Property Management: should they stay or should they go

[Gregory Schwartz]

I am in the process of purchasing my first buy and hold rental. Very excited to close in a few weeks. The property is a duplex with one side rented and the other recently vacant. The property management company who currently manages the property has contacted me and is interested in continuing their business with me as the new landlord. I budgeted for management but planned on self managing for increased cash flow. The pros and cons of hiring the management company...

Pro: they're actively advertising the current vacancy

Con: 10% of my income gone

Pro: I will be moving in about a year out of the state making self management more difficult

Con: I live 3 mile from the property and pass it on my way to work everyday

Pros: the seller highly recommends them 

Thoughts, advice, guidance...

[G. Brian Davis]

Hi @Gregory Schwartz, and congratulations on your first rental purchase!

I wouldn't think in terms of "higher cash flow" from managing it yourself - it doesn't change the cash flow, it changes who gets paid for the labor. Labor is an expense no matter who does it. If you managed it yourself, you're accepting a part-time job basically, for a certain amount of pay. Whether that pay is worth the labor is up to you. 

On the one hand, managing your first few rental properties yourself is a great education. On the other, if you're moving away in a year anyway, the continuity of having this property management company stay on may be worth sacrificing the education you'd get. 

I'd probably keep them on if it were me, while continuing to educate myself elsewhere.

Please feel free to PM me at any time, and best of luck!