Self-manage vs property manger?
Member since 2023 · 31 posts · 27 votes
Self-manage vs property manger?
Most Popular Reply
Rental Property Investor · Philadelphia, PA · Member since 2015 · 478 posts · 362 votes
3y@Jessica Stern Great question and good that you are seeking advice. I live just shy of an hour from Philly and have a portfolio that includes Philadelphia and many other areas around the country. But even in Philly, I do NOT self manage. My reasons: I do not have the personality for managing tenant relations which in a city especially, can get complicated; I am an investor - not a landlord. In other words, I spend my time on developing my portfolio, analyzing markets and other projects related to RE rather than dedicating time to vetting tenants, replacing smoke detector batteries, chasing a delinquent payment, administering paperwork (lots of it in Philly). Also, my intention in becoming an investor was to live my life more freely - and now I travel extensively, often leaving the country for a month+ at a time. That would be challenging if I self managed. I worked my way through FOUR Property Management companies here before landing on one I am able to work well with. If you do self manage, I also have a great property maintenance for you :-) I manage the FB group Philadelphia Landlords Connect which you may want to join. Feel free to reach out
29 Replies
- 3yGreg ScottPro MemberRental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
If you have no experience and no time, and can't be there in a pinch because you live 2 hours away, isn't that being penny-wise and pound-foolish?
Once you have either experience or time, then I'd look to possibly self-manage.
- 3yBjorn AhlbladPro MemberInvestor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
Congrats on closing the two properties! I think you are inviting disaster-financial and otherwise-wanting to manage these properties without enough knowledge of land lord tenant law, or PM practices. A 4 hour drive plus time to remedy a situation is a major undertaking with a full time job. Find a decent PM that will save you time and money. All the best!
- 3yKevin MoyerBusiness MemberProperty Manager · Philadelphia, PA · Member since 2019 · 269 posts · 301 votes
Generally I think it's a good idea for a local LL with 1-2 units to self-manage. You'll learn the basics of advertising, tenant relations, maintenance issues/costs, compliance, and save some $$ at the same time. It's a good way to get a hands-on feel for the industry.
That said- I would never try to do it 2 hours away. How would you conduct showings of vacant units? How would you coordinate move-in for your new tenants? Move-out inspections and turnover assessment? Seems like a logistical impossibility unless you have a trusted capable family member in town.
As a Philly property manager I'm certainly biased, but I can confidently say it's not a winning strategy to try to remote manage in this city
Otter Property Management4.8624 Reviews - Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
I encourage self management because you'll gain a lot of experience. When you decide to hire a PM, you'll have a better understanding of what it takes and can make a better decision.
On the other hand, if you suck at self management, it can cost you 10x what it would cost to hire a professional, not to mention the stress it can cause.
Read Brandon's book "Managing Rental Properties" as well as "Every Landlord's Legal Guide" by NOLO. Those two will give you a lot of the tools necessary to be successful.
The DIY Landlord Book4.7248 Reviews - Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes3y
Self-manage. My clients and I are firm believers in this and self-manage remotely properties that are located throughout the US. We have a process for doing so that is seamless and vetted. It's not time consuming and it ensures that we know our tenants, our properties are well-managed and maintained, and that we control expenses. You can do it...
- Investor · Philadelphia, PA · Member since 2019 · 618 posts · 430 votes3y
I agree with Kevin. I usually tell folks to manage their first couple themselves so they can really understand the local laws and what goes into each aspect, but being new, out of state, and investing in a city that has no tolerance for missing one piece of paperwork if you end up in court, Id tell you to instead spend your time finding a great management company in Philadelphia. Just be careful as many are here are boarderline terrible.
- Rental Property Investor · Houston, TX · Member since 2014 · 139 posts · 140 votes3y
@Jessica Stern recommend self managing them at first especially since you're only 2 hours away. Once you've gained a better understanding of how it all works, you'll be more equipped to manage the PM and control costs.
- 3yTravis BohlingBusiness MemberProperty Manager · Gilbert, AZ · Member since 2011 · 65 posts · 78 votes
Congratulations Jessica!
