “Do it yourself, if you can and want to!” I have sold homes without a realtor etc. when people (mostly realtors) told me that it couldn’t be done. Some people would rather not do things themselves for whatever reason and I respect that. My point, really, in this conversation, is to let property owners know that there are other property owners out there doing it well without a PM running a multi-unit business, not just a “hobby” (I don’t know at what number of rental units a hobby becomes a business). I enjoy managing my business myself and as long as I can do it successfully, I will continue, but you are right, at some point (retirement), I will need to hand it off to someone or sell it all.

I took a work assignment out of the country for 4 years. A PM was hired. I thought all was good and when I came back to the States every 6 months for 2 weeks, I insisted that he go with me to each and every property to check furnaces etc. and review and repairs that had been done and receipts paid by me. When I got home, several tenants had dogs when it wasn’t allowed and claimed the PM said it was okay (he just wanted to fill a unit and get me off of his back). An AC unit was installed that I found out had been stolen from a construction site etc., the PM was accused of peeking through the window when a female tenant came out of the shower resulting in her sending me an angry e-mail wanting to terminate her lease immediately etc. He was busted taking tenants from my rentals and putting them in rentals of another property owner that he was working for, just so that he could get a fee for filling a vacate unit etc. Since then I have done everything myself with a good system resulting in a lot fewer headaches and all of the cash flow for myself. No PM required.

I agree with you to FIND A PM BEFORE you need him/her. I have done this now and stay in touch with him. Just in case….

By the way, I recall you mentioning that you are in Belize. If you have not been to your properties all the time that you have been in Belize, when you finally come back and check on them, you will find out that your PM was not as honest as you thought and you may be in for some surprises. Just saying…!

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Sharon Tzib June 8, 2014 at 8:43 am

Yes, James, there’s bad apples in every profession. Formerly I owned a pool maintenance company, and the stories I heard from our new customers about our competitors were atrocious, but it didn’t mean people stopped hiring us just because they’d had a bad experience with them. There will always be a need for service professionals, and as such, there will always be horror stories since good service is incredibly hard to find in most industries. I hear your point though and agree – if you like doing it and it has worked well for you, no reason why you shouldn’t share that point of view with others. I guess Mike, Ali and I have taken the minority view in this post, but that’s ok lol!

Yes, I’ve been living in Belize for the last four years. Will be returning to the States soon (Houston, specifically), but have no plans visiting my property in Indiana. Every year I email the tenants and let them know the PM will be contacting them to do an annual inspection, HVAC cleaning, and lease renewal, as well as take pictures, and I ask them how things are going. I have a very good idea what condition things are in, and since I get that rent check every month, I’m pretty sure the house isn’t falling down lol! Thanks James for the spirited conversation :)

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Ali Boone June 9, 2014 at 11:20 pm

Sharon you live in Belize and we haven’t talked about this?! We should definitely chat offline. You know I’m a Nicaragua nut and I’m always looking for a new place outside of the US.

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Sharon Tzib June 10, 2014 at 9:05 am

Oh, I thought you knew, Ali. Feel free to PM me any time if you want more info on Belize – would be happy to help. I’m in Placencia now but have lived all over the country and at one time owned a property management company here for two plus years…

Sharon Vornholt June 7, 2014 at 8:29 pm

Ali –

Another great post. You are living proof that using property managers can free up your life and allow you to run your business “hands off” for the most part. You make some great points for letting go of the reins and hiring a property manager.

Sharon

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Ali Boone June 9, 2014 at 11:20 pm

Thanks Sharon!

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Rob K June 8, 2014 at 7:00 am

Wow,

Reason #5: you don’t need to know how to “fix wonky toilets”. As if that is what property management is all about.

I don’t think you can really make a reasonable case that not having the experience of self managing does not really help in managing managers. It is probably the most helpful experience one can have in gaining the skills to manage a manager.

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Ali Boone June 9, 2014 at 11:21 pm

How so Rob? Explicate.

And the fixing wonky toilets was really intended to be representative of all of the tasks involved in landlording.

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Joel June 8, 2014 at 8:48 am

I think it was a great article.

How intensive management is going to be is the quality of the property being bought going in and the tenant base.

