I think the biggest issue I see with PM is they don't always understand how you're thinking and what you want. It's a delicate balance to be in PM. However, I think they can be great for that boots on the ground access. It's challenging.
@Mark Fries so I'm clearly biased here but I have to disagree. A quality PM will make/save you far more than they ever charge you in fees and although your individual experience might have been negative I can assure you that true professional PM's are worth their weight in gold.
Do you repair your own transmission? Reroof your own house? Think about why you pay any professional or specialist? They can do the job faster, cheaper and with far better results than someone who doesn't do it full time. I can agree that hiring an agent whose primary job is selling real estate and PM is only a sideline is a major mistake. True pros specialize to a high degree and being good at both sales and management would be incredibly hard. There are lots of bad apples out there but once you find a good one you will immediately recognize the difference. Start by making sure they are credentialed through NARPM and I would suggest someone who solely does PM alone. I would also never have someone manage my property who didn't own multiple investment properties themselves because they just wouldn't "get it".
@Mark Fries, I am planning to buy 3 new construction SFR in Jacksonville. How is the rental market in Jacksonville holding up, in your opinion? How much time will it take to rent a new unit? I am also worried about hurricanes and other natural disasters. Please share your thoughts.
@Mark Fries I 100% agree with you and disagree with you... because effective property management is not only based on the company, but based on your investment goals. Let me break that down:
I work for a firm that has both a brokerage division and a property management division. The property management side of the business is BY FAR larger and more profitable than the brokerage. As an individual, I make a lot more money brokering deals, but the company as a whole makes a lot more money in property management. Our company operates on the philosophy that we treat your rental properties like our own. Every single thing we do is designed to help you grow your investment portfolio. When we manage for a client, the goal is to help maximize cash flow for their existing buildings, and guide them through growing their portfolio. Its a win-win. If we manage more of your units and maximize your profits, you make more money and we make more money.
A good property management company should help you achieve your investing goals. They should be bringing experience to the table to not only "maintain" your portfolio in its current state and run it without your intervention, they should be actively helping you expand. I think that's what defines a good property management company and how they should run. They're out there, but rare.
On another note though, sometimes property managers are unnecessary. I work with a gentleman who owns 60+ rental condos and manages everything and does everything himself. No management intervention and has been doing it for years. A manager would free up his time, but suck up a lot of his profitability. In a SFH model... you might not need a manager depending on the quality of your tenants, the average vacancy factor, etc. If you're just starting out and own a couple of three-families nearby... don't hire a manager. Do it yourself and learn. That way you know what to look for in a good property manager when the time comes.
Being OOS my PM is far cheaper than the plane tickets it'd take to do what they do.... if I was local then I'd probably look at the value differently.
@Mark Fries , perhaps, if being your own PM for 35+ properties takes so little of your time and effort, you're well qualified to become a PM for others too? Could you be the one who could help restore their lousy reputation?...
Oh look, ANOTHER property management vs. self managing thread................
Originally posted by @Mark Fries :
what I've experienced many times is that usually property managers are also Realtors. and is everybody knows being a realtor is usually way more profitable than being a property manager so they tend to put all their focus in that instead of the property management aspect of their business? what have you experienced?
Mark, this is mostly because to legally be a Property Manager in many states, you must have a Real Estate Salesperson license (aka Real Estate Agent License) in that state and be operating under a brokerage or someone with a broker's license.
Personally, I'm much more interested in growing the property management side of my business, but my current real estate clients are investors who intend on using me for their property management as well, so it works out for both parties.
In states like Ohio where there are laws requiring Property Managers to be licensed real estate brokers, competition is restricted and most structure fees in a manner that is counter to an owner's best interest. PM's make more money when they churn tenants, when they up charge shoddy repairs, when they won't work with tenants having temporary payment issues and when they nickel and dime both owners and tenants. Not a system I'd really like to deal with on either side.
My PM is the key success factor in my OOS investments. A good PM can make your investment. A bad PM can kill it. This is particularly true for lower end rental. We do manage local Bay area rentals ourselves but when your tenants have a higher income than you its usually not a problem :-)
The rental market is really intense right now in Jacksonville Florida hard to find quality inventory and if you did purchase those three new constructions my estimate is that you would be able to have them rented within 2 weeks maximum. And there's no need to panic about hurricanes we only get one that does any kind of damage every four or five years the rest do minimal impact
I just listed one of my rentals through Zillow 48 hours ago and I've already got a qualified tenant that's giving me the full deposit and the first month's rent and they're moving in on Saturday
@Alex T. The market for rentals in Jax is strong. You should have no issues getting new SFHs rented. Mine never stay empty for long.
@Mark Fries and & Jack Bobeck, thank you so much for your great feedback. I am in contract for 3 homes and was planning to cancel one since I was worried if it's too many to start with. I see new homes in the same location are selling for $120 per square feet today versus $108 when I signed the contract early this year. Thanks again!
@Alex T. Some "hot" neighborhoods are up to $220 per square, like Avondale. Its all pretty hot here.
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