Become a landlord or hire a property manager?

Question

I plan on investing in rental properties and I've never had landlord experience before. Would it be wise to hire a property manager? What are the costs?

Harry M. · Answer

A property manager will typically charge you around 8-10% of gross rents, and around 1/2 a months rent to fill a vacancy. Another option is to hire a property manager just to fill vacancies - that will cover advertising, tenant screening, and lease writing - and manage the property yourself the rest of the time. That will typically cost about a month's rent.
I believe a good property manager can be a valuable asset, but I have heard stories of not so good ones. In the end no one is going to care about your property/tenants as much as you do, but a good property manager will bring experience, knowledge, contacts (e.g. contractors they've worked with a long time and trust to fix problems) to the table and save you time.
Regardless of which way you go, you should always factor the cost of PM into your number crunching to make sure a deal works for you - if you decide to manage it yourself, think of it as paying yourself to do the PM.

Steve L. · Answer

I think it'd make a lot more sense to hire a handy man or part time employee to property manage once you achieve volume versus a property manager.

I have managers on one property... long story, but I bought it with a manager in place for at least 1 year.  They suck, after 2 months I found the tenant for them.

I hired another property manager to rent a property and wasn't really happy with that either.  Do it yourself if you have time.

Sharad M. · Answer

Hi Cherryl,

I agree with the previous replies that you must definitely factor in the management cost in your numbers. But to answer whether you should hire a property manager or not, there are a few factors you need to consider and money shouldn't be the most important criterion, IMHO.

First, you need to be honest with yourself that managing property is something you can even handle. You may have a family that will require your time commitment.

Second, you may 'save' 8-10% by hiring a property manager, but is it really worth the 8-10% 'savings'? Are you comfortable with receiving calls in the middle of the night about a furnace not working, about a leaking faucet?

Third, if you have a full-time job, can you handle the extra hours and responsibility of managing properties? If you can, is that something you want to spend your free time on?

Forth, chances are more likely than not you will find an incompetent property manager that will not be worth 8-10% fee.

Above are just a few of the things I answered for myself before deciding whether I should get a property manager or not.

Account Closed · Answer

If your buying single family home nearby, I would manage them myself.  When you start to have to many to take care of or they are more distant then it makes much more sense to use a property manager.  Finding a good property manager though can take some time.

Caleb Fritzler · Answer

Do it yourself, it's not hard to learn. It's like anything, scary at first because you're afraid you might make a mistake, however, you'll learn a lot and stay in control of your financial situation. I would recommend, however, than when calculating your ROI that you build a management fee in, just in case you have to turn your properties over to management. Plus you need to get compensated for your time, above and beyond the risk you're taking as an investor.

Become a landlord or hire a property manager?

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