Transitioning from pro PM to self managing

6 Replies

Howdy BP Nation!

I'm fed up with the poor response times, the high expenses, and generally poor ROI (time and money) on using a professional property manager on one of my SFRs, so I'm planning on going to self-management. I've already signed up for Rentredi, and have talked with the current tenant about changes that will soon take place. I've also pre-filled a new Virginia lease agreement I got from the BP Forms section (since the lease included an agreement with the property manager).

Other than 1) Actually firing the PM, 2) Having a separate bank account to hold the tenant's deposit, 3) Having the old lease end and new lease start the next day...Are there any other considerations I need to take into account? Any issues with dropping the old lease because of firing the PM?

If the lease is still in force you may not be able to just drop it, unless all parties agree. If it is a month to month lease then you can transition after 30 days or at the end of the current 30 day period.

I prefer to get a google voice number and link it to my cell so that that is the number the tenants know and use rather than giving out my personal cell.

Have some means of tracking income and expenses for reporting and tax purposes.

My state doesn't require a separate bank account for deposit so I just have the single account for income, expenses, and deposits.

1 SFH shouldn't be any problem at all.

@Jeff Lee out of curiosity, how many properties are you going to self-manage?

I also self manage and love it. I have a system down for mine that puts it on complete auto pilot but I only have 2 and it took me a few years to get it right. I am also super type A about my rentals and have put a lot of thought into every step. 

If you haven't already, I would read up on fair housing laws.

I would have to read your current lease to see if you can drop it like that. To my knowledge, the lease has to stay as is until it's over. If they are on a month to month then you are in a good position. If I were you, I would consult a state specific real estate lawyer and get it done expensive and right. Might as well have them review the new lease so you are fully protected when sh*t hits the fan.

I am not a lawyer.

Hope that helps :)

@Jeff Lee Don't underestimate what all you need to know. Join a LL group, your local State LL Association and hang out on BP.  There are some really big traps out there and most favor the tenant; be sure you are ready and the properties are within easy access.

Hello @Jeff Lee . I understand your frustration on this completely. You are not alone. This is probably the number one reason why investors/landlords leave their property managers. The main problem with most of the property managers out there, is that they don't have any skin in the game. It is a 9-5 job for them as they are usually an employee of the property management company and they very rarely really know about the investment real estate market other than how to process maintenance requests and handle tenants issues. Property management companies for the most part are all about the quantity of properties they have rather than the quality of properties and the quality of their property managers. They pay their property managers a small salary and that is why the service most receive is not where your expectations would be as an investor. 

I would strongly recommend that you find a property manager/property management firm that specializes in the Investment Real Estate Industry and doesn't only do Property Management Services. My investors are the lifeblood of my business and if I do not perform for them on all fronts then I will lose them to someone else. We pride ourselves on making sure every aspect of the investment real estate is being looked after. We want to make sure not only that we are responsive, but we want to make sure we are keeping your repair costs as low as possible to help make your ROI better. We do yearly inspections on the property before we will allow a tenant to renew the lease to make sure there aren't any large ticket repairs that would cause the value of the property to drop. We make sure to get rent increase each and every year to stay in line with the current market rents. We identify deferred maintenance items that will need to be addressed in the near or distant future so these items aren't a surprise to the investor and they can set money aside accordingly. Our investors not only use us for property management services, but they also purchase all of their investment properties through us as well. It is important that your property manager knows the market really well as most real estate agents do not know the rental market as well as someone that does it on a daily basis.

Self managing can be tough depending on how many properties you have in your portfolio and how much time you have to dedicate to it. There are a lot of pitfalls with self managing as well, and if you are not well versed in the fair housing laws, landlord tenant act, etc, you can open yourself up to liability that is limited by using a professional property management company.

Sorry for the long winded response, but this is my passion and I love to help others in the property management field. 

Good luck!!

@Jacob Sampson Thanks for the tips! I'll look into the current lease - not sure what the situation is with being able to drop it. I might also talk to the current PM and see if we can drop it "mutually." Also, I'm currently using Quickbooks for accounting and iPlum for phone service (like Google voice but with some more functionality, and I can see that someone is calling my "business" line so I know how to pick up).

@Mary K. I have three SFRs at the moment, but only plan on managing this one for the moment. Thanks for the info! Yes, fair housing laws are obviously important but not something I've done any specific research on. That will go on the list.

Thanks @Bjorn Ahlblad . I figured some of those traps were mitigated by the fact that I already have a tenant (who is great, BTW), but I definitely need to do some more research before pulling this particular trigger. Thanks for the warnings!

@Christopher Sanchez Thanks for the perspective! I'll definitely keep that in mind when I'm looking for new property managers - I'm working on getting into the small multifamily space, and definitely don't won't do manage all of the additional units I plan on getting in the next few years!

**UPDATE** So I asked the PM to cancel the contract and they complied with minimal fanfare. Their SOP actually seems pretty easy and straightforward - they will create a lease addendum to reflect the new PM/security deposit holder (me). After that, I should have the tenant for the rest of the term, about 11 months. I honestly plan on selling and doing a 1031 with this property next summer, so the fair housing considerations for marketing and new tenants is moot (although I would probably outsource that bit to a realtor if I needed to).