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Updated over 9 years ago on . Most recent reply

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Mitch Ottoson
  • Denver, CO
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House Hack - PM or be the landlord?

Mitch Ottoson
  • Denver, CO
Posted
Hello BP! I'm starting out and would like to house hack a small multi family home (duplex, tri, or quad) in the Denver area. I'm curious how other house hacker have handled the management of the property. After listening to several podcasts, I firmly believe that a good PM company is the success to scaling a buy and hold portfolio but is this a route that people go on their first property while living on site? Any input is appreciated!

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Scott Trench
  • Rental Property Investor
  • Denver, CO
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Scott Trench
  • Rental Property Investor
  • Denver, CO
Replied

@Mitch Ottoson I live in Denver, House-Hack and manage the property myself. I firmly believe that it is clearly more economical for me to manage the property myself than to hire a property manager. 

When the tenants need a minor repair, I can go ahead and do that myself in about 10 minutes when I get back from work or make the phone call to the handyman myself. 

The sum total of my work with the tenants has been this:

Advertise the property, show the property, accept applications (and fees), screen the applicants, sign the lease (5 hours or so upfront).

The tenants called once about a leak in the drain under the sink. I took a look when I got off work, and called the plumber (10 minutes). By the way, most property managers would bill you for the plumbing fee or have the plumber bill you directly - they would make the phone call for you though ;).

The tenants have called me twice in the past year. Once was for that leak. The other was for a problem with the grading outside the property - water was pooling next to the foundation - thankfully they brought that to my attention (it's next to their porch), or I might have missed it for a few weeks. Otherwise, I bill them automatically on the first.

I also reach out to the tenants periodically to ask them if they are happy and need anything. At my own initiative, I bought an AC unit for their side of the property in June (15 minutes to order it + installation) and at their response to one of my inquiries, they suggested a weather strip on their kitchen door to keep the snow out. I installed that just last month (10 minute installation, 45 minute trip to home Depot).

This has, in the last year, been about 8 hours of property management work. In exchange, I've not had to pay a property manager over $1,000. Now, I've done a lot of other work on the property, unrelated to the tenants, and the investment hasn't been easy, but the property management piece (which, by the way, does NOT generally include the fees for the plumber, the weather strip installation, or the AC purchase) has been really easy. 

Why is it easy? 

Because I live right next door. It costs me seconds to check out the property, vs minutes or hours for a property manager with many properties. I believe that I would be giving up hundreds of dollars per hour, every month, by hiring a property manager. I'm not worth that much... yet.

Will this scale? Nope.

But when I get to the point that my time is so valuable that I would rather pay someone else $300 per hour, I will surely hire out things like property management and easy repairs.

I think that day is a long way off for me though.

You should note that property management further will not include services for "basically maintaining a livable home" like mowing grass, shoveling snow, and keeping the landscaping reasonable. If a regular homeowner would have to do it themselves or hire it out, that is generally not included in property management fees.

Just to clarify - the property manager will coordinate these types of repairs and maintenance... then bill you for the fees for the third party contractors. Just know what it is that the property manager actually does, and understand exactly what you are paying for when it comes to property management fees. I believe that when you understand that, it becomes more apparant just how much the house-hacker sacrifices value-wise when it comes to property managment fees.

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