To Self-Manage or not to Self-Manage

Rental Property Investor · Indianapolis, IN · Member since 2019 · 30 posts · 17 votes

As I sit in my rental with my second consecutive no-show appointment, I can’t help but ponder: to self-manage or not to self manage. I’ve gone back and forth, see pros and cons of both, and would love to know your thoughts!

Pro:

- Keep 10% more of my rent

- Ability to self-screen and place high quality tenants.

- Learn the business from the ground up

Con:

- Sitting in an empty house waiting for a no-show that confirmed earlier in the day

- Actively manage a passive investment

What’s and investor to do???

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Jill F.

Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes

I have just about eliminated no-shows by requiring a completed application (free) and uploaded pay stubs and DL before a showing is scheduled. I do a preliminary (free) court records search as well. The application fee is charged when both the tenant and I are interested in moving forward and I collect that money at the showing.

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James Barnes
Rental Property Investor · Mechanicsville, MD · Member since 2015 · 123 posts · 62 votes
7y
@Scott Donahue Self manage for now. I very much liked “getting a vibe” when I interviewed tenants. As I grow I will no doubt hire PM but for now it’s self manage. Save the 10-12%, although I do believe in making your life simpler and stress free. If hiring a PM does just that and you still have an acceptable amount of cash flow per month then hire out!
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Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
7y
I have just about eliminated no-shows by requiring a completed application (free) and uploaded pay stubs and DL before a showing is scheduled. I do a preliminary (free) court records search as well. The application fee is charged when both the tenant and I are interested in moving forward and I collect that money at the showing.
13 Reply
Scott Donahue
OP
Rental Property Investor · Indianapolis, IN · Member since 2019 · 30 posts · 17 votes
7y
@Jill F. That is a fantastic idea! What rental software do you use? How do you process an application without charging the potential renter?
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Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
7y
We use Buildium for property managment software. It permits you to set any charge you like for the application fee. I run free civil/criminal court record searches for everywhere the prospective tenat has lived or worked or if they're young where their parents/refs live. I search social media accounts (especially for young tenants and look for consistency with their rental application. Sometimes I'll call the employer if they are smaller or job history is short.

I only charge a background check fee to a pre-qualified applicant that I plan to offer the apartment to contingent on a good transunion smartmove background check which is integrated into Buildium, I do not have a set credit score requirement but I do have some extra hoops for low credit scores or very low credit that I disclose to prospective tenants in advance. I may (or may not depending on lenght of work history) charge last months rent and/or require and honestrenter.com quiz. I have given up on trying to guess which applicant will be best. Some of my best tenants are not the one I probably would have picked if I just went with my gut or gave it to the one I liked best. I think application timestamp is more fair and helps eliminate bias-- so far I've only had to do one eviction and he was inherited.
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Michael Ablan
Real Estate Broker · Watertown, NY · Member since 2016 · 1k+ posts · 1k+ votes
7y
@Scott Donahue @Jill F. - I'd say Jill's advise is great, but YMMV (your market may vary). I tried this approach and it just doesn't work here. Too many rental options and too many lazy landlords whose only screening is for a pulse. It's worth a shot, but I'd be prepared to change course quickly.
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John MorganPro Member
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
7y
@Scott Donahue
Self manage and pocket all that extra dough. I manage 6 of my properties and it’s easy peazy. It saves me over 7k/year. I get maybe one a month at the most about something wrong at a property. I text someone else to go fix it. For $700/month ( what property management companies would end up costing me) I can text the appropriate person to go deal with the problem.
Yes, I get no shows for scheduled appointments too. We’re dealing with some flakey people who will never be able to save $ or buy a house. I use Zillow manager and have them apply with them for $29.
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Brent Paul
Rental Property Investor · Shakopee, MN · Member since 2015 · 985 posts · 374 votes
7y
The nice thing about self managing is you get a feel for how it works.  I think even if you decide not to self manage down the road you will have a good understanding of what works or doesn't and what kind of property manager will work for you. It's not for everyone, but you never know it could turn into something you really enjoy.

As for no shows. It works really well if you set them up and you have a few things to do at the house anyway.

