How much do you outsource in your landlording?

Question

I am interested in learning from the pros--

How much of your landlording do you outsource versus what you do yourself? I would love to make my business run passively and believe the best way to do this is to outsource outsource outsource! I know the obvious one (property management) but beyond that... what do you all outsource?

Mike H. · Answer

I think the whole passive thing is overrated. If you truly want to be passive, then yes, get a PM and let them deal with all of it. Calls from tenants, payment collection, make ready, leasing.

But the cost you'll pay for that just doesn't make sense to me. Your returns are much lower that way - especially in the beginning.

If you don't want anything at all to do with tenants, I'd question why you'd want to get into real estate in the first place.

I outsource all of the maintenance.  I do everything else.The nominal amount of time it takes to PM houses is ridiculously small in comparison to the cost.  Plus, I'm convinced that an investor can rent out a house far quicker than any PM.   We know how to sell because we know what we liked about the house when we bought it and we know what we fixed up.

That doesn't mean its always possible to PM yourself (i.e. out of state investing, someone thats simply too busy). But if you're looking for the best balance, I think doing the PM work yourself and outsourcing the maintenance is the way to go and the best bang for the buck.

Ali Boone · Answer

I outsource EVERYTHING. I don't want to do any of it.

Stephen E. · Answer

I don't have a property manager, my properties are higher value relative to a lot of the rental property discussed here (many on BP discuss properties below $100,000, some a lot below this). Mine are all in the $130,000 - $175,000 range and rent to value ratios for higher priced property are such that I can't lose a month's rent. Plus, there are some pretty poor property managers out there by all accounts. I feel much better about having selected my own tenants.

The big one to outsource is maintenance. I used to do odd handyman jobs but even with simple things now I hire the handyman. I have a guy that works for $22 / hour and can do electrical and plumbing jobs. My time is worth way more than $22 / hour, and its tax deductible.

The next one we might outsource is book keeping. My wife has been handling that but it has been taking more time. I will see what the rates are  and whether this is a good option.

Selecting new units, arranging financing, choosing new tenants are all things I don't want to contract out. These are crucial decisions that materially influence the outcomes for my business.

It is a business of ups and downs. I have had something like 2/3 of my units turn over this past year. Statistics suggests you will have runs like this, and then there will be quiet times. The rental business seems to work that way; you have times when it is quiet for months and then times when all hell breaks loose. Those latter cases cause me to think of outsourcing more, and when the business is more mature and rents have risen I might do that, but for now in a growth stage I think the people who care most about our success are us, and that limits outsourcing, particularly in the area of property management.

Nicole A. · Answer

I find my own tenants. I do my own general quarterly inspections. I stop by properties to see big repairs/work done to my standards.

I hire out rent court. I have a handyman take care of small jobs. And I have a contractor for bigger jobs. I do not pick up rent in person.

So I'm definitely not passive, but I'm not needed all the time either.

Account Closed · Answer

I think it depends on how important your landording is to your overall portfolio and life. For me, owning rentals is one part of a diversified portfolio. I have invested less than 10% of my overall portfolio in out of state rental properties. As such, I want it to be as passive as possible. So like @Ali Boone I outsource pretty much all of it. Tenant screening, maintenance, rent collection and even book keeping to the most part is done by the PM. I get monthly income/expense statements and I transfer those to my Quickbooks. My mortgage payments are automated, Insurance and Taxes are paid once a year in a lump sum. All other expenses are deducted from collected rents. I do talk to the PM once a month or so to catch up and more often if there are vacancies or any major issues.

We also have two more high end Bay Area rentals and those are different. We self manage those but its a completely different class of tenants when the monthly rents exceed $3000!

Christy Hall · Answer

Thank you! This is fantastic advice!

Brandon Hicks · Answer

I outsource most of the maintenance and all the cleaning.

I do take care of a lot of the work in between tenants like painting and so on. Once the tenants are in there I pass the vast majority off to my handyman.

I really enjoy the bookkeeping and mostly enjoy the management side of it. Deal making is favorite part.

Dawn Anastasi · Answer

I used to do a lot more maintenance myself but I've pulled way back and now only do some small things myself.  I still self-manage but use contractors for repairs.

Arlan Potter · Answer

We hire out the sewer clean outs.

And HVAC.

And use some handy men.

Other than that we do a lot.  We self manage our properties.

How much do you outsource in your landlording?

Most Popular Reply