6 Excuses for Managing Your Own Rental Properties
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.
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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.
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.
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!