Is Hiring a Property Manager Worth It, or Are Investors Giving Away Their Profits?

Question

I've been thinking about the trade-off between managing rental properties yourself and hiring a professional property manager.

On paper, self-management seems like the obvious choice. You avoid management fees, maintain direct control over your property, and potentially keep more of the rental income.

But there's another side to it.

Tenant complaints, late-night maintenance calls, vacancies, rent collection, inspections, and coordinating repairs can quickly turn an investment into another full-time job.

A property manager takes some of that responsibility off your shoulders, but their fees can significantly affect your cash flow, especially when you're starting with just one or two properties.

So I'm curious:

- For those who self-manage, has the money saved been worth the time and stress?

- For those who hire property managers, have the fees justified the convenience?

- At what number of properties does self-management stop making sense?

- Would you trust a property manager with your entire portfolio, or would you still prefer some level of direct involvement?

Here's the bigger question: Are you building a real estate portfolio to create another job for yourself, or to build an investment business that can operate without your constant involvement?

I'd love to hear some real experiences, particularly from investors who've switched from self-management to professional management.

Henry Lazerow · Answer

Self managing is 100% worth it. I spend no more then a few hours a month. As long as the properties are class A B areas with 700 credit tenants there is very little to even do. Rents on autopay, tenants can meet contractors when you make a group chat which takes a minute of your time to send the group text. Its very easy. I even have out of state clients self managing in this class with the same strategy. Low income or working class areas are where managing takes 10x the work and professional manager is really needed.

James Jones · Answer

At 236 doors, a property manager is not giving away profit, it is buying back the one thing I cannot get more of: time to find the next deal. Deal flow is my bottleneck, not money and not contractors.

Self-managing the first few made sense. At scale it becomes a second job, and every hour on a maintenance call is an hour I am not underwriting. You asked at what number it stops making sense. For me, it stopped long before 236. If you want to scale, you have to get out of the day-to-day.

The key is the manager has to fit the model. I run Section 8, 3 bedrooms and up, rents $1,395 to $1,950. A manager who does not know Section 8 inspections will cost you more than their fee.

Run the numbers per property, not on a portfolio average. If rent covers the fee and the all-in still clears the 1% rule and a DSCR refi at 70 to 80% loan-to-value, keep the manager. If it does not, the deal was thin before the fee.

Chris Seveney · Answer

It is 100% worth it if you can find a good property manager. That is the key, as I have found some property managers that are excellent and others that I have no idea how they manage people's properties. We have one right now that continues to double bill us and is charging us invoices from other properties, and I question whether they can even count to 10. Unfortunately, we did a bad job vetting them originally, but have since moved on from them. Thankfully, it was a very quick relationship once we started noticing these issues.

John Racine · Answer

Michele, I'd start with "begin with the end in mind." Before choosing between self-managing and hiring a PM, decide what you want the portfolio to do for you. Is it the most income possible? Hands-off, passive income? Or something else, like learning the business first? Once you know that, the PM decision usually makes itself.

I've done it both ways. I self-managed my first five properties in Orlando. It wasn't bad, but it wasn't great either. More than anything it was educational.

When I moved to California, I turned my Orlando primary residence into a rental and hired a property manager. I didn't want to be a long-distance landlord. Because I'd self-managed before, I knew what should be getting done, and that made me much better at managing my PM.

So my answer changed as my goals and situation changed. If you're early and want to learn, self-managing a property or two teaches you things a PM report never will. If passive income is the goal, or you're not local, a good PM is usually worth the fee, especially once you know enough to hold them accountable.

What's the end goal for you?

Lee Futcher · Answer

Hi @Michele Balady,

I think your bigger question is the right place to start. Whether you self-manage or hire someone, the goal is a portfolio that doesn't need you for every single decision.

I don't own rentals myself. My wife and I have spent the past four years living mostly in short-term and monthly rentals, and my work is with property managers and hosts on the operations side, so I've seen how owners run things and how it feels from the tenant's side too.

To your question about when self-management stops making sense, I think it depends less on the number of doors and more on how much of the work is written down. The owners I see self-manage well usually have a repair spending limit decided in advance, a short list of trusted vendors for the common trades, and a move-in and move-out record with photos. With those in place, two or three doors can be very manageable alongside a full-time job. Without them, even one property can start to feel like a second job.

If you're weighing it up, I'd self-manage the first property for a year and keep a simple log of every hour it takes and what each hour went to. At the end of the year you'll know exactly what a manager would be taking off your plate, and you can compare that against the fee with real numbers instead of a guess.

Best of luck with it,Lee

Is Hiring a Property Manager Worth It, or Are Investors Giving Away Their Profits?

Is Hiring a Property Manager Worth It, or Are Investors Giving Away Their Profits?

Most Popular Reply

5 Replies