Should i hire a property manager?

Question

I am looking at getting a duplex within the next year. To be honest I know little about screening and what’ comes with having and finding a good tenant. I am a plumber and can handle most of the handyman work on the property but I was wondering if it would be smarter for me to hire out a property manager rather than me managing it? And if anyone knows, how much does a property manager typically cost?

Bjorn Ahlblad · Answer

@Matthew Johns were you a good plumber on day 1? No. You won't be a good LL on day 1 either. Being a LL is not hard when you are experienced and diligent. If you screw up the consequences can get really ugly-just like being a plumber!

If you are willing to learn all the complexities of LL-tenant law, and you are willing to be good at screening tenants go for it! If not hire a PM. My wife and I are really good at being LL's but we never try to do our own plumbing!

Nam Trang · Answer

My personal opinion is to self-manage initially, and to also try to keep it local... at least local enough to be able to swing by and keep an eye on the place without too much trouble.

You will learn a lot about what makes a good property management company, what makes a good tenant, what parts of your rental property are and aren't a hassle, etc.

Filipe Pereira · Answer

Enough of the fear mongering @Peter T. If he has a plumber he's one call away from solving the problem. Is paying a PM really worth that?  Doubt it. I'm a PM too, I get what you're doing but it's just not fair to put the fear in people. Grow a business by adding value, not instilling fear. Account Closed - self manage it dude, you can do it. Signed, A property manager.

Andy McQuade · Answer

Hi @Matthew Johns, property managers costs vary by market, but up here we typically see 10% of gross rent as the fee they charge.

Not all property managers are created equal - there are a lot of them out there doing the right things and adding value to your property via good maintenance and screening.  Others will suck the value out of your property and leave you with a derelict building when you finally fire them.

Do research and choose wisely.

Joe Scaparra · Answer

@Matthew Johns, it is natural to feel overwhelmed at buying your fist property and then having to manage it.  If you want to be successful with investment real estate then BE YOUR OWN PROPERTY MANAGER.   You're a plumber, if you own your business this is a lay up.  If you don't, no problem you already have half the problems a property manger faces handled.

Fixing your property when something breaks is half the battle. You already have those skills!  Being a plumber you can handle those issues.  Usually a skilled tradesman can do other skills outside their immediate expertise.  But even if you don't, you surely know a lot of other tradesmen that can assist you in keeping your duplex in tip top shape.

So now all you need is to learn how to market your property, screen for tenants, and manage tenant's expectations!   Yes there will be a few learning curves that only experience can provide but you are SET UP TO SUCEED!

There is plenty of knowledge on this site concerning any topic associated with property management in the message forums. Also get to know other investors in your area to share experience and knowledge.  Good luck and Cheers!

Karl B. · Answer

A PM will likely charge you 10% on a duplex. Some add fees for anything else they must do (including but not limited to tenant placement).

Screening can seem scary but it's easy to learn. If you have a local apartment association join it; my local apartment association actually did the background checks for me (I paid them for the credit/criminal check and had potential tenants pay me the same amount for the credit/criminal check).

Another bonus of managing the property yourself is you'll learn a ton about landlording - and to be blunt... a landlord is going to do a better job than 99% of property managers. I recommend you self-manage - if it's not for you or if you grow to a size where you don't have time to manage then hire a PM whether 3rd party or in-house.

Steve Vaughan · Answer

A mom and pop low unit owner will be charged about 16% year one.  10% of rents plus a large placement fee.  1 month's rent is 8%.  Plus busy PMs will take longer to turn over a vacancy, so there's another month.  10% is BS.  16% yr 1 is probably low.

I hired my first PM of a community.  They were already in place and doing a fair job.  With volume, a PM makes more sense.  I am charged 8.25% with no placement or renewal fee and no long-term contract.  Its also an attractive b-class community, so less work, less drama for them.  The class and area matter.

The repairs to me are the hard part and being able to do them sets you apart for being able to make it as a LL.  PM service calls will eat your lunch and drive you nuts.   To get a handle on expenses I had to direct my PM to call me prior to any licensee work.  They were calling in HVAC, electricians and plumbers too often.

Being a plumber alone won't do it, though.  Jack of alls are the ones that make it.  Mastering little crap like hanging blinds, ceiling /exhaust fans, light fixtures, switches and receptacles, closet doors, doors, screens, screen doors, patio doors, lockset changing and unsticking, smoke alarms, appliances, paint, trim, wall repair, cleaning, etc are the most common needs.  Licensed type plumbing is only about 5% of what I do in my rentals.

The screening is actually easy, especially with like smart move or cozy or any number of services. Ask questions about animals and smoking in your ad then have your applicants complete the servicor application.

The lease and disclosures are tougher IMO.  An RE attorney may be needed.  I spent years 'perfecting' that and learning state and federal law.  But it was worth it.  If scaling up to more than 5, the savings will pay off your mortgages. If just a hobby with a rental or three, maybe hire the placement and rental agreement out for 1 month's rent.

Theresa Harris · Answer

I would do it yourself especially if you want to handle the repairs on your own.  Read your local laws, find a standard lease for your area and trust your gut.  Often the tenants who are really chatty or sell themselves...are the ones to avoid.

Jennifer Ruelens · Answer

Interesting perspective, Joe and I am sure that is true based on your experience. I stabilize portfolios from 1 to 100 units all the time.  It is sometimes the maintenance on the buildings, but it is usually the way the leases are written, enforced, and the inexperience of the property owner in making decisions.  I save these portfolios from the mistakes the owners make with them.  So based on my extensive experience, I gave the best advice I could give to the question.

Jennifer Ruelens · Answer

I guess it is a question of what is the bet?  How much upside and downside can you expect and what data do you have to help you assume a probability.  DIY Landlording, your upside is that you make the return you expect without paying a PM. Downside is you are very likely to make big costly mistakes. Hiring a PMC, your upside is you make the return you expect and you don't run yourself around trying to learn everything on your own, downside is you pay them for their services and/or you hire a bad one.  I have been a PM for 16 years.  I don't know of many DIY landlords who love this, make the money they expected or if they are being honest are doing well with their mistakes considered.

Should i hire a property manager?

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