How many properties before you'd hire a property manager?

Question

I'm curious about this...How many properties would you (or do you) have before you'd hire a property manager?

I imagine it would vary from each person's individual situation but I guess what I'm asking is in the general sense, at what point would you say "I could be doing other things instead of managing all these properties" and decide that it's worth the extra money to just hire someone else to manage them and deal with tenants, etc.,?

We aren't nearly to that point of course, but I was just curious. At some point I would like to see us own maybe 10 or 15 SFH as rentals. By that time we will probably be getting closer to retiring and would want to travel, etc., and not sure if hiring a manager is the way to go in order to free up our "hands on" obligations/responsiblities. Such as collecting rents, screening tenants, showings, maintenance, etc., As I would imagine you get to a certain amount of homes and it can turn into a full time job.

Any thoughts?

Scott M. · Answer

Hey Kel - great question and while I agree the number will be different for everyone I think everyone should be their own property manager for a few years.

For one - you will never find anyone who will do it better and two - the experience you gain will be priceless.  Even if it is the most giant pain in the world - it is priceless and will help you better qualify property managers when you get there as you will know what the job is about.  Will also make you appreciate them when you find a good one.

For me some of the questions you need to ask yourself are:

- What is your goal?  If you want to get to 100 houses by the end of next year you need to outsource it - if your happy with adding 1 property a quarter etc then maybe you don't' have too.  
- What is your profession?  Meaning maybe youâ€™re a landlord so doing your own PM is what you should be doing - VS being an investor (doing things other then landlording) so maybe PM isn't what you should be doing.
- Location of homes - if your buying all local (within a 30 mile drive) then you can handle yourself but once you start getting even 1 hour drive away that is a time sucker
- Do you enjoy it?  If you hate it â€“ I would still do it for a few years to learn the ropes but then hire it out.  No need spending your life doing something you hate.  Just remember the grass is not always greener â€“ meaning you may hate having a PM even worse !

Bottom line is it really comes down to time.  Some will say if you do it right, if you do your screening right and are a good manager then it will not take up a lot of time.  And while that is true to some degree there will always be something as the number of homes grow.  If you have 10 properties then your work should be minimal but once the numbers start getting up there the odds of someone needing attention grow and they seem to grow exponentially.

When you start I would start by moving the 1 problem child off your hands (if you have one) or the one that needs attention â€“ meaning get the most bang for your buck and keep the ones that are good and quiet for yourself.

I did my own landlording for 5 years and wouldnâ€™t trade the experience for the world.  I still do my own for a portion of my portfolio as I think it helps keep me grounded and in touch.

Michael Rossi · Answer

Kel,

If you talking strictly about management (without maintenance), then I would say that a well-organized owner who is managing his own property could manage 250 units working full time or a little less.

Here in my area of Ohio, it is typical for one full-time paid manager to manage a complex of about 150 units.  The difference between the number of units a paid manager vs. an owner can handle is the bureaucracy of the management company and the motivation of the owner.  I have friends who are professional managers and I can say with absolute certainty that I am MUCH more efficient than they are.

Whether you can manage a substantial portfolio and still travel depends on the nature and length of the travel and the way you set things up.  For example, I personally collect rents the first four days of each month and therefore I don't schedule vacations or travel on those days.  The rest of the month, I'm generally good to go.

My wife and I like to take frequent 3, 4, or 5 day weekends throughout the year.  The rental property business is ideally suited to that type of lifestyle.  We're taking a 10 day vacation in September, and I can easily manage the business while on vacation.

Good Luck,

Mike

Scott M. · Answer

yes - the general public can find out - just go to the county website or county office building and you can find the owner of the LLC - in the case of the child LLC it would be the master LLC.

It makes it harder but not impossible.

Corey Demuth · Answer

a question regarding the name on llc issue- in another thread, i think the one about business credit, there was mention of having one master llc and having properties be held in child llc's underneath it. in that case, as long as the child llc holding the property the tenant lives in has a generic name, would you be safe? or can the general public find out what the name of the master llc is?

Chris L. · Answer

Hey Kel,
                    That is a great question and Scott that was a very good and comprehensive response.
                    I have a property manager and this is actually our 2nd round in the rental business.  We had 8 duplexes in round 1 and managed our own because we could not find a good property manager,  
Before we ever looked at a single house to start round 2, we interviewed property mangers.  (round 1 was about 5 yrs ago)  
Having a competent property manager has made all the difference for us.  My job is pretty consuming and my wife is busy with the activities of our three sons.  We did not want to babysit tenants.  However, we learned a lot managing our own properties during round 1.  
                   
 Here is what I have learned from my current property manager: they have properties of their own but they do not let the tenants know that they are the owners.  They represent themselves as the property managers which they are.  This seems to keep the relationship much more business like.  They also recommended that we not use our last name as part of our LLC.  This is not meant to be deceptive but simply to limit access by the tenant to the property manager and not the owenr.  There is no reason for the tenant to have access to anyone other than the property manager.
                    
A competent property manager has made a significant difference for us and they are worth every penny that we pay them.
                    Good Luck

How many properties before you'd hire a property manager?

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