Learn to manage tenants, or learn to manage managers?

4 Replies

I was listening to podcast ep. 340 last week and something Whitney touched on made me question everything I'm doing right now. If my long-term goal is to grow a large portfolio of long-distance rental properties, should I skip learning to manage my first few properties myself and instead learn to manage property managers right away?

My intuition was that learning to manage tenants first would help me down the road when I would mainly deal with property managers. Now I'm thinking it may be wasted effort, but some of my investor friends with < 5 properties think property management is just throwing away good cashflow. 

Background: I work full time as the sole provider for a young family and I don't see that changing in the next 5 years. Managing any more than a handful of units on my own would be a huge strain on my already non-existent free-time, so I see myself switching to using property management on my second or third property. I want to scale rapidly though so any time spent building unnecessary skills or systems to manage my investing is a real concern.

This is a step-by-step process:

1.  Get the RIGHT deal

2.  Get the RIGHT tenant

3.  Be your own property manager for the first couple, two-three

4.  Interview and hire a professional manager.

If something isn't working quite right--review #1 and #2 above.  In other words, if the deal isn't right from the start, well, then it's wrong.  

You'll be looking to cut as much as possible on legit expenses--you want to maximize cash flow--but a management fee should already be figured into your calculations and due-diligence before you pull the trigger on the buy.

Good luck to you.  Remember to take some time to enjoy your kids.  The property will still be there...

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@Travis Daudelin,

I totally agree.  

How do you know the stove is hot?  By sitting on it for too long!  Yes, mix it up a bit, get to learn about all the unique and wonderfully educational experiences you will have with your very own tenant to nurture and enjoy.  THEN you'll understand (and laugh about) an outsider who, after seeing a destroyed unit says, "how can people actually LIVE like that?"

NOTE:  If you can't laugh about the amazingly bizarre things tenants do, get out of the kitchen!

Learn how to manage your property manager by setting clear expectations with their contract. Make sure to...

1.) obtain their track record of success 

2.) give them the chance to perform

3.) have KPI's on a monthly basis that you can develop with them to make sure their performance is up to par with your expectations.