Manage property on your own or hire management company ?

Managing Your Property
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Manage property on your own or hire management company ?

Kristine Norris
Member since 2021 · 9 posts · 3 votes

Newbie here! I’m about to be a first time rental property owner. I’m considering having a property  management company run it for a while until I learn the ropes or indefinitely. Thoughts? and how should I go about finding the best company?

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

@Kristine Norris Congrats on your upcoming property purchase.  I am a big proponent of using property management.  It looks easy when things are going well, but it can be a real pain when there are less than ideal tenants or emergency repairs are needed. It's a tough job to manage a property well which is why I outsource all my property management. I am happy to do it so it can free me up to do the things I want and/or find more properties to acquire.

Make sure you do a thorough job finding a property manager. They are not made the same. Many will talk a big game and you will want to do a thorough check on them to ensure what they say is what they do. You must have complete trust in a property manager as they are your eyes and ears on the property, and can make or break the investment based upon the way they manage it. 

Best of luck!

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

    @Kristine Norris Congrats on your upcoming property purchase.  I am a big proponent of using property management.  It looks easy when things are going well, but it can be a real pain when there are less than ideal tenants or emergency repairs are needed. It's a tough job to manage a property well which is why I outsource all my property management. I am happy to do it so it can free me up to do the things I want and/or find more properties to acquire.

    Make sure you do a thorough job finding a property manager. They are not made the same. Many will talk a big game and you will want to do a thorough check on them to ensure what they say is what they do. You must have complete trust in a property manager as they are your eyes and ears on the property, and can make or break the investment based upon the way they manage it. 

    Best of luck!

    3Reply
  • Kristine Norris
    OP
    Member since 2021 · 9 posts · 3 votes
    5y

    @AJ H.

    Thank you for your honest and professional opinion! It’s good to hear and get confirmation that a management company is the best way to go

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

    You might want to read our series about “How to Screen a PMC Better than a Tenant”, since selecting the wrong PMC is usually more harmful than selecting a bad tenant:

    https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

    [email protected]248-209-6824
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  • Forrest Faulconer
    Real Estate Agent · Oklahoma City, OK · Member since 2020 · 471 posts · 462 votes
    5y
    Originally posted by @Kristine Norris:

    Newbie here! I’m about to be a first time rental property owner. I’m considering having a property  management company run it for a while until I learn the ropes or indefinitely. Thoughts? and how should I go about finding the best company?

    Hi Kristine, do you live close to your rental? Should the property and area attract decent tenants? Sure, things can go wrong that require some work when self-managing, but you could also be looking at months of everything being peachy and never hearing from the tenants. With a single rental I would highly consider self managing until you build your portfolio. Only when out of state or with multiple rentals does a PM start to make sense to ME. But everyone is different and maybe you would prefer to not worry about it all!

    Forrest Faulconer 

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y

    @Kristine Norris one option is to use property management only for tenant placement. They will generally charge 3/4 to a full months rent and they will handle pricing, showing the unit, tenant screening and lease signing. Then you handle managing the property and don't pay any ongoing PM fees. 

    3Reply
  • Davartay Miller
    Architect · Memphis, TN · Member since 2020 · 259 posts · 144 votes
    5y

    @Kristine Norris 

    Congratulations! 

    As a real estate investor, you shouldn't have to worry about a leaky faucet, residential disputes, or any other emergency that may arise at one of your rental properties. A great property manager ensures that investors like you have an excellent property management team behind you. They should ensure you that the experience is professional and stress-free for you, your residents, and everyone in between. Investing with a property management team is not just about choosing a company. It's about choosing an experience. 

    Property Management is spearheaded by excellent customer service, a standard that anyone you hire should hold themselves to by keeping an open line of communication between investors, residents, and property managers. Monthly updates, in-house professionals, and exceptional customer responsiveness are all part of the process.

    Best of Luck! 

    2Reply
  • Jay Thomas
    Chicago, IL · Member since 2017 · 141 posts · 62 votes
    5y

    @Kristine Norris

    It boils down to your cash flow. Will you still cash flow positive after hiring a property manager that will charge you 1 month rent to place a tenant and 10% of your monthly rent after that?

