Self-Manage vs Property Manager
Architect · Fort Lauderdale, FL · Member since 2017 · 37 posts · 16 votes
Self-Manage vs Property Manager
Most Popular Reply
Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes
8yI recommend managing yourself for a few reasons.
#1. Great way to learn first hand experience as to what it takes to manage a property. When/if you ever decide to use a PM you will have a much better understanding of what to demand/expect.
#2. PM can eat up a lot of your profit, especially early on and trying to get started.
#3. If you get good tenants then you won't hear from them very often. After getting them placed there isn't a whole lot of managing to do.
35 Replies
- Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes8y
I recommend managing yourself for a few reasons.
#1. Great way to learn first hand experience as to what it takes to manage a property. When/if you ever decide to use a PM you will have a much better understanding of what to demand/expect.
#2. PM can eat up a lot of your profit, especially early on and trying to get started.
#3. If you get good tenants then you won't hear from them very often. After getting them placed there isn't a whole lot of managing to do.
- Member since 2016 · 13k+ posts · 12k+ votes8y
Self managing your first property (first few) is highly recommended. It is not much different than being a home owner in regards to taking care of a property and will provided essential knowledge down the road.
This knowledge will assist you in managing a PM when you grow to the point of actually needing one.
Without the first hand knowledge of managing your own property and tenant it will be very difficult to manage a PM. Trust me when I say that finding and managing a PM is a job in itself. Get it wrong and it can bankrupt a new investor.
- 8yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
From one Architect to another...use a PM. Your time is more valuable, and you don't schedule when issues come up that need you. A good PM does more than you think. For 18%/month (due to volume), our PM does the following (and more):
1 - Vets the new tenant
2 - Handles all emergencies
3 - Handles the rent collection
4 - Handles collection
5 - Handles evictions, including going to court if needed
6 - Goes to court with us if we are the plaintif
7 - Handles the building departments
8 - Handles the CofO...and maintaining the CofO
9 - Handles all repairs/rehab needed...this could include when the property is 1st purchased
10 - Handles the transition (repairs, cleanup, followup, etc...) between tenants
11 - Pays up front for CAPEX and other repair/rehab costs and we reimburse through the rents until they are whole
12 - Keeps track of all of this online where we have total access.
13 - Provides online access to tenant for communication, rent tracking, timelines of events, etc...that we also have access to.
14 - Auto deposits cash flow into our account, and auto transfers rent from tennent's account.
15 - ...and more...Your time should be spent analyzing, negotiating, finding properties, finding partners, finding more funding, managing rehab on flips, etc...
- Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes8y
You give up 18% of your profits? I'm mind blown right now.
- Dayton, OH · Member since 2017 · 143 posts · 62 votes8y
This is something I've researched heavily and I think the best route is to start off doing it yourself, for the reasons listed above, but to include PM fees in your calculations (even if you aren't using one to start).
Your life and circumstance will evolve and change and you never know when you might want to make the transition to a PM company. You should be prepared for the possibility you may need to transition to using one and, for that reason, you should include it in your numbers.
- 8yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Originally posted by @Derrick E.:
You give up 18% of your profits? I'm mind blown right now.
8%...not 18%. Typing too fast...sorry
- Rental Property Investor · Atlanta, GA · Member since 2016 · 325 posts · 253 votes8yI recommend you to self manage your first property. I currently have several SFH and I also work fulltime like you. The key to success is knowing your short term and lo g term goals. I wanted to know ins-and-outs of rental business so when I scale up and eventually hand it over to PM, I kind of anticipate what is involved. However, after my first couple houses, I felt like I can actually manage it myself. I have put together a solid team of support staff that handles my issues on a minutes notice. The team includes a handyman who does electrical and plumbing too, but I also have a very economic certified electrician and a plumber as backup, a great realtor who drafts my offers in less than an hour. Good real estate attorney, however I use him only for closings and deed transfers, obviously a CAP. So what I do? Well, when acquire a property, I ensure it is fixed the way I would have my house fixed (not with expensive faucets or cabinets but reliable). it is clean and painted beautifully. it doesn't take lot to do all these plus apartment grade carpet. While I am working on the house, I list the property on zillow that automatically puts the listing six other sites. I phone screen the tenant using advices I have read here on BP or nonosenselandlord.com (Thanks Eric). If i like thier answers then i schedule to show them the property in the evening or weekend. always schedule multiple people to see in the time slot. That creats competition. I then use TransUnion's mysmartmove.com to run credit check and criminal background for the applicant of my choice. I review their paystub and do employment verification myself. of everything is good then I collect the security deposit and first month rent at the signing of lease. They get keys on the weekend before their move and have three days to transfer utilities to their name. I do all these while working full time. It is doable but not until you have your first property. PM me if you need more information.
- Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes8y
Originally posted by @Joe Villeneuve:
Originally posted by @Derrick E.:
You give up 18% of your profits? I'm mind blown right now.
8%...not 18%. Typing too fast...sorry
OK. Now that makes sense lol
- BOISE, ID · Member since 2014 · 77 posts · 45 votes8y
Just make sure if you start out self managing, you account for PM costs in your analysis. That way when you are ready to hire a PM the numbers still work.
- Rental Property Investor · Overland Park, KS · Member since 2015 · 492 posts · 234 votes8y
You can also hire someone who is very good at getting the property leased. They get all the paper work in order, find a great tenant and you take it from there. If you have a great tenant and property you shouldn't hear anything.
I do this on my duplex. Tenant is on auto-pay, effortless.
- Rental Property Investor · Atlanta, GA · Member since 2016 · 325 posts · 253 votes8yI breakup my rental income in few buckets after servicing mortgage. Profit first, OPEX, CAPEX, Tax & Insurance and Owners Comp. the last one should go to PM if I were to get one. This strategy came from the book Profit First.
- Investor · Franklin, NJ · Member since 2017 · 27 posts · 26 votes8y
I self manage and while tough at first getting used to the tenant turnover process, and learning how to deal with repairs, I have found it to be worth the time in the longrun. You save a great deal not paying a PM to do a job you easily handle yourself with a bit of patience and willingness to learn. It really all boils down to - are you willing to take the extra time to save yourself some money? My answer is yes simply because you can use that money to force appreciate your rentals and raise rents, put that money towards more deals, or put it back in your pocket, but at the end of the day like anything else, the choice is up to you.
- Investor · Northern, VA · Member since 2016 · 1k+ posts · 904 votes8y
Originally posted by @Austin Fox:
Hello Biggerpockets,
As I continue my research into making my first purchase, I have never been a landlord before. I have lived in an apartment so I have an idea what it is like but not from the other side. What are your thoughts on hiring a property manager for my first purchase? Or should I look into self-managing? Any tips/ideas/thoughts on the self-managed vs property manager perspective. I currently work a full-time job 830am-5:00 pm and I am looking for real estate within the 45-mile range. No kids, no wife and still living at home for now, so time would not be a concern(after work, weekends,etc.)
Like most answers in life.. It Depends.. It depends on whether you want to learn more about different aspects of real estate property management, which can include dealing with tenants, taking repair requests, collecting rents, possibly evicting them, even doing some simple repairs, then you should self manage the properties.
If you want to just spend majority of time finding deals and funding them, you should delegate the mundane day to day part to someone else.
The thing is that its almost impossible to delegate the latter part to someone else unless you are working with a TK provider, in which case the former part is also their responsibility.
- 8yJordan MoorheadBusiness MemberReal Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
@Austin Fox what are you looking to buy for your first purchase?
Typically I would recommend self managing and house hacking if you can but it depends on what you'll be getting into.
The Moorhead Team5139 Reviews - Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes8y
I generally recommend self-managing if in your backyard, but it also depends on your personality type. If you're 'too nice' or fly off the handle at little things, better to get a PM.
The PM will cost you, though. Factoring in the high repair costs of calling the maytag man for every little thing and the 'apathy fee' of it taking longer to turn units + the fee of filling vacancies, a PM for mom and pop owners will run about 14%-16% after all is said and done.
I've paid off loans entirely with the savings I've realized from self-managing. If you are emotionally flat and have the time and interest in doing it yourself, go for it @Austin Fox!
- Realtor · Concord, NH · Member since 2017 · 48 posts · 30 votes8y
@Austin Fox ,
I'm new to Bigger pockets, but from my experience a PM is most of the time not invested in the property. I currently self manage my buildings, but I have used 2 different PM's in the past.
