Los Angeles, CA · Member since 2017 · 12 posts · 3 votes
Hi all,
I'm Katie, new to BP, and a full-time English teacher, soon to be a landlord. I'm also a traveler. A few times a year, I go out of town for up to a month at a time in summer, a couple of weeks in winter, as well as a week for spring break. I live in Los Angeles, but all my family is in Louisiana, and I like to go to different countries (26 so far!).
I'm wondering since I'm extremely new to being a landlord, and a traveler, plus a full-time teacher, if hiring a property management company is worth it. I'm leaning toward yes, it's worth it, since I don't know much at the point about being a landlord, and I travel. I'm also super busy at work.
Any thoughts, suggestions, anecdotes, etc., are much appreciated. Thanks.
San Francisco, CA · Member since 2017 · 29 posts · 3 votes
9y
Jeff nailed it but it also depends on how hands-on you want to be. If you like dealing with people and want to learn to be handy, you can have some fun while earning a little extra more. If not, then property management is a good investment.
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
9y
it's absolutely worth it.
from a financial perspective, the retail value of the work is set by the market, NOT by how you value your time. so if the job is worth X and you pay someone else, or you pay yourself, the value remains the same. Now if your time is not valuable and you're happy to spend it on this work, you may be able to justify the expense OR if you think you can do a better job than the professional and your efficiency can return a better value than the market sets. Unfortunately both of these situations almost never occur in the real world, people who pay themselves to property manage aren't really saving any money, they are paying themselves for the same market rate and spending the same amount of time that the market deems necessary.
another way to look at is: you make the most money in real estate when you buy houses. Spending your valuable time maintaining properties is a distraction from where you make real money: acquisition.
Lastly, tenants are a headache, make them someone else's problem.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
Hey Katie! I'm also in LA (Venice) and I won't landlord myself...I've always used a PM company. Granted all of my properties are out-of-state so PMs definitely make sense then, but I'd probably use one if my properties were local for one of the main reasons you mention- I love to travel and I do it a lot. Then for me I just don't have a desire to have a job as a landlord. I'd much rather spend my time doing a million other things (basically anything other than landlording) and I also don't want to learn to swing hammers, fix toilets, or learn tenant laws :)
Investor · Edmonton, Alberta · Member since 2015 · 24 posts · 24 votes
9y
Hi Katie,
Good question, and I see a lot of great answers. But I think I can help a bit more with this.
I met my mentor about 7 years ago who had built up to own 48 rental properties. The funny thing was, he didn't live in the city where he bought. Hi skill being a landlord was very high, and dealing with issues was easy for him, even being a 2 days drive away.
Was he profitable? Very! Still to this day he will never hire a property management company. One thing I learned from property managers is they will never take care of your house better then you will, and that is the reason he likes to manage properties himself. As well, 48 properties with hundreds of dollars a month in savings is a big deal to your monthly profit. Income - expense = profit.
Having said that, I am a property manager myself and manage 100 properties on a daily basis with a professional property management company. Do I think I provide value to landlords? Absolutely I do. I am a property manager 24/7 and have dealt with almost every tenant issue under the sun, therefore I am more skilled at dealing with landlord and tenant issues. So I should be able to provide my owners with more value in the long run and avoid costly mistakes.
Lastly, is I also teach DIY landlords every day how to manage rental properties themselves instead of hiring a property manager. I can tell you from experience, if you have a mentor at your side in the beginning, you should not need a property manager to have success and can save hundreds of dollars every month. 1-4 properties should be easily manageable on your own even if you are traveling a lot. 5-10+ properties is when you might need to stick around an it to keep an eye on thing and possibly hire a property manager depending on what you are trying to accomplish in life.
Hope that helps and good luck!
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
9y
In your situation as a busy worker bee and traveler, I would say yes. Explore the PM option but vet well as @Shaun Patterson recommends. Don't have to look far here on BP to view many PM horror stories. Will your property be in your backyard? Close to you? That's a huge factor as well.
I self-manage because I enjoy it and my properties are in my backyard. I also need something to do. As much as I would love to spend all my time working on million dollar deal negotiations as all the 'this is beneath you, work ON your business not IN your business' , 'tenants are a pain'... drivel suggests, it's just not so. Especially in the beginning.
I choose which things I work on and which I sub out. I saved myself at least $600 in 4 hours Tuesday dealing with plumbing issues, but I don't clean, dig, etc because I don't like it. I do like mowing lawns (while I listen to podcasts) so I and/or my son and I handle those. Darn, should be working ON my business more....
