Is it absolutely necessary to hire a property manager when owning long-distance rental properties? I’m concerned they would not always have mine and my wallet’s best interest at heart.
I plan to purchase my first rental property in the coming months and could use some advice. Thanks!
Rental Property Investor · Hendersonville, NC · Member since 2016 · 446 posts · 412 votes
5y
I would say its not required, but you should consider it anyway. Find someone who you are comfortable will have your best interest. Know that they will cost you more money than you can do yourself typically. Look at that extra cost (10% of rent and maybe 20% extra expenses) and determine if that extra money is worth the headache and devoting your time and mental energy. I would treat the PM role as a job that pays $X and determine if that's a job you want and separate that from your investment return. There is lost opportunity costs potentially, where you can be spending your time and energy more effectively finding deals, etc where you will make more money. If you factor that in and you think you want the job of being the PM for that property, then you should go for it.
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
5y
Hi @Matt Lopez, it is absolutely not required. Some people prefer self-management, both in the place you live or somewhere else in the world.
In fact, unless you have a PM that you trust to represent your best interests then I'd vote for self-managing the properties AS LONG AS you approach it like a business, and a darn good one.
Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
5y
@Matt Lopez you need someone trusted to be your boots on the ground. Whether that’s a friend, trusted handyman, or a PM.
It’s really hard to run things by just calling contractors. There will be a hundred little things that just need handling - and you don’t want to be struggling to find someone to go over to the house.
Rental Property Investor · Hendersonville, NC · Member since 2016 · 446 posts · 412 votes
5y
I would say its not required, but you should consider it anyway. Find someone who you are comfortable will have your best interest. Know that they will cost you more money than you can do yourself typically. Look at that extra cost (10% of rent and maybe 20% extra expenses) and determine if that extra money is worth the headache and devoting your time and mental energy. I would treat the PM role as a job that pays $X and determine if that's a job you want and separate that from your investment return. There is lost opportunity costs potentially, where you can be spending your time and energy more effectively finding deals, etc where you will make more money. If you factor that in and you think you want the job of being the PM for that property, then you should go for it.
@Will Fraser thanks for the reply Will! I appreciate you lending your insight. In your opinion, what would be the most difficult task i would encounter if I decided to manage the property?
@Mike McCarthy thanks for the response, Mike. How would you go about getting a potential property manager? Aside from public reviews, what else should I look out for?
@Ryan Howell that’s a really great way to look at it. Thanks, Ryan! I guess my only concern is that the PM may try and make a bigger problem out of something small just to pull cash from me. How can I ensure that suggested repairs and other expenses are legitimate?
Rental Property Investor · Hendersonville, NC · Member since 2016 · 446 posts · 412 votes
5y
My PM and I agreed on a limit that for repairs over $500 require my approval. I have a portal that they use so I can see all tenant requests logged, and quotes from their vendors as well, so it is fairly transparent. I use a larger PM company that manages hundreds of rentals, not just a mom and pop shop They do walk-through inspections quarterly and take pictures of the condition and if something needs repaired, there are pictures for proof.
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
5y
Managing your tenants well and dealing with issues as they come up. Many times the issues are perceived as urgent and hard to automate or "template", so they require individualized attention.
@Will Fraser thanks for the reply Will! I appreciate you lending your insight. In your opinion, what would be the most difficult task i would encounter if I decided to manage the property?
Investor · Denver, CO · Member since 2017 · 94 posts · 42 votes
5y
@Matt Lopez, how far are your from your market area? If you are a few hours away, then it is possible to manage. However as a newer investor, I would discourage from managing your properties. I made some classic mistakes managing my first property and did a horrible job screening tenants. Also, you have to ask why you want an investment property? Is it for passive income or are you wanting to be more involved? I decided to invest out of state, so it would force me to rely on a team and making it more passive for me. That being said, I am on my third property manager but I am very happy with my current PM. It simply takes some trial and error no matter what and you just have to expect that. You will also find PMs structure their businesses differently. I found one that allows me to find my own contractor or maintenance person, if I want to, and they don't charge extra for maintenance expenses.
If you interested I started a long distance investing group on facebook group to build a network of people investing long distance, you may find recommendations of a PM to use in your market.