Hiring a Property Manager for First Unit?

Question

Newbie question - seems like all of the books I read suggest having a property manager run the process.  I love the concept, but my agent scoffed at the idea and said it's too expensive if you don't have several units.  Is this true?  Do investors generally self manage until they get multiple properties, or do you suggest hiring a property manager from the get go?  I'm looking at a 2-3 Bed Single Family Rental.

Tom Jordan · Answer

Awesome feedback and that's really what I was hoping to hear.  I would say "scoff" probably wasn't accurate, but when he said PMs are too expensive until you get 3-4 properties I was a little discouraged.  I guess it comes down to getting some rates from some local groups here so I can run my own numbers.  In all fairness, you guys are PMs yourselves, so I'm hoping to get the same feedback from investors who pay for the service.  I was a personal trainer and I can give you 10 reasons why paying me $80/hr is a great idea :-)  on a different note - should I be asking the PM company for agent referrals? Seems efficient to have my agent, PM, contractor, and lender all under one roof, but not sure that's a good idea?

Peter Tverdov · Answer

You can learn to appreciate what a property manager does if you start out doing it yourself. The people that think PMs are too expensive though...the worst. They don't understand the value in savings on repairs because we give a plumber $50k worth of work a year and therefore the call out rates are better. They don't understand the market value and timing. They rent the house for $50 more than we do but it took 1 more month of vacancy, things like that.

A lot of people are penny wise and pound foolish.

If you think you can do it and you're very close by then go do it. If you decide it's not for you, that's what we are for!

Nathan Gesner · Answer

1. Find another agent. Scoffing is not allowed. :) Seriously, what evidence did they provide to support their position?

2. If you think hiring a professional is expensive, try hiring an amateur.

Most private Landlords think they'll save money by managing themselves. Most of them are wrong. They track the market well enough to demand market rates. Even if they start at market rate, they tend to get behind over the years. They don't know how to screen for quality tenants. They accept sob stories, excuses, complaints, late rent, etc. They don't know how to handle six people co-workers wanting to rent a 3-bed house, or the tenant that sneaks in five dogs, or the difference between a pet and a service animal and an ESA. They don't understand the laws. Seriously look at the questions in this forum because the same ones come up time and time again and they're asked by people with their first rental and people with ten.

I manage over 350 rentals. Most of them are Landlords with 1-2 rentals but some have as many as 40. Well over half of these clients are making more money AFTER hiring me than they made on their own. They have better quality tenants, the tenants are happier because I'm responsive and professional, and the owners free up their time for better things instead of fretting over a tenant that's three months behind on rent.

Don't step over dollars to pick up dimes.