5 Reasons You Don’t Want to Be a Landlord of Multiple Properties

by | BiggerPockets.com

Being a hands-on landlord is not the dream gig it is made out to be. It can be hell, and it can be a lot less profitable than many real estate gurus make it out to be — especially when you factor in your time.

There are definitely many benefits to owning real estate and investing in income-producing rental property. There can be great cash flow, high returns, equity appreciation, pride of ownership, and protection against inflation. Yet, for all the reasons below, being a self-managing landlord can be more of a nightmare than a dream come true when multiple properties are involved.

Here are five reasons land lording can be a real drag.

1. Time Commitment

If you are going to self-manage your own rental property portfolio, you can go ahead and kiss your time goodbye. Forget occasionally going on vacation, taking the weekends off, booking dates that you can stick to, or getting plenty of sleep. Be ready for the phone to ring with incoming tenant- and prospective-renter inquiries. You will have to be on call 24/7/365.

Related: The 4 Types of Horrible Tenants (& How to Deal With Their Shenanigans)

2. There Are Too Many Roles to Master

Being a property manager involves mastering a whole team of full-time job roles, including:

  • Customer service representative
  • Marketer, designer, and copywriter
  • Leasing agent and tenant screening professional
  • Bookkeeper
  • Handyman
  • Property inspector
  • Property manager

3. Mental Drain

Being busy is one thing. Though in this job, you’ll also have to deal with a lot of stress. It doesn’t matter how good your properties are or how nice of a landlord you are. You will eventually get some tenants who are very demanding. You’ll get tenants with drama. Everyone has a story for why they can’t pay the rent — and it can be draining.

4. You Can’t be Objective

When you are that close to selecting investments, supervising rehabs and improvements, accepting tenants and managing your properties, some emotions can come into play. When you allow your emotions to influence your decisions to buy, lease, renovate, manage, and sell, you run into risking financial results. It’s often better to just stick to looking at the numbers, without even seeing the property. One thing I always work to avoid is falling in love with a property. This can severely cloud judgement. 

Related: 10 Security Deposit Tips, Tricks & Hacks for Landlords

 5. It’s Risky

From the physical dangers of being on job sites and dealing with tenants — to collecting rents and dealing with angry tenants and dogs — to the financial liability involved in being too close, being a DIY landlord is risky.

The Alternatives

Fortunately, there are alternatives. There are ways to get all the benefits of investing in rental properties without having to be the on-call landlord yourself. These include: investing in funds, choosing turnkey rental property investments, private lending, outsourcing the management, and partnering up with others who will do all the work.

Summary

One of the biggest mistakes I made was starting out personally managing my own properties. It taught me a lot about managing a property. I’ve also found it to be way more profitable to have a professional team to handle most of the day-to-day property management. My advice? Be an investor, not a landlord.

We’re republishing this article to help out our newer readers.

What do you think?

Have you had headaches or success with managing multiple properties? Share your experience below!

About Author

Sterling White

Sterling White is an investor and business owner on a mission to make the world a better place through principled and efficient real estate investment.

Even before co-founding Holdfolio, Sterling and his partner Jacob Blackett had been involved with the purchasing and selling of over 100 SFRs. Today, Holdfolio is a prominent platform for investing in income producing multifamily apartments. The firm has been featured in national publications such as US News and was ranked as one of the best real estate crowdfunding sites in 2018 by Fit Small Business.

The success of Holdfolio’s technology gave birth to SyndicationPro, a fast growing all in one software solution empowering investors to efficiently and easily raise capital online.

62 Comments

    • Dave Rav

      Some great points by @John Underwood.

      That’s right, there are ways to mitigate some of the things Sterling mentioned. It is also a bit far-fetched stating “you can’t go away on vacation” or keep date/meeting commitments. Really? I have rarely felt this way. And I’ve been on BOTH sides of the fence – Used a PM and have self managed.

      The tenant phone call issue can be much reduced through training them to handle some “emergencies” on their own. This goes for both repairs and late rent. Repairs: have them take care of small items themselves (and as allowed by local laws, either pay them or take some $$ off rent). Or you could give them the direct number of your highly trusted handyman (must first develop this relationship with h-man). As for late rent, mine know to just mail it with late fees. Do they still call? Sure. But I don’t need to answer because they know the answer. I don’t meet anyone for rent. Suggest you send it next day mail. The only time I will have to act is in the case of financial hardship which must be fully documented and evidenced in writing- this has yet to happen. Oh, and possibly if there is a banking error (this has happened once in the last 12 months – hardly reason to skip a vacation).

