Do I have to have a property Manager

[Jeff Shivprashad]

Do I have to have a property manager for my 2 single family rentals in Wilkes Barre if I live in New Jersey? I cannot find any ordinance. Please help.

[Eric Fernwood]

Hello @Jeff Shivprashad,

I do not know whether the county or city where the property is located requires you to use a property manager. I do know that most investors cannot afford to manage their own properties.

Many people think a property manager just collects rent. That is not the biggest value. The real value shows up before the lease is signed and after problems start.

Here are the three skills that matter most:

1. Property selection: A good property manager helps you avoid bad deals. The manager we work with is part of our property evaluation team, and about 1 in 10 properties are rejected. In one case, a property looked solid on paper and in a good area. The manager stated the floor plan as hard to rent. I checked the data. Similar homes rented in about one month, that floor plan took closer to three. That one decision likely saved the client thousands.

2. Tenant selection: This is the biggest value. I have worked with investors for over 17 years and delivered more than 600 properties. I have met many managers, but only two that I trust with tenant placement. The goal is simple, place tenants who stay for years, pay on time, and take care of the home. That outcome is not luck, it comes from experience, screening, and judgment. Most self-managers do not have that.

3. Contracts: Self-managers often download a lease online. That is risky. Laws change, and a weak lease can leave you exposed. A property manager uses leases that stay current with local rules. Also, they know how to enforce the terms of the lease, if necessary.

4. Maintenance: Doing your own repairs sounds efficient, but it often is not. Some issues are urgent. Others require skills or pricing you do not have. We had a client get a $4,000 quote from a “friend” for a water line replacement (between the house and the street). The property manager got it done for $1,800. Speed and vendor access matter.

I want to emphasize “good” when it comes to property managers. I would describe most property managers as overpaid, underskilled, inefficient rent collectors. I only know two property managers in Las Vegas that I trust with my properties. We work with one regularly, and the other is a backup if our primary property manager goes bad. If anyone is interested in a guide I wrote on how to select a good property manager, reach out.

When does self-management make sense? We have a European client with three properties in Las Vegas. They wanted to save the 8% fee by managing the proeprties themselves. I advised them to let the manager place the tenants and run the properties for the first year. If the tenant performed well, they could take over management. They followed that plan. After one year, they started managing two of the properties. The third property had a poor tenant (the couple went through a divorce, the wife stayed in the property, and she was an erratic payer), so we did not renew her lease. The property manager found another tenant who performed well, and at the end of that year, they took over managing the properties themselves.

I stand by my statement that no owners can afford to self manage.