With the little houses you tend to get a pot luck of fly by night PM’s that manage more on the side and close houses in between. One minute they are ON IT to make that small coin and the next they care nothing about your property to close that house sale.

In commercial real estate the properties are much larger and the PM companies are mainly full time professionally trained companies with a software and structure to manage the properties. My clients are very high net worth and do not manage themselves. I believe many buy houses starting off as investors because it’s all they can afford. If they cash flow 100 a door say and own ten properties after mortgage they are doing 1,000 a month pre-tax profit and self managing. That’s not the best use of someone’s time in my book.

Even if you believe you want to self manage build in that cost anyway on buying. That way later you are not shaving 10% off the top of your expected profit when you want to use a PM. You can put controls in on the releasing mechanism to align you and the PM’s goals. It doesn’t make sense to do a 10 an hr job when you make in the 100’s per hour or more with your job or business.

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Ali Boone June 9, 2014 at 11:22 pm

Great put Joel! I agree.

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Chuck H June 8, 2014 at 11:25 am

Bingo. Nice post. Im enjoying my Sunday afternoon at home because i have professionals running my properties. Ive NEVER taken a maintenance call. There is no “I” in team.

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Ali Boone June 9, 2014 at 11:24 pm

Ha, Chuck. I like that. Yeah, I’ve never taken a maintenance call and have no desire to, ever.

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Ryan S June 8, 2014 at 11:42 am

When you use the example of the $1000 rental costing you a mere $100 a month, it sounds very tempting….”just a hundred dollars a month for your time and freedom!” But more realistically, landlords may have a dozen or more properties that need to be managed. If I were to turn all of my properties over to a PM and pay them 10% per month, I would lose out on about $1200 bucks a month. That money could go a long way in my own life.

As another poster mentioned, I have heard nothing but horror stories about Property Management companies. My own brother just had a nightmare experience with one up in Denver, and I kept telling him “now you see why I put so much time and effort into my rentals to do them the RIGHT way.”

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Jim June 9, 2014 at 10:01 am

exactly!

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Ali Boone June 9, 2014 at 11:25 pm

Ryan, you give a good argument for managing your own. Again tho, it’s about finding the right PM and as far as the financials, the time and effort investment doesn’t exponentially change with the number of properties. The same theories all apply no matter how many properties are involved.

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Pete T June 8, 2014 at 4:38 pm

I don’t think its LAME to not use a PM. I don’t and have experience w/ ones that weren’t great (as nice as I can say it). I think it depends more on your situation IMO/
1. I’ll Save 10% a Month by Not Paying a Property Manager
It will cost you 10% plus any other BS fees. On top of that you will still have the stress, will likely still need to go to court, and have a middleman to talk to instead of straight to the source. I prefer direct as I can usually communicate better and quicker w/o a go between that has other things to do and hours they work.

2. I’ll Take Care of My Property Better than Anyone Else Ever Would…

That may be true. And no one will definitely care as much about it as I do. I don’t need to make everything perfect, but I do want to make sure everything is being taken care of. On top of that- some PMs will not be as concerned w/ certain things as I am, as I am concerned about more than just the rent.

3. There’s no Way for Me to Know my Property is Actually being Taken Care Of!

Yes there is. Keep your eye on it. I have seen properties were the PM had no clue of drug use or something as obvious of pets on the property despite all the evidence. Why would I trust someone else to ensure my property is being taken care of when I can do it myself, as I would want to anyway.

4. Property Managers will Make Up Maintenance Requests so They can Upcharge Me and Make More Money

I don’t have experience w/ this, but have friends that do. Also, I can do and have contractors that I KNOW the quality of their work and the cost associated. Why would I waste those relationships that took time to find and build?
5. I Need to Understand How to Landlord Properties so I Know How a Property Manager Should Manage Them

Really? You do? I disagree. Maybe not necessary, but it does provide knowledge and experience that can be helpful. It definitely doesn’t hurt or is a reason to get a PM.

6. I’m a Control Freak so I Need to Manage Them Myself
Maybe- but I am not opposed to using a PM if I needed it (volume, out of area, etc)

The more you know, the better you are prepared. Knowledge gives you a better basis for finding professionals when you need them by knowing what to look for, what to ask, etc.