Great question but it is hard to give a recommendation to such a personal decision. Maybe think through it like this:
Is the value of your free time worth more or less than the cost of management?
Is the satisfaction from mastering this skill greater or less than the heartache and stress you may endure?
Happy to chat further if you want to dive deeper on the questions above.
- Rental Property Investor · Philadelphia, PA · Member since 2015 · 478 posts · 362 votes3y
@Jessica Stern Great question and good that you are seeking advice. I live just shy of an hour from Philly and have a portfolio that includes Philadelphia and many other areas around the country. But even in Philly, I do NOT self manage. My reasons: I do not have the personality for managing tenant relations which in a city especially, can get complicated; I am an investor - not a landlord. In other words, I spend my time on developing my portfolio, analyzing markets and other projects related to RE rather than dedicating time to vetting tenants, replacing smoke detector batteries, chasing a delinquent payment, administering paperwork (lots of it in Philly). Also, my intention in becoming an investor was to live my life more freely - and now I travel extensively, often leaving the country for a month+ at a time. That would be challenging if I self managed. I worked my way through FOUR Property Management companies here before landing on one I am able to work well with. If you do self manage, I also have a great property maintenance for you :-) I manage the FB group Philadelphia Landlords Connect which you may want to join. Feel free to reach out
- Property Manager · Phoenix, AZ · Member since 2021 · 39 posts · 22 votes3y
It depends on the properties you buy. Some properties based on location, age of mechanical equipment, and property health are incredibly costly upfront if nothings been updated. Having a PM that has preferred vendors/contractors and an internal maintenance staff typically save you money because your pm gets discounts for the business they provide the vendors/contractors. If your properties are older than 10 years, I'd hire a PM and hang on for a bumpy 5 years it'll be expensive even if you do BRRRRR there's always something wrong. Additionally, if you've never livid in that market a PM is a Pro in that area and can better provide insight on what rents really should be and what type of tenants to market to for your property types. Your PM also has the advantage of seeing the tenants before leasing it out were as it might not be advantageous for you to spend two hours commuting just to let a prospective tenant view your property. A PM would also have more experience dealing with bone heads that maybe aren't the best of people to rent to based off a single conversation. My wife and I manage our rentals in Indiana but not in Texas, but we currently live in Arizona. the biggest reason is my experience in property management and high expectations of property managers puts me in a position to think most of the PMs in Indianapolis are garbage and or incompetent at their jobs... I have tons of horror stories in dealing with 3 different property managers in Indianapolis. However, the ones in Texas are great and will never manage my rental their as long as they keep up the great work.
I will tell you though when you start interviewing PMs you need to ask these questions.... When I found out that some states charge these things, I realized I overpaid for my rentals, and it made my propeties immediately lose money.
Do you have an in-house maintenance team? How many people are the team? How do you charge for their repairs? Is it included in your property management fee or additional?
What does your fee structure look like? Is it a flat fee ie 100 dollars a door or 10% of rents? Do you charge for new leases and lease renewals? If so how much? Do you offer discounts for the more properties I provide you?
How long are your unit turns taking at the moment? What's the average cost of the turns?
What are your new tenant qualifiers that you look for? IE does the tenant have to make 2x rent or higher? IE what does an acceptable criminal history look like? What credit score gets a new tenant accepted? What do you charge for a class C security deposit? 2x rent? What type of properties do you currently manage?
These questions in my opinion are the most valuable. How the pm treats their rental requirements will determine if they are good at managing your assets. I had a property sit vacant for 3 months because the PM required a 3x deposit and income requirement in a class C minimum wage neighborhood. You don't charge that for class C. At most security deposit should be 1 month rent, and gross income should be 2.5x income tops, but not less than 2x income. Obviously, it depends on local laws, but knowing your local micro market makes the difference when marketing.
- 3yCorey ConklinPro MemberInvestor · Member since 2021 · 129 posts · 209 votes
The upfront costs and fees for a good property manager are peanuts for what value they can bring. That is only if every PM were created equal and did a good job. Unfortunately that isn't the case. Vetting through and finding a good PM company is harder than you think. It's even harder for newcomers.