      So these two nuggets will solve at least 80-90% of your hassles with tenant phone calls. Not bad. If you really want to be hands free, the rest can be further mitigated through use of lease optioning.

    • Laurel Devine

      I agree, I’ve been managing my own properties since 1991 and love it! Third generation who has done it this way. I have everything automated, I get rid of the PITA tenants, I have a team of professionals (plumber, electrician, HVAC, painter, handyman, locksmith, etc…) who I can call if something is needed that is out of my scope and/or I just don’t feel like doing something or I am away on vacation, etc. To rectify the problem of getting calls while on vacation, I have a family member and also a friend who are also landlords and we take over for each other when need be. We just send out a blast text to all tenants to please call so and so from this date to that date if there are any emergencies! No explanation of why or where i’m going necessary. Simple!

      • Daniel Dietz

        @Laurel Devine, or others too,
        What systems, apps or programs do you use as a ‘small investor’ to help automate things? We have 25 units and working on adding another 10-20 more and do all our own PM. It seems like some things are so complex to implement that it is easier to just do it the old way.

        Thanks, Dan Dietz

    • Gerald Peters

      Me and my wife have self managed for over 20 yrs. honestly I had to think a bit for anytime I regretted. I’ve gone over 6 months without a single phone call, thts on 20+ houses. I will add, I rent slightly below market avg and I do intense make overs on property turn overs. I love painting, fixing the little things and stay on top of it. I find it a joy and get lot sattisfication our managing the properties. Feels great turning over keys to single mom or newly marriered couple who’s getting a great property that they most likely couldn’t afford if it wasn’t for our work. I hear so many people bitch and complain about repairs and tenants. $100 bill says my properties are way nice, better cared for and more profitable then property being managed by property manager. Does he crawl under house before new tentants move in? Check foundation, the plumbing, look for possible upcoming issues? Do they crawl around in the attic? Do they go up on roof? I do. I have a saying, paint 10 houses you get 1 free. $3000 x 10 = $30,000 savings which is down payment on new house. Everyone that says thier time more valuable is nonsense. Just lazyniess and excuses for not putting your hands on your property. You own it, act like it.

      • Bianca Echeveste on

        I agree Gerald. I only outsource properties to property managers over 40 miles away. 3 in total. The other 18 residential and 3 commercial I handle myself.

      • Matt L.

        I like your approach Gerald! I also get a lot of enjoyment out of fixing up a place and going above and beyond. For our last rehab I helped with some major parts of the renovation, and definitely did more than was necessary to get it rent ready. But I treat a rehab as if my own family were moving in. I want something that’s safe, up to code and built to last. Not to mention there’s a real sense of satisfaction when you DIY.

  1. Aly W.

    I agree to some extent about some of these things, but in the end, you need to watch your own farm. No PM company or person will care about your properties the way you do, and ultimately, who is watching your money?

    I have a fantastic contractor who handles the repairs and showings of our out-of-state properties, and we email/talk several times a week. I visit the properties/tenants several times a year. Yes, sometimes it’s a pain to deal with the tenants – but as John Underwood, above, said – train the tenants, have systems in place, stick to your policies, and let experience be your guide.

  2. Ali Hashemi

    Sterling, there’s another key reason not to self manage –

    To all those who self manage – your time is not scalable.

    Self management only really makes sense if you’re starting out or if you plan to keep your portfolio small.

    Your time is limited, PM’s are unlimited – best to use the less scarce resource.

  3. John Murray

    I have 10 single family home properties, if you know what you are doing and your life is based upon service you are really free to do what you want. Being competent and effective with multiple income streams as well as manipulating them to pay nearly zero taxes is pretty easy to do. I go skiing and surfing when I want, go to the gym or spend time in research study. We work when everybody else is retreating from their employee stressed existence. We go on vacation to sharpen and think of ways to get better at what we do. Employees go on vacation to escape their stress. I think you are confusing laziness with passion. You got love it baby, or do the robot thing. Freedom or money prison, the choice is up to the individual. One great tip, be nice to your tenants, nobody likes and asshole landlord, Not even the asshole landlord.

