Is it more effective to have PM rehab property or to DIY?

Question

The property in question is a SFH, needing new flooring as a major repair and also several minor repairs such as hardware, cracked tiling. Is it more cost effective to just have a PM take care of this or do they generally charge a premium? On the other hand, I imagine they might have repairmen/contractors they deal with that might do the work for less. I have no knowledge about such things and would be starting from scratch, using resources such as Yelp to find repairmen. I also have very little interest. If I had to pay an extra 1-2k to have it taken care of by a PM (which I will hire anyway since I don't want to manage the property myself - I'll be a first time landlord) I would rather go that route.

Any advice / tips / feedback would be greatly appreciated. Thank you!

Carrie Hiner · Answer

We are a property management, full service real estate firm in Austin Texas.  We do NOT mark up repairs + rehab.  It's a total pass thru.  We bill our investor owners the cost of the job. It's not a revenue source for us.  We believe it's a mutual benefit for us and our property owners to improve property.  It captures higher rents and reduces service calls.

How long to you think the project will take if you DIY? Vacancy is so expensive.  Paying more for service might help you get income (rent) sooner.  Good Luck.

Martin S. · Answer

A contractor usually charges 2x-20x times what materials cost depending on what the job is. For tiles or flooring, you will likely pay 3x-5x materials. With a PM taking care of it, expect to pay 6x-10x.

Steve Davis · Answer

You can be your own general contractor and sub out the work; that way you gain contacts in the contractors' field and can pick the best for continuing maintenance on the property.  When you hire the PM you may be able to write into the agreement that they hire the one you chose and it may give you a bargaining position to reduce the cost or eliminate the cost for the PM's fees for future upgrades and other properties you hire them to manage.

Jeff B. · Answer

A PM is an intermediary and their business is NOT refurb/rehab and if you elect to use one, they'll just smile and proceed without concerns other than you pay the bill.

a) network with friends who have remodeled recently to get names and first had references - - one of these are work 10x any website review.

b) learn as much as possible about what you WISH to be done vs what actually NEEDS to be done (ie know the needs vs wants problem we all have) as there's lots of cash between them.

c) read up on contractors bid process in your state, the allowable deposit and how to make progress payments.

d) set a completion date with penalties for missing it.

e) a contractor must have a license; verify and find complaints.

f) must have liability insurance and be bonded (this protects  you from him just walking away).

Dina Harleth · Answer

Thank you for the responses.

@Mike Wood, this is a property I own that has not yet been rented but that needs some repairs to be done. I don't have a PM yet.

Dan C. · Answer

@Dina HarlethMy PM is overall pretty competitive with what other contractors would charge, but in some areas a little higher.  What my PM does when there is a large amount of work is give me an itemized estimate.  This helps me decide, and I may at the same time get estimates from other contractors.  So what I've sometimes done is pick and choose from their estimate what I want them to do, and what I want someone else to do because I think I can get a better price or better quality of work or both.

None of us here for sure know whether your PM is competitively priced - they may or may not, you will need to determine that.  So I think what would help you the most is to ask them for an estimate.

Mike Wood · Answer

@Dina Harleth Is this a property that you currently own and have with a property manager? Your post is confusing, as a PM typically does not enter the picture until after you own the property.  If its already under management with a PM, and you have no interest in the rehab, let your PM do it as they understand the property and the market. They also should have access to qualified contractors at reasonable rates.

If you dont own the property, then the answer would be no.  But given your lack of interest in rehab, maybe you should consider a turn key investment.

Dave Toelkes · Answer

Whether a PM charges you anything to supervise repairs will be stated in your property management agreement.  I have PMs that charge a 10% "supervisory" fee on every maintenance or renovation project they accomplish for me.  I have another PM that only charges the supervisory fee as a one time expense for repair/renovation costs exceeding $2000 for the year and only on the total amount over $2000.  I have another PM that just passes the contractor invoices through to me without any additional costs, but, I do pay a higher PM management fee to begin with.

Your question can only be answered by the PM you select to manage your properties.  You should probably make this point an interview question for your PM prospects.

James Wise · Answer

@Dina Harleth

Doing it yourself could save you some money but it could also cost you some money. Don't be penny wise and pound foolish. Those that try to hire the cheapest possible labor get what they pay for. You may end up paying a guy to do it then paying another guy to do it again the right way. If you have an existing relationship with a PM company you know that it will be done right and if something is not done right you have somebody to hold accountable.

Matthew Paul · Answer

PM compaines make money on everything they do .  They are a business

Is it more effective to have PM rehab property or to DIY?

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