“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take your money and go to Las Vegas.” –Warren Buffett
That’s it. That’s the reason. Get it?
No? OK. Let me explain.
If you’re an investor, as in you define yourself by your ability to put money to work for you, you want the money to do the working. Investing your money in one thing, but turning around and investing your time and energy into that same thing isn’t “investing,” it’s “a startup.” It’s also a whole bunch of things you’ve been told never to do, like “putting all your eggs in one basket” and being “all work and no play”–because believe me, being your own property manager is ALL the work.
Download Your FREE Tenant Screening Guide!
Hey there! Screening tenants can be a tricky business, and this critical step can be the difference between profits and disaster. To help you with your real estate investing journey, feel free to download BiggerPockets’ complimentary Tenant Screening Guide and get the information you need to find great tenants.
What is “All the Work”?
A property manager, as we like to say in our office, wears a lot of hats. In order to manage property poorly, you have to be able to:
- Negotiate a decent rate on a repair job with a surly contractor.
- Convince a mostly broke person that paying his rent is more important than buying steak (seriously, that’s why they made chicken, guys).
- Keep track of at least three and as many as a dozen separate streams of incoming and outgoing money, some commingled and some not, across anywhere from four to a dozen different accounts, while being able to provide proof at any given moment of what went where, when, and why.
- Advertise property inexpensively and effectively without sacrificing your ability to get a tenant who will pay a reasonable rent and not destroy the place.
- Avoid signing a mostly reasonable-looking tenant who will destroy the place if you do sign him/her.
- Functionally communicate with and alternately placate and motivate tenants who have essentially opposite goals and priorities without letting either one take too much advantage of the other–or you.
And that’s just your run-of-the-mill, no-frills property management that can passably perform the job. If you want to be a top-of-the-line, advanced property manager, you need all those skills at their peak level, plus the abilities to:
- Navigate a court case, remaining professional and calm while bat-guano crazy tenants make absurd claims about how horrible of a person you are and how you ate his dog, and that’s why he’s late on his rent for the third month in a row.
- Comprehend the effects that the large-scale and local-scale market movements are having on each client’s properties, and predict how that will affect your ability to charge, your future costs, and the client’s risk levels.
- Work with finicky city inspectors to bring buildings that were just last week 70% hellhole into the realms of livability without spending too much of your client’s reserves to get it inspected and approved.
- Comprehend the systems used by your writers, inspectors, agents, photographers, builders, vendors, and so on well enough to troubleshoot each of those systems and help guide them toward the solutions they need to help you keep doing your job effectively.
In short, being a property manager is an enormous investment in time, effort, and energy–and you, the investor, rightfully should be directing all of that toward furthering your own future income streams. Hire a property manager not because you need one to deal with your couple of investment properties, but because you intend to turn those couple into a dozen someday, and having the right PM on your side will make that possible.
Have you hired a property manager yet? Why or why not?
Let us know with a comment!