Should I use same person as both realtor and property manager?

19 Replies

Hi Fellow BP members,

I have a realtor who helped me on my first Buy & Hold out of state property and I quite like him. He has his own real estate company which also does property management, so I went ahead to use him as my property manager after closing.

Do you guys have any experience using same person as realtor and property manager? Maybe I am still too new, but I rarely heard of people doing this on BP podcast and book. It is definitely convenient communication wise, but I am not sure if one person can perform multiple roles well at the same time? It's like primary care doctor vs specialist.

I am looking forward to build my team so that I can do BRRRR in the future, so do you recommend me hiring different people as realtor and PM?

The man has a fundamental conflict of interest. He wants to sell you a property to earn a commission so he doesn’t really care what you buy as long as you buy. It might even be in his own personal interest as a property manager to sell you a property that requires a lot of maintenance and management. Some might argue the reverse, i.e., that in order to garner more business with you in the future he would do a good job on both ends. I think the risks are too great. Better to keep the two functions separate and arms length. 

@Xiaoyi Yu

I’d self manage. One problem I ran into as a sales person was running a management company for other people. My principal broker did not like that because it doesn’t fall under their insurance.

Food for thought, check to see if a property manager needs to be licensed in your state. In New York State, all property managers have to have a brokers license in order to handle other landlords money.

@Xiaoyi Yu  I have one place where I use a property manager and he also has his real estate licence.  I bought the place through him and haven't had any problems.  It wasn't my first rental and I knew the area already. 

So to Nick's point my answer is assuming that your Realtor is properly licensed in both Real estate and property management, and is not doing it under the table (has other properties his company manages and your not the first one)

With all of that being said, I do both for my clients and it builds in accountability for me. If I sell you a house saying rent will be this much and now I am the PM for you I better be able to put my money were my mouth is and get you that much for rent.  and since I'm your broker I want this property to do well so I have to manage it well so that you will buy more property in the future.

To Dennis's point of the conflict of interest, If you don't have trust in your PM you need to find a new PM that you can trust, PM is a conflict of interest in general as I am making money off of the problems you have so if I was a dishonest PM it would be better for me to cause more problems and than fix them.  If your PM has low star ratings on google or you don't trust them on a personal level run. This is your most important and expensive investment.  I think the same holds true for your Realtor as well

With all of that being said, I do both for my clients and it builds in accountability for me. If I sell you a house saying rent will be this much and now I am the PM for you I better be able to put my money were my mouth is and get you that much for rent.  and since I'm your broker I want this property to do well so I have to manage it well so that you will buy more property in the future.

I totally agree with Tim here.  My realtor and PM are the same person.  He wouldn't even bring me a property he wouldn't want to manage.  He already knows which types of assets are going to profitable. 

However, the conflict of interest might come into play when buying and selling among clients, especially with a tenant in place.  At that point, the PM controls the asset fully, has a lease and a PM agreement in place, and has limited incentive to price the asset at market price.  This might come into play if a client is liquidating assets or phasing out the PM and decides to sell.  The PM would rationally favor the buyer, assuming they are continuing as a client.  

Trust, but verify.  

@Xiaoyi Yu . We do both acquisitions and management. We get calls all the time from people who had another agent help them find a property and now they are having trouble renting it out and need our help managing or selling to get rid of a problem property.

By also doing management we cannot just collect a commission check and move on, if we give estimate of rental rates or rehab for the property we are held to it as we are managing.

It is very uncomfortable conversation to tell someone our estimate was wrong, this is why we are conservative on our estimates. We like to underpromise and over deliver.

We also never know if a client will manage themselves with our assistance or have us manage.

@Xiaoyi Yu I don't see a problem with that. Whether its a PM who is also a realtor or just a PM, it will be a hit or miss because there are so many bad PMs out there. If the realtor is also a PM, he may also have better insights into rents.

@Jonathan Oh Thanks for your reply. I agree with you that it all depends on the competence of that PM & Realtor. I feel my Realtor & PM is trustworthy and knowledgable (at least so far). I will give it more time to verify.

Hi @Amber Gonion  ,
Thanks for your reply. Your insight as both realtor and PM gives me more confidence that one person can be a good realtor & PM at the same time.
I would like to have a member like you in my BRRRR team who can deliver promise.

