Is it necessary or important to have a management company?

Question

I am going to be starting soon buying and holding properties, but I realized I feel I would rather have a management company take care of all the paperwork, screening and day to day of the property. Is it worth it with your experience? or is there a certain amount of properties you would own first before a management company is involved? Advice please!

Thanks!

Account Closed · Answer

Joseph,

If you do hire a PM make sure they are license and have E & O insurance.

Joe Gore

Curt Davis · Answer

I am too busy to manage my homes.  Leave it to the experts.  The little money they charge is worth it for them to arrange maintenance repairs, tenant screening, the eviction process, handling the weekend repair calls, etc.....

Its not worth your time to do it!!

Suzie B. · Answer

If you don't use a management company and you are new to renting be sure you come across as confident and as if you know what you are doing.

Also, we found that once we started acting under a business name and made it clear up front that a credit and back ground check would be done, our weed out process for tenants became much easier.

If you do choose a management company, interview several and don't just go on costs.  They can vary in how they handle your property and tenants and you want to be sure they are working for you, value your business, and respect your property.

Joseph Pytcher · Answer

Thanks for the info!

Tim Melton · Answer

@Joseph Pytcher

I'll give you my $.02, and my perspective is from both that of an investor, as well as a property manager.  I've had this talk countless times, and it's really quite simple.

The question is, what is the actual $ value of your time- and by substituting yourself in the management scenario with a property manager...will you be money ahead?  If yes, then it makes sense to have a manager.  If not, then no.  Some investors can't let go of their properties, and that's ok.  Also be aware that you'll always have some time invested into a property each month, even with a manager.  So keep that factored into your equation.  (You have to spend time with your mgr each month doing a brief review, even if nothing has happened).

Understand that this statement was totally made in a vacuum (which we obviously don't exist in) and doesn't take into account the delta of risk associated with getting burned by a bad manager, bad vendors, etc.  But that's a whole 'nother topic.

Hope that helps...TM

Al Williamson · Answer

@Joseph Pytcher

Sounds like you'd prefer to be a hands-off landlord. It's good to know thyself.

Personally I enjoy optimizing my properties. I like to convert new information into additial income.

But if that doesn't sound like fun, you should spend some time visiting and interviewing a property manager that fits your personality.

Best to you.

Jeff Bridges · Answer

These BP blog posts should get you started on the topic:)

• A Few Lessons Learned on Working with Property Managers
• Owning Rental Property Without Managing Tenants: Why I Use Property Managers
• Ten Reasons Why I Don’t Need Property Managers
• Why I Have to Use Property Managers

Tom Goans · Answer

@Joseph Pytcher,

The question is best answered by you.

Primarily, managing real estate properties is complex and requires thorough knowledge of the laws - especially tenant rights laws in your state and local - proper legal forms that best suit your needs and are acceptable in the state where the property is located, and the laws governing how to communicate with tenants.

• Even the way you communicate with a tenant regarding payments and delinquencies are regulated by law.
• The way you advertise a property for rent is regulated by law - however, many people and companies violate the laws on a regular basis.

It is also extremely valuable to know how to collect money. It sounds simple enough, but it is much more complicated than demanding money.

Do you have software for tracking the collection of money?

The list goes on.

So, the question is bounced back to you. Are you prepared?

As for how many properties before hiring a manager is also a unique question and answer. It depends upon the individual and situation.

If you do hire a company, have a thorough interview that goes beyond determining their skills. Make sure the company will represent you as you want to be represented. If you have a soft approach to people, be sure whomever represents you does as well.

As for me, I never and have never hired a company to manage my properties. I have hired someone to be my eyes and ears and to post notices. But I still run the show and handle all challenges. My goals are different from most in that I want to resolve problems instead of going through an eviction. My calculator says this is more profitable and my conscious says this is just being a better person.

Nicole A. · Answer

Just be sure you factor in the cost of management regardless if you hire one or not. You should pay yourself (or at least set aside the money) if you manage!

Do you what you feel is best. Check in on your managers to be sure they're doing a good job. Be ready to fire them if needed.

I personally manage my units myself at least for now. I have 4 units and do not feel overwhelmed by it (and i have a full-time job).