Why do a lot of people say stay away from property managers

[Shawn Ziegaus]

I am new to real estate investing. So please forgive any wording that is incorrect in this post. But, a lot of people I have talked to say to stay away from property managers and mange the properties yourself. Yet on here I see a lot of people say to use them. Which is the better option? Or is it situational?

Any response would be greatly appreciated. Thankyou.

[Alexander M Stanton]

@Shawn Ziegaus

Until you know how much it should cost for different repairs and how much time and energy actually goes into managing a property, it will be very easy for them to take advantage of you. They’re not all as honest as you might like, and it’s on you to understand them well enough to find a good one. Experienced investors tend to recommend that you start out self managing so you know what you’re dealing with.

[Jared Wonders]

@Shawn Ziegaus

I just wanted to echo what every one has already said. My wife and I had an absolutely horrible experience with our PM to the point where I was basically self-managing our SFH rental the last sixth months of our contract because the communication with us and the tenants was abysmal. I actually called the person "managing" our property once and the voicemail box said "this person's voicemail box is full and can not accept messages at this time". If they can't accept messages from me, then how on God's green earth could my tenant reach them if there was an emergency situation. This was the straw that broke the camels back in our situation with our previous PM. Needless to say we did not renew our contract. I'll add in two points that I learned through this experience.

1. Be slow to hire and quick to fire.

2. If you have a lot of PMs in your area try to look for one or even ask if one of the better ones can do month-to-month contracts. Having to self-manage the last six months AND paying our PM for doing practically nothing was beyond frustrating.

Hope all this info helps and feel free to message me if you have any other questions!

Jared Wonders

[Ned J.]

One factor that hasn't come up....

Some people just don't have the personality to self manage very well....

They cant say NO..... they fear being the "bad guy"...... they cave easy...... they get walked all over..... they are scared of conflict so they avoid addressing issues...... they are so cheap, they make stupid choices that in the long run cost them $$.... they aren't organized or disciplined to do the job....

Some people just cant do the real job of a PM.... its not in their personality..... which is fine.

One of the strengths of a good leader and good businessmen is being realistic in acknowledging things you aren't good at and delegating that task to someone that is.....

[Brad Shepherd]

I think you should have the experience of managing property at least once. But I wouldn't want to stay there. Think of how much opportunity cost there is doing minimum wage activities that the property manager can take off your shoulders. If you want to scale, invest out of state, or just enjoy your weekends, finding the right property manager is the ticket.

[Joseph R. Smith]

I never used property managers. I haven't had more than 20 properties yet, so I would consider it then. The main downside is their fee will be around 10% of the total rent. For some this can be more of an issue than others. I also feel that they will not necessarily do as good of a job as I can myself.   However, the upside is that many newbie investors do some very dumb things, particularly when it comes to engaging in civil issues with their tenants. ie: entering without 24 hours notice, having no familiarity with the basic eviction process, etc. In that case of a lot of this I've seen, I would definitely recommend they have their property professionally managed.  

[Joseph R. Smith]

Shawn, just skimmed most of the replies, and another of your queries. I think 20-25 units is the # often stated as 'the landlord trap' (where one begins to spend much of their times attending to an existing property disenabling them from spending time buying and rehabbing more. I think that is the time to perhaps seek a property manager. 

[Terry Wroten]

PM are great if you are an out of state real estate investor with doors. If you are
local to your doors and have the time pm are a waste of money when u can do it yourself..

[Meghan McCallum]

Look property tech companies who can help you solve your problems using AI. Certain companies give all the backend processing away for free. I'm in love with NestEgg.rent. They have the ability to diagnose a tenant complaint with AI and then ask if you want a preapproved service or repair provider to execute the work at a discounted price. Their app tracks the repair and lets the landlord know when its completed. The company provides a free 14 day happiness guarantee for all repairs made through them. They have blown up in Chicago with over 3000 units being managed and they are expanding everywhere across the country currently.   

I got a code for $50 off the first repair. I don't know how long it is good for but when you get to their website add "/join" to the home address and then there is a place to enter the code HATCH2019. Then you just enter in your property addresses and they will provide rent collection. They have a couple features you can pay for like rent assurance where you get your rent paid even if your tenants stop paying. It's been the coolest proptech companies I've seen yet.

[Shawn Davis]

@Jan Kerr

Thank you Jan! This was an excellent supplement to what Ola stated and some extremely sound advice. In your desire to help one you’ve educated and helped another so thank you for your time and consideration. Very well received.

