I read this quite often: 'should I self-manage my property or hire a professional property manager?'
It's understandable why many investors and/or accidental landlords would opt to simply self-manage. Among other concerns, many simply feel the fees of property management are too high.
In my experience, most who were willing to take the extra step toward having their property professionally managed were relieved to not have to deal with:
A. Late-night unexpected phone calls from tenants
B. Random calls, voicemails, and invoices from maintenance vendors
C. Evictions (we all dread this one)
D. Compliance issues regarding local landlord regulations
E. HOA violations or fees racked up by tenants
F. Tenant screening (how many prerequisites were really screened before they signed the lease)
G. Vacancy expenses when attempting to market your property above the average rent rate
Alright. You get it. Self-managing can be more expensive than simply working with all of the above. Professional property managers are often licensed real estate brokers who specialize in acting as the filter for you for the number items, which are not only costly but a headache.
Paying a bit more for a property manager isn't so bad when you consider something as priceless as peace of mind.
What has your experience been like, self-managing or with a property manager?
Valhalla, NY · Member since 2013 · 132 posts · 84 votes
2y
I think if newer investors want to learn the ropes of Property Management it would be wise to try and self manage their first few units. Obviously property management is not for everyone but for those who treat it as a separate business venture, it could become beneficial in the long run. As for myself I have been self managing for a few years and continue to learn the processes that go with management. Later on in my investing career when I have less time to deal with the day to day I will hire a PM and have a good understanding if they are running my property in an efficient manner.
Valhalla, NY · Member since 2013 · 132 posts · 84 votes
2y
I think if newer investors want to learn the ropes of Property Management it would be wise to try and self manage their first few units. Obviously property management is not for everyone but for those who treat it as a separate business venture, it could become beneficial in the long run. As for myself I have been self managing for a few years and continue to learn the processes that go with management. Later on in my investing career when I have less time to deal with the day to day I will hire a PM and have a good understanding if they are running my property in an efficient manner.
I think if newer investors want to learn the ropes of Property Management it would be wise to try and self manage their first few units. Obviously property management is not for everyone but for those who treat it as a separate business venture, it could become beneficial in the long run. As for myself I have been self managing for a few years and continue to learn the processes that go with management. Later on in my investing career when I have less time to deal with the day to day I will hire a PM and have a good understanding if they are running my property in an efficient manner.
Many do get a better idea of the benefits but also the challenges of self-managing by diving in. If you, as an investor, understand the side of compliance, communication, and maintenance, you can also appreciate why people pay to have property managed. It's certainly not easy, even when using all-in-one software like Appfolio. You mentioned timing being one you may have less of in the future, and that's a big reason investors will turn their property over to a professional PM. What are some other things you'd turn over to a PM if you could?
Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
2y
I still believe no one cares about your property as much as you do. As a self-managing investor, my returns have come from being hands-on, even with the occasional costly mistake.
The benefits? I save on property management fees, maintain control over tenant relations, and personally ensure things are done right. However, it’s not without challenges—
Here is my experience with my 26 unit portfolio
A. Late-night unexpected phone calls from tenant 1-2 times per week
B. Random calls, voicemails, and invoices from maintenance vendors 2-3 maintenance items per week, takes about 30 min to deal with
C. Evictions (we all dread this one) I've had 1 in the last 5 years. Easier than expected
D. Compliance issues regarding local landlord regulations not an issue in my area. I dont think we've had any major regulation issues, ever
E. HOA violations or fees racked up by tenants I dont invest in HOA neighborhoods. Non of my clients have had this issue either
F. Tenant screening (how many prerequisites were really screened before they signed the lease) software makes this easy. Screening tenants takes 2-3 days, 30 min per day as you collect paystubs and contact past landlords. We turn 30-40% of the portfolio ever year
G. Vacancy expenses when attempting to market your property above the average rent rate. This applies to both PM and self-managed investments. PM companies will pride themselves in finding a tenant quickly, often at the expense of top rental rates and quality tenants.
Unfortunately, most landlords don't have the skills necessary to manage their units well. They rent below market rates, they pick bad renters, they don't have a good lease or know how to enforce it, etc. Their mistakes often cost them way more than a professional manager ever would.
Unfortunately, most landlords don't have the skills necessary to manage their units well. They rent below market rates, they pick bad renters, they don't have a good lease or know how to enforce it, etc. Their mistakes often cost them way more than a professional manager ever would.
I have a perfect example in my upcoming book.
I agree you have to take self-management seriously, the upfront effort is the real hurdle. That being said I have seen a large number of "professional" property managers that dont do their jobs well resulting in... below-market rents, bad renters, and bad leases that aren't enforced well.
Yep. Property Managers are just like tenants: some are good and some are bad. The key is to know what a good one looks like, then screen until you find one. Too many investors just grab the first one in a Google search, the one with lowest fees, or the one with a flashy website.