I agree with @Nathan Gesner, if you have an understanding of the process you should try to self manage to learn the ropes on your first properties. You will make mistakes but you'll learn your lessons and get better. As you scale you will have a better knowledge of how to vet a property management company and can outsource at that time.
- 3yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
Why are novice investors always short-sighted about, "upfront costs and monthly fee for the property management"?
Following your logic, why did you pay all the real estate commissions, title fees, appraisal costs, etc.? Why didn't those, "seem steep to me"?
@Greg Scott stated it best, so stop being so foolish!
Logical Property Management4.9453 Reviews - Member since 2023 · 2 posts · 1 vote3y
Remote mgmt is HARD.(anything farther than ~2 hours. Especially when the house flips.
I have 10 properties. Manage 9 of them that are all within 5 miles of my house. The last one is 1,200 miles away, and it is managed by a Property Manager.
Pay the 6%-8% and the fees for a PM. You'll be glad you did. It will cut into your CAP-Rate, but you'll likely get higher rent to support the decision.
(all comments are my own uneducated opinon)
- Lender · Philadelphia, PA · Member since 2017 · 8 posts · 3 votes3y
@Jessica Stern Get Property Management Company. There are a few good ones in Philly.
- Member since 2023 · 31 posts · 27 votes3y
Quote from @Sheryl Sitman:
@Jessica Stern Great question and good that you are seeking advice. I live just shy of an hour from Philly and have a portfolio that includes Philadelphia and many other areas around the country. But even in Philly, I do NOT self manage. My reasons: I do not have the personality for managing tenant relations which in a city especially, can get complicated; I am an investor - not a landlord. In other words, I spend my time on developing my portfolio, analyzing markets and other projects related to RE rather than dedicating time to vetting tenants, replacing smoke detector batteries, chasing a delinquent payment, administering paperwork (lots of it in Philly). Also, my intention in becoming an investor was to live my life more freely - and now I travel extensively, often leaving the country for a month+ at a time. That would be challenging if I self managed. I worked my way through FOUR Property Management companies here before landing on one I am able to work well with. If you do self manage, I also have a great property maintenance for you :-) I manage the FB group Philadelphia Landlords Connect which you may want to join. Feel free to reach out
So much valuable insight here. Thank you so much!
- Member since 2023 · 31 posts · 27 votes3y
Quote from @Michael Smythe:
Why are novice investors always short-sighted about, "upfront costs and monthly fee for the property management"?
Following your logic, why did you pay all the real estate commissions, title fees, appraisal costs, etc.? Why didn't those, "seem steep to me"?
@Greg Scott stated it best, so stop being so foolish!
Calling me foolish is taking it a liiiittle too far. Message received but work on your delivery ;)
- Member since 2023 · 31 posts · 27 votes3y
Quote from @Randy Hopkins:
Remote mgmt is HARD.(anything farther than ~2 hours. Especially when the house flips.
I have 10 properties. Manage 9 of them that are all within 5 miles of my house. The last one is 1,200 miles away, and it is managed by a Property Manager.
Pay the 6%-8% and the fees for a PM. You'll be glad you did. It will cut into your CAP-Rate, but you'll likely get higher rent to support the decision.
(all comments are my own uneducated opinon)
Totally get what you’re saying. Thank you for the advice!
- Member since 2023 · 31 posts · 27 votes3y
Quote from @Marc Globensky:
It depends on the properties you buy. Some properties based on location, age of mechanical equipment, and property health are incredibly costly upfront if nothings been updated. Having a PM that has preferred vendors/contractors and an internal maintenance staff typically save you money because your pm gets discounts for the business they provide the vendors/contractors. If your properties are older than 10 years, I'd hire a PM and hang on for a bumpy 5 years it'll be expensive even if you do BRRRRR there's always something wrong. Additionally, if you've never livid in that market a PM is a Pro in that area and can better provide insight on what rents really should be and what type of tenants to market to for your property types. Your PM also has the advantage of seeing the tenants before leasing it out were as it might not be advantageous for you to spend two hours commuting just to let a prospective tenant view your property. A PM would also have more experience dealing with bone heads that maybe aren't the best of people to rent to based off a single conversation. My wife and I manage our rentals in Indiana but not in Texas, but we currently live in Arizona. the biggest reason is my experience in property management and high expectations of property managers puts me in a position to think most of the PMs in Indianapolis are garbage and or incompetent at their jobs... I have tons of horror stories in dealing with 3 different property managers in Indianapolis. However, the ones in Texas are great and will never manage my rental their as long as they keep up the great work.
