How many properties/units can you self manage before it becomes impossible?
short background. I am about to start looking to buy a second rental property here hopefully in the next coming months. But also, I will be moving out of my house around the same time and turning that into a rental. In total, once I move out I will own 3 single-family rentals. I believe I can manage these myself but just curious, what was the breaking limit on properties for all those self-managers out there?
Hi Patrick,
I have 4 properties, and I am in the process of delegating out as much as possible. I think there is value in self-managing in the beginning, however... I am a firm believer that the sooner you can find the "who" to do most of the stuff, the quicker you will grow. With that being said, I would argue that you should find a PM even if you hypothetically can still self-manage them.
The money you "save" by doing everything yourself can be washed away with one mistake. My theory now (after learning the hard way and taking advice from those more experienced than I am), is that you should focus that time on higher value items... whether that be producing income, or recharging.
The last two years I have been so incredibly busy doing everything under the sun (managing, repairs, rehabs, etc) and I have not grown the way I would have liked to. That time spent left me no time to recharge my batteries, and more importantly spend time as the "visionary" to review and optimize my portfolio. It can be so easy to focus on the things that need to be done immediately and push aside the things that at the surface level can wait.
I wish I would have started delegating a long time ago.
Quote from @Patrick Crehan:
short background. I am about to start looking to buy a second rental property here hopefully in the next coming months. But also, I will be moving out of my house around the same time and turning that into a rental. In total, once I move out I will own 3 single-family rentals. I believe I can manage these myself but just curious, what was the breaking limit on properties for all those self-managers out there?
Why would you want to manage any ? Why deal with it, PM fees are meaningless. I live on the beach in FL and do all my business in the Cleveland markets, (about 500l yes 500 deals, ) my phone never rings,,,,,
All the best
All the best
What else do you have going on in your life? How many hours a week does your regular employment take up? How flexible and understanding is your boss about you taking calls, placing ads, leaving work to deal with a problem at a property? I'm self managing 9 units with a pretty flexible 50hr/week work week. I'll be buying 7 more units (3-plex and 4-plex) in the next month. I'm thinking that will be at or over the limit for me.
Does self-manage mean self-renovate, self-handyman, self-plumber, self-painter, or, do you have a team? The answer to that will make a difference.
After 3 years and 24 units (4 Airbnbs) my wife and I finally got to a point that between the 2 of us we could not longer self manage and work out 9-5 jobs.
So we quit our jobs! Now I can manage 200+ units
#3 Investor Mindset Contributor
- Handyman
- Pittsburgh, PA
My estimate for Pittsburgh low C-class single-family and small multifamily is about 25 units. That's self-managing and handling most of the fixes in 90-100 year-old buildings. On the maintenance side: a great deal depends on how good you are at locking a property down, hardening a rental, to start with. If you're the type that pays various handymen to fix things as you go and never really cares to learn how a building or a house operates, what it needs as periodic maintenance, what its weak and strong points are -- fixing old properties can easily turn into Whac-a-Mole and cost three or four times what it should.
On the people side: after doing this for long enough, I've come to understand that not everyone is psychologically cut out to be a landlord and deal with tenants all day long. They just aren't, and it wears on them. They start to have bizarre attitudes and unrealistic tenant expectations.
There's this strong general belief here on Bigger Pockets that "a good property manager" will solve every problem you have and "your time is too valuable" to spend managing apartments and working with tenants. That's if you come to landlording and property management from a high-income job in the first place. For others like me, it ends up being the best paid job we've ever had, and we're fine with that.
@Patrick Crehan if you get really good and have your things in order you can self manage a few hundred. We manage 800 units in the Pittsburgh market and some of our property managers handle a few hundred and some only 50-80. Your skill set will increase as you grow.
@Patrick Crehan I have 36 residential units, 2 commercial units, and 10 garage units spanning over 9 properties. I’m just about reaching my max…….trying for more sweat equity another year or 2 and then I’m sure I’ll start off loading certain responsibilities.
