PM vs Self Managing - What's the breaking point?

Question

Hey everyone! I'm curious to hear some opinions on the titled question. What does everyone consider the tipping point when they stop self-managing and start utilizing a property manager? Was it a bad tenant experience? Portfolio grew too big? PM pricing? In-state or Out-of-state?

John Underwood · Answer

Never hit that tipping point.If you have processes and procedures you can easily scale up your self management.

Nathan Gesner · Answer

You have to know yourself. It's not a question of how much time you have available; it's a question of how valuable your time is.Are you tired? Do you work too many hours? Is it hard to take a vacation? Would you rather spend time on hobbies or family? Do you hate dealing with tenants or getting calls at 8pm to talk about clogged toilets? Could you grow faster if you had more time? Ask the questions, do the math, see if it makes sense to you.

Bjorn Ahlblad · Answer

When we lived in CA we managed our own there and a PM managed our Wa properties. Then we sold our Ca properties and moved to Wa. We bought more Wa properties and ditched the PM in favor of self maintaining. For us it really comes down to how much work you are willing to do and what level of proficiency are you willing to maintain. In our experience most PM's maintain a high level of proficiency (as long as you police them) and do what it takes, or they will be replaced. So it comes down to expertise and work-not money in our case. We have 16 doors which provides sufficient retirement income for our needs. If we were scaling we would hire a PM.

Tracy Streich · Answer

@Matthew FordAre you an investor or a landlord. The two are very different and both can be great. You will find on here there are many people on both ends of the spectrum. Never hire a PM they will suck the money out of you and do a terrible job. On the other side there are those who have never been to their property and the PM does it all and does it well. If you have the time you can do it yourself with the right tech and systems on place but all the tech in the world does not solve you going to the property or properly screening tenants etc. There are plenty of online trading platforms that allow people to invest in the market. Great technology at their finger tips, yet they still loose money. Tech does not mean experience and knowledge. Time is another big factor. If you have a career that allows you to bill your time and hours at few hundred dollars and hour why would you take the time to coordinate maintenance and screen tenants. Keep billing and pay someone else to do that work. So many factors make this a very grey question and most want it to be black or white. Hire a PM like you would a money manager. You need an asset manager PM. Someone looking at the whole picture not just a rent collector.

Ford Bennett · Answer

Hi Matt!I'm a PM in Washington state and I also work with investors to discuss handing their property over to professional management. You're pretty much right on the money. I mostly see investors that are moving out of town/state, or have the fear of managing a bad tenant (not necessarily already having that bad tenant experience), are those contracting with a PM. Very few of my clients, or those I speak with, are waiting until their portfolio grows to a unmanageable size.

Kyle Mccaw · Answer

There a many reasons my clients have hired my firm. Most common are below.1) They have a better use for their time. 2) Their personality doesn't allow them to be successful. Too kind hearted. Or they don't have the problem solving skills to solve issues that come up.3) They haven't learned how to manage tenant and vendors with processes and by creating boundaries.

Gabriel Graumann · Answer

@Matthew Ford Great question to be considering. My career started in PM for my grandfather's commercial development company, managing properties they had already built and retained equity in. Now 20 years later I'm 100% out of the PM business but continue to invest. What I found is quality PM is a full-time job (at least in the commercial RE realm). My goal wasn't to take on another job when investing, performing endless "low dollar tasks" instead of pursuing "high dollar tasks" (something only I could do) such as analyzing new deals. Decide what you enjoy doing, determine if you will continue enjoying it when you scale your investments (if that is your goal), and that will likely answer whether you need to start with PM yourself or hirer it out from the start. Happy to connect on this more if that is helpful to you.

Jordan Sand · Answer

@Matthew Ford - good processes can help you scale on your own. started on excel. I moved to Hemlane once I had 2+ rentals and haven't looked back. I have out of state and in state and find that as long as I build a good team (especially handyman) and integrate it into my software ... then i'm golden.

Sergey A. Petrov · Answer

Not everyone reaches that breaking point, ever. Most start doing it themselves because they don’t believe there is any value in professional management and they can do it just as well or better. They learn, they make mistakes, they stick with it. If they don’t mind the time commitment and enjoy doing it they essentially learn enough to be a manager. If they start hating it and want their freedom back because quality of life is more important than savings on management fees, they hire a manager. I think it is a personal preference that also depends on each individual’s skillset and personality

Eliott Elias · Answer

When you start thinking of ways to evict your tenant in a legal matter and can’t figure it out because of fair housing laws and county regulations. It doesn’t make me any money managing my property, so I don’t do it