I will tell you though when you start interviewing PMs you need to ask these questions.... When I found out that some states charge these things, I realized I overpaid for my rentals, and it made my propeties immediately lose money.
Do you have an in-house maintenance team? How many people are the team? How do you charge for their repairs? Is it included in your property management fee or additional?
What does your fee structure look like? Is it a flat fee ie 100 dollars a door or 10% of rents? Do you charge for new leases and lease renewals? If so how much? Do you offer discounts for the more properties I provide you?
How long are your unit turns taking at the moment? What's the average cost of the turns?
What are your new tenant qualifiers that you look for? IE does the tenant have to make 2x rent or higher? IE what does an acceptable criminal history look like? What credit score gets a new tenant accepted? What do you charge for a class C security deposit? 2x rent? What type of properties do you currently manage?
These questions in my opinion are the most valuable. How the pm treats their rental requirements will determine if they are good at managing your assets. I had a property sit vacant for 3 months because the PM required a 3x deposit and income requirement in a class C minimum wage neighborhood. You don't charge that for class C. At most security deposit should be 1 month rent, and gross income should be 2.5x income tops, but not less than 2x income. Obviously, it depends on local laws, but knowing your local micro market makes the difference when marketing.
Thank you SO much for this response! Extremely helpful.
- Member since 2023 · 31 posts · 27 votes3y
Quote from @Travis Bohling:
Congratulations Jessica!
Great question but it is hard to give a recommendation to such a personal decision. Maybe think through it like this:
Is the value of your free time worth more or less than the cost of management?
Is the satisfaction from mastering this skill greater or less than the heartache and stress you may endure?
Happy to chat further if you want to dive deeper on the questions above.
Really good points. Thank you
- Investor · Philadelphia, PA · Member since 2019 · 618 posts · 430 votes3y
Quote from @Michael Smythe:
Why are novice investors always short-sighted about, "upfront costs and monthly fee for the property management"?
Following your logic, why did you pay all the real estate commissions, title fees, appraisal costs, etc.? Why didn't those, "seem steep to me"?
@Greg Scott stated it best, so stop being so foolish!
Not every investor is on the same path or the same point of their journey. Just because some folks trade time for money doesn't mean everyone else has to. Most newer investors I speak with need every dollar that comes in. No shame in that at all.
I see what you are trying to say, but not sure I agree with the analogy. To get a mortgage most/all lenders ask for a professional to perform a title check and appraisal. Yes you can learn this skill but at the end of the day you still need to pay a third party to perform this act in order to get a mortgage. I understand this all can be waived for offmarket cash deals, but thats not where most beginners start.
To me its more like learning basic car maintenance (how to change the oil, brakes, etc). Is it a great skill to have, yes. Is it something thats 100% necessary, no. But it could help in the future to not over pay a car mechanic or if you end up in a bind to help solve or at-least diagnose the problem at hand.I believe there are a lot of net benefits for self managing if one has the time. At a minimum one really learns to respect how much work goes into onboarding / dealing with tenants and can help ask relevant questions when choosing a PM.
- 3yNed J.Pro MemberInvestor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
I'm a "self manage the first couple of units, to learn the ropes" proponent..... but a 1st timer 2 hours away..... Id hire a PM.
You still have to learn a lot because you still have to manage the PM and have an appreciation and understanding of how everything works.
I self manage mine but they are much closer to home for me.
- 3yTracy StreichPro MemberReal Estate Broker · Tulsa- OKC Oklahoma · Member since 2017 · 868 posts · 801 votes
@Jessica Stern. Full disclosure I am a property manager. I think with just a few units you could do it either way. it is a little more difficult if you are not right there. 2 hours away makes it hard for the little stuff like posting a notice. If you have the time to do it yourself then jump in and give it a go. you can always hire a PM in 3- 6 months if you decide it is too much work from a distance.