[Joel Owens]

In the beginning most people have more TIME than MONEY. So early career they are leveraging for some the one asset they have is time to do things themselves and learn along the way and hopefully start building something successful for the long term.

As time goes on and experience is gathered income starts to go up. The value of your time per hour gets more and more. Some people for example make a thousand dollars per hour for their time or more. So anything else below what they are doing to make that kind of money you try to find the best professional you can at the most reasonable (usually not the cheapest)price and outsource it.

People often get CHEAP and VALUE mixed up. I can go out and find a meal that tastes like crap for 6 bucks. It's cheap but it tastes like crap. I can find a meal that costs 50 dollars and tastes great. The magic is to find the meal for 15 to 20 bucks that is not to pricey but still tastes great ( that is value). I search for value and not what is cheapest. It's about what I am getting in service for what I am paying. That higher service usually generates a much better return on freeing up my time to do other things and eliminates more headaches in my life because I can have someone doing something they love to do at a much higher skill level than I can. They can do it quicker, better, and more fluid than me. That is why I stick to what I do best.

[Jan Kerr]

@Shawn Davis Thank you for the acknowledgement. I agree, this is a fun and lively discussion with lots of good advice. I am passionate about Real Estate and investing as well as mentoring. I appreciate that it shows through, because I really do believe that everyone deserve success and there is plenty of room for all of us to have it. 

[Shawn Davis]

@Jan Kerr

I’m extremely glad to hear because I’m applying for your class as we speak 😂.

[Kenneth Mooney]

@Shawn Ziegaus I think there are people who say stay away because there are A LOT of really bad property managers out there.

I’d recommend finding a good one, that has experience with investors, and can help you with every piece of the puzzle. You’ll be very happy if you can find that company (there are many out there).

[Peter Tverdov]

Everyone's situation is different. Most people who manage the property themselves have all the time in the world and need something to do, or (the majority) don't understand time value. They think they're saving money but ignore the time it takes to get to and from their property, the time it takes to coordinate with vendors, pay vendors. The time it takes to speak with tenants, so on and so forth.

The people "saving" money to self manage are not saving as much as they think. We wind up managing property for people like this and show our value off the bat when a repair call doesn't cost as much as they think because we give the vendor so much business we get a discount. Or we actually know the rental market and rent a property for $100-$200 more a month. There are a lot of variables where a good PM company adds more value than cost and that's what I tell people.

What is your time worth to you? What is your stress level worth to you? Hard to quantify but I'd wager it's more than paying a PM 10% a month. Something to thinking about for you all...

[Kevin Mitchell]

@Shawn Ziegaus I would absolutely agree it’s situational. If you don’t mind the foregoing a percentage of your cash flow and reducing the headaches associated with managing the property yourself then a PM might be the route for you. For us, we don’t use a PM, have 6 properties and closing on our 7&8th houses in November. Given our current “9-5” jobs we have flexibility to manage our own properties but if we keep growing I will happily “buyback” my time via a PM to reduce the head aches and time commitments to manage a growing rental portfolio. Figure out what works for you and let’Er rip. Good luck

[Jan Kerr]

I advise anyone owning rental properties to calculate in the cost of  property management as part of their expenses. If you are doing it yourself, you should still either set the amount you would have paid aside to build your reserve account or pay yourself for doing the management. That way, when your portfolio grows so big that you need someone else to manage it for you in order to have a life, the cost of it will be already accounted for and factored in. 

[James Wise]

Penny smart, pound foolish.

[Melissa Nash]

Originally posted by @Shawn Ziegaus:

I am new to real estate investing. So please forgive any wording that is incorrect in this post. But, a lot of people I have talked to say to stay away from property managers and mange the properties yourself. Yet on here I see a lot of people say to use them. Which is the better option? Or is it situational?

A good property manager is hard to find- but there are plenty out there. The bad ones give others a bad name. Just vet them out- ask questions, talk to other investors using them- ask for references and vet them. My property managers are experienced and want to see me succeed too- if I succeed,  they succeed!   Remember that most people only post about the bad things that happen because they are mad and want everyone to know about it. But less people post about the good things that happen, do you leave yelp reviews on all the great places you have eaten at? or only the bad ones? I am guilty of that- the same thing is on here. Look for the positive posts and see what those people are doing, chances are they are more successful than the negative people. 

[Brian LeBow]

There’s a lot of reasons to use a professional management company.  I’m based in California and the laws here are very complex, and a professional pm company will serve and protect owners from complex legal issues.  For many owners with a few small properties, we often get hired after they violate the law or are getting sued.  Hiring a professional management company can be a great choice in California.