First time investor: Hire a Property Manager or Self Manage?

Question

Hey everyone,

In my quest to learn everything before buying my first property I am staring up at this large topic of being a landlord and all of the responsibilities that come with it. My wife and I are currently working full time jobs, and eventually after a few good investments she may be able to quit hers to do this full time instead. One thing that I thought when weighing the pros and cons of hiring vs self managing is that if we do hire we can learn from a professional company how they are structured, what a lease agreement looks like, responsibility scope, etc. Last night, just asking for quotes, I was given a long list of "services included" from one of the companies that basically was a great outline of everything involved.

For those experienced, what are your thoughts? Is it just a lot of work on paper and not that bad for managing one 2-4plex? Or should we hire a company for our first investment?

Bonus: if you are in the QC area, let me know which companies you prefer and which ones to stay away from!

Thanks!

Joe Villeneuve · Answer

Hire. If you have no knowledge of how, no experience to fall back on, and no time to do it, HIRE someone that does have all those things. IF you don't, it will cost you what they would charge you and then some.

Ryan D. · Answer

@Tyler KressReal estate is NOT a passive investment - you are starting a small business. Realizing this fact is the single greatest differentiation between success & failure. If you want to be successful in your small business, you need to have experience & a working knowledge of as many aspects of it as you can. Manage your first property yourself (assuming you are close enough), so you gain the experience & have a solid understanding of what it actually takes to successfully manage a property. Once you understand this, THEN you can go out & hire a PM with the knowledge of what a good PM does & does not do.

Shaye Mora · Answer

Tyler - As I mentioned at the meet-up, everyone views this topic differently. I believe property management should only come into play when you get a decent size portfolio and you can't handle the workload or if you're an "out-of-state" investor. QC is also known for their horrible Property Management industry, therefore it would be best for you to oversee your tenants and property yourself. Managing 1 or 2 properties yourself won't be so bad. Since you're first starting out, I would suggest doing everything yourself - management wise. Not only will you save that 8-10% monthly, but you'll also learn so much over that first or second year. (You can also pocket that 8-10% for managing the property yourself)Things you'll learn from managing the property yourself:1. Property Showings2. Screening/Reading a Tenant3. How to collect payments 4. Contacting Subcontractors / Creating Relationships5. Save labor cost on scopes of work you believe you can handle6. Inspecting your properties quarterly to make sure they're not completely trashed7. Etc, Etc, Etc Hope this helps with your questions stated above. If you're worried about not having a lease agreement or any type of template - reach out to members at our meet-up, reach out to people on BP, search BP's Tools > FilePlace, or even search google for some. There are many individuals out there that have been in your shoes before that are willing to help you and share documents they use.Best of luck & looking forward to seeing you next meet-up,Shaye Mora

Charles Carillo · Answer

@Tyler Kress self-managing properties will provide you will invaluable experience. That being said, it is very difficult to self-manage when you work full-time. I self-managed for 6 years and I have a flexible schedule which is why it worked. The pros with a property manager are that they handle all of the low value activities and you have immediate access to all of their contacts without having to build the whole team yourself.

Ali Boone · Answer

I vote for hire. Unless you're seeking to become an experienced landlord yourself for some reason down the road, there's no benefit to self-managing in my opinion except to have a first-hand look at what's going on with the property at all times. Outside of that, you're on the hook for a ton of extra work, late-night repair calls, etc. Basically that long list of services the PM showed you.People argue that everyone should start by landlording themselves. I totally disagree, unless you're trying to learn those skills for a specific reason. When you hire a PM, you still have to learn things, but it revolves more around people management. I personally would rather build an empire, and if I'm going to have an empire, I have to be able to manage people/employees and know how to make sure they're doing their job right. I, as an empire owner, don't have time to do their jobs for them, nor does me learning that job (when they are better at it than I am anyway) benefit me in any way.My theory in life is--if someone is going to do a job better than I am, let them do it. Especially if I have no interest in doing the job myself.

Brandon Sturgill · Answer

@Tyler Kress The more stable the asset, the easier it becomes to self-manage. If you are buying renovated and performing assets, your need for management is almost non-existent. If you are buying properties in the bad part of town with bum tenants, having a management company will be your only option. Ultimately, its all about systems and process. I always renovate on the front end...then train tenants how to deal with issues themselves...and empower them to resolve issues themselves or by contacting professionals directly...plumbing, HVAC, etc...Reputable companies will verify work before proceeding and you can pay with a card online or on the phone when complete. Tenants are responsible for direct deposit of rent to the properties designated account every month...or by payroll deduction.It's just a balance...focus on systems and don't buy crap properties.

Jason Hendrickson · Answer

Look at the list you made and ask yourself if doing those things is how you want to spend your free time, and if it's how your free time is best spent.

Tyler Kress · Answer

Thanks again, Shaye! It was definitely a learning experience last night, I wouldn't have expected to hear that the QC does not have a reliable property management company. After hearing yours and others take on it, I think we will take a shot at it to start and see where things go. I think my biggest concern is making sure we are legal and we don't make any missteps in that department. I didn't ask it at the meetup, but do you have any good references for lawyers I should consult with before purchasing our first property and preparing for leases?

Tyler Kress · Answer

Thanks Brandon, that is a great way to put it. If my wife and I move into a duplex as our first time deal, we would be managing tenants in our current house (which is a new construction just 3 years old and has an HOA to deal with anything exterior) and then the tenants on the other side of the duplex - as you said addressing issues up front may be the key to a smooth first year of self managing...

Shaye Mora · Answer

@Tyler Kress - I personally don't know one. I'm sure someone at the meetup next month can point you in the right direction for one.