Personal Development

Why I’ll Never Self-Manage My Rentals Again

Expertise: Personal Development, Real Estate Wholesaling, Real Estate Investing Basics
90 Articles Written
Female hand holding key house shaped keychain.

The past few years I’ve been getting my hands dirty with rentals. I’m mainly a wholesaler but wanted to branch out.

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While I live in the Phoenix metro area, I found I was better able to find solid deals in the Chicago market. I discovered this when doing some virtual wholesaling. The numbers on the rentals were seriously ridiculous.

Often I’d encounter motivated sellers who were willing to offload their houses for $40K to $50K—despite the fact they were bringing in $1,500 to $1,800 monthly in rent. Amazing right?! That’s the Midwest.

I just couldn’t pass up the prices and locations. These were not D and F neighborhoods. So, I took the plunge and figured I would manage the rentals from afar.

Going into it, I had minimal knowledge about being a landlord and managing tenants, especially from a distance. But I challenged myself to figure it out.

Lots of podcasts (specifically BiggerPockets’ podcasts!) I was listening to at the time talked about other long-distance landlords who were making considerable strides as investors. It sounded like they were able to do so because we live in the age of technology.

Related: How I’ve Made Over a Million Dollars Listening to Real Estate Podcasts

It seemed like something I could definitely do, too! And so I did.

I started with a small 2 bedroom/1 bath turn of the century raised ranch. It was not in the best condition, but I figured I could get between $675 to $750 in rent with a little sweat equity.

After a light rehab, I marketed the property. I was going back and forth to Chicago a lot while all of this was going on. That part, I didn’t like.

man on cell phone in airport wheeling suitcase

My aim was to create passive income, but I found myself being away from my family for weeks at a time. I knew, however, that once it was fixed up and tenanted I would accomplish my goal.

The property turned out to be a success! I managed it for years from 1,500 miles away.

Full transparency, I had one bad tenant who ended up breaking her lease, but while she was living there, she did pay her rent consistently. It still equated to success in my book.

So, I purchased more and did a seller carry back on another property. I was all in at that point, doing wholesaling in Phoenix and Chicago and earning some passive income on the side.

Everything was great—until it wasn’t. As I continued to grow my portfolio, I was traveling more and noticed my wholesaling business began to suffer.

I realized that in order for me to scale, I could not manage these properties from a distance anymore. I had to pass on “my girls” (as I affectionately referred to my properties) to a property manager.

Related: When To Hire a Property Manager

This change is taking some getting used to if I’m being honest. But between the time I was away from home and the money I was spending on travel, I know I’m actually coming out ahead. Also, I could not continue to grow being a one man show.

closeup of hands piled on top of one another indicating teamwork

I know there are other investors just as hell-bent as I was on doing it themselves. When starting out, I definitely do think going about it that way is a plus. However, in order to grow—if that’s what you want to do—a great supporting cast is needed.

Yes, I once subscribed to the “save a few dollars and do it yourself” philosophy. Not anymore though.

I’m refocused on marketing and negotiating these days, the main trades of a wholesaler. And I have my rentals to thank! They taught me a very valuable lesson about the importance of establishing a team.

Don’t make the same mistakes as me! Learn to let go, and find quality help.

Do you landlord? Or use a property manager? Which do you prefer and why?

Let me know in a comment below. 

Marcus Maloney is a value investor and portfolio holder of residential and commercial units. He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. He has also converted some of his deals into cash-flowing rentals. Marcus holds seven rentals, two of which are commercial units. He’s even purchased a school, which was converted into a daycare center. His overall goal is to turn what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (buy, rehab, rent, refinance, repeat) strategy to increase his portfolio without any money out-of-pocket. Marcus has been featured in numerous podcast such as the Louisville Gal Podcast, The Best Deal Ever Podcast, The Flipping Junkie, and many others. He contributes content regularly to his YouTube channel and blog.

