Self Manage Your Properties

[Adam Tafel]

Every property manager needs to be managed. PMs are the most frustrating thing about the business, because even the best PM won’t be as effective as a skilled owner-operator. In a tight market where cashflow can be tough to come by, it’s the PM factor which puts most deals out of reach for investors in the 1-12 unit space in our market.

It’s not so much the fees and lease up commissions, it’s the unknowns regarding maintenance and repair pricing. I used to have a PM contract on a 30 unit building in Saint Paul, we actually made most of our profits off the air filter contract at 12k/year. A previous vendor had bid it at 12k, we saw this when we took over and thought “hmmm we can take care of that..”. I had another PM tell me recently that his biggest profit margin activity is swapping fire detector batteries. These are the things a self-manager doesn’t think of when underwriting to add PM.

Everyone should self manage for as long as possible IMO, and by “everyone” I mean the 99% of us who own under 5 properties. Get to know the buildings and their quirks, the best lease schedules, the difficult neighbors, the best tenant sources, the boiler system, etc. If you don’t, you’ll be paying $100/hr or more for vendors to figure everything out, as it can take a year or 2 to stabilize a new deal.

[Richard F.]

Quote from @Adam Bartomeo:

If you think that PM's are the most frustrating part of the business than you are a VERY inexperienced investor and shouldn't comment about things you do not know about. An experienced investor should tell you that the best part of the business is the PM. PMs are the people who deal with all of the most stressful parts of the business - tenant complaints, the code violations, the nonpaying tenants, and all of the stuff that no one wants to deal with. 

Funny that they are most frustrating part of the business but yet you still employ a PM to manage your property. I wonder how they feel about you...

Yeah, and we never get credit for the 10's or 100's of thousands of unit-months actual experience as well as the knowledge of the multitude of laws that legit operators must follow. For the newbs, one mistake can, and often will, cost far more than any legit PM fees.