When did you bring on a property manager?

Question

I am under contract on a 4-unit investment property and want to use a property management company.  I am wondering when is the time to bring them in.  I close at the end of the month, so it isn't a done deal yet.  Should i bring them on prior to closing on the property or wait until I have it in hand?  I am thinking that I should self manage for a couple months to get a better understanding of how things work with the property, but don't know if that will make the transition more difficult or not when I do hand it off to a management company.

So, when you have acquired a new property that was going to be run by a property management company, when did you bring them in?

Some more details... It is my first property in the area and is about an hour away from home.  I have a handyman/contractor in the area that could handle routine maintenance and repairs.  I currently have multifamily that I self manage with no issues, but it is in a B+/B area with A/B class tenants.  The new property is in good shape structurally and aesthetically, but is in a C class area and currently has 4 Section 8 tenants that I am inheriting.  The seller claims they are all wonderful, from what I have seen this could be true.  I don't have time to be involved with maintenance or collecting rent, I have a FT job that keeps me busy 50-70 hours a week.

Robert Motch · Answer

@Matt Leonard - congrats on your upcoming purchase!

I would hire a property manager from day one.

While I completely understand the argument of managing your own properties at first as this is an invaluable experience and a great way to juice your returns, I consider myself a real estate investor, not a landlord. I didn't get into real estate to be a landlord/property manager. If I can't afford to hire a property manager, then it is either a bad deal and/or I can't afford to be a real estate investor.

I have always had property management in place prior to closing. In fact I run the property by my property manager prior to getting the property under contract. This way, if the property manager doesn't like the area or something else about the property gives them any hesitations regarding whether they would manage the property, I know ahead of time and can take this into consideration when deciding to move forward with a deal. I don't want to own something that my go-to property manager doesn't want to touch.

Andrew Johnson · Answer

@Matt Leonard I have a PM and I got them before I closed on the (first) property.  My opinion, you don't want the tenants to know you, have your contact number, think they should be speaking to you, etc.  It just leads to confusion and has to potential for a he said/she said down the road.  And if you're "not sure" if you want to use a property management company, use one.  It sounds like you already have a heavy workload with your W2 job and you don't have to give up managing the other multifamily yourself.

I've also never had a seller claim they had a bad tenant.  They are always wonderful, pay on time, don't hassle them, etc.  Most of the time the tenants are fine but I doubt you'll find anyone who has inherited a great tenant base 100% of the time.  Oh how I wish that was the case :-)  But that's also why I look at the first 12 months are a "stabilization" timeline.  You never know how is going to be a great vs. bad tenant, who will leave, etc.

Anyway, I'd get a PM but I'm tremendously biased that way given my experience.  Others will disagree.

Matthew Olszak · Answer

This exactly. If you have a PM - all you need to know is your reports and the balance in your bank account. If you need to know your individual tenants on a name or personal basis, something is going wrong. They should know you only as "ownership".

I've had clients who contract with me from prior to closing, to those who engage my services 20 years after owning a building. It depends on what type of investment you want this property to be and how involved you plan to be.

Jarrod Kohl · Answer

I would also recommend getting a manager in right away if you are planning on using one.  Prior to closing just gives you time to interview a few and ask some questions.

Elvis Vasquez · Answer

Woah you're hitting my hours per week... those 12+ hour days get to you.I'm impressed you can handle a single rental!more power to you man.

Sam Shueh · Answer

I would self manage to get to know tenant by first name first.  You know PM will do very little. Key is you need to have the rent into your bank account and the company that meets your deadline gets the job.

Matt Leonard · Answer

@Robert Motch Good advice!  I don't intend to be a property manager, might as well get their feet wet on day 1.  I have 10% property manager costs factored into my expense calculations, so the cost is not a concern.

When did you bring on a property manager?

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