Property Manager vs No Property Manager for first investment

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Property Manager vs No Property Manager for first investment

Dalton O'Rourke
Northern Virginia · Member since 2020 · 15 posts · 4 votes

Debating the pros and cons for hiring a property manager for a first investment.

What are your thoughts ?

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Soh Tanaka
Property Manager · Lindenhurst, IL · Member since 2016 · 854 posts · 506 votes
5y

If you are willing to educate yourself on how to manage properties, have time to manage, and like (the idea of) managing properties, then do it yourself. Otherwise, hire a PM. 

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  • Tommy AdeoyePro Member
    Investor · Member since 2020 · 164 posts · 87 votes
    5y

    In as much as I will like to share the pros and cons of hiring a PM, I believe this article does a better job 

    The Pros & Cons of Hiring a Property Manager

    Have you considered how much impact that will do to your cash flow? Wouldn't you be better off building a team (plumbers, repairmen, carpenters, etc) and automate rent collection , tenant correspondence ? Have you considered automated systems like rentredi that acts like a virtual property manager. Have you considered just adding an independent property manager to the team mentioned earlier? 

    I say weigh your options closely but if I were in your shoes, I'll see what other creative options I am open to before considering a pm hire . I personally will only bring in a property manager If I had a commercial apartment investment - 10 units northward. 

    3Reply
  • Abubakar Acheneje
    Member since 2019 · 2 posts · 2 votes
    5y

    If majority of the successful investors out there are for using property managers, as opposed to doing it yourself, then there must be something attractive about it. However, as a beginner with barely three units, I'm having a ton of fun and satisfaction doing it myself right now. Maybe when I'm able to scale up to ten and above, it'll no longer be so much fun holding on. So far, I try to do a decent job of rehabbing the properties, get a tenant placement company/agency to recruit the tenants and onto the search for my next property I move

    1Reply
  • Soh Tanaka
    Property Manager · Lindenhurst, IL · Member since 2016 · 854 posts · 506 votes
    5y

    If you are willing to educate yourself on how to manage properties, have time to manage, and like (the idea of) managing properties, then do it yourself. Otherwise, hire a PM. 

    4Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y

    If it is local, I would manage it yourself.  As Soh mentioned, make sure you read the local laws, use a standard lease for the area (often govt websites have one that you can then add anything to-eg no smoking).

    0Reply
  • Steve R.
    Investor · MN · Member since 2015 · 72 posts · 37 votes
    5y

    @Dalton O'Rourke

    I echo what @Soh Tanaka said. I have 12 SFRs and place tenants and manage them myself. It is important to educate yourself or you will pay a higher price for the education in the long run. The key to self management is to have a team of key people to call that you can rely on, especially a plumber/heating guy, and to automate rent collection and anything else you can.

    0Reply
  • Aaron W.
    Rental Property Investor · Northern Virginia · Member since 2019 · 793 posts · 620 votes
    5y

    @Dalton O'Rourke Is your investment local or further away? What are your goals with investing?  

    We are out of state investors and rely on a property manager for all our rentals. The property manager can make owning your property more passive if that is your desire. However, not all property managers are made alike. Your property manager can make or break the profitability of your property if managed poorly, so thorough due diligence is necessary.

    No matter what, when analyzing your properties, you should build in property management expenses even if you plan to self manage just in case you decide to hire this out in the future.

    Good luck!

    1Reply
  • Tracy StreichPro Member
    Real Estate Broker · Tulsa- OKC Oklahoma · Member since 2017 · 868 posts · 801 votes
    5y

    @Dalton O'Rourke Depends on your goal.   Do you want to be an investor or a landlord?  Are you local or out of state.   This is really a hot button issue on the forums.   some will say you are stupid if you hire a PM and others say just the opposite.  There is no right or wrong answer.  What is best for you will differ from others.   I say look at what you could or would be doing with that time.   Is is cost effective for you, then you have your answer,   Good Luck!

    [email protected]918-728-8080
    2Reply
  • Alexander Szikla
    Real Estate Agent · New York City · Member since 2020 · 819 posts · 641 votes
    5y

    PMs will cut your margins tremendously. They are in business to make money for themselves, not the client. 

    Plus, you want to get a handle on your property and the business in general before putting it on "autopilot" 

    0Reply
  • Dan Maciejewski
    Realtor · PInellas County Largo, FL · Member since 2016 · 902 posts · 810 votes
    5y

    Management can be easy, or it can be very hard.  If you set yourself up for success during the interview and set expectations, you make your job much easier.  That's why inherited tenants have a bad rap -- they aren't ready for the new landlord's expectations.

    It is a skill, and like any skill, you can learn it.  Management and leadership go hand in hand.  If you have any experience in either, it will carry right over.

    Also, the amount of time a properly managed rental takes is very close to 10 hours / year.  That's for management (repairs, check cashing, calls to tenants, changing filters, talking to vendors).  Lease up can take a few more hours for interviews and ads and stuff like that.  If your units are in disrepair, you will spend more time on repairs.

    0Reply
  • Account Closed
    Rental Property Investor · NJ · Member since 2020 · 52 posts · 25 votes
    5y

    Working on my first rental with my first tenants, and I promised myself I would, at least start out, doing it myself. I want to learn the ropes and understand everything that goes into owning and managing a property. So far, I've been lucky to have a pretty smooth experience, but it has taken a good amount of time to do all of the reading, form formatting, database building, etc.

    I'm definitely a noob, so I love reading the other replies, too!