    1Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    5y

    It depends.  I put in a ton of time and energy perfecting my tenant screening process and leases.  I also learned a ton on the handy side and have a slow to react personality.  It has worked well for me and I've paid off over a dozen rentals with the cost savings. 

    Now I have a PM manage half of my portfolio.  It's nice not having to deal with it much,  but my self-managed tenants and properties blow the doors off that community. PMs are a cushy preservation stage move, not for accumulation stage where cf matters. 

    Put in the time or have mediocre tenants and performance.  Prepare to stroke large checks for little repairs. 

    3Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    5y

    @Kristine Norris I think some of the answer boils down to taking a good hard look at yourself and your expectations and your goals for the future.

    How much time do you have to devote to management? Do you want to own 2 units or 50 units? Are you organized? Are you a people person? How do you handle conflict? Do you handle conflict well? Do you have a team in place? Are you willing to put a team in place?

    Is earning an extra 10% worth spending a little more of your time on your real estate each month?

    Bigger Pockets has great books on property management and rentals in general. If you get your forms organized and your team in place this significantly reduces the actual amount of time you have to spend on your properties each month.

    I currently have 3 properties with 7 doors, soon to be 4 properties with 10 doors. (Maybe 5 for 12). Right now I spend about an hour each month on banking, for the past 4 months I’ve spent about 3 hours apiece on a flipper that’s almost done, and now that it’s summer and the grass is growing I’ll have about 4 hours a month of landscaping for 2 properties. The 3rd one I pay the snow removal and my neighbor mows the lawn, we share the driveway. So a total of 7 hours a month.

    So without property management I make $1850 a month cash flow for 7 hours of time but my flip will go on the market in 2 weeks and profit $80,000 for a holding period of 1 year after all costs.

    I don’t have a lot of maintenance calls because I do full rehabs on my buildings at initial turnover

    But occasionally there’s something that I deal with. However my time is less expensive than a PM.

    2Reply
  • Mark AinleyBusiness Member
    Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
    5y

    @Kristine Norris Here is a couple of paragraphs I wrote from a blog.  I think your time is the number one value in hiring a PM.  You can always do things cheaper yourself but what is your time worth.  

    • We all know we have a limited amount of time in the day and what you do with that time has a direct correlation with your success and happiness in life. I know a lot of investors in their 20’s and single who began self managing but now years later they are married, have kids, and focused on building either their career or portfolio. This means something needs to give so outsourcing lower level activities like management is a good option.
    • What is your hourly value you calculate for yourself? I calculate mine at above $150.00 per hour so when I need to delegate something I figure what can I pay someone to do for less where I can use my time to complete higher level activities. Leveraging time is tough for many to do, as easy as the concept might seem, but look at the most successful people you have ever read about and they make this leverage of time decision many times per day in all aspects of their life.
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  • Joanne Tsai
    Investor · Millburn, NJ · Member since 2018 · 141 posts · 100 votes
    5y

    @Kristine Norris

    1) how far away is the property?

    2) how flexible is your schedule?

    3) are you or someone on your team handy?

    4) what type of property is it?

    Most of our properties are out of state, so we prefer to have PMs just bc we can’t address most of the issues ourselves physically there. — screen your PM carefully and we’d rather pay a little more for better PMs than some flat fee PMs. After all, they are managing something that’s quite expensive for you.

    We are all both working professionals who are either in the meetings or on the calls for most part of our days, the last thing I want to do is to get a call about a leaking pipe or clogged toilets while dealing with my day to day job. And if there is an emergency they call you during your sleep. No thank you.

    Again, I can’t fix a clogged pipe myself, if anything breaks in my house, I call the service! So what can I do for my rental? Call the service too! An honest PM will try to save money for their clients, and while they may not be the cheapest, most times it’s not outrageous either.

    We have a condo in NYC where the handyman is on site 24-7, this is the only place we self manage. The tenants can simply call front desk to have most issues addressed without having to call us. We regard ourselves investors rather than landlords.......

    Best of luck!

    1Reply
  • Curtis Mears
    Property Manager · Raleigh, NC · Member since 2014 · 729 posts · 596 votes
    5y

    @Kristine Norris

    Congrats on property. I recommend starting out managing yourself to learn the ropes. Once you understand the job, then you can look to outsource the management.