  4. Christopher Smith

    Due to excellent property managers I’ve never met a tenant in 20 years, and hopefully that will be true for the next 20. Last year my management fees were 11.9% of my net rent (8% on gross), and they did 95% of the work. Factoring in underlying appreciation management fees were 4.4% of my overall net (i.e., net rent + underlying appreciation), and again they did 95% of the work – sounds like a plan to me.

    Naturally I agree.

    • Costin I.

      Christopher, can you please elaborate on what the PM is doing for you? What kind of services, operations, reports, bookkeeping is included in the PM fee?
      Let’s try and bringing it to an apple-to-apple comparison. Maybe that’s where there is a disconnect between the “self-manage” and “outsource” camps.
      For example, one of our first property managers never went to the property in 2 years we had him as PM. Whatever problem at the property he would send a repairment or handyman (I assume his connection) and then pass to us the invoice from that person, plus a “service fee” for himself. He charged us $85 at one time to change batteries in 4 smoke detectors. No reports, no drive-by’s, no maintenance inspections, no annual inspection, no pictures. Of course on top of the 8% monthly and 50% lease/release fees. We self manage since we fired him.
      So, what do you consider included in the PM and what is customary to be extra?

      • Christopher Smith

        First my managers get 8 percent of the gross rent actually collected and no other compensation of any kind direct or indirect (e.g., no fee for a new or renewed tenant, nor any othet misc charges). I’ve had other PMs bid lower (some much lower) on my properties, but after long consideration and review of these competing PM tenant reviews I declined. My tenants are extremely satified with my PM’s services which means happy tenants that nearly always pay on time and take very good care of the property.

        What do my PMs do? They do everything other than items I choose to be involved with by my choice, not necessity. My properties are nearly new homes (or were when I acquired them) in B+ or better neighborhoods and were chosen as such for their low maintenance requirements (all brick or stucco) and higher appreciation potential, both of which have been substantially realized.

        What specifically do the PMs do? You name it,

        Marketing – my vacancy rate over 10 years has been about 1 percent.
        Tenant screening – never been stiffed by a tenant, never evicted a tenant, the last one added had a credit rating of 790 as an example.
        Repair and maintenance – issues very promptly addressed keeping tenant happy and guaranteed work performed at reasonable rates keeping me happy.
        My PMs do at a minimum a complete walk through every year even for renewals with supporting pictures and recommendations for maintenance as necessary.
        Legal and Accounting – I get monthly reports, both a tentative summary report and a final detailed report listing all activity of any kind. Also a year end summary report and 1099 tax reporting.

        In summary I look at my PMs as my personal agents, and while I work totally behind the scenes with full annonimity we work very closely together and I am always aware of exactly what they are doing because they represent me. It actually takes little of my time to do this because the relationships we have are very tight and all expectations are very clear.

  5. That was an awful lot of hyperbole. I tend to not take anybody to seriously when they’re screaming “never do this or that”. Self managing can absolutely work out great. And no systems work in every situation and every local.

  6. jorge vazquez

    To me is pretty simple you are either the best investor or the best property manager but not both! #1 Property Management Yields Higher Quality Tenants
    Real estate investors generate higher profits when their properties are leased to higher quality tenants. Typically, these tenants:

    Pay on time.
    Abide by the terms of the lease.
    Often renew their lease.
    Seldom terminate their lease early.
    Don’t engage in illegal activities on the property.
    Don’t abuse or destroy the property.
    Therefore, a property management company that avoids problems by carefully screening applicants, increases the investor’s profits over the long term.

    #2 Fewer Legal Problems
    Landlords hate dealing with legal problems, mostly because of the time and expense required to resolve issues in court.

    Effective property management companies minimize the risk of legal action against the landlord, because of their knowledgeable adherence to local, state, and federal laws.

    And because they carefully screen applicants to avoid potential problems, while working to detect situations early that could become issues in the future, property managers can positively impact a real estate investor’s bottom line.

    #3 Shorter Vacancy Cycles
    The longer a rental property is vacant, the less profit it generates. Using a property management company that quickly turns vacant properties can be the difference between generating a good profit and losing money.

    Here are 6 ways a property management company can shorten vacancy cycles:

    Use property management software to bill tenants direct for utility bills, thus avoiding a delay in turning a property due to a delinquent tenant not paying the utility company.
    Perform maintenance and repairs while the property is occupied, reducing the time to turn the property.
    Quickly clean and repair vacated properties.
    Make property improvements to attract tenants.
    Competitively price rental properties using area rental comps.
    Maximize the advertising budget to quickly generate prospective tenants.