    0Reply
  • Jenning Y.
    Investor · USA · Member since 2015 · 168 posts · 243 votes
    5y

    This issue has been discussed numerous times, and there's is no right or wrong answer. It really all depends on your goal and personality.  Using PM will cut your profit tremendously, no doubt about it, but whether worth it is a pure personal question.

    I am an investor but hate to deal with any kind of people due to my personality.   If I had to manage my properties by myself,  I would not be a landlord at all.  But I am still a landlord now.  Using PM, whether you have 1, or 5, or 10, or 20 properties, does not affect your life that much.  Yes, you need to pay for it!   

    0Reply
  • David Gonzalez
    Realtor · Camarillo, CA · Member since 2014 · 162 posts · 102 votes
    5y

    I would ask my self two questions:

    1) Do I have an even temper and can handle/manage the personalities of different people?

    2) Am I close enough that if an issue occurred that I can solve the issue? (Factor maintance and the management of vendors as well).

    If you can’t answer both questions as a yes then find a property manager and factor it in as the cost of doing business. Just don’t settle on the first property manager you meet and be willing to fire them when the relationship does not work. Also even if you said yes to those two things it may not make sense to self manage. Your time is better spent finding deals then managing the property.

    0Reply
  • Nick Barlow
    Warsaw, IN · Member since 2017 · 229 posts · 270 votes
    5y

    @Dalton O'Rourke the right answer is the one you choose :)

    All kidding aside, newer investors, stereotypically, are I’ll prepared dealing with professional tenants, and are not forceful enough with the provisions of the lease, which can haunt them in the long run.

    I rely on a PM, and recommend the same. Good luck!

    0Reply
  • Michael Moy
    Member since 2018 · 12 posts · 8 votes
    5y

    If you have the time to manage the property yourself, I highly recommend it.  You will learn how a property should be managed which will help you out when you get to the point where you need to hire a property manager.  The experience will help you when you interview PM's in the future.  You save money and get experience, win win if you have the time

    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    5y

    @Dalton O'Rourke you'll learn a lot of you can do it yourself for a year or two.

    It can be fun and exciting at first, but after that initial 2 years, it just becomes a job.

    Some still like the grind after those first two years, others can't stand it anymore and hire a PMC.

    [email protected]248-209-6824
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  • Jelissa Ulloa
    New to Real Estate · Winter Haven, FL · Member since 2020 · 2 posts · 1 vote
    5y

    I don't think it's worth hiring one for only one property. Especially if you are local. It will cut your income and sometimes there are property managers that are not that good.

    1Reply
  • Padric Lynch
    Rental Property Investor · Craven County, NC · Member since 2016 · 146 posts · 61 votes
    5y

    @Dalton O'Rourke

    I self-managed my first rental for about a year to understand the process. If you decide to, I would use cozy.co. it's a very intuitive PM site and it's free. I had easy going tenants and it was mostly a breeze, but there were times where I felt inconvenienced. Collecting rent was exciting, but all of the other nuts and bolts felt like a heavy obligation. It just wasn't my highest and best use, so now I only use PM. My analysis for new deals always include monthly PM fees and initial leasing fees. It frees up a lot of time, especially if you ever have trouble tenants and/or an eviction.

    0Reply
  • Account Closed
    Rental Property Investor · NJ · Member since 2020 · 52 posts · 25 votes
    5y
    Originally posted by @Drew Sygit:

    @Dalton O'Rourke you'll learn a lot of you can do it yourself for a year or two.

    It can be fun and exciting at first, but after that initial 2 years, it just becomes a job.

    Some still like the grind after those first two years, others can't stand it anymore and hire a PMC.

    Right on! After x years of managing yourself, when you decide to hire someone else to manage your properties, you will have a much better knowledge of what they should be doing.

    0Reply
  • Greg WeikBusiness Member
    Property Manager · Denver, CO · Member since 2020 · 263 posts · 327 votes
    5y

    I may be able to shed some light on other aspects of the conversation of "PM vs. Self-Manage." I own rentals personally, and I would hire professional property management if I did not also own a property management company.  There are many reasons. 

    The most important aspect that seems to be glossed over here, is that just with ALL professional services, the providers themselves are individuals with wide ranging experience, disposition, expertise, etc.  They exist on a spectrum from borderline criminal all the way to brilliant leaders of their industry. You can't lump property managers into a single category without understanding this distinction. 

    Also, the focus is always on the paltry PM commission.  If that commission will break your investment, you made a bad investment.  If the PM charges you $100-$150/month for their services, and if the PM company is solid, it's money well-spent. 

    If you think you can self-manage, because you can collect rent and find your own vendors, you don't understand the value proposition of professional property management. What do you know about Fair Housing?  ADA?  What do you know about your state's Warranty of Habitability?  How will you know your lease is any good before it's too late?  How will you handle security deposit claims?  Have you been to court?  

    Professional property management does two things for landlords.  1) It makes them money.  Quicker turnover time/reduced vacancy, better tenants, better marketing, knowing market rent and market conditions and typically better access to vendors who will go the extra mile for 500 customers vs. 1.  2) It keeps them out of court and unnecessary litigation with extensive knowledge, process and procedure that a private landlord cannot match. 

    Plenty of private landlords have had success and continue to have success without property management.  In my view, it's just a matter of time until the wheels fall off for those landlords.  In many years of doing this, I've yet to come across a single DIY landlord that has a checklist or a process to ensure their rentals are up to code, safe, clean, and rent-ready.  Just because you can do something, doesn't mean you should! 

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    1Reply
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