Age old question in real estate, management company or not? I am entrepreneur and have never been afraid of starting a business, and am thinking of doing it myself. I have built the cost into all of my properties, however I fin that it inherently removes you from the day to day dirty work of the property. Example, I received a bill for replacement of the kitchen sink faucet, and it was reported and replaced. Not that I want to be bothered with a faucet, however, it was $150.00 out of my pocket, and I could've fixed it for far less.
Anyway, I guess my question is what are the pitfalls and areas of concern in the property management business? Is it fairly easy to get into, or for a novice, is it out of my league?
Hi @Brad Schmitz . Your question (self-manage or pay a property manager) is a fair one, but your example concerns me a bit. Even if you had chosen to manage that property yourself, you would still be ill-advised to repair that faucet yourself. That's not self-management: That's being a contractor!
Embedded in that $150 bill is the material cost, the time expense for the plumber, plus the (management) expense for someone to process the repair request, coordinate the repair, verify the repair, pay the plumber, and then generate that bill you saw. You need serious systems and well-trained personnel.
To me, property management covers the handing of client issues (non-payment or late payment of rent, lease renewal), repairs and maintenance, and property admin (payment of property taxes, insurance, etc.). Unless you have serious landlording skills, or a burning desire to develop them, I'd leave it to the pros.
If your goal is to build your portfolio, then I strongly recommend you focus on that and avoid the distraction of property management.
thanks @Mitch Messer very good advice
@Brad Schmitz You're talking about two different things...property management and actually doing the handyman work. I manage my own properties, but I just spent $175 to replace a kitchen faucet. The tenant sent me a text. I sent my plumber a text with the tenant's contact info and a description of the issue. The plumber went over there, bought a faucet, replaced it and sent me a bill.
Well worth $175 for me to not have to deal with the running around.