Flexibility and control are two of the main benefits of real estate investment. This is your choice. Please check back in an update us @Katie Andrews about how badly your first 3 PMs burned you! LOL
Investor · Edmonton, Alberta · Member since 2015 · 24 posts · 24 votes
9y
Steve Vaughan Shaun Patterson
I don't know if it is the same situation in your state as it is in my province here in Canada, but I find most property managers are older people ready to retire and haven't got a clue about what customer services means lol
Or, they are realtors using property management to cover monthly expenses and sell real estate as a full time job.
Neither is really passionate nor educated enough to be professionals. Typically I find investors are the best landlords.
Property Manager · West Palm Beach, FL · Member since 2012 · 296 posts · 143 votes
9y
@Corey Arnemann No its like that every place. its the sad truth that most firms just want to collect a check. Their is a big void in the smaller management of properties 100 unit building and smaller.
I don't know if it is the same situation in your state as it is in my province here in Canada, but I find most property managers are older people ready to retire and haven't got a clue about what customer services means lol
Or, they are realtors using property management to cover monthly expenses and sell real estate as a full time job.
Neither is really passionate nor educated enough to be professionals. Typically I find investors are the best landlords.
I appreciate your comments from up north, Corey.
Here it's not poor 'customer service'. They will respond and smile while they are using you to fund their Porsche payment.
If I could find one that spread their lease-up/vacancy fill fees out over the length of the tenancy and just ask a couple additional probing questions when a service call comes in, I would consider trying one out. They immediately dispatch the Maytag man at $100/min (with upcharges) when a tenant calls in about any little thing. Nobody talks about how repair requests are handled. I save 10s of thousands per year handling little items over the phone.
After all the discussion about who takes better care of what and who charges how much for what, it all comes to one question:
What do YOU want for your life?
Do you want to continue to travel and spend your days with the students you may love?
... or do you want to be property manager / handy-person / janitor / grounds keeper or landscaper / tenant screener / eviction filer / etc.? ... on top your "day job"?
Some will argue about the expense of PMs. I look at it this way:
I can always get more money (some people reading this just fell to the floor in cardiac arrest).
Investor · Edmonton, Alberta · Member since 2015 · 24 posts · 24 votes
9y
Steve Vaughan Shaun Patterson
Seems insane...
What's interesting to me is most management companies will say anything under $250 we take care of, anything over $250 and we will call you.
However, anything under $250 should not be anything urgently important. So why can't the owner be involved and possibly repair the issues themselves.
With my property management company, I just default to calling he owner after I have personally assessed the problem and determined the best course of action.
Idk, but getting into this line of business has opened my eyes to how wrong property management companies treat their owners. The number 1 complaint I hear, is managers never get back to them about anything. Just boils my blood
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
9y
Hhhmmm... Sounds like Canada is a ripe market for developing training both for property managers on how to run their business so they are actually sought after by landlords and for landlords on how to screen and properly manage property managers!
After all the discussion about who takes better care of what and who charges how much for what, it all comes to one question:
What do YOU want for your life?
Do you want to continue to travel and spend your days with the students you may love?
... or do you want to be property manager / handy-person / janitor / grounds keeper or landscaper / tenant screener / eviction filer / etc.? ... on top your "day job"?
Some will argue about the expense of PMs. I look at it this way:
I can always get more money (some people reading this just fell to the floor in cardiac arrest).
Time? Not so much.
My $0.02 ...
I agree with your premise that time is much more valuable than money, David.
Just want to throw this angle out there - because I self-managed early on and saved the money I would have paid to a PM and GC (I was rehabbing a ton to stabilize) I estimate I exited the cubicle 7 years ahead of schedule. Some may argue I received more time by doing it myself.
PMs largest cost isn't the 7-10% of rents. It's the over-priced repairs and make-readies. The 1 month's rent to fill a unit. (Really?) It's the times they forget to shut off your water when it was vacant in winter and it floods for a week or they don't maintain your gutters and your basement floods. The $10,000 biggies that could have been avoided but weren't. Cheers!
Toronto, Ontario · Member since 2017 · 5 posts · 0 votes
9y
Here in Ontario, Canada, home insurance companies require you to be resident (yourself) of one of the units, or live just a few miles from your rental property. If not, then it is mandatory to hire a property manager who I believe doesn't have to be a professional one. Anybody who could do the job of a PM is good enough.
That all comes under the heading of "Managing Property Managers". They work for you, you don't work for them. Screen them like you would any employee and, when performance falls short of the mark, exercise the termination rights in your contract with them, learn the lesson and incorporate it into your screening of and contract with the replacement PM.
