When to hire a property manager?

Question

In the research stage of real estate investing and finding that I think rental properties are the most appealing to me. I was wondering what do most people who just start out do in regards to hiring a property manager? Do they hire one when they own just one rental home? Wait until they own a few? What if their first property is a multi-family home? I like the idea of trying to manage them myself for the first few, but I do currently have a 9-5 job that keeps me pretty busy and was curious how realistic that is. I know every situation is different, but would like to hear a few perspectives on this - thanks!

Jaysen Medhurst · Answer

@Tyler Sipe, you'll hear a lot of opinions on this...

Mine is to get a PM immediately. Your time is better spent finding deals than unclogging toilets and chasing down rents. If a deal doesn't pencil out with an allowance for management, it isn't a deal.

Beau Fannon · Answer

What works best for you depends on your specific situation. Will you be buying your multifamily rental property in the town you live in? How fast do you plan to build up your portfolio?

If you are purchasing in town and it's going to take a year or two between acquiring properties, then manage your first property yourself so that you understand how things work. There's a big difference between being a renter and being self-managing owner. I promise you will find the experience very beneficial.

If you are purchasing out-of-town or you plan to scale quickly, hire a property manager immediately. Once you acquire your second local property hire a property manager. Like people have said before, your time is better spent scaling your portfolio.

Dakota Wilde · Answer

Hi!

Hire a good property manager or sign up for a property management system that will help you to manage your rentals from anywhere.

I don't have a full-time job, so I can manage everything myself. But will be considering hiring a PM once I get a 9-5 job (hopefully). :)

Carolyn Smith · Answer

Hi-

My husband and I acquired 6 units over 2 properties  within about 6 months of each other. Being new to real estate investing and out of state, we hired a PM. It was nice getting checks in the mail and doing minimal work until I noticed a few things- statements not being sent consistently, numbers not adding up, not being able to get ahold of them etc. It became me managing the managers and I didn't need to be paying someone for this so we agreed on an end date and I have been managing the properties since then. Yes there is a little learning curve but as long as you can call plumbers/ lawn guys/ handyman/ rental company/ lawyer etc to handle issues, it's really not too hard. And really- the problems rarely come up from 9-5 M-F.

I think it really depends on the number of units and what type of tenants you've got but self management is doable.

Grant Rothenburger · Answer

You can manage the first few on your own, especially if you use the non full service property managers (can't remember what they call themselves). Secure pay one was an example of what I'm talking, they help fill units and take care of maintenance tickets for you, or whatever it is you want them to do, it's negotiable how much they do for you.

Even fully managing on your own is do-able with a full time job on your first few.

Charles Carillo · Answer

@Tyler Sipe

I hired a property manger after having 11 units. It really depends on how profitable your 9-5 is and your flexibility. If you have a high paying job or own a profitable business, you might hire management sooner or from the start. The proximity of the properties is also very important with management.

I am self-employed and managed my properties for years before hiring a 3rd party management company which allowed me to scale my non-real estate business and my real estate business.

This is why you will hear from seasoned investors to start with 12+ units for your first property to minimize the per unit cost of management or scale to ~12 units or so as quick as possible.

You will not get wealthy from managing property however it does provide some invaluable lessons if you are really focused on growing your business.

Anthony Fecarotta · Answer

@Tyler Sipe

I'm a little bit ahead of you in the process. I'm closing on my first property but unfortunately because of the market I live in (Chicago) and the fact that I only put 3% down I don't have the luxury of hiring a property manager. I'll try to do as many things as I can by myself and for things I can't I'll be networking to find a good handyman. In the future when I invest out of state on  higher cash flow properties I will definitely be using a property manager. I've seen people on here who invest out of state without a property manager with success, but that boggles my mind.

Caleb Heimsoth · Answer

@Tyler Sipe I have a property manager from the get go but I am what you’d call a more “hands on” owner probably.  I follow up consistently and I ask a fair amount of questions.  I’m not totally hands off.  So to me it’s sort of a hybrid model.  In my mind I am basically paying someone to deal with tenants and collect rent.  That’s fine, I don’t want to deal with tenants (that’s my biggest thing)

Carolyn Smith · Answer

Would you be the one who physically fixes things that break? If yes then being out of town regularly would make it hard to do so in emergencies.

But if you would only be the one to call plumbers etc then it's still doable from out of town. With that being said we do have a handyman for our properties who lives down the street. He's the guy I call if someone gets locked out ( although we are in the process of switching to keyless entries so that's not much of an issue anymore) and he's the guy I call first if any small issues arise.

Do you have anyone in mind that could be your "backup" if you were out of town? Just things to think about.

Tyler Sipe · Answer

Appreciate the responses, all! I am planning on purchasing a property in my hometown but with my 9-5 job I travel quite a bit so I am not in my hometown many weeks of the year. My plan is currently to try and buy one property per year so I can learn along the way and then escalate my purchases in 3 years or so. I am a little torn because i like the idea of doing it myself to see what all I can learn, but the fact that I am out of town a decent amount makes me think it may be more of a hassle than it's worth. Does this additional information spark any additional recommendations?

When to hire a property manager?

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