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Updated about 13 years ago on . Most recent reply

User Stats

603
Posts
130
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Adam Craig
  • Investor
  • Cleveland, OH
130
Votes |
603
Posts

Why BP so negative on property management?

Adam Craig
  • Investor
  • Cleveland, OH
Posted

I commented before on my situation, but just a quick recap so you know where I am coming from. I am self employed via eCommerce and my business bring me about 15K/ month profit and rising - leading me to want to invest in real estate.

I am in Cleveland but eventually want to invest in growing markets (Texas/Atlanta/Florida) and hire a property manager (I dont want to nor have the time to be a landlord). My investment goal here is appreciation/equity build up/ tax shelter/ and cash flow - In that order.

Most comments on biggerpockets seem to bash property management because of bad managers and it cuts into cash flow. The advice I get is "Manage it yourself, save money and headaches."

For me - my business is my main concentration and form of cash flow so I am okay with taking a smaller cut and letting professionals screen tenants and control rent. The 6-10 percent they take is WELL WORTH the amount of time it will give me to run my business and peace of mind.

Is there anyone doing what I want to do? Can someone tell me a successful property management story? I know good ones are out there...

Most Popular Reply

User Stats

1,316
Posts
569
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Nathan Emmert
  • Investor
  • San Ramon, CA
569
Votes |
1,316
Posts
Nathan Emmert
  • Investor
  • San Ramon, CA
Replied

I won't say BP is negative towards PMs... but you have to realize, most of the landlords here are fairly small time. So lets correct a few misconceptions.

For the small time landlord, the fee is closer to 12 - 15% of rents, not 6 - 10%. They are going to charge you 10%, plus some amount to fill vacancies, plus some mark up on all repairs.

Second, having a PM doesn't mean the investment becomes passive, it simply changes who you manage. When you're a landlord you can either manage your tenants... or you can manage your Property Manager. A quick search here will show you what happens when you simply turn a blind eye to your property manager. Expect to speak with them every 2 weeks or so. If you aren't squeaking, they will likely get complacent.

For me, it frustrates me that I have to do that much screening to find a good PM given the amount I would be paying, even at my small level. Until the work load becomes some overwhelming that it takes over other parts of my life, I'll continue to do it myself.

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