I am very new here and also new to the whole Real Estate industry. I recently joined a property management agency as a licensed REALTOR and I have sooo many questions!
In our portfolio, I see there are investors with just one property and others with many, my question is:
At what point do YOU decide to get a property manager instead of managing your portfolio on your own? Is it when you reach a certain number of properties or do you generally look for a landlord? Also, what is the main thing you are looking for in a property manager?
Very good question Ondrej. When to get a property manager for many investors comes down to how you value your time. How much is your time worth is the question.
When looking for a property manager one of the most important questions you need to ask yourself is; How do you know they are doing what they say they are doing and/or have done? Therefore, make sure that any property manager you select has a tracking system you can verify, that they can explain, and that you can trust.
I hope this helps.
@Ondrej Gargula Welcome to BiggerPockets and the world of real estate.
So when do you get a property manager(PM)? Well that depends entirely on the person. Some people enjoy being very hands on and managing their own properties and some do not. Some people just don't have the time to manage their properties themselves. I'll try to just make a pros&cons list here.
1) Rent collection- PMs collects rents/charges late fees and deposits straight to your account. You don't go chasing tenants down every month for rent money.
2) Repairs- PMs takes all calls regarding repairs. You don't receive a call at 2am because a pipe broke.
3) Leasing- PMs do the work to find and screen new tenants.
4) PMs will do some degree of record keeping for you so your not buried under paperwork
5) PMs may handle evictions
6) Time- have a PM's saves you exponential amounts of time buy not having to deal with the previous points, allowing you to either have a life or work harder towards the next deal
1) PM charges a fee to do their job, but its generally worth it. Unless you didn't run your numbers correctly and you can't afford one.
2) You don't learn the management side, which then again some people may not care
3) If your too hands off and don't have the right PM, your property may be ran into the ground or put on the back-burner, costing you big time.
Generally, in a property manager, people want a few things. They expect the PM to treat the property as their own investment.
1) Make necessary repairs and general maintenance
2) Find and place qualified tenants
3) collect rent and possible associated fees
4) evict tenants who aren't paying
5) keep Financial records on the property
6) Communicate with the owner
@David Wright thank you for the advice! I didn't think about it this way before but I love the answer, getting a property manager is pretty much buying yourself some free time.
@Heath Ryans Thanks for the list! One thing I thought about adding.... Do you expect your PM to file claims with your insurance company... ex. replacing a roof ?
@Ondrej Gargula Your welcome.
I honestly don't know the answer to that. I'm not sure if they would be allowed to do that being it is your policy.
The quick way to find that out is if a perosn enjoys managing properties, have time to manage proeprties and have knowledge to manage properties, then that person should manage. Otherwise, hiring become a good option.
@Soh Tanaka Sounds pretty straight forward, thanks Soh!
@Ondrej Gargula Ultimately, it depends on the person. Most people who self-manage properties have the time to do it and are open to dealing with tenants. Those who do not and hire property managers want to be more hands off. Though, you do need to still manage the managers. Hope that helps!!
We self manage some of our properties and have a PM to manage others. It really comes down to making the best use of your time and not doing what you do not like to do. Having a PM is ideal if there is distance involved, or you may not like manageing and want to focus on being an investor-it is a layer between 'you and them'. If we were to ever buy a property with 'D' tenants and in a bad neighborhood we'd get a PM involved for sure. Always construct your numbers with a PM accounted for then you have a choice. A PM is not a magic wand, most do a great job and will save you time, while others just get in the way and suck profits.
Welcome to BP! I actually have location rentals managing my properties in Lubbock. You’re in good hands over there.
Being an out of state investor I needed a property manager. I self manage in California and like others have said, how do you value your time? That’s how I look at it. Once it becomes too much work here I’ll hire a property manager. Hard to put an exact figure on it.
Hey Mike! I am glad to hear that you have a good experience with the company I work for! I am ready to start managing some properties, the support system here is pretty awesome!
Thanks for the input as well! I see that you usually need a PM if you are out of state.
@Bjorn Ahlblad Thanks for the answer! Would you ever even consider buying a "D" property?
@Ondrej Gargle I think it depends what you like spending your time on. If you great at finding and buying properties then pay for a property manager. If you have lots of free time and aren't doing a lot of deals maybe keep it in house until you have scale. If the property is not close to where you live I heavily suggest outsourcing your PM.
@Scott Morongell Thanks for the reply! I am starting as a PM so I am trying to educate myself on why people look for my services and also what are the expectations.
@Ondrej Gargula I would buy a D property if it was in a C area and I could reposition the building. Been looking for that rare bird for a while!
It comes down to.... Desire, time, money and control. I self manage because I only buy local and have the time, I have the desire and skill set to do all repairs myself, I can do all repairs for the cost of material plus my time so in essence am paying/saving myself a contractors hourly rate. When considering control I can not trust anyone to manage my properties as efficiently or as cost effectively as I can. If a contractor is needed I do not need to pay a PM to hire a contractor for me. I hire a contractor I trust.
I am not a corporation with a staff of minions working feverously to purchase properties constantly and therefor have the desire, time and skill set to properly manage what I have so why not.
If your business is buying properties then managing what you have is likely a very low priority and should be farmed out.
I self manage and have for a long time. I've survived to tell the tale because I select my own tenants.
I'll read a tenant horror story. Nitpickers claiming mold and complaining about every little thing or bringing in an SO or roomate that is awful and won't leave (I have an additional persons clause in my lease). I'll read the saga, and a lot of times, a PM selected that tenant. PMs seem so bound by laws, all they can do is accept the first person that meets the minimum criteria. I want a PM that selects a tenant with other factors in mind like promptness, eye contact, nitpickiness during the walk-through, cigarette smell, etc.
PMs make money when we suffer. They make more wiith every repair, turnover, late fee and new placement. Have a revenue model where we both earn, like lease renewals and rent raises. Spread your fill fees over the length of the tenancy. Bet you'd select a good tenant then.
If I could find a PM that triaged service calls, doesn't keep late fees, doesn't make overrides on repairs, has quality repairmen in-house and spreads out fill fees over the lease, I would consider hiring them for sure. Be a pioneer in this industry!
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