I am about to close on my first two properties in Philly next week (woohoo!) and cannot decide if I should hire a property management company, or self-manage the future renters.
I have a full-time job and live two hours away in NYC, but the upfront costs and monthly fee for the property management services seem steep to me.
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
Investor · Pasadena, CA · Member since 2017 · 612 posts · 523 votes
3y
As always, it depends on what your goals/plans are and then you work your way backwards from there. If you want to end up with a portfolio of rentals that bring in enough cashflow to support yourself, and you see you managing that business yourself eventually, then you may want to plan on managing a property or 2 when you are starting out. Or at least, learning about property management.
But, if you are hoping to acquire a relatively low maintenance portfolio, netting you enough cashflow to support yourself with little oversight or hand-on work, then your focus may be better spent on developing the skills to find a good PM to assist you in your goals.
Or maybe you want to build a business syndicating larger multi-fam projects, etc. Then again, experiencing PM may come in handy.
But, I don't agree with some others, that you should always learn the hands=on PM part of this business. It may be good to know some of it generally, but, unless that is what you aspire to do (for yourself or others), I don't believe you need to take that on yourself. And, you should take your current situation into account (i.e. distance to rentals, available time, etc).
But, this is a business and IMO the property management should always be a line item on your spreadsheet - even if you do it yourself. The same way as you shouldn't buy an existing retail business that only makes money if YOU work there. The business should make money when you have employees work there, even if you decide YOU want to be one of those employees. Otherwise, you are buying yourself a job, not a business.
So, in real estate, are you building a hands-on business you want to be more involved with, or are you planning on building a relatively low maintenance longterm investment business that requires minimal oversight.
Now, as someone previously pointed out, it looks like you are forced to use a PM anyway, since you don't live in the city. So, ...decision made!
"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 🙏🏼
He is absolutely right. Kind of a stupid requirement IMO
The designated agent must have a Phila address. Even if you live in neighboring county you do not qualify
Property Manager · Grants Pass, OR · Member since 2009 · 429 posts · 201 votes
3y
If you lived closer I would say self manage. But 2 hours is a long ways away to deal with emergencies and other landlord duties. Property management is expensive, but so is your time and gas. I'd lean towards property management in this case.
Alan Asriants - New Century Real Estate 590 Reviews