Should I Self-Manage 11 Student Rentals to Save $~100k/Year…or Stay Focused on BRRRR?

Question

I own 11 student rentals (15 units) near the University of Cincinnati (~$600K gross rent annually). My current PM charges 10% of rents (~$60K), 75% of first month rent for new leases, 50% for renewals, and a 15% markup on maintenance/CapEx. Unit turns run $3K–$4K each, so with her markup my all-in annual PM cost is ~$112K (≈18–19% of gross). She’s been a solid partner for 6+ years and also brings me deals, but the numbers are starting to feel heavy.

If I keep her full-service, I free up my time for acquisitions and BRRRR but eat the $112K/year. If I go Hybrid (self-manage ops/CapEx, she just does leasing/renewals at $750 each), my PM cost drops to ~$25K. That saves ~$90K (after-tax, about $70K), while keeping leasing off my plate. If I go Full self-manage, I’d save ~$112K gross (~$90K net after tax), but it could mean 15–20 hrs/week in management, plus seasonal spikes — and that’s time I’d otherwise spend sourcing or managing BRRRR rehabs.

Here’s the tension: One BRRRR deal in my market creates ~$75K in forced equity. If taking management in-house costs me even one deal per year, the extra savings disappear. If it costs me two deals, Hybrid actually wins out.

Curious how others have navigated this. Has anyone regretted taking management in-house because it slowed down acquisitions? For those running hybrid setups, how do you structure leasing season (VAs, leasing agents, partial PM partnerships) so it doesn’t become a time suck?

Will Gaston · Answer

Kyle, I own ~300 beds at the University of South Carolina in Columbia, and I have an in-house team that manages my portfolio. I oversee them, but mostly work on new deals.

I struggled w/ this exact question for years, but eventually took it all in-house.

A great question to ask IMO:

Would you rather have a 3rd party PM manage your portfolio and give it 3-5% of their time?

Or, for the same price, could you hire a full time person to dedicate 100% of their time to your portfolio?

Drew Sygit · Answer

Great posts by all so far!

Trying add some value.

Once I got to 20 doors, with a full-time job, hired two PMC's that weren't very good. Then got laidoff, so joined a third to make them better.

So, I've been on both sides.

1) Time: how much time it takes to manage a property depends on the Property/Tenant Class. The lower the Class, the more time it takes to manage the property well.

2) Student Rentals: never going to be above Class B.

3) Renewals: how often do students actually renew? 50% should actually motivate your PMC to proactively keep tenants, which cuts down on your turnover costs. Every owner wants a PMC to do these for a flat fee - but then what are you really incentivizing your PMC to do? Proactively pursue a renewal for a decent commission or give minimal effort and get a significantly higher amount to place a new tenant?

4) Negotiate: you probably negotiate with your contractors all the time, why not with your PMC? - 10% of rents might come down to 8-9% (6% is ridiculous for all but 20+ unit apartments - unless otherwise offset)- Placement Fee seems reasonable as guessing most students have extra layer of hassle/time with co-signing parents.- Renewal cost you may be able to shave 5-10% off without destroying the incentive.- Maintenance markup of 15% for $3-4k work could get negotiated down to 10%.

4) Hybrid: from my exprience:- 80% of Day-to-Day Management is time consuming, but not hard. - The 20% of serious concerns, often legal, who will handle them so they don't get worse?- Placement is time consuming - nationally, around 25% of showings are no-shows.- Maintenance may not be worth you scheduling with contractor & tenant, following up to confirm completed & quality, then paying. - Cap-Ex is where you could definitely take over and save yourself some coin.

Good luck:)

Zach F. · Answer

I find that once you do get above a certain number of units, even if they are SFR's and small MFR's, most landlords want to try and DIY property management to save money, like you are thinking.  Our largest GOOD client has always had less than 30 units.  We managed for someone with 43 units at one point and they ultimately ended up bringing the PM in house.  They were inexperienced and were OK adding another JOB to their day-to-day life.

With only 15 units, in my opinion, the option to bring property management in house will either:

1.  Force you to have a job as the PM or

2.  Force you to hire an employee at an exorbitant rate that your 15 units cannot support

Both of those options are not great IMO...  Once you get above 30 or 40 units, I think then at that point your numbers will justify building out your own property management company/team if you still think it's worth your time.

If you enjoy being a property manager, then option #1 isn't bad.  With only 15 units, you won't be adding 30 or 40 hours of additional work per week to your plate most likely.

If you approach it with option #2, this could work if you plan on very quickly getting to that 30 to 40+ unit mark.  But even then, with this option, you're now in charge of managing the property manager.  You will be their boss.  This honestly might end up taking more time than option #1 if you are not careful.

I'm currently reading WHO NOT HOW and you may want to check it out with your current dilemma you laid out.  It might get your creative juices flowing and come up with a good solution or find peace with keeping your current PM.

You need to be very protective of your time.  Calculate your "hourly rate" that your time is worth.  I guarantee you it's much higher than what a leasing agent or maintenance coordinator gets paid.  Your time is much better spent increasing your net worth, in this case, in the form of buying more rentals.  Right now your headspace isn't cluttered with nonsense that comes along with property management.  Even when you get done handling a routine maintenance request or driving out to do a showing, you're going to still be thinking about it.  Do you want your mind to wander and dwell on that leaky pipe?  Or do you want your mind to go to work thinking about acquiring more deals or focusing on higher "dollar per hour activity"?

My 2 cents is that it's a better use of your time to focus on sourcing and acquiring more properties, if you want to grow.

Travis Lake · Answer

If I understand you correctly Will, you’re saying maybe hire an employee to manage the portfolio, presumably someone who is licensed in that state.  That way he gets the best of both worlds, cost savings, and totally free to keep on the acquisition side.     Makes sense to me.   Those PM fees seem really high!!!  I know it’s a totally different market there so maybe that’s the norm over there.  But not here in SC!

Sam McCormack · Answer

That sounds like a lot. Especially someone who brings her a TON of business every year. My go to guy is 6%, unsure of his turnover costs. Granted that 6% is based on about 6800/month for 2 buildings, 10% is quite heavy. Granted, her services could be amazing, that extra % may be worth the headache, i'm not sure. Assuming the cheaper option/route would be more difficult or more headache, is that extra % worth it?

Arman Ahmed · Answer

@Kyle Neff

Kyle, that’s a great breakdown — you’re clearly looking at this the right way. A lot of investors I know in similar positions have found the hybrid model to be the sweet spot: outsource leasing/renewals since that’s where student rentals can really eat up time, but keep CapEx/maintenance oversight in-house to protect margins. One thing to consider is hiring a dedicated VA or part-time “boots on the ground” runner to handle the day-to-day tenant/maintenance coordination — that way you save most of the PM cost without losing focus on acquisitions. At your scale, even if that costs you $15–20k/year, you’re still well ahead while keeping your deal pipeline strong.

Will Gaston · Answer

Correct Travis - I think you could probably get a solid hire for 70-90k in Cincy.

I wish I had figured this out sooner. Lot easier to scale up when all you have somebody focusing on existing issues.

Should I Self-Manage 11 Student Rentals to Save $~100k/Year…or Stay Focused on BRRRR?

Most Popular Reply