Hi, all! I'm an investor with about 30 of my own properties and about another 270 under management in my PM company. We began an integrated marketing plan a few months ago to try to find new investors who need PM, and we keep coming back to this question of psychology in our strategy discussions: What makes a self-manager decide they want to outsource management of their properties?
I know the answer is different for everyone. We've had new clients say it was a volume issue - they just couldn't handle management after a certain number of acquisitions. We've had people say life circumstances changed and they just didn't have the time to devote to management any longer (and do a good job). And so on.
Since I manage my own properties via my company and never made that switch myself, I'd appreciate hearing input from self-managing investors about whether they've thought about outsourcing, what would make them switch and necessarily give up a slice of cash flow, whether they've just done what I did and decided to open a PM company, and any other thoughts you might have.
David Panzera, Panzera Realty
Here's a recent post on this very topic:
Volume, quality of the PM and the compensation structure. If I'm going to get charged $85 to have a breaker un-tripped (should have been explained on the phone) to a PM that is rewarded financially when I have turnover, then our goals aren't aligned. I self-manage 35 houses and apts. At times I am busier than I want to be, but I'll sell before I turn my properties or my people over to the status quo. Be excellent @David Panzera and you'll have more business than you'd dreamed of!
The things I predict a PM would do poorly for my properties are:
1) Poor advertising
-I try to make sure my property is at the top on Craigslist and also on Facebook groups and Postlets, PM might not even put it online anywhere.
-Many PM won't show a property until the person has filled out an app and paid $25 or more.
3) Higher maintenance costs
-Many PM will go to the phone book and hire a company that results in a charge grossly higher than it should be; They should really have their own maintenance guy(s) on their payroll to make it work for me.
4) Lack of interest in showing my property as a "open house"
-Might cause a lot of underqualified people to show up but at least it will get some applications filled out and some interest in the property from people who want to see it in person first.
To some extent I think the question of self-managing is about whether or not you're focusing your time on where you make money. If you can make more money looking for new properties, then managing might take up too much of your time to justify it. Second there's the question of whether or not you even like doing it, since I'm sure we'd rather all not stress ourselves out when we can unload that work and still make money.
Then there are issues about how effective you are at managing, if you're able to scale your efforts with in-place processes to deal with the random things that come up, and so on. At some point it'll make more sense to find a good property manager to help unload some of your work.
On the other hand, I personally started my management company because my area had no company that I found that could manage my properties as well as I could. That pulled me into managing, and now it's becoming central to growing my business.
It comes down to how much an hour of your time is worth. The older and more experienced you become the more valuable your time is and the more it makes sense to hire out as much as you can and only focus on your area of expertise which give the highest payoff. For most of us that is buying new property and refinancing our current holdings.
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