I still believe no one cares about your property as much as you do. As a self-managing investor, my returns have come from being hands-on, even with the occasional costly mistake.
The benefits? I save on property management fees, maintain control over tenant relations, and personally ensure things are done right. However, it’s not without challenges—
Here is my experience with my 26 unit portfolio
A. Late-night unexpected phone calls from tenant 1-2 times per week
B. Random calls, voicemails, and invoices from maintenance vendors 2-3 maintenance items per week, takes about 30 min to deal with
C. Evictions (we all dread this one) I've had 1 in the last 5 years. Easier than expected
D. Compliance issues regarding local landlord regulations not an issue in my area. I dont think we've had any major regulation issues, ever
E. HOA violations or fees racked up by tenants I dont invest in HOA neighborhoods. Non of my clients have had this issue either
F. Tenant screening (how many prerequisites were really screened before they signed the lease) software makes this easy. Screening tenants takes 2-3 days, 30 min per day as you collect paystubs and contact past landlords. We turn 30-40% of the portfolio ever year
G. Vacancy expenses when attempting to market your property above the average rent rate. This applies to both PM and self-managed investments. PM companies will pride themselves in finding a tenant quickly, often at the expense of top rental rates and quality tenants.
You stated that as an investor, "no one cares more about the property than you." And that's where a good property manager will agree with you. You can save money and be able to check off certain items related to management with software, but how accurate are they? You mentioned tenant screening through the software, but does the software also run detailed rent reports to determine you're marketing at the correct rate? By charging below on rent, you're losing profit, and by overcharging, your properties may end up sitting vacant, which ultimately will cost quite a bit.
Once you have all of these processes being handled by a PM, you can finally afford the one item all investors seek when managing a property that you simply cannot put a price on: peace of mind.
I agree with @nathan on this too; there are good and bad PMs out there (just like tenants). Think of it this way: if we were to screen tenants on criminal background, credit, eviction history, landlord references, and income (3X that of rent and employee verified), even with 25 tenant applications, it's difficult to find a reliable tenant to match all those criteria. The same goes with a property management company. Most are going to screen for: lowest priced, top listed on Google (many top listed PMs in your local area pay to be sponsored, so their actual listing is much lower), volume or size of business, and those who are willing to break their own processes to simply tell you what you want to hear (e.g., I'll list your property $300 above the AVG even though the CMA shows that's overpriced and I won't tell you that it's going to sit vacant).
Things to look for in a property manager if you consider:
1. Google search ranking is important, but read the reviews. It's shoddy if you have a small PM company with only 20 reviews and a 4.9 rating (likely means employees are slipping in 5-stars). Read the negative reviews too; did the PM respond to them to provide transparency? What do the positive reviews say about the experience?
2. Set up a Discovery call with a PM. Your investments are worth your time, and a quick call to find out whether or not the PM aligns with your long-term goals is worth it.
3. Don't be hasty to sign on with someone eager to tell you 'yes' to just about everything. This applies in most areas of life, but if someone is simply agreeing with you, dropping PM fees down a percentage or offering discounts up front and sounds a bit desperate, they could be experiencing high turnover and poor customer retention. The real professionals will lay everything out up front, likely letting you read a copy of their agreement to understand additional services and benefits in detail, and aren't going to be pushy about getting you to sign anything if they feel it's a bad fit or something doesn't align.
At the end of the day, a good PM will have your best interests in mind. After all, some of the best of the trade are also investors too.
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
2y
Everything is a tradeoff!
How many of us at our jobs, think we can do things better than our coworkers? Better than people that work under us?
Same thing applies to property management.
No one will manage your property the way you do - period!
A professional may often do a better job when it comes to hard decisions as it's just business to them.
A DIY landlord though, may babysit their tenants a search high & low for the cheapest contractor and then pay them cash to get an even better price. - A PMC is not going to go to the extremes owners do as a PMC can only afford to spend X amount of time on problems for owners - or go out of business.
I think if newer investors want to learn the ropes of Property Management it would be wise to try and self manage their first few units. Obviously property management is not for everyone but for those who treat it as a separate business venture, it could become beneficial in the long run. As for myself I have been self managing for a few years and continue to learn the processes that go with management. Later on in my investing career when I have less time to deal with the day to day I will hire a PM and have a good understanding if they are running my property in an efficient manner.
Many do get a better idea of the benefits but also the challenges of self-managing by diving in. If you, as an investor, understand the side of compliance, communication, and maintenance, you can also appreciate why people pay to have property managed. It's certainly not easy, even when using all-in-one software like Appfolio. You mentioned timing being one you may have less of in the future, and that's a big reason investors will turn their property over to a professional PM. What are some other things you'd turn over to a PM if you could?
