Early Investment Decision: Self-Manage or Property Management?

Question

Hello BP community,

I recently closed on a duplex, and I am seeking the opinion of the BP community regarding my situation. The duplex I purchased has three tenants, one of whom is using it for storage.

While I have confidence in my property management abilities, there are certain aspects of property management that I am not particularly keen on, such as staying up to date with current rules and regulations, resolving tenant disputes, and screening tenants. In essence, I am not fond of the day-to-day tenant interactions.

However, there are two main factors that I need to consider:

(1) Desire for Property Management:

The property is still generating decent cash flow even with a property manager. However, I am uncertain about my desire to handle the hands-on property management tasks. I am more interested in the administrative aspects of property management, such as bookkeeping and financials.

(2) Efficiency of Property Management:

While I am capable of managing the property myself, I am questioning whether it would be the most efficient option. I have a list of contractors ready to handle maintenance and repairs, and I have established backup systems and processes in case property management becomes challenging. If I find a competent and reliable property manager, their efficiency could prove to be a fantastic investment.

I would like to pose the following questions to the BP community:

• Have any investors used property managers early in their investing journey?
• What has been your general experience with property managers?
• If you have used property managers, what questions and criteria should I look for to find a rockstar property manager?
• If you have not utilized a property manager, what were your reasons for opting out?
• Share any of your experiences or comments regarding your stance on PMs.

Thank you all for your time, and I am eagerly looking forward to your responses!

Best regards,

Tommy Nguyen

Michael Smythe · Answer

Everyone thinks managing properties is easy.

And it is - until something goes wrong and you're in over your head, which costs you MORE than hiring a PMC in the first place.

Trevor Schmitt · Answer

If there is a PM in place and the property is performing well, I would leave it that way. Keep that time available for other income producing activities. It can be easy and tempting to try and take on all of these tasks because you are capable, and it could save you money... but if you are trying to scale it is far better to start delegating right away. I can say this from experience and making the mistake to take on too many responsibilities.

With that being said, it is still VERY important to manage your property manager well. Set expectations right away and hold all parties accountable. Have a system in place that forces you to check in and ensure things are being done right. This also was a lesson I learned the hard way... I just let a PM do their thing... and it ended it disaster.

Ned J. · Answer

I only have 2 units, both within 20 min of my house and Ive done all the PM work for 8 years now and its been easy for me...knock on wood.

I feel comfortable doing the advertising and screening..... I do most of the repairs myself unless its over my head or I just don't have the time to do it.

If I have a big issue....eviction etc, I'll hire a lawyer....if I need a repair I cant do, I'll find my own contractor.

If I was out of state or far from my properties I would hire a PM.

For me and my situation, I just cant see paying 10% each month for the PM to just accept a rent payment. My units are on autopilot 95% of the time. If an issue comes up I cant handle, I'll hire a professional when that time comes.

From your post it sounds like you CAN do it.... but don't WANT to do it.... then dont..... its ok.....hire a PM and move on

Steve Harlow · Answer

I self manage the properties that are within 5 miles of my house but ones that are in other parts of California or in other states I use property managers. Even using a local property manager would probably net out as they would probably get me a higher rent.I pay all of the mortgages, HOA and taxes myself, the property managers take care of most of the repairs, collect rent and make repairs. They prepare statements for me.

Eventually I will probably hand over all of the properties to Prop Managers so I don't get those calls on the holidays or so it seems.

Rose White · Answer

hi Tommy,

congratulations on closing on your duplex!

while i personally do not own investments yet, i wanted to send you some of my response on your questions. i hope that my perspective can help you go through some additional outlook.

• Have any investors used property managers early in their investing journey? 
• i mentioned above that i personally dont have any investment, if your portfolio is manageable (1-5 units), i think it would be a good learning experience for you to manage for about 6-12 months. it would help you understand what are really necessary skills/tasks that needs to be handled. it may be tough but it will help you know what abilities you really want your future PM should have. 
• What has been your general experience with property managers?
• If you have used property managers, what questions and criteria should I look for to find a rockstar property manager?
• i think you could potentially look into multiple local PM companies or realtors that also provide PM services and interview them. if they have a PM service they regularly provide, ask them what are some of the tasks they are doing for their clients and how their approach is to situations that could be applicable for scenarios you had to deal with in the previous months of managing your own. i think asking what type of platforms are being used for background check, tenant payment portals, repair/maintenance workflow & how often they visit the property or do they receive inquiries on the weekends/holidays is important questions to be asked. additionally, i would also ask what type of tasks are out of scope and if out of scope, are they willing to manage that for x cost. obviously any type of negotiations could come on the 2nd phone call (after you screen all your potential PM providers). 
• If you have not utilized a property manager, what were your reasons for opting out?
• Share any of your experiences or comments regarding your stance on PMs.

additionally, i am not sure if you are on spotify, but biggerpockets daily has a lot of podcast contents related to property manager (needed or not) or how to manage on your own. eps 460 has "do you need a property manager" & eps 54 "20 questions to ask a prospective property manager" may have some additional information you are looking for.

whether you decide to manage your own or to hire it out, i wish you best of luck on your portfolio and scaling if that is a part of your roadmap!

Michele Fischer · Answer

We went the opposite direction.  We self-managed for many years then turned the properties over to PM.  It was mostly driven by proximity, we moved away, but we were getting tired too.

There are plenty forums here on how to hire a PM.

What I like best is not needing to deal with the urgent issues or multiple move outs at the same time.  What I don’t like is giving up control.  PM’s rarely do things as quickly, aggressively, or cheaply as you would.

But overall it has been good and I would go that route again.

Even if you have a PM you still have administrative tasks to ensure bills are paid, taxes are calculated, and rent is really coming in.

Chris Parreira · Answer

With a small portfolio you could go about it either way, the question is are you willing and capable of self managing. From your post it sounds like you may be capable but aren't really excited about doing the management activities, if that is the case you may be better off finding other income producing activities to spend your time on and letting a PMC handle the management.

Tommy Nguyen · Answer

Hi Richard,I want to clarify that I always follow federal and local laws regarding tenants and landlords. I do not cut corners or delegate improper tasks to my property manager. My concern was about being unaware of changes in state or local laws hidden in the fine print. To avoid legal trouble, I prefer my property manager to keep me informed about any updates to the rules and regulations governing landlords and tenants.

All the best,

Tommy Nguyen

Early Investment Decision: Self-Manage or Property Management?

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