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Ali Boone June 9, 2014 at 11:29 pm

Pete, sorry the title was misleading. In no way was I inferring anyone is lame for not using a PM. The ‘lame’ was in regard to the excuses as to why not. But as said earlier, that word got taken very out of context, hence why it doesn’t exist anymore :)

I agree about the knowledge part. There can be debate though on what knowledge is required. If I spent the time required to learn the details of how to do everything a landlord or manager does, I might as well just continue to be one myself rather than hire someone out. The time it would take me to learn all that would be more than what it would take for me to fix a few mistakes here and there with a manager.

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Sharon Tzib June 10, 2014 at 9:09 am

Ali, the word “lame” is still showing up in the permalink; might wanna let management know to fix that :)

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Rachel June 9, 2014 at 12:30 pm

Nice topic for discussion, Ali!

I do not think you are taking sides on this issue at all – you’ve always been one to respect the opinions of others. Upon a more meticulous reading, your message is obvious in your introductory and closing remarks.

Personally, I believe everyone has different experiences – what may work for someone else may not work for another and vice versa. Unfortunately, there are folks with strong opinions who force them on others. Consequently, some may take this as advice which may lead to ineffective results.

As always, I enjoy reading your thoughts and perspectives. Thanks for sharing! :)

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Ali Boone June 9, 2014 at 11:31 pm

Thanks Rachel! I always do try to make it clear I respect everyone’s methods and preferences, but inevitably people miss those statements. Oh well, I can only try my best :)

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Keith Weinhold June 9, 2014 at 7:38 pm

Ali,

Nice article. Why would one self-manage for very long when there is a full palette of life experiences out there?

Sure, one will probably save money self-managing. Many that do so have a scarcity mentality and neglect to consider the opportunity cost.

“You are only as wealthy as your lifestyle.”

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Ali Boone June 9, 2014 at 11:33 pm

Keith, I think we should be friends as well. I love meeting people with your mentality. I’m huge on seeking out cool life experiences, which managing rental properties is not one of. I get the side of managing your own if that is something you enjoy doing, but man it takes up a lot of time and brain power that could be used towards other things. But not everyone is that adventurous, and that’s okay. I know I wouldn’t trade it for the world.

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James June 10, 2014 at 12:51 pm

Ali,

Thanks for your responses to ALL of my posts!

Yes, I am still a big fan of yours and always will be. I would have responded earlier, but I was busy fixing ‘wonky’ toilets…just kidding, I hire toilets out, unless it’s something really simple. I could replace them, but I don’t like to do the work, so I totally understand that you don’t want to deal with it either or any aspect really of your rental properties. However, a PM usually doesn’t do the work either because he doesn’t like it anymore than you or I. He calls someone to do it.

The PM that I had was recommended by a real estate agent. He was a dud and since then I have been able to PM my own properties and hire out the stuff that I don’t want to do. I guess that’s where we need to decide what the duties of the PM are. Is it simply screening, checking in and out and evicting tenants (which I do myself except for the evicting). If your PM doesn’t fix stuff and simply calls people, well I can make calls and I don’t mind doing it. One time a tenant said the ice maker in the freezer was broken. Over the phone, I told her to lift the metal bar and sure enough it began making ice again. Ok, this might annoy some rental property owners. I don’t mind these calls. I don’t need to pay someone to handle this. Rent collection is on autopilot and if someone is late, I call them. My bank creates a report for me showing if all rents are collected and which ones are outstanding. I rarely have to call anyone and I manage multiple units.

I’ll admit, I like dealing with tenants, because I pick good ones. To answer your question, I have had a bad tenant or two, but never bad enough to evict. I learned from all of those situations and feel like I’m finally an “expert” landlord (rental property owner) and don’t need a PM. As Sharon suggested, I have a PM who I stay in contact with, just in case…. One time when I was traveling, there was an emergency at one of my properties, not a tornado, mind you, but a fire-related emergency. I called a fellow landlord and he met the fire department at the property. Everything else, insurance etc. was taken care of long distance. No PM required. My rolodex is gold! A steak dinner was all I needed to repay that fellow landlord too!