- New to Real Estate · Yorba Linda, CA · Member since 2023 · 3 posts · 0 votes3y
@Jessica Stern Congrats! I am closing on my first Philly property next week and I reside in California.
I just reviewed the City's Rental License Application requirement https://www.phila.gov/media/20230502102646/L_023_F_Rental-Li...
"If the owner/ operator resides outside of Philadelphia, an agent who resides within the city limits must be designated by the owner/operator." The definition of a "designated agent" is essentially a property manager. For this reason alone unfortunately I feel like I have no choice but to hire a property manager.
Best of luck! - Investor · Los Angeles · Member since 2022 · 36 posts · 24 votes3y
Quote from @Marc Globensky:
It depends on the properties you buy. Some properties based on location, age of mechanical equipment, and property health are incredibly costly upfront if nothings been updated. Having a PM that has preferred vendors/contractors and an internal maintenance staff typically save you money because your pm gets discounts for the business they provide the vendors/contractors. If your properties are older than 10 years, I'd hire a PM and hang on for a bumpy 5 years it'll be expensive even if you do BRRRRR there's always something wrong. Additionally, if you've never livid in that market a PM is a Pro in that area and can better provide insight on what rents really should be and what type of tenants to market to for your property types. Your PM also has the advantage of seeing the tenants before leasing it out were as it might not be advantageous for you to spend two hours commuting just to let a prospective tenant view your property. A PM would also have more experience dealing with bone heads that maybe aren't the best of people to rent to based off a single conversation. My wife and I manage our rentals in Indiana but not in Texas, but we currently live in Arizona. the biggest reason is my experience in property management and high expectations of property managers puts me in a position to think most of the PMs in Indianapolis are garbage and or incompetent at their jobs... I have tons of horror stories in dealing with 3 different property managers in Indianapolis. However, the ones in Texas are great and will never manage my rental their as long as they keep up the great work.
I will tell you though when you start interviewing PMs you need to ask these questions.... When I found out that some states charge these things, I realized I overpaid for my rentals, and it made my propeties immediately lose money.
Do you have an in-house maintenance team? How many people are the team? How do you charge for their repairs? Is it included in your property management fee or additional?
What does your fee structure look like? Is it a flat fee ie 100 dollars a door or 10% of rents? Do you charge for new leases and lease renewals? If so how much? Do you offer discounts for the more properties I provide you?
How long are your unit turns taking at the moment? What's the average cost of the turns?
What are your new tenant qualifiers that you look for? IE does the tenant have to make 2x rent or higher? IE what does an acceptable criminal history look like? What credit score gets a new tenant accepted? What do you charge for a class C security deposit? 2x rent? What type of properties do you currently manage?
These questions in my opinion are the most valuable. How the pm treats their rental requirements will determine if they are good at managing your assets. I had a property sit vacant for 3 months because the PM required a 3x deposit and income requirement in a class C minimum wage neighborhood. You don't charge that for class C. At most security deposit should be 1 month rent, and gross income should be 2.5x income tops, but not less than 2x income. Obviously, it depends on local laws, but knowing your local micro market makes the difference when marketing.
Hi Marc - Very insightful info! I have one property in Indianapolis, and will hopefully get my 2nd property very soon. I have a property management company currently managing my 1 property. I have a question for you, do you mind if I send you a private message?
- Member since 2023 · 31 posts · 27 votes3y
Quote from @Connie Phung:
@Jessica Stern Congrats! I am closing on my first Philly property next week and I reside in California.
I just reviewed the City's Rental License Application requirement https://www.phila.gov/media/20230502102646/L_023_F_Rental-Li...
"If the owner/ operator resides outside of Philadelphia, an agent who resides within the city limits must be designated by the owner/operator." The definition of a "designated agent" is essentially a property manager. For this reason alone unfortunately I feel like I have no choice but to hire a property manager.
Best of luck!Wow! Super helpful! Thank you 🙏🏼
Join the conversationCreate a free account to reply, vote on answers and follow this thread.