How many doors does everyone get before hiring management?

Originally posted by @Alex Monaco :

How many doors does everyone get before hiring management?

That's very different for everyone. If you're a heart surgeon making $650,000 a year, handling phone calls from tenants making excuses for late rent is not a good use of your time. If you live in California and have rentals in Idaho, managing them will be difficult.

If you live in the same area as your rentals, there are still a lot of factors to consider. Are you working another job? Full-time or part-time? Do you want to spend more time with family? Are you skilled at management, or have you just been lucky so far?

In general, a single person can manage 75 - 100 rentals on their own as a full-time job. But even that depends because there is a big difference between managing 75 single-family homes spread around town vs. three apartment complexes with 25 units.

17.  It is a law in most states.

Of course, just kidding.  No straight answer on this question as it is very personal.  If you have the time, desire, connections you may manage hundreds of doors for yourself.  For others, if they don't have the time, desire or connections they may chose to get management on day 1.

And despite some people who try to shame others if they don't manage their own 1 or 2 properties there is no shame.  You do you.  You do what your life, time and desire allows you to do.  

I don't have the time, desire or skill set to do my own taxes.  So, I hire that out.  This is no different.  Whatever works for you is what works for you.  

How much is your free time worth per hour?

Once that is established, hire out everything you can pay someone else to do cheaper than that number.

I started out with a PM but I decided early on that I wanted to be more remote. I was willing to take the 8-10% cut. Decision is yours!!

@Alex Monaco

If you don’t know what you are doing immediately. If you have the time and know how, and business systems, and understanding of the law… whenever it becomes to much of a time suck to manage rentals.

I went all in and couldn’t help myself or give up control so left my corporate job and started managing rentals full time for myself and others.

I'm really not sure. If you're asking how many you need to make it your full time job then the number for my income would be 62. But I'm invested in 2 markets, so it's hard to manage the one that is 8 hours away from where I live.

This is a question that I think will be different for every single individual. If you really just want passive income the answer could be 1.

Until managing your own properties is taking away from your ability to pursue your “$1500 $ per hour” tasks. That’s when you make the switch.

We invest out of state for multiple properties so it only makes sense for us to use a manager. Otherwise, I'd say it makes sense to manage your own properties until it becomes such a task that you begin losing money due to opportunity cost.

Depends on your goals, and focus! It's all about buying your time back. 

@Alex Monaco

Like everyone else said, it depends on your goals, the location of your property, and your mindset.

REI is not passive even with a PM, they still have to run through a lot of things by you, like when something costs more than $200 breaks. I'm not interested in getting phone calls at night or during my day job, hence PM. How much is your time worth to you?

Zero! In my case, every deal I have done has been out of state however and it has been key to have a great team partner on the ground. 

However, here is my advice for anyone looking to scale and grow. Hire any and all roles out IF you as an investor are not interested in playing that role. 

Learning all the roles can make you well-rounded, but it sure will slow you down (if scaling is the goal).

Also, read "Free to Focus" by Michael Hyatt to answer this question but in the words of the book: If you don't enjoy it and you aren't good at it, you shouldn't be doing it. :)

0 for me. When I get my first rental property, I don't plan on dealing with any of that ish, just gimme the money. Partly because I make a pretty darn good living, so I don't have to pinch pennies if it saves me time that I could be getting more clients.

Besides, I don't think I have the kind of personality to put pressure on someone to pay rent if they're late or break something. I'm too empathetic and forgiving and trusting. So I need someone else to do it for me haha

@Alex Monaco

Day 1. Think about your time spent on generating top line growth. For example, if you make 100k your hourly rate should be high and focused on sustaining or growing that 100k. Thus better outsource on Day 1 and optimize your time to keep that income and increase to buy more doors.

You use leverage in real estate via finance, why not do it on then operations / Mgmt side?

My biggest regret was not hiring a PM sooner. Sure, I managed my first property on own and learned a lot, but got lucky and did not run into trouble.

@Alex Monaco

I self manage a property I have about an hour away from me. It’s an Airbnb that stays fairly busy and I keep up on the maintenance to avoid as many problems as I can. I recently hired a cleaning lady who does a fantastic job and that alone has taken away so much stress.

I recently closed on a duplex in another state. Duplex is fully occupied and there’s no way I’m self-managing that. I hired a PM team that handles everything including evictions if it comes to it. The 8% is worth my time, headaches, etc. As long as it cash flows, even a few hundred dollars, I’m good!

When I get my next property, if it’s close to me I’ll self manage. I’m handy at fixing things and not afraid to hire out if I can’t. I have a decent work schedule so it works for me. Any other properties out of state will definitely have a PM.

Great answer thank you. The short answer I know is that it depends. I want to get a feel for what everyone does so I can compare to my situation. Thanks again.

