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

Question

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?

Xiaoyi Yu · Answer

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.

Kyle Wells · Answer

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.

Xiaoyi Yu · Answer

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.

Dennis Cosgrave · Answer

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.

Lane Kawaoka · Answer

@Xiaoyi Yu I would suggest getting a different person. I used to buy turnkey rentals and when the PM and provider was the same firm it seemed like the PM was always trying to cover stuff up.

let me know if I can help with anything!

Amber Gonion · Answer

@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.

Nicholas LaGatta · Answer

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 · Answer

@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?

Crystal Smith · Answer

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.

Javier D. · Answer

@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.

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

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