Quote from @Bob Stevens:PM fees are not meaningless! I have 17 single family rentals and my PM fees would be $28,000 a year. For 12 texts a year that take 5 minutes or more to fix. They usually either have to call the AC guy or the plumber. And I answer the text from the beach too🏝️ I plan on keeping these rentals until I pass them on to my grandchildren so I’ll probably be able to pass another $600,000 worth of assets to them because I spent an hour a year being my own PM. No brainer for me.
Quote from @Patrick Crehan:
Why deal with it, PM fees are meaningless.
@Patrick Crehan
I self manage 18 SFH. It's easy and hardly takes any time. If something breaks, my tenants text me. Then I text an hvac guy, plumber, electrician etc and the problem is solved. Takes 30 seconds. And I save about 30k/year in PM fees by doing this.
#2 Managing Your Property Contributor
What exactly do you mean by "self-manage"?
Day-to-day management of tenants?
General maintenance?
RentReadies?
Applicant screening?
Rental marketing?
Accounting?
Handling all of these would max out most people at 20-25 doors.
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
You should not be self managing any of your real estate.
Quote from @Kristi K.:
Quote from @Bob Stevens:PM fees are not meaningless! I have 17 single family rentals and my PM fees would be $28,000 a year. For 12 texts a year that take 5 minutes or more to fix. They usually either have to call the AC guy or the plumber. And I answer the text from the beach too🏝️ I plan on keeping these rentals until I pass them on to my grandchildren so I’ll probably be able to pass another $600,000 worth of assets to them because I spent an hour a year being my own PM. No brainer for me.
Quote from @Patrick Crehan:
Why deal with it, PM fees are meaningless.
Meaningless, I have 100 or so, I am never bothered. PM cos are like owning a gun. You hope you never need it, but when you do you sure are glad you have it. If the PM fee takes too much of your ROI well find better deals. ALL my personals are never less then 20% NET caps, based on cash purchase, with ALL expenses. Also, it depends where you have your rentals. All mine are in the Cleveland markets. Well, the winters are terrible. We had 47 yes 47 busted pipes over Christmas weekend, would you want to deal with that, not me ? Also, we are dealing with low-income tenants, you need to know what you are doing when dealing with them. So sure, if you're in a great area, self-management can be ok, I still would never want to deal with it,
Continued success, I love how you are thinking about leaving a legacy, GREAT way of thinking,
All the best to you
#5 All Forums Contributor
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#5 All Forums Contributor
- Real Estate Broker
- Twin Cities, MN
@Patrick Crehan I appreciate the question although the answer, to be accurate, isn't such a set in stone type fact, it's situational.
The one point that is universal is as @Trevor Schmitt pointed out, that is foundational knowledge all should adopt because if you don't, your going to learn it the hard way.
3-main factors will dictate a persons capacity;
(a) Personal capacity to "DO" the job. That's time, skills, savvy, and the rhino-skin.
(b) What class of property and tenant it is as lessor condition means more inputs
(c) The "SYSTEM", or even just the existence of one, and a persons individual skills to automate effectively.
Personally, via my experience and systems, my "tipping point" is at 200 units per PM. This comes after many years experience, a natural knack at efficiency and systemizations. I have things nailed down to an insane methodical degree. Layers upon layers of systemizations, automations, efficiency. At that "full-capacity" there is serious strain on the system so it's not ideal. But 150 is all but auto-pilot. Again, this is a full-out optimized system.
Most self-managing are, ironiclly, rather novice. It's just the truth of it, the vast majority come to find the power of human leverage at some point and how PM is not a profit center so they get out of it to focus themselves in most efficient use of their time, like deal generation not PM.
Most often I see serious strain start to appear around unit 4. And serious breaks once into teens, that's saying completely avoidable problems happening that cost severely.
In all my years I have yet to see anyone self-managing a number as low as 50+, not once ever seen that. Yes, many who have created own PM system for 50+, but they have staff, not self-managing.
So self-managing seems to have a very tiny window of efficiency potential, between 1and as many as 10. Maybe. And here is the issue with it and why "maybe", because that's clearly in the "growth" segment of things and what is the opportunity cost of growth, for self-managing? How much time, energy and resources did it eat? How many deals, how much growth was lost for that?