Or you can set up an open house to show potential renters. That works really well in my area and a lot of times it gets rented right away. And if I fill the vacancy with a lot of extra inquiries. I have a few investors that I can send these applicants to when mine fills up. And in return they send clients to me as well. It helps if you have networked with other investors. And another thing I like to tell applicants is if this unit is full I might have others in the future. If they would like I can email them or call them with any new openings.  This also works really well when you happen to close on another property in a month or two and are looking for renters!
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Greg Moore
Rental Property Investor · Tampa, FL · Member since 2019 · 128 posts · 166 votes
7y
@Scott Donahue
Never in a million years! A great property manager is worth their fees and then some. In 12 years, I’ve never missed receiving a rent payment thanks to excellent property managers!
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y
If you think a professional is expensive, try hiring an amateur!
I'm biased, but I also manage for nearly 200 owners and half of them started out self-managing. They thought it was easy, until it wasn't. They thought they were saving money, until they realized they weren't.
On a $1,000 rental, it would cost $1,200 a year for me to manage it but it frees up the owner's time, ensures they are keeping up with the market, and protects them because I know the law and have policies and procedures in place to mitigate losses.
Most the owners I pick up are "rescues" that have made mistake after mistake after mistake, costing them a lot more than my management fee would cost, not to mention the amount of time and stress involved.
Yes, you could successfully manage your own rentals. I know many that do so. But I know many, many more that have tried and failed. They think it's easy. They have no problems for years. Then reality hits them square between the eyes and they lose $10,000 from one tenant. Then they come to me for help and I inform them that they've been renting 20% below market for many years and could make much more AFTER paying my fees.
That's my experience with 350 rentals under management. Your mileage may vary.
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Peter TverdovBusiness Member
Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
7y
You can do it but from my experience (I own rentals and also own a property management company) the self-manager is not saving as much money as they think and in many experiences with clients I pick up, they have COST THEMSELVES hundreds or thousands. The number one item people do not understand is time value.
How much is your time worth to you? $10 an hour? $20? $50?
How long does it take you to talk on the phone when there is a repair request (phone/text/email)
How long does it take you to get in touch with a vendor to make the repair?
How long did it take you to find that vendor?
Is the vendor insured? Passed a background check? You comfortable with having a registered sex offender or felon fixing your tenants sink? Guy throws himself off the ladder (Frank style from Shameless) to sue?
How expensive is the vendor? $50 higher than your local PM?
How about your stress level when a tenant is getting emotional, how do you quantify stress or higher blood pressure?
I can go on and on....as you can see, there are multiple things landlords don't think about that are a cost. So that $120 a month you're "saving" on your $1200 a month rental is definitely not $120 and it's definitely not 10 minutes of your time a month.
[email protected]732-289-3823
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Vance Beckner
Property Manager · Boise, ID · Member since 2018 · 2 posts · 1 vote
7y
Thanks for the insight Nathan G. A no nonsense professional. Thanks for the wisdom and the smile.
1 Reply
Timmi Ryerson
Property Manager · Ketchum, ID · Member since 2016 · 277 posts · 132 votes
7y
I think that there are several kinds of people who buy investment real estate. Some do so for retirement security. (sell the properties for profit and retire) Some do it for a business. So just want to diversify their investment portfolio. In each group the owners will want differing levels of personal involvement. That is what you need to decide. I have done this property management thing both ways. I managed for myself and then had a disastrous experience hiring a property management company. They stole me blind. (That is before software was available for people to use for property management.).
Now with that being said, with one or two units that are close to your home you may choose to manage for yourself and save the monthly fee. If you do I highly recommend that you invest in software. I use Smart Property Systems. For 2 units I would pay about $21 per month and have almost all repetitive tasks required in property management automated. That means rent collection and accounting for rent collection, advertising for vacancies, tenant screening, lease management etc., would all be automated. It makes you look good.
The other thing is that there is a learning curve when you first start doing this job. So read some best practice books about how to do it. Your first aha moment is that you need to do something different than just planning a meeting with a prospect and then not having them show up. I think you are missing some vetting steps here. You can pm me and I will elaborate as it is too long to post here. But basically start with thinking about how the prospect saw your vacancy. How did they contact you and how much information did you get from them when making the appointment. There are several ways to avoid no shows at showings. I will share them.
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Bruce N.
Investor · Chico, CA · Member since 2015 · 12 posts · 5 votes
6y
To avoid sitting idle at an empty unit I always stack my appointments for a time period at 15 minute intervals. I take my tools along to do some yard work or minor improvements for the gaps when applicants inevitably don't show.
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