When Should You Use a Property Manager

Question

There are obvious situation were it just makes sense to hire a property manager.  Out-of-state investments would certainly be one situation.  For some it may be difficult if they had a full time plus job.

I know some would recommend a manager in most cases.  Others are like me and would tend to manage their own properties.

I would like to discuss reasons of why, when or if it is a good idea.

There certainly are issues of time, perhaps of even good management practices.

Curtis Williams · Answer

Hey Charles,

I think there are several factors that really direct an investor in a particular direction.

Barring out of state, I think it comes down to number of properties, free time beyond work obligations, understanding of real estate laws and the nuances of property management.

1. At some point if you stick to you it your will reach a level or properties that will require either full time attention or a property manager. This being said, a solid system like Propertware can lengthen the time before you need full time attention to your investments or a property manager.

2. Can you take calls from tenants during all hour of day and night and have a maintenance team ready to go? A happy tenant is a tenant that doesn't smash windows. :)

3. Do you fully understand the laws surrounding real estate and renting properties? If not, its time to hit the book store if you aren't interested in a property manager.

4. Ask any property manager about the time and difficulty of managing properties and you will normally get a fatigued looked followed by a groan. Don't get me wrong, they love what they do, they just understand that dealing with tenants can become quite a job. From getting your rent to keeping the property intact, there are a lot of behind the scenes activities that a property manager deals with.

So... have a couple of houses and have time to handle a few calls, line up maintenance when needed and collect your rent? Try it out and then revert to a property manager. No sense in always wondering if you could do it yourself.

Although 10% to 12% on average may appear high... think about how much your time is worth.

Oh.. and don't forget vacancies... do you have the time or ability to get them rented as quickly as a well connected, pipeline established property manager? You could use a lease agent for this but in my experience with a vetted, reputable property manager, they consider the long term impact a particular tenant will have vs. just getting their commission check. (No hate for leasing agents, not all are like that.... just life experience opinion).

Account Closed · Answer

Curtis, you bring up a number of excellent points that any investor should consider.  I have managed my own properties for about 15 years and realize that there many problems that will come up over time.

A new investor would be well advised to review your list and consider these things if they want to be a landlord.

For some perhaps the peace of mind knowing that they don't have to deal with emergency calls is enough incentive to hire a manager.

Account Closed · Answer

Bryan, good point.  Time is a major consideration.  There is a trade off that must be considered.  If you are spending time in managing properties you will have that much less time for deal making.

Bryan Hancock · Answer

Nobody is ever going to care for the asset like you would.  I look at myself as more of an asset manager that manages the managers.  To me it is always worth it to use a good manager b/c they will do a better job at a thankless job than I will and it frees up my valuable time to do other things I find more interesting.