The Zambia trip was a way to burn some of my frequent flyer miles. Now, my trips are a little less frequent and for not as long…2 – 3 weeks max. I understand, if you don’t ever come back to where your properties are and you are permanently somewhere else all of the time, that a PM would be essential to screen tenants etc. However, I did this also for a while when I was working in Europe with some help from a friend. I placed the ad, I screened the responses, i.e. court records check, google etc., I called the top 5 chosen and brought it down to 3, I called a friend and asked them to go to that particular property and open the door. Rental applications were done online, a background check was ordered online and my friend checked-in the new tenants (30 minutes of her time). I did this from Germany and the tenants did not know and didn’t need to.

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Ali Boone June 10, 2014 at 7:48 pm

Hey James! Well my only response is, I bet a lot of people would love to learn landlording from you! You sound like you really have a handle on it. I applaud that and give you total props. I know I wouldn’t be able to do it personally, I am far away from my properties all the time for one but it’s just not in my blood for two.

But, for the record, my PM does do maintenance. Even if he has to send a handyman out, as long as the work takes less than 90 minutes, it’s free :)

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LaShelle Smith June 13, 2014 at 3:49 am

I’ve been going back and forth about would I want to manage myself or hire a PM…good points on both side. Then you referenced Ford. He was involved in a lawsuit where the lawyer was questioning his intelligence. His response…”If I should really WANT to answer the foolish question you have just asked, or any of the other questions you have been asking me, let me remind you that I have a row of electric push-buttons on my desk, and by pushing the right button, I can summon to my aid men who can answer ANY question I desire to ask concerning the business to which I am devoting most of my efforts. Now, will you kindly tell me, WHY should I clutter up my mind with general knowledge, for the purpose of being able to answer questions, when I have men around me who can supply any knowledge I require?”

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Ali Boone June 15, 2014 at 6:03 pm

Ooh LaShelle, I LOVE that! I’m actually saving it to refer to later. Thanks for sharing!

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Loren Whitney June 20, 2014 at 10:02 am

#4 is the biggest fear of mine. It’s sad to say but I don’t trust most of the property managers I’ve met. I always feel like there’s something they’re not telling you. I hope to keep my perfect tenants for as long as possible.

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Ali Boone June 20, 2014 at 4:30 pm

I hear you Loren. It can be tricky (and annoying). The best way I’ve ever gauged if my managers are ‘keeping something from me’, and this sounds naive to an extent but it works, is to just feel if things are going right or not. If I’m getting paid regularly on schedule and my manager calls me with any problems, I don’t know what else he could be hiding.

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Keith Weinhold June 20, 2014 at 10:09 am

Fear compels some people to manage their own property and tenants.

Education dispels fear.

Robert Kiyosaki says that the chief difference between the wealthy and the poor is how they control fear. He’s right.

Learn how to find a good property manager. Adopt an abundance mindset. Wealthy people don’t manage their own property.

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James June 20, 2014 at 10:59 am

Keith, thanks for your opinion and it is nothing more than that.

I hope that you aren’t out professing what the wealthy do, if you are not, in fact, a wealthy person. Many bloggers are posting nothing more than their opinions, sometimes without practical experience or knowledge and education themselves on the matters that they are writing about.

Most rental property owners do not know the local laws in their state and simply make up the laws themselves until a savvy tenant takes them to court. Then they learn the hard way. A PM can be useful if one does not know the law and does not care to be bothered by it. In terms of education about managing properties, RE investors hire PMs for that very reason…lack of education on how to manage their real estate investments. They don’t have the education and don’t want it, so they hand it off to a PM and pay them (what they think is nominal fee) some of their monthly cash flow to do it, while they travel the world….

I’m not going to talk numbers of units, cash flow and how big my house is on a blog, because it is irrelevant, each property owner manages their own business the way that he/she sees fit AND the way that is most profitable for them. I manage my own properties, not out of fear, but with the goal of maximizing cash flow in mind.

I really have to laugh at the people who say that they cannot travel or look for more deals if they have to manage their own properties. Spend your time finding an owner of properties who manages them him/herself and learn from them, not from people blogging their opinions and telling you to do otherwise. If hiring a PM is the easy way, then do it, but don’t tell me or anyone else out here that they are doing something out of fear or lack of education. I’ll be waiting for you to publish your book on how the wealthy live.