Originally posted by @Nathan G. :

Originally posted by @Alex Monaco:

How many doors does everyone get before hiring management?

That's very different for everyone. If you're a heart surgeon making $650,000 a year, handling phone calls from tenants making excuses for late rent is not a good use of your time. If you live in California and have rentals in Idaho, managing them will be difficult.

If you live in the same area as your rentals, there are still a lot of factors to consider. Are you working another job? Full-time or part-time? Do you want to spend more time with family? Are you skilled at management, or have you just been lucky so far?

In general, a single person can manage 75 - 100 rentals on their own as a full-time job. But even that depends because there is a big difference between managing 75 single-family homes spread around town vs. three apartment complexes with 25 units.

@Alex Monaco

Some of this is a question of priorities.. How do you value your time? If the highest and best use of your time is achieved by working a W2 job, another money generating activity, or in leisure...then by all means hire help in the form of a PM to take the management task off of your plate

On the other hand, if retaining the 8-12% to be paid for help is more important than other activities...then you probably want to figure out how to manage it yourself.

There is no right or wrong answer. Just make sure that you conyinue to acquire and manage your investments consistent with your priorities.

Hello Sunil,

I am a Realtor in Las Vegas and worked with over investors. I own several rental properties in Las Vegas. Do I manage my properties? No, I cannot afford to do so for many reasons, including the following:

• Marketing - You cannot just post a listing on Craigs List and hope to find the right tenant. You have to know where to post to reach the right tenant pool. In some places, it might be the MLS or maybe apartment.com. In another location, it could be a local military base newspaper. Only an experienced property manager will know the best channel(s).
• Showing the property - Prospective tenants will want to see the property. The property manager is the person to meet this need. Also, as they show the property, they have an opportunity to evaluate the potential tenant.
• Tenant selection - Tenant selection is the most important skill the property manager provides. A good property manager has the tools and experience to evaluate prospective tenants.
• Compliance - There are multiple federal, state, county, and city ordinances concerning rental properties. There is no way you can keep up with all the changing rules.
• Lease agreement - The lease agreement is the number one tool for controlling tenant behavior, protecting the property, and collecting the rent. The lease agreements the property managers use are not some generic form from a stationery store. The lease agreement they use is compliant with all applicable laws and regulations, provides maximum control over the tenant's behavior, protects the property, and is the tool for collecting the rent.
• Rent collection - Collecting all the rent on schedule is critical. If the tenant does not pay on schedule, the property manager knows the process for enforcing the lease agreement, up to and including eviction.
• Control maintenance costs - A good property manager will control your maintenance costs. They also have a list of proven vendors who will get the job done right at a reasonable cost.
• Rental Rate - I often see owner-managed, tenant-occupied properties for sale with rents far below market rate. REI is a business, and you need to treat it as one. A property manager knows the right rates and will maximize your cash flow.

A few considerations:

• Never work with a property manager that has an in-house service department. I do not want my maintenance expense to be their profit center. Also, service should not be marked up. A $20 per repair fee is OK, but a 10% market up is not.
• Be wary of a property manager with good Yelp reviews. Yelp only takes reviews from tenants, not property owners. Tenants are not the property manager's customers.
• Check out what types of properties the property manager specializes in. Unless it is the same type as yours and they have several properties in the same general location, look somewhere else.
• Get a detailed understanding of their tenant screening process. The best way to avoid tenant issues is to not put a problem tenant into your property.
• You cannot afford a discount property manager. However, you do not need the most expensive. You need a property manager that will maximize your cash flow, and that means a skillful property manager

I hope this helps.

...Eric

^ Yelp only takes reviews from tenants and not owners? FALSE. Their algorithm does not hide a review because it’s from a property owner. More likely to hide reviews from out of town people but not always. More likely to show reviews from locals but not always.

@Alex Monaco  It depends. 

If you're investing out of state, you probably need to hire a PM from the first door. If you're local and you have the extra time and want to save money, then you could do it yourself. In all cases, I recommend running the numbers on a potential property with property management expenses included. Even if you self-manage in the beginning, you probably won't want to do it forever. Real estate investing is supposed to be mostly passive right?? 

To the people who say "I do a better job than any management company could. If you want a job done right, you have to do it yourself" I say you need to get comfortable hiring experts and delegating tasks, or you'll have a job and not an investment. You can't grow if you're self-managing all your properties. 

Best of luck and keep us updated on your progress!

From https://www.yelp.com/guidelines

"Conflicts of interest: Your contributions to Yelp should be unbiased and objective. For example, you shouldn’t write reviews of your own business or employer, your friends’ or relatives’ business, your peers or competitors in your industry, or businesses in your networking group."

In the past and maybe still today, Yelp considered property owners to have a vested interest in the property manager. Therefore they were filtered out.

...Eric

Zillow isn't filtering out owner reviews. Good Yelp reviews is not a red flag.