Both I had zero luck with, the more rentals I would buy the more money I would lose to excessive costs or past due rents etc. Fired both, took over the management, yes it was a learning curve, but the calls/emergencys are limited to bi-monthly.
I have a fulltime job 60+hrs weekly with a wife and kids ;)
I have a checking account per tenant at the same bank, they deposit the rents, I do not have to collect rents, this works for me, doesn't always work for others!
Thanks!
- Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes8y
Originally posted by @Austin Fox:
Hello Biggerpockets,
As I continue my research into making my first purchase, I have never been a landlord before. I have lived in an apartment so I have an idea what it is like but not from the other side. What are your thoughts on hiring a property manager for my first purchase? Or should I look into self-managing? Any tips/ideas/thoughts on the self-managed vs property manager perspective. I currently work a full-time job 830am-5:00 pm and I am looking for real estate within the 45-mile range. No kids, no wife and still living at home for now, so time would not be a concern(after work, weekends,etc.)
I recommend self managing for a bit, it will help you learn the ropes and as you grow and scale you can hire a PM.
For me, I know when I am asking my PM to do something that should have been done yesterday and when I am asking them to bend over backwards for me. I also know expenses much better and can run the business more efficiently because I did it myself for awhile
Second City Real Estate4.821 Reviews - Rental Property Investor · Jefferson, GA · Member since 2017 · 95 posts · 145 votes8y
It depends on your situation....what is your time worth to you and how tight is your budget? If landlording fits into your current lifestyle, I'd save yourself some money and go for it. If you don't want to deal with the hassles and simply collect a check every month, go with a PM. Personally, I do the latter, because my time is more valuable than what I would save managing my properties myself. Just make sure you hire a good PM if you go that route. Good luck!
- Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes8y
@Austin Fox I'm not like most people replying, I'd recommend using a PM. It's not that there's no value is managing something yourself but it's just easier. That said, I grew up with family that had property that they self managed. I spent enough nights/weekends helping with projects, driving buy for late rent pickup, etc. that I knew I had no interest in doing it myself. Yeah, I know, I'm lazy. I also invest out of state so there are some practical implications. All of that rambling aside, when I started investing in real estate I knew (and planned) that I wanted to be an absentee owner.
- Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes8y
I think you can’t go wrong with a lot of what is said above. Some people are not doing themselves any favors by managing their own properties because they can’t assume the proper role of landlord. But please try and find other landlords in your area that you can rely on for guidance (mentors).
I will tell you this: I love it! It is a lot of fun, for a whole host of reasons.
When I started I had my down days- my stomach would sink when the landlord phone rang. But I stuck it out and it got easier and more profitable and fun.
I hardly hear a peep now most times- now that is not to say that I didn’t get a silly text from a tenant when we were on vacation in Europe, but it happens!
Just remember- if I can do it, you definitely can! Enjoy and good luck!
- Investor / Broker · Brooklyn, NY · Member since 2016 · 665 posts · 1k+ votes8y
When you do self-manage in the beginning, you are basically a paid intern and you quickly find out how important tenant screening will be.
If you stick with it, as I did for the last 20 years, you wind up putting in a system that works incredibly well.
In the beginning of my REI career, I had to evict 3 tenants in 3 years. Just recently I evicted another tenant.
All of the 4 tenants are inherited tenants.
The 1st tenant I had to evict came in the 3rd year of my investment history.
I used an Attorney. HOWEVER, the Attorney was delaying the case by postponing it when he went to court. In this Attorney's situation, he was too busy with other pending cases, that it caused me to have a longer eviction than what was necessary.
Most Attorney's in NYC will charge $300 or more per hour when they go to Court.
It wasn't until I decided to do my own eviction (called a Pro-Se Eviction) that I found out that I prefer to do it myself, despite all the literature contrary to this.
On this 2nd Eviction, the tenant did not show up. In NYC, the 1st Judge you see is a Summary Judge. The Summary Judge called both the tenant and I to appear in front of him. The tenant was not present.
The Judge then asked if I was ready to go to see the Trial Judge or would I postpone the case. I then realized that Attorneys would need to postpone because they have to wait for their other cases to be called that day as well.
Either way, I had the time and the Summary Judge sent me to the Trial Judge where we did what's called an Inquest, a trial where one of the parties is not present.