Again, not universal to any/all people, but in general yeah I see it doing more harm than good. 1 serious mistake is all it takes and that can wipeout months if not years of that "savings" of self-managing vs staffing for it.
@James Hamling
That was thorough and wise. I will have to agree 100%.
When I began this journey, I did not think I would need a PM. I was able to handle it solo. 1 turned into 2 then 6, then 10, 20, etc.. However, when I got to about 50, i realized that it want impossible to self manage, but it was inefficient. The time value was not making sense.
Admittedly, I was still holding a full time job and had 3 young kids. But thank goodness for that, because it forced to shift my thought process to make better use of my time. I hired/trained my own PM so that they can align with my growth strategy. After some growing pains in the beginning, it smoothed out. This gave me more time to concentrate on deals.
I think this is is the natural progression. Just as @James Hamling stated, you will get to a point where it become more about growth. At that point, you have to shift your management strategy. If your goal is just to own enough for semi passive FI, perhaps 10 to 30 rentals, then self management might still work. However, if you are focused on wealth building and going beyond FI, getting to the point of time freedom AND into leisure lifestyles/frivolous purchases, then you will need to focus more on growth.
#1 Tenant Screening Contributor
- Property Manager
- Honolulu, HI
Aloha,
The number of units you can effectively manage is entirely dependent on age and condition of each property; quality of Tenants and effectiveness of your screening and move in process; available qualified contractor pool; solid systems for all major processes; your personal knowledge of all applicable laws, construction fundamentals, and troubleshooting capabilities.
Do the right things right, the first time. It is far less costly to be pro-active with preventative maintenance, than to be reactive and in crisis mode.
@Patrick Crehan
I work full time and self manage 11 units over 5 properties. It's a part time job that takes time away from family. Sometimes I can go for a few months without an issue and other times three or four things that need my attention will all of the sudden pop up. I figure a property manager would change at least 10%, but I don't have a huge turn over because my properties are well maintained and I rent slightly under market value.
Quote from @Bob Stevens:Hey Bob, congrats on your 100 or so. If your rents are anything like my rents you are paying $162,000 a year in PM fees. Maybe you should start your own PM company so your ROI’s are even higher and you could get even more people to invest with you. All the best to you too.
Quote from @Kristi K.:
Quote from @Bob Stevens:PM fees are not meaningless! I have 17 single family rentals and my PM fees would be $28,000 a year. For 12 texts a year that take 5 minutes or more to fix. They usually either have to call the AC guy or the plumber. And I answer the text from the beach too🏝️ I plan on keeping these rentals until I pass them on to my grandchildren so I’ll probably be able to pass another $600,000 worth of assets to them because I spent an hour a year being my own PM. No brainer for me.
Quote from @Patrick Crehan:
Why deal with it, PM fees are meaningless.Meaningless, I have 100 or so, I am never bothered. PM cos are like owning a gun. You hope you never need it, but when you do you sure are glad you have it. If the PM fee takes too much of your ROI well find better deals. ALL my personals are never less then 20% NET caps, based on cash purchase, with ALL expenses. Also, it depends where you have your rentals. All mine are in the Cleveland markets. Well, the winters are terrible. We had 47 yes 47 busted pipes over Christmas weekend, would you want to deal with that, not me ? Also, we are dealing with low-income tenants, you need to know what you are doing when dealing with them. So sure, if you're in a great area, self-management can be ok, I still would never want to deal with it,
Continued success, I love how you are thinking about leaving a legacy, GREAT way of thinking,
All the best to you
Quote from @Kristi K.:
Quote from @Bob Stevens:Hey Bob, congrats on your 100 or so. If your rents are anything like my rents you are paying $162,000 a year in PM fees. Maybe you should start your own PM company so your ROI’s are even higher and you could get even more people to invest with you. All the best to you too.
Quote from @Kristi K.:
Quote from @Bob Stevens:PM fees are not meaningless! I have 17 single family rentals and my PM fees would be $28,000 a year. For 12 texts a year that take 5 minutes or more to fix. They usually either have to call the AC guy or the plumber. And I answer the text from the beach too🏝️ I plan on keeping these rentals until I pass them on to my grandchildren so I’ll probably be able to pass another $600,000 worth of assets to them because I spent an hour a year being my own PM. No brainer for me.
