Should I get property management right from the start?

Question

New investor here and doing a lot of research before purchasing my first property. My friend and I both agreed to invest in real estate together. We are both fresh out of high school and work full time jobs. If we didn't work full time I wouldn't be asking this, but is it a good idea to get property management from very start? Investing in real estate is something I definitely want to do but I'm worried we will both be too busy working, and will not be able to take care of the property and tenants properly. Making less income on a month to month basis is not a major issue to me because we plan to take 100% of our profit and reinvest it. Either in the property we buy or in an account getting ready to buy the next property. We plan to do this for about 7-10 years. So what do you guys think?

*I understand that I am getting into a business relationship with a friend. Which is a big No-No for some people, but I would like to avoid that topic and focus on the question asked. Thank you!

Alexandria Sobboh · Answer

@Carmen Falcone, No matter what you decide it will be a learning experience, and as long as you and your partner maintain that mindset you will be fine - either way. If you choose to go it alone, refer back to BP podcasts where people talk about how they manage their own properties and check the show notes for links to the software, resources etc. that they use to be professional, organized and ultimately successful. If you decide to move forward with property management, do the same thing and make sure you find the right fit.Personally, I would be more inclined to manage my first; or first few properties myself and as we close in on that time vs money threshold, that's when I'd consider bringing in property management. As they say, nothing can substitute experience. Our current circumstances/goals are key here... my partner is my boyfriend, we're in our mid-twenties, we don't have children and we look to invest in the same area that we currently live in. Even though we both work full-time, there would still be time enough to manage our own tenants. Because I work a typical 9-5 I can take care of any issues after business hours and I'm available via text or email virtually all the time. In my boyfriend's line of work, the shift schedules rotate, he could potentially answer phone calls and handle any (immediate) issues during the week days where I could not. And all of this will yield first hand experience and perspective in our market so that when we do move towards property management, we will be able to have a much more sophisticated discussion about our needs and expectations due to the fact that we have done it ourselves. BP episodes #121, #165 (see Natali Morris's blog), #60, #53, #51 are some helpful podcasts that come to mind that stood out to me. Best of luck, let us know how it goes!

Percy N. · Answer

Carmen Falcone start with doing the PM yourself so that you get a good appreciation for it, but include the PM numbers in your budget so that you can always elect to have one in the future.

Sam LLoyd · Answer

Personal experience: First investment was with a friend and had property management. Lost tens of thousands, and set me back several years... very bad experience. As was mentioned, budget for PM (otherwise it is not a good deal), but do the work yourself. This forum has many aids and ideas on how to manage while working a full time job... and in the end, it does not take that many hours. I've been doing this for 10 years, and I've never had a call in the middle of the night. That being said, it's not for everyone, but if you've budgeted for it, you always have the option of handing things over to a PM. Even if you screw up placing a tenant, and want to be rid of it.... just hire an eviction service and move on.

Mark Holencik · Answer

I sold all my property's 10 years ago because I did not have the time to manage them. Last year I decided to get back into buying rentals. I looked for an area I wanted to invest in. Then I found a property manager in that area. I do not want to run the day to day operations of managing rental properties. Once I had that in place, the rest is easy. Finding deals and getting them ready for a tenant is what I am good at. This part of being a landlord does not feel like a job to me. Managing the properties would make this feel like work. When it does not feel like work, you do not count the hours.

Corby Goade · Answer

I'd recommend managing at least your first few properties on your own. There are so many details to property management that you just won't get if you don't learn through doing it yourself, which will be invaluable once you turn things over to a PM. I've been managing my own properties for years, and I am still constantly modifying my lease and doing things differently because I'm learning new things and having new experiences with tenants. If I'd never managed on my own, I would have never learned those things and my profits would be diminished because of that. If you just have a property or two, we aren't talking about a full time job. Buy a decent property, find great tenants and you likely won't hear from them for months at a time.

Jeremy Brown · Answer

It depends on your background, experience, and personality. Do you want that call in the middle of the night when a pipe bursts? Who will you call or will you try to fix it yourself? What about when the roof leaks in a big storm? If they call to ask about a light bulb that burned out in the ceiling fan or the air filter in the HVAC, how well can you politely but firmly remind them that it's their responsibility. How will you like screening tenants 2x your age? How will it go when they're late on rent and you have to call them up and make them pay a late fee? Do you have a lawyer lined up to help with an eviction? It takes a special person to do all this well. If you are good at this sort of thing or honestly want to get good at it, then by all means, do it. If you are conflict-averse or don't want to be bothered with answering the phone or returning calls promptly, then suck it up and hire someone. But, while you're new, talk with the PM regularly to at least get a good idea of what they're doing with your property.

Robert Ombres · Answer

Ralph R. · Answer

Carmen Falcone Percy N. Alexandria Byrd I'm thinking it's better to get a PM. The most important part of owning properties is managing them for a long period of time. The dollars you have in them is huge. Find a goo PM. Then learn from the Pm. It's like owning a leer jet. You need to hire a pilot while you learn to fly it. Real estate is a people business. You need to learn to net work with all sorts of people. Lenders realtors and Pm's. Network and get a good Pm. They know rents they know tenants and most will do the bulk of your bookwork for you. Way too much to learn in a month or two. Don't believe me?? Just look at the questions asked on this site. They usually start with HELP my tenant _____!!! Or how do I ______ my tenant!! You will cost yourselves way more than the Pm Charges if you spend a year or two watching and learning from them. Besides its not truly "passive" income of your "working" to get it. Just my .02. RR