Hi @Nicholas L.

Your reply is amazing. You warning about conflict of interest is enlightening me because that was exactly what I experienced.

The deal my realtor brought me was exactly a property he's also managing with tenant in place. He told me that it was a good deal because as dual agent and a private sale, seller gets discount on commission and I get discount on selling price at the same time. Now looking back, it did seem that he could have less incentive to sell for high price for seller and favored me as a buyer.

Fortunately, I am at the buyer side so it was a pleasure experience for me. I do feel he's a nice guy that gives me confidence, but I will keep in mind if I decide to sell the property in the future.

Hi, @Lane Kawaoka thanks for your reply. I did recently buy my 2nd property from Memphis Turnkey and they do want me to use their own team for PM. I guess I will give them a try first since they have some good reputations on BP, but I will be mindful of situation like covering stuff up. Will it be difficult to switch PM away from turnkey company's own PM?

@TIm Harstead Thanks for your reply. I agree that for good realtor, being PM at the same time can help build accountability and encourages investors to buy more in the future. Hope we can all get good ones. Do you help investors who do BRRRR investment?

@Theresa Harris  Thanks for your reply. You give me more confidence on letting my agent handle PM for the same property.

@Dennis Cosgrave  Hi Dennis, thanks for your reply. I think it does involve some risk if you use a bad one that does both realtor and PM. Like other member said, there are bad PMs out there so I will be careful.

It all depends on your bottom line. I wouldn't recommend a PM until you have multiple units under your belt but it all depends on your time, your comfort level, and your understanding of Landlord laws in that state. If you have time and are able to thoroughly understand the laws then there should not be an issue being a remote landlord. However, if you don't have the time or comfort level to do so then you should hire a PM. Not everyone has the personality to be a Landlord some people actually need the PM. From my experience it doesn't make sense to get a PM unless you have multiple units to manage from an economics/my comfort level. Also you don't know what you don't know so if you don't have a thorough understanding of where to look for new housing laws and restrictions that maybe a bigger liability than paying an expert. Keep in mind that my dad is a Landlord in California and I assisted him with that for over 10 years. I also went to school for Urban and Regional Planning- that taught me how to navigate government entities 

@Xiaoyi Yu I like using one company for both the acquisition and property management components. For my out-of-state purchases, my realtor finds properties that she knows are rentable, in safe markets, with good people. She wants those things just like I do so that we can find quality and qualified tenants. If she’s uncomfortable with something that I find she’ll tell me and we pass. I want her to feel the house is a good investment and know that she’s an active and vested participant in my investing process.

@Xiaoyi Yu

No. In about 12-36 months theyll start manipulating you to sell. I hate to generalize obviously not all but I’ve seen it as common practice. You imagine everytime you have a vacancy they can make half a months rent or potentially 6%? I wouldnt expose myself to that.

Originally posted by @Xiaoyi Yu :

I am looking forward to build my team so that I can do BRRRR in the future, so do you recommend me hiring different people as realtor and PM?

If the realtor has a separate operation that's composed of a team for property management then my opinion it's ok to use the same person as a realtor & a PM;  but if they are a one-person band then it's a bad idea.

@Karla Talancon Thanks for your advice. I wish I could manage on my own but I am investing out of state so I have no choice but hire PM.

How is investing in Houston nowadays? Do you recommend it for cash-flowing properties?

Originally posted by @Xiaoyi Yu :

Hi Fellow BP members,

I have a realtor who helped me on my first Buy & Hold out of state property and I quite like him. He has his own real estate company which also does property management, so I went ahead to use him as my property manager after closing.

Do you guys have any experience using same person as realtor and property manager? Maybe I am still too new, but I rarely heard of people doing this on BP podcast and book. It is definitely convenient communication wise, but I am not sure if one person can perform multiple roles well at the same time? It's like primary care doctor vs specialist.

I am looking forward to build my team so that I can do BRRRR in the future, so do you recommend me hiring different people as realtor and PM?

I think it's more efficient and cost effective this way. I use a realtor who does PM work as well and he only charges 8% on the PM end. He can also help with rental comps more quickly since he knows the property already. I would recommend having a back in both arenas just in case though. Losing one person is like losing 2 in this case.