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Ali Boone June 20, 2014 at 4:39 pm

I agree Keith and those are the principles I personally live by. I do think there is another side of it though, and that is some people may just want to manage their own properties and fear has nothing to do with it. There is also an argument to be had about what constitutes wealth. You and I clearly have the same definition, but other people don’t need as much or want as much to consider themselves wealthy. And not everyone wants excessive abundance. I do, but not everyone wants it.

I love your statements though and I love how to-the-point they are. They even gave me a little refresher in thinking of what I work towards every day! Thank you.

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Keith Weinhold June 20, 2014 at 12:15 pm

Nice post, James. I don’t agree. No one has to.

One can choose to “maximize cash flow” or “optimize life”.

Provocative posts spur point-and-counterpoint. In fact, what better way to have a “discussion”?

Yes, you may leave your e-mail address at my website for the book. Thanks for the interest!

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Ali Boone June 20, 2014 at 4:39 pm

I’d buy your book Keith :)

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James June 20, 2014 at 12:29 pm

Keith, you ‘assume’ that I am not optimizing my life? Again, your opinion. You have not a clue and for you to post such a statement speaks volumes about your lack of knowledge and education about real estate investing. But I guess you are an expert and we should listen to you because you are a blogger?

By the way, the comment about the book was sarcasm…guess you didn’t get that. I’m not surprised.

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Ali Boone June 20, 2014 at 4:36 pm

James, I really don’t think Keith is trying to attack anyone. There are different ways to do everything in the world and everyone has their own. He does his, you do yours, there is no right or wrong for either side.

In defense for your side of things (since I live by Keith’s principles), I would say that more than jumping on Keith’s accusation, try to inform the rest of the readers of the other side. I agree that Keith is correct in that fear can lead to people managing their own properties, but I think there is another reason people manage their own properties and that is because- they want to. I think that is the category you fall into and there’s nothing wrong with managing your own properties, it’s all in preference. But there is a large group out there that do fall into the fear category.

Education is the best way to stand your ground. I’m not trying to stand up for Keith, I don’t even know Keith personally, but I just don’t think he was meaning an attack. And I’m pretty sure his book comment was sarcastic back.

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James June 20, 2014 at 5:25 pm

Ali, with all due respect, I know that I am not going to change anyone’s mind who has chosen to use a PM and I don’t want to. I respect others’ choices about how they manage their RE investments.

Having said that, I would never say that people in general who don’t use PMs do so out of fear and lack of education or that it’s due to “lame excuses for doing so”. When I bought properties (and inherited some) many years ago (perhaps before you or Keith were even born) I was fearful about managing them myself. But I don’t know of anyone who becomes the head of a large corporation without having to work their way up the ranks and learn the business. You chose to buy some properties and hand them off to a PM. Am I to think that is because you were afraid of doing it yourself because of your lack of education on how to manage them? I don’t know. It doesn’t matter either. You made your choice and you are happy with it. I am in this discussion to support those who manage their own properties (some of whom, like myself are even working a full-time job). I support their decision to do so and would never say that they are acting out of fear or lack of education. On the contrary.

I do not own a lot of slum properties that I paid $25,000 for just for cash flow (half of which would go to evicting criminals, paying for repairs due to tenant damages, vacancies, a PM etc.) My properties are $250,000+ and attract top-notch tenants (thus I do enjoy interacting with them…they are professional people with interesting careers). I don’t have constant calls for repairs, the cops being called to the property, vacancies etc. all of which would require a PM to handle or I wouldn’t have a life. My properties are on cruise control because I manage them myself and it took years to perfect it. I have more cash flow for more deals and for more travel. If a tenant calls about something, I have a perfected system in place to handle it. I don’t need a PM to make a phone call etc. PMs are useless to me and my life is better for not using one. Again, I don’t need one and feel quite confident that I am “optimizing” my life.

In regard to fear, since that was brought up by Keith, I was never more afraid than when I took the referral of a RE agent and hired a PM. He was lousy and if you think that your PM is giving you all of the information about your properties, well that is a wonderful world to live in. I thought so too when I was touring Prague and Venice. I put my properties out of my mind, but while I enjoyed myself, my well run properties gradually turned into places that needed lots of maintenance, vacancy rates went up etc. All due to the PM and by design! It was his job security and if you believe otherwise, again you’re in a different world than I am.

