Why Are So Many Investors Suddenly Ditching Property Managers

Question

Has anyone else noticed the recent increase in forum posts about self-managing rentals, building your own management systems, and questioning whether property managers are worth the cost?

To me, this has a lot more to do with the real estate than the property management. A lot of owners bought real estate that simply are not performing the way they expected. When a property isn't cash flowing, the property management fee becomes the obvious target because it's one of the few expenses they feel they can control.

The problem is that removing the management fee won't fix a poorly underwritten investment. If the numbers only work on the surface because you eliminated professional management, the issue is almost always going to be the real estate.

Over the last several years there has also been a big push into asset classes that were traditionally owned by local investors who were very hands on because they had to be.  It feels like a predictable stage of this cycle. Instead of accepting that the investment isn't performing as expected, owners start looking for someone to blame. Right now property managers seem to be taking the heat which is just prolonging the inevitable. I suspect a wave of distress coming once these property owners realize the real estate is still failing with nobody else to point a finger at.

Bill B. · Answer

I really haven’t seen that many posts of people ditching PM’s to manage themselves. I have seen a lot of posts by people asking “What’s the worst part about having a PM?” Because it turns out they want to start a PM, or they have some new software that will replace your PM, or they’re going to make a chat bot That replaces your PM.

I agree 100% with Chris. I have 10 properties bringing in a little over $23k/mo in rent and pay $1,555 in management fees.  That might sounds like a lot but…

They keep me legal in the ever changing landlord law landscape. The vendors they sue daily care more about making them happy and putting them first than the one I use once a year. 95% of all repairs are completed same day, even Sunday’s and holidays, this makes people stay. They’ve got the 100 page lease they know is legal and deals with problems they’ve experienced with other clients homes, I get that for free. They’re better at screening, advertising, and raising rents than anybody with only 10 properties is going to be. I “work” 30 minutes a month, 90% of that is bookkeeping. If I had to spend 10 hours a week that “Job: would pay less than $40/hr, it could be required to be done anytime on any day, and it would be done much worse. Heck, I could just buy another house to pay the management fees on the first ones. But I treat them as my 401k/Roth, not my job.

Certainly to each their own. But I believe like a good CPA. A good PM should pay for themselves. Most of the time it’s “just” more free time, but sometimes it’s literally cash money. Good luck whatever you choose.

Ps. Is your post another one by someone who’s not leaving their PM? Or are you going to self manage?

Henry Lazerow · Answer

I have always found property managers pointless for class A B areas. You throw a lockbox on, have a handyman on call and use a leasing agent. Tenants pay electronically its easy. I have many clients do this. Lower class is where you NEED a manager unless your local and very hands on.

Chris Seveney · Answer

For Class A rentals, there are single-family. Sometimes managing yourself seems pretty simple, but most people don't have Class A rentals. Many read the horror stories and think the grass is greener on the other side, but what it really boils down to is: what is your best use of time?

Not every property manager is awesome, and not everyone is awful. At the end of the day, it's down to the person to determine what's their best use of time. For me, if I have a $2,000 rental paying $160 to $200 per month to manage repairs, rent, and everything related to property management, it is well worth it, especially for somebody who has under 20 doors

Jim Johnson · Answer

I think there's some truth to that, but I'd also say owners should regularly evaluate whether they're getting value from their property manager. A good management company doesn't just collect rent—it helps reduce vacancy, protect the asset, manage risk, and keep operations running efficiently.

Self-managing can absolutely work for some investors, especially if they have the time, systems, and local knowledge. The key is making an honest assessment of whether you're saving a management fee or simply taking on responsibilities that end up costing more in the long run.

Drew Sygit · Answer

Several times over the last 3 years, we've been terminated by a property owner of a Class B-D rental that really didn't have a clue about what their actual expectations should be, given their property Class.

We continue to track the properties and over 80% go up for sale within 12 months of these owners thinking switching to a new PMC is going to solve their property problems.

As AI evolves, it will make "properties" easier to manage, but doubt it will make it easier to manage tenants.

Rachid Abadli · Answer

@Stuart Udis, I think you're right that bad underwriting is the root cause for a lot of these — but I'd push back on the idea that it's the only driver.

I self-manage 40+ units in Sacramento. I didn't fire my PM because the investments were bad. I fired them because I realized I was paying $7,200/year and still doing half the work myself — fielding tenant calls they missed, catching compliance deadlines they didn't know existed, and reviewing invoices for repairs that seemed high.

The real shift I've seen isn't "I can't afford a PM" — it's "I now have systems that do 80% of what a PM does without the 8–10% cut." Maintenance intake, rent collection, lease tracking, compliance calendars — five years ago you needed a PM or a spreadsheet. Now there are tools that handle the operational side while you keep the relationship with your tenant.

@Bill B.. makes a great point about the value of a good PM. I agree — for out-of-state investors or anyone with 50+ doors, a quality PM is worth every penny. But for the 5–20 unit self-manager who's local to their properties, the math has changed. The operational gap between a PM and a self-manager is narrower than it's ever been.

Where I still see people get burned is compliance. That's the one area where "winging it" as a self-manager actually gets expensive. In California, missing an AB 1482 notice window or miscalculating a rent cap can cost you more than a year of PM fees. Whatever system you use — PM or self-managed — the compliance piece can't be optional.

Ed O. · Answer

I think there's a lot of poorly run management companies... I have used two.  One had 100+ units under management,  the other 700. Both were managing properties i previously self managed.  The 700+ unit operator was making rookie mistakes at my expense. I know there are good ones.  .

I agree with the sentiment that the turn key sellers are behind some of this also.

Richard F. · Answer

Blame the "get rich quick" promoters, and the Slumlords that believe the rules don't apply to them (or, more accurately in a lot of cases, simply don't have a clue what the rules are), the truly oblivious that really don't know WHAT they don't know!

Due diligence is the most basic preventative measure to take, whether you are talking about purchasing a property; hiring a contractor; screening applicants; "writing a lease" (which in many cases is actually "practicing law without a license"); and, oh, I don't know... researching the applicable laws before anything else!

The wise investor makes their profit when they Buy. They know their market niche, they know the rules, they know the effects of age on a property, and, even though they might not know all the answers, they DO know most of the questions, and who or where to get them answered appropriately.

Why Are So Many Investors Suddenly Ditching Property Managers

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