    Gordon Cuffe Investor from Roseville, CA
    Replied 8 months ago
    I used to manage my rentals In Nashville from CA only because the prior property manager was terrible. It worked for awhile then when the tenants stopped paying that is when the stress went through the roof. My other problem was that I could obtain a tenant fast ,however, my screening process was not as good as it should be. I finally found a good property manager and I have been with him for close to ten years. It is easy to self manage one or two properties but if you ever want to build a good sized portfolio ,it is impossible to manage yourself. When you find a trustful , competent property manager dont let them go. Dont try to save a couple bucks by asking for a discount in fees.
    Marcus Maloney Rental Property Investor from Queen Creek, AZ
    Replied 8 months ago
    Gordon, You hit the nail on the head. I managed for a while and it worked out for a while but I knew in order for me to grow my business and expand I needed help. I hope I have the same success having a property manager for 10+ years.
    Janice G.
    Replied 7 months ago
    One of the biggest heartaches we have experienced as CA Landlords for close to 20 years, without too many problems, involved our worse Tenant ever – a professional couple! We had no idea they would be setting up a business (not a simple computer-type one) in our garage – without asking! (I shouldn’t be surprised, but it had never happened). Our address was what they listed for their LLC. We live 50 miles away, so it took 2 yrs to discover this! Our Insurance Agent was livid! But what hurt just as much is we worked very hard making the home very clean and very presentable. Only to find when they broke their Lease early, all the firm details we put into our 33-page Lease (yes, they were so bad, we realized we needed this much), was worthless. In CA, we were warned Landlords are apparently the bad guys, even if the Tenant has broken the Lease, refused to pay late rent, made outrageous allegations, and kept the place a very big mess.. Who promptly advised us to There were deep scratches they left on their way out in one of our laminate floors, and we were advised to let it go. We suspect they had a 3rd (unlisted Tenant) living with them. We were told to just forget it all, and give someone 8% of our income to take over. Doubt we will ever put so much work into making a place immaculate, thanks to this awful experience. We knew we had to turn this place over to someone else, but nobody seems to care as much as you do. And we’ve been told that is one of our mistakes. Opinions?
    Saffron Bright-Rawlings Flipper/Rehabber from Eugene, OR
    Replied 8 months ago
    Hi Marcus, My husband and I both have recognized the incredible value of rentals in the Midwest, but my question is what criteria did you use to find a reliable and good property manager there? My brother had a property manager who seemed to be doing a good job until the tenant of 3+ years moved and suddenly everything went to pot… Also, if you were to buy properties there that needed rehab (and you didn’t want to do it yourself) how would you go about finding reliable contractors/handymen? Love your post!
    Marcus Maloney Rental Property Investor from Queen Creek, AZ
    Replied 8 months ago
    Saffron, It is a little easier for me since I am from the Midwest and I still have a lot of contacts. I’m new to the relationship with the property manager so the jury is still out on that we will see how it goes. As far as contractors, again its my network and resources. Sorry I couldn’t give you an earth shattering answer but its all about relationships. I do still fly in if there’s a big job just to peak in and see how things are going until the property manager and I have the same eye for rehab and repairs.
    Mike McKinzie Investor from Westminster, CO
    Replied 8 months ago
    As a freelance Business Consultant, the first thing I tell anyone is to MANAGE YOUR TIME. in other words, ask yourself if what you are doing at the moment is bringing you the highest and best return for the time invested? It amazes me how many REI brag about saving $100 Roto Rooter bill while missing out on a $100,000 investment opportunity. I pay in excess of $25,000 annually in Management fees and do it gladly. Because I make ten times that in investments since I have time to research and find the deals.
    Marcus Maloney Rental Property Investor from Queen Creek, AZ
    Replied 8 months ago
    Well said Mike. We have a habit of thinking saving a buck is important but our greatest commodity is our time. Once its gone its gone. It took me some years to learn that but I finally got it.
    Isaac Agbolosoo Rental Property Investor from Grosse ile
    Replied 8 months ago
    I disagree with most of the issues the writer mentioned. I manage my own properties and work full time as an Electrical engineer. When systems are set up correctly, self-manage runs smoothly.
    Marcus Maloney Rental Property Investor from Queen Creek, AZ
    Replied 8 months ago
    Isaac, I had systems in place and it worked great however I knew I needed to expand and do more deals so instead of management I focus on acquisitions now. Also I plan to manage more than I can handle so it was important for me to start working on processes for growth.
    Isaac Agbolosoo Rental Property Investor from Grosse ile
    Replied 8 months ago
    Marcus, That’s understandable. On the flip side, property managers could up-charge for issues that need a fix. This often happens when the property is miles away … I will recommend setting up your own property management company and have a friend/relative help out..
    Eladio Perez
    Replied 8 months ago
    I have been thinking about that same issue, setting up your own property management company to do in house management. Is this something you have done? If so, do know of a course the manager could take to learn? Or where can he/her learn all the skills needed for the job?
    Isaac Agbolosoo Rental Property Investor from Grosse ile
    Replied 8 months ago
    Eladio: Previousely, I used PM company, but I now manage all myself. In Michigan, a licence is not required if you are manging your own properties. You could easily setup an LLc to manage, colect rent etc
    Domenick T. Investor from Springfield , New Jersey
    Replied 8 months ago
    Do it yourself at first to build a knowledge base and save the cash but then turn it over to a professional when you are ready to scale.
    Susan Maneck Investor from Jackson, Mississippi
