When to get Property Management

Question

Hey Everyone, we are up to 7 doors (2 STRs) which I self manage. Wondering at what point or number of doors it makes sense to get a property manager for. Seems like with the additional 3 doors we just picked up its an awful lot to try to keep track of all the random stuff even when things are running smooth. Not sure whether or not it's worth it cost wise either at this point in our investing career. I know as I look to buy more places that it's not going to get easier either. Thanks for the help! Investing in Central Wisconsin if that makes a difference to anyone.

Account Closed · Answer

This is a loaded question. Here is my short and sweet answer.  I hope it helps.

Tip: At seven doors, you should be able to negotiate a nice discount for multiple properties under one manager.

Two critical questions:  What is the opportunity cost of managing your properties versus generating revenue somewhere else.   Are you willing to give up a large amount of quality of life now to save money on a PM, or are you able to pay a PM while still making a good return?

I could go on and on, but this is where I would start when considering this question.

Corina Eufinger · Answer

When to hire a PM is very personal decision.   There are many pieces to consider.  First, there are some people who honestly should have a good PM off the bat. These are the people who hate confrontation and avoid it all costs, or having a "bleeding heart" (i.e. tend to believe all the stories that people tell them, thus feeling bad and want to help them).  These types of people can, unfortunately, find themselves being taken advantage of very quickly with the 'wrong' tenant.  If that's not you then really the next deciding factor is recognizing when your portfolio has grown to the size where it is either impeding your ability to grow in real estate (meaning it takes up too much of your time so you are devoting fewer hours to growth than before) or when you have so many units that you struggle to keep up with demands of the portfolio.  The last one can obviously vary based on any W2 job demands (hours, travel requirements, etc) and family obligations (involvement in your kiddo's lives, maintaining a relationship with a significant other, etc).   I'm not extremely familiar with the time demands of STR, you don't do showings and leasing in person obviously but I'm not sure what sort of "guest relations" demands or what the repair rate is in those.

I disagree that there really isn't a "number", I believe most people that have 12-15 units and have a W2 job should likely have additional help in some fashion whether it's unskilled boots on the ground (friend, significant other), a PM company, or handyman you can call on.

Lastly, I wouldn't necessarily expect a discount on PM services at 5 units (you said two were STR and it's not common for those to be serviced by the same company).  As an owner of a PM company and someone who has worked for others, I can say those discounts only tend to happen at 10 units, but usually closer 20 units.

Nicholas Ludwiczak · Answer

Hi Dan. I also invest in Central Wisconsin and would like to connect and chat about real estate.

You are really the only person who will know when the right time. When I started, I said if it became too much I would not hesitate to move them to PM.  I moved 3 of my 10 doors to PM a few months ago after closing on a self storage business. So far its been a huge load off my plate, particularly because of a high maintenance tenant.

Feel free to reach out and I can give you more insight on my journey and my impressions on the PMs around the area.

Scott M. · Answer

Well, I think the answer is when you can't handle it anymore. There really isn't a magic number.  For some it is house 1 for others it is never.  When managing becomes to much of a time suck and you run out of hours with the rest of your life it is time to bring in some help.

Joseph Bafia · Answer

Are you working a full time W2 job?  If so I can sympathize as we're up to 8 properties (6 STR/2 LTR) and with a FT day job, it was getting to be a bit more challenging.  It did force me to find ways to automate, streamline and become more efficient.  Also, I'm fortunate to have a son interested in REI and he helps.  I've also partnered with someone to co-own 2 properties and we share workload.  These are just some suggestions if you're looking for ways to avoid the PM step.

Also important to note that some PMs may only do STR or LTRs, so you may have 2 different ones to deal with.

Ian Walsh · Answer

For some people it is out of the gates and others at 100 doors or more.  It depends on how much management fits your goals, personality and resources.  Most people I would see do so around 10-15 doors.

Marcus Auerbach · Answer

You have so many variables that go into that, hard to tell. I managed over 20 just by myself still working corporate with international travel. As we kept growing I groomed and hired part time help to run errands and do showings. I still do the final interview with new tenants and I am involved in all construction issues, but 80% of the time is just small stuff and I have someone do that for me. But if you want to be less involved PM is the way to go. Pick a good one, not a cheap one!

Dan Dahlke · Answer

Third Party, not large enough for internal employees as of right now.

Scott M. · Answer

Question.  You mean as an outside 3rd party or hiring one internally?

When to get Property Management

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