When to hire a property manager?

Question

Hi All,

For those with long term buy and hold rentals, when did you decide to hire a property manager vs. just managing them yourself? After a certain # of units? After a certain amount of cashflow? From the very first one? I am curious to know what your reasoning was.

Andrew Syrios · Answer

We decided to build our own property management company so there's a third choice. Overall it's a tough call. I laid out my pros/cons in this article which you might find helpful: https://www.biggerpockets.com/...

Caleb Brown · Answer

Off the bat. Makes it easier. I'd rather hire an expert and have the investment passive then do it myself. I can take the time saved for REI, family, fun, etc. Everyone is different. Self managing for is valuable but not my cup of tea.

Caleb Brown · Answer

Account Closed with that much going on PM would help. Just factor it in the numbers. Interview and vet to find the perfect one. Makes life way easier(with the right one)

Account Closed · Answer

@Caleb Brown Yes, I am starting to realize that it would be much easier. I just have 1 duplex at the moment but am also flipping 2 houses, have a full time 9-5 W-2 and another business with my parents which I help manage on the weekends. My thought process was that I could self manage until I have a few more doors but now I am second guessing myself just with everything else going on. I have also considered investing in larger multifamily properties out of state (Midwest) on which I think the numbers would work better for a full time PMC.

Marc Rice · Answer

Theres a few philosophies

1. Self manage until you have too many units, then hire an admin to help self manage

2. Hire a property manager from day 1 and they'll help you scale

3. Once you get too big and can't self manage then just hire a property manager

If you're in C class neighborhoods I'd recommend getting a PM from day 1 though because you'll run into some big tenant issues that will make you want to quit.

Nathan Gesner · Answer

This is a very personal decision. You need to evaluate your capabilities, availability, goals, value of time, and other factors to make the decision that works best for you.

Are you able to learn the laws and stay current on them? Are you able to separate emotions from business and treat people professionally even while they cry in your face or threaten to beat you to a pulp? Do you have time available to snake a toilet or troubleshoot a sprinkler timer? Can you stay current on market rates and trends to ensure you're getting top dollar? What's your time worth? Do you have a lot of free time on your hands or are you trying to spend more time raising your kids or traveling?

Lots of questions to ask yourself. Sit down with pen and paper and consider the value vs. cost to see which option is best for you.

Eric Chiang · Answer

I'm in the process on closing on my first property (househacking a duplex in southern CA), and I've hired a property manager.

Main reason is because I feel that the PMs know the rental market + area better, have better resources to advertising for vacancies, and are able to screen tenants more quickly/efficiently than I would be able to. Additionally, my property does require quite a bit of rehab, so I'll be utilizing their contractor network to handle these issues. If they turn out to not be a great fit for my expectations, there's a clause that allows either party to terminate the agreement within 30 days.

I'm okay paying the PM fees in order to free up time for other ventures, such as family/friends, learning more about REI, etc. Like you, I also have a W-2 that is M-F 9am-5pm.The extra time/fewer headaches definitely helps.

Good luck!

Thomas Corley · Answer

@Mehul Patel after my second rental!! Just to get a feel and ￼knowledge then went to property management.

Now I can understand how to manage the management better if that makes sense!

Happy investing!!

Scott M. · Answer

The best time to hire a PM is before you really "need" one.  The worst time to hire one is when you are in over your head and issues abound.  You are more likely to make a poor decision in the later example.

In my opinion you are asking an impossible question for anyone but you to answer.  Person A can manage 0 units.  Person B can manage 1 units and so on.  So the question isn't how many units can others manage, the question is how many units can you manage?

You described a very busy life.  Imagine one or two tenant or contractor or leasing issues thrown into the mix.  You down for that?  If not, make sure the numbers work and hire it out.

Don't get me wrong, being a property manager is glamorous as F.   But not for everyone : )

Jim Kalish · Answer

We went the route that @Andrew Syrios did.  We tried a couple of PMs but found them to be mediocre at best.  Hidden fees, not good at picking tennents, etc.  They don't have a vested in picking quality tenants.  They get paid very time they fill a vacancy.  If you go this way make sure you know all the fees up front and what they are responsible for if you have to evict.  If they pick a bad tenant they should handle the eviction and cover a big piece of the cost.  It can take 2-3 months to evict someone and you will rarely ever see that money.  And every time a tenant calls in a work order they just send someone to fix it, even if its the tennant's fault.  Make sure you keep the PM on a very tight leash.  Self management can be a lot of work but it has its advantages.  If this is going to be your career you can branch out and make money doing it for otheers as well.

When to hire a property manager?

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