    Replied 8 months ago
    I am amazed you were able to self-manage properties at a distance as well as you did. Most of my properties are in Mississippi but I spend a few months in California each year. It is amazing how quickly my tenants fall behind while I’m gone. Usually they catch up when I come back, but when it has gotten too bad, I’ve had to turn the property over to a manager. I still self-manage most of my properties but the more time I spend out-of-state, the more of my portfolio she is likely to get.
    Adam Bonoff
    Replied 8 months ago
    I understand why alot of people would not want to self manage and in your case trying to manage out of state is much more difficult. One thing that I have not seen discussed when people talk about self managing v hiring a property manager is the tax treatment can go from passive investor to professional investor which is huge to your bottom line. If you manage less than 50 units total in one geographic area it may make sense to do it yourself especially if you have good systems in place. This doesn’t mean you paint every unit or make your own physical repairs or cut the lawns, it means you actively supervise all the work and probably qualify and lease up your own tenants, collect your own rent.
    Kevin McGuire Rental Property Investor from Seattle, WA
    Replied 8 months ago
    I like the mental exercise of asking, “What would I need to do in order to triple what I’m doing?”. You can pick a different multiplier, the notion is to pick something big enough that it’ll force you to scale the processes you’re following. This allows you to design for scale in advance of needing it so that you can grow into that scale with less friction. That’s what led me not only to having a property manager but also delegating clear areas of autonomy to the PM. This allows me to focus on my non real estate day job and reduce stress.
    Elaine Christian from 1950 Port St Lucie Port St Lucie, FL
    Replied 8 months ago
    As a licensed property manager for the past 30 years, I have had investors come to me for my services after some very difficult and in some cases costly attempts to self manage. Having great investment skills and insights does not necessarily mean you have the time, the knowledge or the temperament to self manage. Handling day to day activities of landlord-tenant relations is not for everyone and it can be frustrating and time-consuming. Before you decide to self-manage, ask yourself where your time and energy is best spent. Do you want the 3 AM my toilet is clogged calls? Do you want to have to personally chase down your rent every month and post the appropriate notices in person? Do you know the landlord-tenant laws of your state well enough to keep yourself out of trouble? Do you know the best and most cost-effective methods for screening prospective tenants? Unfortunately, just as in any profession there are some less than great property managers out there. I’ve heard the horror stories. If you decide to use a property manager be sure to interview a few in your area before you commit. Treat it as you would any job interview. As for rates, I personally give discounts depending on how many properties an investor is going to contract with me. Ask whoever you are considering what their policy is as far as rates and discounts. Ask about their tenant screening procedures, property inspection schedules, and owner reports and accounting systems. Not everyone is cut out to operate their own rental properties. Ask yourself what you enjoy doing, what you are best at and then decide if you really want to use your time and energy doing self-management. Some investors enjoy that aspect of their business investment activities and have the time and energy to do it well. Best of luck whichever way you choose to manage your properties.
    Elaine Christian from 1950 Port St Lucie Port St Lucie, FL
    Replied 8 months ago
    As a licensed property manager for the past 30 years, I have had investors come to me for my services after some very difficult and in some cases costly attempts to self manage. Having great investment skills and insights does not necessarily mean you have the time, the knowledge or the temperament to self manage. Handling day to day activities of landlord-tenant relations is not for everyone and it can be frustrating and time-consuming. Before you decide to self-manage, ask yourself where your time and energy is best spent. Do you want the 3 AM my toilet is clogged calls? Do you want to have to personally chase down your rent every month and post the appropriate notices in person? Do you know the landlord-tenant laws of your state well enough to keep yourself out of trouble? Do you know the best and most cost-effective methods for screening prospective tenants? Unfortunately, just as in any profession there are some less than great property managers out there. I’ve heard the horror stories. If you decide to use a property manager be sure to interview a few in your area before you commit. Treat it as you would any job interview. As for rates, I personally give discounts depending on how many properties an investor is going to contract with me. Ask whoever you are considering what their policy is as far as rates and discounts. Ask about their tenant screening procedures, property inspection schedules, and owner reports and accounting systems. Not everyone is cut out to operate their own rental properties. Ask yourself what you enjoy doing, what you are best at and then decide if you really want to use your time and energy doing self-management. Some investors enjoy that aspect of their business investment activities and have the time and energy to do it well. Best of luck whichever way you choose to manage your properties.
    Mark J Donahue from Naperville, Illinois
    Replied 8 months ago
    Great article and I agree on investing in the Midwest. However I have a question for those of you who are investing in Northern Illinois or the Chicago area. Even though single-family and multi-family homes are reasonably priced when you find them how do you avoid the pitfall of the outrageous property tax rate? I find the property tax has ” Zapped” the real profit. Thanks in advance for your responses
    Jim Demartini Investor from Moorestown, New Jersey
    Replied 8 months ago
    I could not imagine trying to self-manage properties 1000 miles from my home unless I had a huge personal network in the city where there are located. My 2 little rentals are so close to my home I can walk my dog there, and so far knock wood they’ve been easy to self-manage.