If bloggers’ sole intent here is to be “provocative” (Keith or you, Ali by choosing words like lame in your title, since removed) just to illicit responses to say “look my blog gets a lot of traffic”…well that’s pretty cheap. I am done and tired of this thread. Let it die a peaceful death already.

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Ali June 26, 2014 at 2:39 pm

Sorry James. I think I speak for BP in general when I say that the goal is not simply to drive as much traffic as possible to the blogs, but rather provide helpful and educational material so as many people can learn from it as possible. Traffic is great yes, lots of comments are great, yes, but neither of those supersede the intent. As far as the original title, there was a miscommunication about that internally and in no way was it ever intended to call anyone lame.

As far as the fear, sorry you misunderstood. I tried to make it very clear that fear and lack of education were simply the cause of some of the cases, certainly not all. A lot of people manage their properties either because they just want to, or they enjoy it, or they aren’t comfortable leaving it to someone else, and that is absolutely okay.

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dzr June 25, 2014 at 4:36 pm

What a load of rubbish. I manage my rental properties better than any rental agent ever could…

1) Tenant screening. I personally show my properties and appear to just chat to prospect tenants. Actually I’m probing and interviewing them for inconsistencies, untruths, exaggerations, etc. I also not only do the normal checks I also visit them at their current home to see how they live rather than rely on their references and income

2) Managing my own property means I can schedule works (mostly small stuff) so I don’t need to announce an inspection. Consequently I get to see how the tenants actually rather than how they pretend to live.

3) Never met an agent yet who doesn’t have time pressures that lead to low focus on my properties. They just don’t get the time to care for stuff the way I do.

4) Since all my properties have been completely renovated by me I know my property better than any agent, builder or the like. I’m therefore better position to know what to do when things go wrong

5) Since I provide a quality home at a slightly less than market value (passing on the agent saving) I get to choose my tenants. It means not only do I get better tenants but they also stay much longer than the average. My current average is 5 years.

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Ali June 26, 2014 at 2:43 pm

There is no doubt that a property will always be managed better by the actual owner/investor than by a property manager. Well, in a lot of cases at least (I guess it’s not safe to assume all owners are that on top of things). But again, it just depends on the goal(s) of the owner. I would rather have my properties ran at 80% perfection than 100% perfection if it means I don’t have to deal with them at all. Personal preference only, and no way is right over the other.

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Shaun June 26, 2014 at 3:06 pm

Actually I think this is the comment that really hits the nail on the head.

It isn’t that people that manage their own properties are making a mistake or anything like that.
But if they are really good at it and feel that it is more important than freeing up the time to do other things then that is their priorities. Also of course if you actually enjoy it then that is different again. If you actually take pleasure in it then that is different since getting rid of those duties isn’t something you want to do.

At the same time you see lots of self managed rentals where the owners don’t have ANY idea what they are doing. Those kind of people are probably not on BP. This is the mom and pop types that don’t know all the detailed laws and what not and either have just had decent tenants for years without any issues or get burnt and burnt bad then they answer a yellow letter. :)

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Jad July 6, 2014 at 2:16 pm

Just a few comments to add. (Not like anymore were really needed)

The only part of the article that I have an issue with is the mentioning of the loss of 10% net income like it is not really a big deal. That loss of 10% comes straight out of profits so it is a very big deal.

When switching to a property manager your profitability will drop by 20-40% depending on the market. If you then add in fees and expenses (evictions, re-renting, maintenance markups, and added time during tenant turnover) having a property manager could possibly reduce profits up to 50%!!!! That is a really big deal and should not be taken lightly.

Another point in considering property management is scale. 2 properties is a far cry from 20 which is a far cry from 200. At some point everyone needs help. So for many of us PM’s are eventually a necessity.

Now, a positive about having a property manager is that they are the bad guys. Having a PM means I do not have to listen to any sad stories and rough times then at the end of the story then say ‘I still need the rent:’

For me being hard and firm with tenants is often the hardest aspect of being a landlord. Sometimes there will be tenants (who are good people) really going through tough times and it is hard to be all business then. Having a PM keeps you from getting involved emotionally.

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Ali Boone July 9, 2014 at 2:36 pm

Great points Jay! Informative.

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