how helpful are property managers, really? 66 posts by 22 users

Posted: 07/23/2008 at 06:30AM

I have never used a property manager and if you know what you are doing they are not necessary.

Also, as many people like to say.....nobody cares as much about your property as you do!

I would learn everything I can about becoming a top notch landlord.

Posted: 08/12/2008 at 10:56AM

Don't alot of people end up getting burned out of the "landlording" business rather then the REI business.

It sounds like most people like to start off without a PM company and do it themselves because they can save some money and make more. But do you really want to wake up in the middle of the night because of a tenant call? Deal with them to collect rent? Talk to them when they have problems with everything?

I don't own any property or deal with tenants but I feel as though a good PM company would be worth it's weight in gold.

You can focus on finding the deals and as long as you build the expense into your analysis and it still cash flows nicely why not...

Also won't limit yourself to local investing. Unless you want to move every time a market gets hot somewhere around the country.

Posted: 08/12/2008 at 04:15PM

In my opinion, property managers are the most overpaid people on the planet. I do all my property management myself and it requires VERY little effort, other than answering the phone and collecting the rent (believe it or not, I LIKE collecting the rent). The call in the middle of the night is more of a legend than fact.

Pay a property manager for a property that I could manage myself? No way.

Mike

Posted: 08/12/2008 at 06:21PM

On the other hand, as I said before, good property management is worth more than their weight in gold they will increase your bottom line NOI not decrease it. Good ones cost you absolutely nothing.

As to the call in the middle of the night, even when I managed my properties myself I never received such a call. My answering service did one time. Even if it happened every night, that is not the reason you should hire a good manager.

To each their own I guess, I make much more money by not managing them than I would managing them. I can concentrate on improvements that allow rent increases or decrease costs or even better find another one to buy.

It all comes down to where you maximize your effectiveness.

Posted: 08/13/2008 at 02:59PM

No doubt that logic is why Donald Trump manages all of his casinos, apartment buildings and hotels. That logic certainly explains why if you checked into his casino and found your shower didn't work the knock on the door would be "The Donald" with his bad toupee and a pipe wrench ready to do the maintenance.

Oh, and let's not forget that logic explains why if Geico is your insurance carrier and you call to file a claim you can expect to hear Warren Buffet on the other end of the line ready to take the claim information.

Wait a minute! They don't do that! Hey, Mike, you need to get on a plane and go to Omaha, Nebraska and explain to Mr. Buffet how he will make more money by actively managing every aspect of every company Berkshire-Hathaway owns. After all there are 168 hours in a week. That should leave him plenty of time to earn another billion or two while doing an hourly job like answering the phone.

There is a very big difference between working in your business and working on your business. There is nothing at all wrong with you working in your business by doing everything yourself. And there is nothing wrong with me working on growing my business by outsourcing when it makes sense.

I have no problem with you wanting to do it all yourself, why do you have a problem with me delegating and improving my leverage and improving my monthly cash flow?

I'm just curious though, what happens if you get sick or injured and can't do it all yourself?

Posted: 08/13/2008 at 03:23PM

By the way, here is a great blog article that talks about why you should use a property manager.

Posted: 08/13/2008 at 03:35PM

Gary,
By the way, your last post did not have the link show up for why to use PM.
Could you re-post? Thanks.

Posted: 08/13/2008 at 03:51PM

Hey, Will. Thanks, I'm glad my point was not lost in all the sarcasm.

Here is the link: [LINK REMOVED BY ADMIN - LINK HAD NOTHING TO DO WITH PROPERTY MANAGEMENT]

By the way, I'd like to take credit for the analogies in my earlier post but actually they are what my mentor used on me in May of this year to drive the point home to me about using a property manager.

Edited: 08/14/2008 at 08:43AM by

Posted: 08/13/2008 at 04:09PM

P Nw,

I have my mentor to thank for helping me find the one I use in Spokane and no doubt he will be the one I turn to again until I am confident I can do it on my own.

It comes down to interviewing them and measuring the things you want done. It sounds like your problems start with poor tenant screening. I'm sorry to say, that is probably more your fault than the property manager. You have to very clear on the standards and criteria you will allow. If they deviate, then they better have good malpractice coverage.

The other thing is you don't get a property manager and walk away. Going back to the Warren Buffet example, there is accountability all the way up and down the command chain.

The last, and this is why I know I will be relying on my mentor for a few more times, is negotiating what is in the contract. Things like who controls the bank accounts, is payment based on gross rents or collected rents, what happens if the occupancy suddenly drops, who initiates and who approves marketing, all those little things you'd have to deal with over and over again if you were doing the work. Except, you get a clear understanding of what and how they are going to do it and then you let them do it.

It is a partnership. I am still in contact with the Spokane manager every day and will be until at least the rehab is complete. Every weekday morning, 9 or 10 AM their time depending on my schedule; 20 minutes and we are done. Once the rehab is complete it will start to scale back. My time per unit works out to way less than 30 seconds a week.