Should I hire a property manager

Question

Hello Bigger Pockets. Thank you in advance for providing such a great platform and community for real estate investing!

I am new to real estate investing. I currently live in a townhouse that I bought as a new construction about two years ago in South Carolina. I love it. However, I am about to be relocated to California for a job. I plan on turning this townhouse into a rental property. I find myself caught between two decisions: should I find a property manager to take care of everything for me or should I look for a tenant myself and have a buddy help fix up little things when needed.

I have talked to a friend who is a newbie landlord. He told me to find a tenant myself and have a buddy help me fix things up when needed. His property manager charges him 10% evey month and retain his first month's rent and charges him $85 every time they send someone to the property. This sounds like quite expensive...

What are your opinions?

Thank you!

Kurt K. · Answer

Account Closed said, for only one property its almost not worth it, but if you want to continue to build your portfolio, it might be. Good luck.

Thomas S. · Answer

Is the property actually a viable rental property for investment purposes or are you simply holding on because it is convent. Managing one property with or with out a PM long distance can be a major pain and very often not worth the trouble. What are the numbers on the property.

Han Zi · Answer

Thanks everyone! @Joshua D. Thomas S. In the conservative case, I rent out the property for $1500 and try to manage it myself, and either hire an on-call handyman or a friend, I could cash flow about $300. Maybe $200 to be conservative. But after property tax, I am breaking even... If I hire a PM, I might go negative. In the optimistic case, I can rent it out for $1700 (I think a reasonable number for my neighborhood), I could cash flow about $500. But after property tax, I will most likely cash flow $200. If I hire a PM, I might break even. One reasons for me to rent it out is for the experience since I am still very new to real estate investing. Another reason is that my area is booming due to different industries moving in; housing/rent is raising.

Zach Quick · Answer

Account Closed You also have some major tax advantages in selling now if you have lived in it at least two years.

Joshua D. · Answer

Account ClosedWhat would it sell for in your market? Based on what you have already told us, I would NOT keep it as a rental. You will have an experience, and it wont be a good one. What about long term repairs (Roof, furnace, etc) or any other small issues. Sell... get something that truly cash-flows!

Joshua D. · Answer

Account Closed asked the critical question here. Is it better just to sell? If it don't cash-flow well with property management, it don't cash-flow well. There is a reason the management company charges 85 dollars to go to the property for even something small. It is a hassle just going over there. I would not put the undo stress on the friend. Might work good for 6 months but what happens when the friend is no longer there. I am a huge fan of rental properties. I own a good handful of them but having a long distance property that might have bad numbers... No thank you. I am interested to hear the numbers...

Ryan Hilbun · Answer

I've managed one of my rentals in WA remotely for several years with great success but it may not be for everyone. I initially hired a terrible PM and fired them 6 months later. I would have fired them sooner but that's how long our contract was. They had horrible communication skills and the owner either didn't realize or didn't care which were both big red flags to me. They also took advantage of call out fees. For example: I wanted the roof cleared of pine needles and a large broken limb in a tree removed. They charged two separate call out fees because the person "forgot his ladder and equipment to remove the branch." I started to believe their entire business model was based on charging call out fees. Some options if you want to rent it: 1. Find a good property manager (easier said than done). You need to know the numbers, how much will your investment return with management fees and additional money each month for repairs. 2. Hire a property manager to get the renters in the house and handle all the legal stuff i.e. background, credit, lease. They usually charge about 1/2 months rent for that service. IMO that's money well spent. I wouldn't even try to manage it yourself unless you know a good handyman or can find one before you leave.3. If you do manage everything yourself, treat your tenants with respect, get repairs made as quickly as possible, and try to establish a good rapport (doesn't mean you should be their friend). I truly think this is the key to my success with tenants. I hear lots of tenant horror stories but I haven't had those problems and I believe the reason is how I treat them. Of course you still have to hold them to the agreement. If you're too nice some people with take advantage of you with out a doubt. Maybe I just haven't dealt with enough renters yet.I have properties in different states because I move around for work and it's allowed me to buy and rent out when I move. I don't know if your move is permanent but personally I want my properties consolidated locally. Its much easier and cheaper to manage when your local. I will get rid of my remote rentals when I get somewhere more permanent but for now it's working out fine. everyone's situation is different so ultimately the best thing to do is whatever works out best for you.

Teresa F. · Answer

Hello Han -- I manage property for others and have property managers that handle out of state property for me. I currently manage one of my out of state properties remotely because I had three instances of terrible management. That said, I suggest you meet with some people doing local property management. Have the manager see your place and interview them. Regarding a property management contract, I review the contract and cross out things I don't like and insert things I do. Take advantage of this time while you are still in the area to interview property managers and then decide if you and a buddy are the preferable option. Best, Teresa

Jean Norton · Answer

It think you will be fine as long as you have a local handyman. I will hire a property manager when there are communication issues or cultural issues with the potential tenant.