The only thing I had to do was prove that I was the landlord by presenting a certified copy of the deed, which I brought with me, but did not know how useful it was going to be that day!
Needless to say, I won the case. The Tenant was surprised since it seemed that her legal aid told her not to worry as because her no show would automatically be postponed. That legal aid did not count on me being Pro Se and going to the Inquest! HA!
In NYC, I can now see why evictions take so long from my personal experience in Court.
I have a few more stories, but I think you get the point.
Some of these experiences definitely make you a better Investor and Landlord if you do not allow it to intimidate you.
After one more Pro Se Eviction, I had not done an eviction for 12 years until 2014.
In 2014, I bought a property which was so good, it made my Partners $800k in 3 years. HOWEVER, I had to take the building with a tenant who started an illegal hair Solon. Somehow she had a Business License in a Residential Apt so we had to be extra careful. That's why the previous owner wanted to sell. (BTW, the building's $800k in appreciation was due to increasing economics mostly, not because I bought it far undervalue).
That eviction took a year but we were rewarded for sticking it out. Really, there isn't much time spent on doing the eviction. I treat it like part of the overall job of being a Real Estate Investor. Like every job, there are somethings you learn that you may not like but makes you better in the profession.
ANYWAY, I believe a lot of franchises make you go through their operations before you are allowed to buy it because they believe you will have more success by experiencing the operations first.
I think that's an entirely accurate way to think about business in General, including Real Estate Investing.
- Investor · Redlands, CA · Member since 2015 · 13 posts · 7 votes8y
Originally posted by @Al Pat:
I recommend you to self manage your first property. I currently have several SFH and I also work fulltime like you. The key to success is knowing your short term and lo g term goals. I wanted to know ins-and-outs of rental business so when I scale up and eventually hand it over to PM, I kind of anticipate what is involved. However, after my first couple houses, I felt like I can actually manage it myself. I have put together a solid team of support staff that handles my issues on a minutes notice. The team includes a handyman who does electrical and plumbing too, but I also have a very economic certified electrician and a plumber as backup, a great realtor who drafts my offers in less than an hour. Good real estate attorney, however I use him only for closings and deed transfers, obviously a CAP. So what I do? Well, when acquire a property, I ensure it is fixed the way I would have my house fixed (not with expensive faucets or cabinets but reliable). it is clean and painted beautifully. it doesn't take lot to do all these plus apartment grade carpet. While I am working on the house, I list the property on zillow that automatically puts the listing six other sites. I phone screen the tenant using advices I have read here on BP or nonosenselandlord.com (Thanks Eric). If i like thier answers then i schedule to show them the property in the evening or weekend. always schedule multiple people to see in the time slot. That creats competition. I then use TransUnion's mysmartmove.com to run credit check and criminal background for the applicant of my choice. I review their paystub and do employment verification myself. of everything is good then I collect the security deposit and first month rent at the signing of lease. They get keys on the weekend before their move and have three days to transfer utilities to their name. I do all these while working full time. It is doable but not until you have your first property. PM me if you need more information.Al gives a great example of how you should manage your own if you do decide to go that route. You have to run it like a business and create a system to manage it all. Otherwise it ends up managing you and your time is better spent allowing a professional to do the job or worse you end up hating your rental duties, they should be a rewarding investment. I do highly recommend you give it a shot at least for the first couple leases so you really get a feel for it as so many have mentioned. You can create your system as you go along. Most people find they either love it or they hate it, i personally love it.. but only because Ive created a system that includes minimal contact with my tenants lol.
- Houston, TX · Member since 2010 · 150 posts · 159 votes8y
I would recommend you self manage your first property. Its just too easy not to. Before you rent out the property be sure and replace anything that may go out in the near future...water heater, HVAC, garbage disposal, faucets, toilet mechanisms, supply lines to toilets and faucets, dishwasher, etc. That will cut out the bulk of your repair phone calls. If its more than 10 years old replace it...except HVAC...it can last more than 10 years and if it breaks you just call a repair company to fix it.
Next, screen your tenants and get quality tenants. It is a little time consuming upfront but then it should be on autopilot for a few years. Then in between tenants revaluate the age of everything and replace what needs replacing again.
People that buy a property, rent it out as is, and eek out the repairs along the way end up with the constant repair calls.
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