I know every investor is faced with this question. Self manage or hire property management? I have self-managed my SFR portfolio (8 properties) quite successfully and developed some great systems and processes. But they were all located within a 30 min drive. Now I am taking on a 16-unit apartment complex that is 60 miles away.
To be clear, I will NOT consider pure self-management. If I do not hire a PM my plan is to leverage a local handyman that I connected with for repairs and maintenance and his wife actually runs a 140-unit nearby, so she offered to help me on the leasing front (meet prospective tenants for showings, etc.).
I have a couple of PM's that were referred to me that seem to have some competitive pricing. But when I tally it all up between monthly fees, renewals, and marketing/placement fees it's still quite a big nut to cover.
What are your thoughts and also, what kind of rates/fees would you consider "good" for something of this size that has 100% occupancy and minimal deferred maintenance?
I think you answered your own question. You said you "will NOT" consider self management, so your answer is a PM arrangement. Hmmm.
Hi @Ray Harrell . What I meant was that I would not try to "do it all solo" like I have with my SFR portfolio.
@Tony Castronovo no one who has a serious sized property or portfolio manages it themselves. So if you are looking to grow beyond that find a good pm company.
Having said that, on smaller properties you often won't find great pm companies so maybe partially managing it yourself is the best answer.
Or a third possibility, form your own pm company. There are tax advantages to doing that so if you enjoy management and are wanting to grow, think about that as well.
Overall I would encourage you to think about what you personally want to be doing in 3-5 years. If you see yourself actively involved managing a company head towards self-management. If you see yourself totally hands-off, spend your energy finding the best pm companies in your area to partner with.
We bought a 12 unit last year that is under an hour from home-our limit is an hour-it was really well maintained and fully rented with mostly great tenants, and one dud. We use a PM for some duplexes in another town and we were looking for a local PM for this apartment building. Nothing good was coming up locally so my wife stepped up and it is working out great, all under one roof, good class of tenants and well maintained=not too much work.
@Tony Castronovo ...
Since you have managed other properties yourself, I'm sure you are very familiar with this process. You could break down the tasks and assign some of them to someone else ...here are a few things to chew on.
1. Have you looked at virtual property managers? i have never used one, but I have seen ads around.
2. You can use a website like upwork.com (I have no affiliation whatsoever with them) to find virtual assistants and delegate some tasks to them, while you focus on other things.
Good Luck !!!
@Henri Meli That is an interesting thought on the virtual assistants. I'll investigate this more. My first reaction though is that the things that can be done virtually I can handle. It's being onsite that is tougher.
@Michael Le Yes, was thinking the same thing about the leasing agent. The only concern is that I am relying on a single person (single point of failure) and if it didn't work out it might be challenging to replace. But I suppose there is always that risk with anything we sub out.
@Jeff Kehl All good points. I just read an article on starting your own PM company even if to manage your own properties. Part of me wants to rip the Band-Aid off and go for the professional PM now while I have a burning platform of sorts. It was very hard to justify on my SFR's because I could easily handle all of them.
*** Assuming I did in fact go with a PM....what would be reasonable rates/fees for a property my size and condition?
@Bjorn Ahlblad Congrats! Sounds like you are in a good place right now. Unfortunately, my wife is just as busy as I am and would make me sleep on the couch if I even suggested she get involved in managing this. :)
@Tony Castronovo , I would start off with your goals and what you're looking to accomplish. Because @Michael Le tagged me in this post, I'd like to give you my and input based on my experience with a 32 unit nearby (30 min away).
I decided to have someone within a few miles of my 32 unit manage my property (she manages a larger property). She uses her maintenance guy and does a great job taking care of any property concerns.
As far as pay is concerned, I actually don't pay a percentage of the rental income. Because my property is similar to the 10 unit you described with occupancy and minimal maintenance, and because she already manages another property, I felt the best way for this to work was to pay her hourly, and as needed. I pay her $15/ hour whenever she is handling anything that has to do with the property, whether that is with calls, leasing, or when she is on the property premises (with handyman) for repairs.
This strategy has worked well for the both of us as it has allowed her to continue her "main full time" job and it has significantly reduced my expenses.
Hope this helps.
@Juan Vargas Sounds like you have a great setup! What activities if any have you kept for yourself?
I just wrote a blog on this topic. I am all for hiring management out. If you are able to form a management company and source it all, that is great as well. https://www.biggerpockets.com/blogs/10145/72780-ap...
@Tony Castronovo , I just oversee what she does to make sure everything is going well. If there is a bigger concern that the maintenance guy can't handle, I get with my partner (who's a general contractor) and he gets his guys to take care of those things.
I always thought the plan was buy enough properties and then start your own PM Company, so you can hire someone to handle all the properties day to day issues but when push comes to shove you still have 100% control of them PLUS you keep all the PM fees. That’s my plan
Have you considered a resident manager to help you with management responsibilities for the 16 unit, and when you get into your next deal, possibly hire professional management.
On our first 2 deals, we self managed and employed resident managers. When we landed our third deal, we began to hire leasing agents, built out a management company and got rid of the resident managers
Hi @Gino Barbaro . Yes, we have considered that as well. I believe there are a couple of tenants who had expressed interest with the current seller. Need to explore this more.
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