Quote from @Patrick Crehan:
Why deal with it, PM fees are meaningless.Meaningless, I have 100 or so, I am never bothered. PM cos are like owning a gun. You hope you never need it, but when you do you sure are glad you have it. If the PM fee takes too much of your ROI well find better deals. ALL my personals are never less then 20% NET caps, based on cash purchase, with ALL expenses. Also, it depends where you have your rentals. All mine are in the Cleveland markets. Well, the winters are terrible. We had 47 yes 47 busted pipes over Christmas weekend, would you want to deal with that, not me ? Also, we are dealing with low-income tenants, you need to know what you are doing when dealing with them. So sure, if you're in a great area, self-management can be ok, I still would never want to deal with it,
Continued success, I love how you are thinking about leaving a legacy, GREAT way of thinking,
All the best to you
Hil my avg rent per door is about 800,( PM fee is 8% ) again its meaningless, can't put a price on free time. BTW my net caps are all around 20% with ALL fees, sooooo.
All the best to you
Obviously a hot topic with all the replies! Some really good advice for sure. At the end of the day, it is all about how you want to spend your time. What do you enjoy and what adds the most value to you at the end of the day. If it is doing the property management, then create the right processes, automate what you can and have at it. The more standardization you put in and automation you leverage, the more you can scale.
On the other hand, if you hate the guest relations, marketing, managing the team, etc then even 1 property will be the limit because it isn't something you should be doing.
I think what most people are saying is that you shouldn't just make your decision based on saving $XXX but take into consideration your time, skills and goals.
Quote from @Patrick Crehan:The breaking limit really doesn't have to do with the number of units. It has to do with you being able to uphold your end of the lease agreement and provide a professional experience to your renters.
short background. I am about to start looking to buy a second rental property here hopefully in the next coming months. But also, I will be moving out of my house around the same time and turning that into a rental. In total, once I move out I will own 3 single-family rentals. I believe I can manage these myself but just curious, what was the breaking limit on properties for all those self-managers out there?
When a maintenance issue comes up, are you able to deploy your maintenance team within 3-5 business days if it's not an emergency? If it IS an emergency, are you able to get someone out there within 24 hours? Or will you be busy with other things and not get to it for 2-3 weeks?
Are you able to resolve conflicts? Especially when you're dealing with conflicting personality types.
And do you believe that you can give your tenants a great experience while living there? Will you be able to check your own biases at the door when it comes to them?
That's all BEFORE you get into your leasing process and qualifications. Are you having the prospects sign release forms and contacting their employer to verify income? Same with rental history. Or will you skip some steps because you are busy doing other things and don't think it'll make that big of a difference?
These are all things you need to objectively look at in order to make this decision.
For me, I run 21 units on a tight ship. I could triple that number running on the same system I have now with little change on my end. I also have processes in place for tenant applications, credit/background checks, application review, lease drafting and execution, annual/move-in/move-out inspections, maintenance ect.
Always look at how "insert blank here" is scaleable. It may seem unnecessary to setup a process like I mentioned about for only 3 units. But when you lay a solid foundation your growth will be much less painful and much more efficient.
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Broker New York (#10491212475)
- Diamond Door Realty
- (315) 608-1879
- [email protected]
We have been self managing 7 units with 3 of those Airbnbs. Maintenance calls and texts are easy to handle but they always come when we are out of town or busy. However, the rest is seamless. Listing properties and acquiring the next STR guest is just time consuming. We just acquired a 16 unit complex and it may test us. We shall see!
True Home Ohio Property Management would be a great choice for helping you with with your rental properties. I am the business Development Manager. Please let me know if you would like to talk more about this!
Quote from @Patrick Crehan:
short background. I am about to start looking to buy a second rental property here hopefully in the next coming months. But also, I will be moving out of my house around the same time and turning that into a rental. In total, once I move out I will own 3 single-family rentals. I believe I can manage these myself but just curious, what was the breaking limit on properties for all those self-managers out there?
start with the end in mind. I think 1 is too many lol
