When should I consider a property manager?

22 Replies

As a general rule I am planning on managing my own properties. However, I do realize that gets a lot harder the bigger the property is. Does anyone have thoughts on what size MF I should really start considering using a PM?

Thanks!

Daniel

@Daniel J. It really is a personal preference and what you can handle personally. Also depends on your work schedule and demands as well. There really is no right or wrong answer it just ultimately depends on your goals and your situation. Your own aptitude as a manager should come into play as well(everyone thinks they area a great property manager).

I hired a PM for a 3 unit building. I work full time and operate a non-profit, so I really don't have the time to manage the building. I also don't own a vehicle, so having to drive to the other side of Chicago to plunge a toilet didn't appeal to me. Also, Chicago has very stringent rental rules. For me it was a no brainer to hire a PM company. If you don't have a job and live close to the property, I'd say go for it. 

@Zach Quick Partially I am considering size for my first couple deals. I don't really have any concerns with managing a triplex or similar, but if I bumped up to a 10 unit that is a bit more daunting. I overall like the extra profit gained from self managing but I don't want to shoot myself in the foot either.

@Ray Harrell That is true. Thanks!

Unless the property is so remote you can't self-manage, the question is how much personal time and effort can you devote to the properties?  We all have different thresholds of pain.

I recommend all investors self-manage until they understand what it involves.  Depending on your growth, you will be able to determine when it becomes a burden for you.  This experience helps you better manage the manager and get a sense of the value a good PM provides.

Two considerations to think about as well.  

  • In my market, because of the size of the PM company I use and their marketing reach, they can actually rent my properties for more than I can covering their own cost.
  • If you're considering selling, third party professional books is always a plus.

Good luck.

@Daniel J. I'd suggest hiring a property manager when it get's in the way of doing key tasks that impact your business.  Additionally, if the cost of PM does not impact your bottom line, go for it!  Self managing as a new investor is always the preferred route as it give you a great deal of experience that you cannot get any other way but to go through the motions.  Good Luck!  Persist and you will win!!!

Hi @Daniel J. - We have found that using a Property Management company is best when you are over 50+ units.  The reason is the price for the service can eat up most of your profits on a smaller property - and 50+ has been the point when we have found it to be cost effective to higher PM.  Although you pay for a PM they many times can save you money as well, as they have experience and they have ways of cutting costs as well as increasing income. Plus many of them have relationships with vendors that can save you money in the long run vs you going out and finding a vendor yourself.  I hope you find this helpful!! 

I recommend that you start with your first property.  Why? The cost is really small  probably less than $18 per month.  The benefits are really big.  Everything is automated for you and for your tenant(s).  As you grow you can easily add new properties and have an organized way to go about your management tasks.  You want to look professional and using software which sends out statements for you, provides automated rent collection, adds late fees when appropriate and automatically sends late notices is a good way to give your business a polished look from the start.  I am sure you will find that the small cost you pay is well worth it with the organization you can achieve.  Good luck. 

Originally posted by @Daniel J. :

As a general rule I am planning on managing my own properties. However, I do realize that gets a lot harder the bigger the property is. Does anyone have thoughts on what size MF I should really start considering using a PM?

Thanks!

Daniel

 30 units or larger, although locating a professional one to manage this small a property might be challenging.

Its all a matter of preference no matter how many units. If things come up are you going to have the time or ability get it corrected no matter how close you live to the property, and in a timely manner. Remember where is your time best spent.  I've had good and bad experiences with PM's, and even with a PM your going to have to do some babysitting. Get references and do check them out, and if possible meet them in person.

Agree with others that you should try to manage your first couple properties yourself. If you have a full-time job and other responsibilities, you'll need to consider hiring a PM sooner than someone who's doing this full-time. From a pure investment standpoint, I've been told 50 units is when it's best to hire a PM instead of solo managing. 

@Jeff B. That is indeed what I am weighing. At this point I have more time than money, so trading time for money makes sense. I also have a young family and want to make sure to not stress that part of my life just for a bit more cash flow. 10-20 units should not be bad to manage though?

@William Hochstedler That totally makes sense, and is one reason why I do want to self manage. Thanks!

@Shawn Ackerman Thanks for the thoughts!

@Bonnie Staples That does make sense, certainly if they can save you more money than it costs all the better!

@Timmi Ryerson I do appreciate the professional aspect they can lend. I believe systems and a professional look are very important. I can also produce much of that on my own though. Where is a cost of $18 coming from. I have seen nothing that low. I realize that that it varies company to company and is frequently dependent on rents, but that is quite a low cost.

@Jon S. Thanks!

@Bryan K. That is always the question! Being in the Houston area I am also trying to figure out distances and the fact that I can invest in a property even 100 miles away and basically still be in the metro area. So would it be worth it for me to self manage a 10 unit 45 minutes away or just pay a management company.

@John Casmon Thanks John!

Originally posted by @Daniel J. :

@Jeff B. That is indeed what I am weighing. At this point I have more time than money, so trading time for money makes sense. I also have a young family and want to make sure to not stress that part of my life just for a bit more cash flow. 10-20 units should not be bad to manage though?

 Good that you keep well focused :)  I did 6 units remotely and it was mostly as if it were local by good tenant screening.

Best wishes.

@Jeff B. Were you then able to find a good handyman to take care of the little stuff? That is almost my bigger concern. I can set up electronic payments etc to manage more remotely, but it's more fixing the small things that I see as more of a time eater.

Originally posted by @Daniel J. :

@Jeff B. Were you then able to find a good handyman to take care of the little stuff? That is almost my bigger concern. I can set up electronic payments etc to manage more remotely, but it's more fixing the small things that I see as more of a time eater.

 Happily YES.  I had a personal friend who was a licensed contractor and very cooperative.  W/O a capable/trusted associate, you're stuck finding someone to play that role for you.

@Daniel J.

Thank you for asking this question! I have been learning a lot from the discussion it provoked.

@Jeff B. Do you have any thoughts on where to find someone if you had to? Or is it simply see who is available and vet them as much as possible and hope for the best?

@Madeline Burke I'm glad you are benefiting as well! I've learned a ton from other people's threads. Are you investing in Ft Collins or are you just an agent there?

I would seek word-of-mouth endorsements and Craig's List, Home Advisor (imo) doesn't cut the mustard.

Hi @Daniel J. ,

As a property manager, I can give you the other side view.  I started as an investor and ended up starting a Property Management business due to the number of people following suit.  We currently manage about 400 properties in the Houston areas, but the majority come from investors not living within managing range.  Most like to start transferring the duties of management over generally after three properties or when they start seeing the collections of rent not happening as initially anticipated.  Many owners (not all), have the tendency to be more lenient with collection of rent and quickly fall into the trap of extending and extending the payment dates.  Before realizing it, they are 2 and 3 months behind.  As property mangers, we are very diligent in making sure that 3 day notice go out immediately after late days begin according to the lease.  Shortly there after we are filing eviction, not necessarily for the purpose of removing them, but to make sure we collect on rents and to build good habits between tenants and management.

This is one small area where management can help to make the money vs. loosing in turnover.

Hope this helps.

@Elias Camhi That is very true, it's always nice to let someone else take care of the harder stuff!

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