Using a property manager is over-rated

[Mark Fries]

I've been heavily investing in single-family rental homes in Jacksonville Florida for the past 5 years. I definitely don't have all the answers and I'm still learning everyday but with a portfolio consisting of over 35 single family homes one thing I have learned is that property managers are overrated and not required for success. I've used them a few times only to see them let me down and cause more problems for me. I wanted to get feedback from other BiggerPockets members to see their feelings on the whole topic? For the money they charge versus what I get in return, it just seems like a bad investment. Does anybody have any hard data in regards to ROI on property managers?

[Matt Lefebvre]

@Mark Fries I 100% agree with you and disagree with you... because effective property management is not only based on the company, but based on your investment goals.  Let me break that down:

I work for a firm that has both a brokerage division and a property management division.  The property management side of the business is BY FAR larger and more profitable than the brokerage.  As an individual, I make a lot more money brokering deals, but the company as a whole makes a lot more money in property management.  Our company operates on the philosophy that we treat your rental properties like our own.  Every single thing we do is designed to help you grow your investment portfolio.  When we manage for a client, the goal is to help maximize cash flow for their existing buildings, and guide them through growing their portfolio.  Its a win-win.  If we manage more of your units and maximize your profits, you make more money and we make more money.  

A good property management company should help you achieve your investing goals.  They should be bringing experience to the table to not only "maintain" your portfolio in its current state and run it without your intervention, they should be actively helping you expand.  I think that's what defines a good property management company and how they should run.  They're out there, but rare.

On another note though, sometimes property managers are unnecessary. I work with a gentleman who owns 60+ rental condos and manages everything and does everything himself. No management intervention and has been doing it for years. A manager would free up his time, but suck up a lot of his profitability. In a SFH model... you might not need a manager depending on the quality of your tenants, the average vacancy factor, etc. If you're just starting out and own a couple of three-families nearby... don't hire a manager. Do it yourself and learn. That way you know what to look for in a good property manager when the time comes.