    1Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y

    I agree with Alecia and some of the others.  If your place is local, will attract good tenants and you have read up on the local laws regarding tenants, you can do this.  I use a property manager for one of my places and they are good.  Not all are.  So if you go the route of a PM make sure you know the contract, can you get out of it and what are the penalties, what if you sell, if there are repairs over a certain amount, do they contact you first, etc. 

    0Reply
  • Kristine Norris
    OP
    Member since 2021 · 9 posts · 3 votes
    5y

    @Drew Sygit thank you so much for the link!

    0Reply
  • Kristine Norris
    OP
    Member since 2021 · 9 posts · 3 votes
    5y

    @Forrest Faulconer thank you for your time and thoughts on the matter

    0Reply
  • Kristine Norris
    OP
    Member since 2021 · 9 posts · 3 votes
    5y

    @Joe Splitrock I didn’t know that could be an option. Thank you for that information

    1Reply
  • Kristine Norris
    OP
    Member since 2021 · 9 posts · 3 votes
    5y

    @Davartay Miller thank you for helping!

    1Reply
  • Kristine Norris
    OP
    Member since 2021 · 9 posts · 3 votes
    5y

    @Steve Vaughan thank you for you opinion on this matter and your perspective on both sides. It’s very appreciated!

    1Reply
  • Kristine Norris
    OP
    Member since 2021 · 9 posts · 3 votes
    5y

    @Alecia Loveless so much great information! Thank you so so much for your insight. You’ve given me a lot to consider

    0Reply
  • Kristine Norris
    OP
    Member since 2021 · 9 posts · 3 votes
    5y

    @Mark Ainley thank you so much mark! I really appreciate your time and help

    0Reply
  • Account Closed
    Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
    5y

    Assuming this is your only property (for now at least) there are only two things you need to consider.

    1. What class property is it? If it is A class with professional tenants with high credit and income, you can probably self manage. No matter if its local or out of state or as in my case 8000 miles away. If its C class, even if it is next door, you should hire a PM. Those tenants require chasing constantly for rent, generate higher maintenance calls, need more screening etc etc. If its class B,  its a toss up.

    2. How far away are you? Again, A class doesn't matter. B class local, maybe you can manage on your own. Honestly, proximity matters much more while filling a vacancy more than day to day management. But as others pointed out, you can hire a PM/Realtor to just lease the property and you can do the day to day yourself

    As a new landlord under no conditions should you self manage a C class property. If the cash flow doesn't support a PM, dont buy it. 

    0Reply
  • Account Closed
    Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
    5y

    @Kristine Norris

    Self manage in the beginning. You'll learn a lot and build connections. I work a 50/hr per wk W2 job now and still self manage 25 doors. It's not easy, but doable. Just create systems and network with contractors so you have people available when something needs done.

    0Reply
  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    5y

    Depends... If you chose the tenant and you feel like there won't be headaches then I would self manage. My duplex has great tenants, I don't have to manage them... but for some other properties I see around... I would definitely hire it out.

    0Reply
  • Chinyere Orie
    Real Estate Agent · Baltimore Maryland · Member since 2019 · 98 posts · 74 votes
    5y

    Congrats!  I would suggest managing the property yourself for the first year or two (depending on how many units you have).  That way, you know what to expect from a good property manager, you know whether or not they are cheating you, and you know exactly what their job is.  I would imagine it would be hard to manage a property manager if you don't know how to do their job.  Good luck!

    1Reply
  • Jim BroznyPro Member
    Investor · Batavia, IL · Member since 2015 · 58 posts · 24 votes
    5y

    @Kristine Norris.  It's smart to keep in mind that property management companies are businesses and they need to make a profit.  Like any business, they will make decisions based on what's best for their business and maximizes profit.  Rightly so.  Sometimes that works in your favor, sometimes it does not.

    Owning an investment property is not like owning a stock.  Stocks don't need a roof or plumbing repairs. Those cost YOU money and time.  A PM will help to take some of the burden from you, but they'll do so in a way that benefits their business first.  And there is nothing wrong with that.  You have to decide if its worth it to you.   

    I agree with @Steve Vaughan, @Chinyere Orie and others on this thread that recommend managing the property yourself if possible.  You'll develop first hand knowledge of the business and put yourself in a better position to know the value you want from the PM that manages your hard earned asset. 

    2Reply
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