I'm curious to hear from people who used a property manager on their first deal. I'm new to RE, have a 50 hour/week job where I travel, so being an active landlord isn't something I think I can do--for now.
Are there others here who, from the start, used property managers and simply use RE as a true investment (i.e. you've always just written checks and don't swing hammers)? If so, what advice can you give a newbie like myself?
Be prepared to go through multiple managers before you find the right fit. Be prepared to micro manage a PM until you are confident they are competent. Never trust a new PM. Regardless of whether you self manage or use a PM you must still be a active landlord. Never turn your back.
Your responsibility as a owner, if not self managing, is to manage your manager. They must operate your business based on your policies and operating practice...…… Best hope you know exactly how to operate your business in advance or your PM could easily run it into the ground.
Remember TRUST is not a business practice.
Hi @Chris Serger I would recommend that you network with others and see who they are using for property management. If you had the time, which it looks like you don't I would have recommended self-managing just to learn the ins and outs. With your current schedule that may not make sense and would be more of a burden, it would likely payoff to pay the 9-10% to have a professional manage the property. Absolutely vet several of them, but get some names from folks that are doing this in volume and that will help you narrow down your search. Best of luck!
Thanks for the advice, @Eddie Sorrell . Someone I trust made the point that if you never manage a property you won't know how to manage the property manager, which makes total sense to me, but I just don't think it's a valid option for me.
I would like to hear from people who have actually done this: newbies to RE that have always used property managers from Deal #1. How has that gone for you?
Hey @Chris Serger ,
If it is your only property than I don't think that having a property manager is 100% necessary. Although, if you are looking to acquire multiple properties or do this long-term than yes I think a good property manager is necessary. It is better to start sooner than later so you can make sure that in the long run, you have the right manager.
My first purchase was 12 units and I self managed them. So if you have a single family home I don't think you'll have an issue.
My big hurdle, and to some extent it still is one, is having people you can call to patch/repair/replace when you can't or don't want to do it yourself. If you already have a supporting cast in place, then it will be a piece of cake. You just take a call, make a call, and pay the person that helped you out.
I certainly understand investors that hire a PM right from the get go, but I personally want that money to help me grow faster, and I also believe there is real value in doing it yourself for a while. Sort of like just about all other things I hire out. I've done just about all of it myself at least once so I know what is involved.
@Chris Serger I am still self managing mine currently, but I really am just taking the phone calls and putting my maintenance contractors in touch with the tenants as needed so it is pretty low key for me. I automatically collect rent through cozy and outsource some odds and ends work through an app called TAKL. Again, I don't think you can go wrong with a property manager out of the gate so long as you are getting referencing from some seasoned investors that have a pretty good portfolio. They will likely provide references that are good and already had to go a few of property managers early on to get the good one they are referencing.
I house hacked a duplex for my first RE investment. 90% of the time it was great, but the 10% of the time when something came up it was a big annoyance. I also was close to filing eviction papers with the court for one of my tenants and I had NO IDEA what I was doing; I certainly would have appreciated a PM when it came to evictions.
I learned a ton through that process so I'm glad I did it myself, but I'm also glad to have a PM now. I work a lot and have small kids so I'm happy to pay 8-10% a month to have somebody manage my out of state SFRs. Initially you need to micro-mange your PM while you get used to each other, but once you sort each other out, it is a time saver. Thats not the right decision for everyone, but at this stage in my life its right for me.
Thanks for all the great feedback, everyone. It's very helpful as I move towards deal #1.
Turning the unit is going to be the most work. Maintenance requests as people move in and find things wrong etc. If you don't think you have the time to do it now when everything is only neat and on paper you definitely will not when it comes time to dedicate time to the property.
Going with a property manager is still not a passive investment. It might feel like that at times with one unit, but it requires management, oversight, etc. But it will likely be passive enough to manage with a demanding job.
One benefit that a property manager provides is experience vetting applicants. As a new landlord it's hard to know what to look for in an applicant's history and what questions to ask. You may want to get a property manager at the beginning so that you can learn how to handle the application process and leasing of the property. Tenant disputes would be another area where having a property manager to learn from would be nice. Once you've seen an experienced pro deal with these situations you'll be much better prepared to deal with them yourself.
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