  7. Dave Rav

    Another thing is profits and actual enforcement of rules.

    I’ve seen first hand, PMs act/not act in ways that cost landlords money and eat away at rules enforcement.

    Let’s just go with the case of late fees. It’s so easy to let a tenant slide when they’re a few days late (yet, past the legal grace period). My late fees can be fairly aggressive. When I had a PM awhile back, they maybe collected late fees two times in a 3-year span. Must have been about 8 instances of late payments PLUS payment workout plans. ALL of that should have come with fees.

    Last month alone, on one of my multi units I fetched $110 in late fees by simply enforcing the rules and applying late fees. That’s just ONE month, on ONE property. What can you do with an extra $110?

    Historically, one time I had a tenant who was chronically late. Inherently, a good guy, just poor on budgeting and prioritizing financials. So, we decided to work with him and play ball. I admit, at first it was a little time-consuming. I maybe dedicated a solid hour each month to that single tenant, for 3 months, each month he was late. Then I developed a system. (I’m a bit slow!). It took virtually NO extra time for me after that, once I figured out all the patterns. For that, I earned a grand total of nearly $1000-1250 in late fees alone over maybe 18-month duration of occupancy by being the one handling this!! Total time spent: maybe 6-8 hours. That’s a minimum of $125/hr. What can you do with an extra $1000-1250?!?

    • Krisitna L.

      I agree 100% and appreciate your comments. When I first started managing property, I was sympathetic and waived late fees. I had one tenant who was late all the time or only had part of the rent. My co-workers tried to tell me, but I thought the late payments would stop. After one year, I enforced the late fees and started the the eviction process. Miraculously, we never received a late payment from that particular tenant.

      Unless there are extenuating circumstances (medical, death, divorce etc.) with a tenant who has an established payment history , I enforce the late fees and the lease terms. Not only does that reduce my workload, there’s an order and mutual understanding. It also eliminates late fee waiver notices, extra bookkeeping, mailing, documenting everything etc.

      With all that said, I under stand the benefits of hiring a property manager. Sometimes it’s difficult to see extra money leaving your pockets, especially when you’re just starting out. However, I’ve actually started training a young man and actually love the extra time. It’s a great way to pass on knowledge and financially help someone start their management career.

  8. Andrew Syrios

    You do generally burn out as a property manager. But if you set up systems and hire people, you can build a property management team that I think is generally more effective than hiring out. That being said, you have to get a good number of properties before that is possible.

  9. Christian Carson

    Systems, systems, systems. I self-manage 21 units and I take regular vacations to faraway countries (some even where the government makes internet access difficult). There is only one emergency that I can think of where being onsite and awake would be useful: burst pipes. Even then, you could just as easily shoot a text to your handyman. You do have a handyman, don’t you?

    Everything else simply can wait until your tradesman get to it tomorrow. In fact, I think probably the most exigent circumstance in the landlording world is a vacancy. That can be a pain, and in my opinion it’s mostly the reason why people hire property managers in the first place. It’s the only reason I’ve ever hired a manager.

    That said, managing existing tenants is positively trivial if your rental property is in good shape and your tenants are decent people. Set up online payments and require tenants to use them. Give the tenant your handyman’s number for maintenance problems. Other than adequate planning for re-upping leases, there really isn’t much to this business.

    I’ve used managers in the past and have found that I had to manage them even more aggressively than the tenants directly. There were always problems with disbursements, uncollected rents, exorbitant maintenance bills, etc. My experience was really solidified when a PM “quit” on me and kept all my security deposits.

    Word to the wise, focus on building systems rather than putting out fires and it will reward you. Put all your bills on autopay and get those tenants paying online. Automate your workorder system and attack it in a systematic fashion. And if any PMs are reading this, please consider offering an a la carte tenant-placing service.

  10. Joann Julius

    Christopher and Sterling,

    I’m just getting started in this Real Estate game, haven’t made that many relationships yet in the business or in partnering. I have one property that I have taken over for my elderly mom and plan to acquire more. I work full time and will be returning to school in the fall. My husband works two full time jobs which will hopefully change in the near future as we acquire more. I really don’t see any other choice for us right now and even less as we increase portfolio. I’m in the Baltimore area, if you know of reliable PM companies, colleagues in the area or can offer some suggestions to a newbie I’d be grateful.