You make sure to include the PM's liability for failures such as water shut offs in the contract or you find a new PM candidate who is responsible and accepts liability for their own failures. Your attorney can help you draft a contract, an addendum or a rider making sure it's legally enforceable.
Poor property management is enabled by the landlords who allow it to happen / continue.
@Renato A. isla, "good enough" for the insurance company? ... or meets YOUR expectations (which should be HIGHER than the insurance company's)?
Property Manager · West Palm Beach, FL · Member since 2012 · 296 posts · 143 votes
9y
@Corey Arnemann when I talk to prospective landlords. I give them 3 options for every kind of issue that usually comes up. This helps me gauge how hands off he wants to be. I also request all maintenance people take pictures of what was done and if their are any parts changed. Now some things you can't take a picture but it still helps to have paperwork.
Investor · Edmonton, Alberta · Member since 2015 · 24 posts · 24 votes
9y
Shaun Patterson Katie Andrews
That's an interesting way to handle the maintenance. I might implement that into our management procedure. Typically I do the inspection if the tenant cannot explain to me what the problem is before I contact the owner or request contractors.
For example, I had a tenant call me stating the dryer (which was brand new) does not work at all. Of course that's as far as troubleshooting goes for tenants. Upon my inspection, it had nothing to do with the dryer at all, but a faulty outlet.
Do you hire a handyman to run down and check? Or is it straight to the contractors or owners? Maybe this is beyond the scope of this thread, but it may help determine what differences property managers have for dealing with maintenance and find the best property manager.
Property Manager · West Palm Beach, FL · Member since 2012 · 296 posts · 143 votes
9y
@Corey Arnemann This would depend on how you train the tenants. I usually tell tenants that if it is a issue with something that you did you will get charged for the repair man going out. If it's a actual broken item then there is no charge. Why should i pay for sending someone out to teach you how to reconnect the dryer cable because your kid unplugged it? I got tired of people not knowing how to use the washer and dryer and then calling because they couldn't figure out how to hit wash. I wouldn't waste a owners time with a issue like this.
Investor · TX · Member since 2015 · 393 posts · 290 votes
9y
I am currently self managing 9 units with another under contract. I agree with the poster above, self managing will get me away from the job I currently hate. I don't mind doing it myself, and I can do everything except the refrigerant part of AC work. We plan to travel for extended times also, after retirement, and we will handle it with our list of local handymen and contractors that we have used in the past on the occasions when I was unavailable to do the work. I am currently looking at the best way to collect rents remotely, but I have no doubt that we can handle our 10 units ourselves, even when we are out of town.
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
9y
@Katie Andrews From the lifestyle you described that you want to live, you should hire a PM without a doubt.
With that said, you want to make sure to put yourself in a position to hire a good PM. If your property is in a good area you will be able to attract a good PM, if the property is in a bad area your property manager and bad tenant pool will drain any potential ROI you can expect.
This is advice I always give to my clients here in Connecticut because I have been through these situations as an investor and realtor. If you think at some point you may want to hire a PM that should directly impact where you choose to buy. Bad areas attract bad tenants and bad property managers. Plain and simple.
I self manage everything, I advise new investors to start by self managing to learn the business and acquire the knowledge to one day be able to manage a PM.
In your situation I highly recommend you go straight to a PM. This will be difficult to find a reliable one and you will have a very steep learning curve in managing a PM but I doubt you could self manage a property and tenant successfully.
@Corey Arnemann when I talk to prospective landlords. I give them 3 options for every kind of issue that usually comes up. This helps me gauge how hands off he wants to be.
@Shaun Patterson, what three options do you give? Thanks, Katie
@Corey Arnemann This would depend on how you train the tenants. I usually tell tenants that if it is a issue with something that you did you will get charged for the repair man going out. If it's a actual broken item then there is no charge. Why should i pay for sending someone out to teach you how to reconnect the dryer cable because your kid unplugged it? I got tired of people not knowing how to use the washer and dryer and then calling because they couldn't figure out how to hit wash. I wouldn't waste a owners time with a issue like this.
Being the teacher that I am, I can see myself posting directions on how to operate the washer and dryer. I can also very much appreciate the concept of training tenants, and will probably be posting another thread about that. I have a feeling it's much like good classroom management: set expectations early, provide limits/boundaries, assert and enforce consequences like who pays for what. Don't escalate, and don't take it personally. Make the problem the issue, and be an ally with the tenant against the problem. And listen, don't just proscribe solutions.