Property manager for long term rental

[Crystal Mendoza]

Hello, I have one property in Texas that I’ve had a property manager for since we are military and move often. We now have a property in Colorado Springs that will be rented out when we get orders again. My question is with all of the apps and technology these days, is it worth trying to manage this property on my own? I have wonderful neighbors who a look out after the neighborhood. I am a very hands on person and am picky about my own contractors/ repairs. I just worry about being away, possibly overseas. I am only working part time now with my w2 job so I do have some extra time on my hands. Any opinions on people who have tried managing their own properties. I think the going rate where I’m at for property management is around 9%. Thank you!! 

[Adam Bartomeo]

Hooah! Thanks for the service! I was active-duty 20+ years ago. You are going to want to keep a PM in place for any property that is more than a 2 hr drive from you. Although, you and your neighbors may do ok for a while none of you are experts on the current Landlord/Tenant Laws in each state. Far too often I see owner trying to save a dime and then a few months later in big trouble because the tenants understand the laws better than they do. Also, CO is the next CA when it come to laws.

[Koren Lavi]

Hey Crystal, 

My wife and I have an out of state property in Florida and manage it ourselves. If you used a good investor-friendly realtor to buy your property, they should be able to give you their preferred list of vendors for any issues that may arise. Get good tenants that won’t likely cause issue (background check, credit check, references, pay stubs). If you have a good tenant and get a trusted list of vendors you definitely can get away without a property manager. 

[Clare Pitcher]

Crystal, 

Congrats on acquiring a new property! I agree with Adam on this one. Self-managing from a different state is extremely difficult, especially in states where the law favors the tenants. I would recommend doing your research and finding a company that has great reviews or try and get a recommendations from owners who utilize PM companies in the Colorado Springs area. Goodluck with everything! 

[Sean O'Keefe]

@Crystal Mendoza if you have time and the ability to self-manage there are some tax advantages that you should include in this decision. 

[Nathan Gesner]

Quote from @Crystal Mendoza:

Many investors will tell you to self-manage. I tend to disagree. You need someone with boots on the ground to drive by the property regularly, inspect every 3-6 months, supervise maintenance, etc. When you have a turnover, someone needs to inspect, coordinate and supervise turnover, show to potential renters, etc. You may have neighbors willing to help now and then, but it's unlikely you'll find a neighbor willing to do this all the time, every time, for years.

In my experience, most landlords lose far more money through self-management than they would by hiring a professional, even when they live close to the rental. One mistake can cost tens of thousands. Even small, common mistakes like renting below market, picking the wrong tenants, unwilling/unable to enforce lease terms, slow turnovers, or unscrupulous contractors can cost more than a good PM will charge, and that's before you account for your time and the stress.

If you have the personality, I recommend self-management for anyone who lives within 1-2 hours of their investments. Outside of that, it's almost always advisable to hire a professional.

[Clare Pitcher]

Quote from @Sean O'Keefe:

@Crystal Mendoza if you have time and the ability to self-manage there are some tax advantages that you should include in this decision. 

 Sean, can you elaborate on this?

[Sean O'Keefe]

Quote from @Clare Pitcher:

Quote from @Sean O'Keefe:

@Crystal Mendoza if you have time and the ability to self-manage there are some tax advantages that you should include in this decision. 

 Sean, can you elaborate on this?

Sure, just sent you a note. 

[Brian Bohrer]

Hey @Crystal Mendoza,

Thank you for your service!  I echo some of the same sentiments as above.  Colorado is quickly becoming on par or maybe even worse than California as far as landlord/tenant regulations.  You will want someone who is on top of these changes and is not committing any fair housing violations.  Also, consider that when you do employ a property manager they do not shield you from vicarious liability.  Which means if they do in fact commit a fair housing violation, you could be held responsible along with the property manager for this violation!  

I personally run a property management business with a small portfolio of properties consisting of my own and a few other investors' single family homes.  I utilize a Master Leasing strategy where I rent from you directly and then sub-lease to an end-use tenant.  This method provides several advantages against a traditional manager as I can cater my service and fees to the individual needs of my owners.  Furthermore, this method shields my owners from any potential fair housing violations since I am a principal in the contract and liability would end with me and not pass to the owner.

You are correct that generally you will spend around 8%-10% of the monthly rent to hire a property manager.  But, as with anything real estate related, this is all negotiable.  If you are interested I would love to connect and have an opportunity to earn your business!  Either way I truly wish you the best on your RE journey!

Take Care,