Outsourcing VS building an in-house property management team??

[Wilson Smith]

One of my preferred phrases is "Let Painters, paint." Guided by this principle, I delegate most tasks to skilled professionals to ensure efficiency. I currently outsource to a full service property manager who excels at their job. However, their services come at a high price—10% of the gross monthly rent and an additional 100% of one month's rent as a leasing fee. Considering that my properties generate an average gross rent of $1800 per month, the combined leasing and management fees amount to approximately $330 out of the 1800$ a month rent. 

With 30 properties, this results in an average of 2.5 new leases each month, costing $4500 in leasing fees and $5400 in management fees. The $10,000 a month price tag has me considering hiring an in-house property manager for around $4,000 to $5,000 per month. As my portfolio expands, I can gradually increase their salary, albeit at a slower pace than what it would cost to outsource the property management. My question is, when should I switch from outsourcing to employing an in-house property manager?

[Tyler Lanners]

Hey Wilson,

Speaking from experience, our private equity firm was originally using third party property managers to look after our 20+ units. We were thinking the same thing you were and decided to bring that part of the operation in house with a small team: a couple PM's, an accountant, and a small construction crew. There's obviously a lot of smaller tasks that needed to be handled (maintenance coordination, leasing coordination, administrative work), so for those jobs we outsourced to VAs.

After trying out a few different companies with the same lackluster results, our CEO wound up starting his own VA company that focuses on finding quality VAs, developing streamlined processes and systems, and properly training the VAs. 4 years later and we've since 20X'd our portfolio and greatly improved our bottom line, now owning and managing 400+ units. We still have a small team in-house, but we're never overwhelmed because of the help from our virtual assistants.

Let me know if you're interested in bringing your PM in-house and I'd be more than happy to let you know what steps we took for our firm.