    Thanks
    -Jo-Ann Julius

  11. Richard Heine

    I don’t get it. You have to love the business. I have twenty properties and growing fast. I spend very little time managing. I have people on call for everything. I spend about fifteen minutes every day going down through the rent rolls and projects underway. Plus I already have a full time job. This is the most fun at making money I have ever had. Challenges, solving problems, that’s what keeps me going. A well oiled machine is a beautiful thing to admire.

  12. Cody L.

    Reason #1 not to manage property: It sucks
    Reason #1 to manage your own property: No one is going to care more than you do.

    I manage my own portfolio of ~1000 units. Or rather, I have a company that employees property managers, maintenance, operations, etc. and they work at my direction. Since I own a lot of stuff, I’m asked all the time”I’m thinking of buying a property. Would you want to manage it?”. I always say “Hell no”. It’s the worst part of the job. it’s just the necessary evil that tags along with the absolute best way to generate wealth.

  13. mindy wibbels

    Strange, negative perspective, and a little contradictory. “One of the biggest mistakes I made was starting out personally managing my own properties. It taught me a lot about managing a property. “ ???

    Starting out it’s probably best to get your hands dirty and learn what it takes. That’s the only way you’re going to know what you need in a good property manager if you choose to go that route.

  14. Jenny Jones

    Very much enjoy being owner and landlord! Hubby and I fix every thing but the ac/heat furnace.. Will not let any tenant work on our properties, as we want to know every inch of our places! Been doing this over 18 years,8 properties now, as we just sold our 9th one. I especially take alot of pride in upgrades after each 2 year plus tenant leaves to our homes…. I look for pitbulls and restricted breed dogs and there people to rent to…. Part of the reason I do this is to be self employed, a future pension in our properties ,and total satisfaction in having a place for a pitbull or two, kitty cats, and there people!! Best job Ive ever had…… I do the book keeping, management, painting, cleaning and landscaping. I also redo all wood floors. Hubby does the rest !

  15. Jeff Lindborg

    I own 7 rental properties (18 tenants) currently and I self manage – I love it – with no debt and no management fees I make enough to live on easily with room left over – I did use PMs for a few years but the costs and the cruddy work their in house “handy men” did along with poor communication lead me to take it over myself. With a good system, good communication and a good online portal (I use Buildium and am quite happy with it) along with an accountant and lawyer on your team, you’re good to go – it’s not nearly as hard as you make it sound. I have a GC that will manage reasonably priced sub contractors for jobs I don’t handle myself for a %5 fee – reduces my stress quite a bit and the quality of the work is always top shelf. I make an agreement with a general “handyman” company here in town to take calls during business hours from my tenants (I use Google phone to forward calls to my business number to wherever I need them to go) – I pay a reasonable fee and they handle basic stuff while I’m out of town – which is admittedly not a lot. Tenants get a heads up I’ll be out for a week and calls will be handled by the company, has never been a problem. If you’re like me, being hands on for your properties is a must – it’s not nearly the “nightmare” you make it out to be.

  16. Jerome Kaidor

    I self-manage 73 units, and it’s about a 10 hours per week job. Fifty-two of them are in one complex, where I have onsite staff that handles all the emergencies. I haven’t had a midnight call in years. They do any property inspections, all the maintenance. They accept rents from the tenants and deposit it for me. I do the payroll, pay the bills, do the bookkeeping.

    I am greatly helped by a bunch of custom software that I wrote. Staff books the rents into the software, the software adds up the deposit for them, they endorsement stamp it and haul it to the bank. The software also tracks individual tenant ledgers, and lets staff issue 3day notices with a few mouse clicks.

    My other two properties are taken care of by a trusted handyman who shuttles from one to the other.

    Since I have no other job – make my living off the buildings – spending 10 hours a week on them is no great sacrifice. Keeps me young.

  17. Alex Corbishley

    Have to second the comments around doing it yourself before scaling up. You learn a ton doing it yourself and reading from the experience here. Plus no one will do a better job on your property than you yourself.

