How passive are passive rental properties?

Question

I'd love to hear from people that have done a significant amount of rental property investment with property management.

I know that in theory you don't really have to deal with much since you're paying for property management, but I'm curious if the reality is different from the theory.

I'm sure it has everything to do with getting good tenants and good property management.  And if/when I invest in a property I would be planning on doing a ton of research to make sure that I pick a good pm / tenant.  And I'm sure even so my first time around I'd do some things wrong and learn some lessons.

But really what I'm wondering is once you become experienced in this and get to the point where you have 10 or 20 rental properties, and you have a good property management company and good tenants - how much of your actual time/energy are you spending dealing with things?

Elizabeth Colegrove · Answer

Honestly I self manage and love it. I simply buy a higher lever tenant base that a 16 page lease and 37 addendums can manage. This make sure there is no questions make it fairly passive after placement.

Jeff Greenberg · Answer

I do believe that one of the keys is to make sure that you can get a good PM before you buy, not after.  I have a couple of locations that I would like to buy, but am hesitant due to the lack of good PM.  They are a critical member of the team.

Jeremy Jackson · Answer

@Kalen Jordan

You've received some great info already!  I just want to emphasize, if you want to keep things passive, hire a good property manager.  I don't believe there's anything passive about managing your own property, although there are other benefits.

Joseph Weisenbloom · Answer

The most work I do on the property is researching and crunching numbers. All managment and repairs are handled by my PM. My PM is much better at managing tenants than me. I have zero interest in doing additional work but am glad to pick up the check at the mailbox. Its key to first find a desirable property. Second you need to do extensive research on finding the right PM. Ask for refferals from local investors or search on BP. If you do your due dillegence correct things can be very passive. I haven't see my house in 7 months but consistently makes money.

Jonathan G. · Answer

We have 4 properties .  Three are higher end   (hardwoods, SS appliances, granite, etc for low $2000s/month) and one is a decent townhouse ($1000/month). On the single out of state home, we have an excellent PM.  He takes care of everything and does not bother me with trivial details and always provides requested data/numbers when asked.  I periodically review details but otherwise just get my check directly deposited each month (minus costs and his 10%).

Our other $1000/month town home is managed by a "professional" company who also take their 10% + 1/2 of each years renewal.  Whenever there is a problem they pretty much call me and ask what I want to do as their "preferred" contractors are way overpriced and I end up coordinating all repairs anyway. Whenever I call them, it's always someone different answering and each individual tries to punt my particular question / concern to someone else.  On a more positive note, they found an excellent tenant who has been there >5 yrs despite my annual rent increases in an attempt to break ties with the PM "professional" company.  Unfortunately, the Owner-PM contract is ironclad tight so the only way I will get out of that contract is if the current tenant moves and frankly , the unit is at fair market and just not worth the hassle at present.

In regards to our other two local properties , we contracted with a realtor to screen tenants for a fee and write up contracts and manage independently thereafter which has worked out well for several years .

Hope that helps

Elizabeth Colegrove · Answer

@Kalen I think I enjoy being property manager because I think of it as a job. Once I started treating it like a business, it got much better. When I sit back and think, what is more stressful by day job or my properties/ My day job wins 100%. So if I have to make money to play and enjoylife. I would prefer to do it with my properties ;)

Elizabeth Colegrove · Answer

It was 16 pages, 37 addendums :) Here is the post I wrote for BP on the subject.

https://www.biggerpockets.com/renewsblog/2015/10/1...

George P. · Answer

we self manage 24 and its a lot of work, but mainly because we have a few rehabs going at the same time. i didnt think it was "work" until i said "let me write down all the hrs i spend on this to see how much i actually work". well, after 6 hrs i stopped writing because i realized i dont do much else besides looking for houses, talking to contractors, visiting projects, every now and then text tenants for water bills, fixes, etc, etc.

i also manage 2 for investors out of state and they dont do anything. i just send them the checks each month. the time they spend on their rentals are just the minutes i update them whats going on..

Geoff Eckert · Answer

I self manage my one rental for the past 3  years  and it  has been doable, but you will have things come up.  Changed a garbage disposal, leaky faucet gasket, front lock as tenant broke a key in it.  This is a newer home (2007) so it isn't like things constantly need to be fixed.   I will be looking to use a PM, as I add more rentals due to me working 50 hrs a week.

With that said, can anyone recommend a good PM firm in the Sacramento area?

Thanks

Geoff

Dawn Brenengen · Answer

@Kalen Jordan It also depends on your asset class.  My own properties are A/B, and I spend almost NO time on them.  Some of the properties I manage for other people are B/C, and I spend way more time with the lower class homes.

How passive are passive rental properties?

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