    Technology really helps this business too; automated payment systems, spreadsheets to track everything on google drive, google phone, TransUnion, Zillow, trulia and HotPads, etc…

  18. Kylven Ross

    I recently wrote about my own Landlord experience that cost me over a half million dollars. I’m glad someone else is showing the “Dark Side” of rental properties. This entire site advocates for real estate investing. It can be a profitable business for those that are educated in the field. From personal experience, I can’t recommend it to anyone that isn’t going to fully invest in this type of endeavor. You really need to steer clear unless you’ve found a mentor and really educated yourself from outlets like BiggerPockets before you dive in. Don’t just jump on the Real Estate hype train and trust your napkin math like I did after the first season of the Apprentice. The sheer stress can also be unbearable in the worst of circumstances.

  19. I have self managed all my properties (multifamily, single family and commercial office for over 10 yrs). I think it is an exageration about never taking vacation, time drain, and mental drain. I set up individual bank accounts for each and have tenants do direct deposit, have list of repairmen that I like and use exclusively and standard marketing plan. I had a property manager for 1 property for a yr when a tenant moved out when I was 36 wks pregnant and didn’t think I had time to lease- biggest regret. Their repair guys more expensive than mine, tenant they found had more repair requests each month than any previous tenant made in a year and I pd management fee monthly for their service- canceled immediately after contract term. I think no one will manage, protect and maximize income and your property as much as an owner

  20. Andres Osorno

    I only have a few properties, and am a very DIY type landlord. I fix fixtures, doors, locks, some plumbing, some electrical, even some appliances. Nothing too fancy but enough to get by. It not only saves me money to it myself, I am building a set of skills to do it at my own home when necessary, or know what it takes to do something to negotiate with a contractor if they are going to do be doing something on my behalf. I also happen to get a lot of satisfaction from the fact that I accomplished something others charge good money for.
    I also do my own administrative work and bookkeeping, which has prompted me to maintain my tax, legal, and marketing skills up to date. For now, this works for me. I will probably defer some of this to others (via systems or maybe a PM company one day) when my passion and time is best invested in other activities like finding deals. For now, this is a good school and I am a willing student.

  21. Mon Nasser

    That does not sound like a good advice! I used a professional property manager for my first rental property. All they did is pass me the issues from the tenants which I took care of, and for being the middleman they kept 10% of the rent every month. Also noticed that they were slow in finding tenants and when they finally did they kept half the rent of the first month and all the processing fees. So when I bought my next property I did the work myself saving over $3,000 in the first year. When something breaks, I send a professional to take care of it. Minor items are handled by the tenants per our lease agreement. Very minimal time is involved in managing the property. I am now running 4 properties and cannot see any value in hiring property manager for them.

  22. Lawrence Maiolo on

    An investor who purchases good properties in good areas and doesn’t create an adversarial relationship with his tenants should be able to minimize these 5 reasons. Also, a greedy landlord will end up with high turnover which will maximize the 5 reasons.

  23. Jarda Brych

    way overblown. sure, it’s not for everyone and there can be tough times, but hey, if you’re not up for that challenge then hire a manager and sleep well at night. if you’re trying to build a portfolio and work towards certain financial goals (for whatever reason) and have a timeline for those, your extra work doing the PM yourself will help accelerate your gains and get you there that much faster.

  24. Ryan Schroeder

    We’re relatively small investors/property owners/providers of quality rental housing who have always managed our own properties and tenant relationships. I’ve never been able to figure out why anybody would hire an outside firm to do that if they have a small portfolio. As has been stated repeatedly already nobody will care more about your property than will you, plus why give up 8%, 10%, 15% of your revenue so that you don’t have to deal with it? An assumption from that crowd always seems to be that “I can make more money doing other things”. The premise there is that you actually do those other things and therefore create additional revenue elsewhere instead of watching TV or going out to dinner. A few things that have resulted from our self management:

    1. We know our properties. We know their idiosyncrasies and how to deal with those
    2. We know our tenants. We have relationships with them which improves the experience that we enjoy and also on their side of the equation
    3. We have learned a great deal that we would not have learned if we were just sitting home writing checks for someone else to learn these same things
    4. We have gained the satisfaction of improving our buildings, our community, and the quality living environment we provide
    5. In some cases we have developed friendships that have survived the tenant/landlord relationship period
    6. We have kept a bit more money in our pocket than we otherwise would had we been hiring PM’s
    7. We have been able to teach our kids a few things that they are now using with their real estate ventures
    8. I have been able to use my knowledge gained through self management of real estate in other areas of my life.

    That’s enough for now…I have to go finish cleaning an apartment prior to its next occupancy

  25. Nancy E.

    Hello Sterling,

    Your article provides great foresight!

    The goal for most newbies is to get out of the 9 to 5 job not take on another job. There are things about real estate investing that is exciting, but becoming a landlord is not one of them.

    The smart investors, say, “let your money work for you instead of working “hard” to make your money.”

    From Nancy

  26. Christopher Smith

    Just wanted to follow up on this issue since I am getting a new tenant move in tomorrow. I requested a copy of the lease agreement from my local market property manager since I occasionally like to read these things (at least for my own edification if nothing else). Its very eye opening:

    1) The property is a 4/3 SFR in a very nice neighborhood – (I have a few of these in this particular market)

    2) Monthly is $3,100

    3) The Manager’s Lease Agreement is 27 PAGES LONG with addendum after attachment after disclosure statements Ad nauseam.

    Suffice it to say I live in a jurisdiction with labyrinthine landlord-tenant laws (which btw are very heavily skewed in tenant’s favor). If for no other reason (and there are many), I would need to have a whole in my head to get up on stage on “amateurs night” and try to manage these relationships myself. Its called risk mitigation, not to mention all the associated administrative headaches and lifestyle inconveniences.

    I’ve noted with some bemusement this recurring notion that no one will care more for your properties than yourself, and all the anecdotal accounts of property manager horror stories. This begs the question, where exactly are these property “managers” being recruited from, the local homeless mission? My managers are generally exemplary and they repeatedly tell me that they manage my properties as if they were their own. I have had no experiences contrary to those assurances.

  27. Dave Rav

    @Christopher Smith, thank you for the post.

    At $3100/mo, it sounds like you have a higher end property (unless it’s a vacation home). At that price point, I would surmise the game changes. Clientele and business associates are different than that of an REI with a property renting at $850/mo. Regarding your PM alone, if they are paid 10% for their services that’s like $325 per month on this ONE unit. Also factor in tenant placement where they could get 50% first mo rent (1550), and it’s completely worth their time to service you very well, indeed. More so than say, a lower end rental.

    Just one thought..

  28. Christopher Smith

    OK so my original point was

    1) 11.9 % of my net cash flow covers all of my property manager expense, and he does 95% + of my total work, or

    2) 4.4 % of my total income (cash flow plus underlying appreciation) covers all of my property manager expense, for again him doing 95% + of my total work.

    Absent really really wanting to perform property management services for some reason (not too sure what that would be) the trade off seems rather obvious at least in my case (assuming I value my time at greater than zero – which I do).

  29. Dave Rav

    Please see my post above – from May 9th. It’s regarding one way some PMs allow for missed landlord fees.

    On late fees alone, I once collected over $1k alone from ONE tenant by enforcing rules. You talked about valuing your time, so look back on that post to see what my hourly rate was for my “work” (not really work)

  30. Christopher Smith

    Ok.

    1) I don’t have too many people who pay late so historically it’s not been much of an issue for me.

    2) However I do have a relatively new tenant who was late a number of times this last year and all late late fees were remitted to me less the 8 percent management fee. While it generated an extra thousand or so, I don’t see that as a partcularly significant revenue event.

    If I were a credit card company maybe I would see it differently, but credit arbitrage is not my forte nor would I think anyone here would possess the expertise to make it so here.

  31. Meg K.

    I have a duplex in an old house…think 8 foot ceilings…one time i looked for quotes for painting. the Lowest was $1000. I rolled up my sleeves and did it myself. Ha ha. I screen tenants myself and even though i had to go through around 50 applicants last time (this was the most stressful thing i did but it was temporary) i found a great tenant who has been paying on time by direct deposit going on 2 years now. The reason for 50 applicants is because this very beautiful house is located in a not-so-great area. I was also a little emotionally attached because it was my first house and i lived in one of the units. A PM wanted first month’s full rent for finding a tenant and 12% per month…i’ve only had 2 calls the whole of last year…the thought of giving someone free money per month irks me. For now i’ll keep managing it and see where things go. If it ain’t broke…

  32. Krishna Chava

    Managing 1 unit is easy, 10 units is tough, 50 units is again easy as you got to a point where you can afford to keep a handyman employed fulltime and also give significant business to professional HVAC and plumbing contractors.
    Key is automation. In this age, most tasks can be automated and you rarely have to visit the properties.

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