Too new for property management??

Question

Hi everyone I just had a thought yesterday. Would it be a good or bad idea to hand over the responsibility and tenant interaction to a property management company if all i have is a 4 unit multifamily, one apt of which I'm currently living in? I closed on the place a few months ago and have showed it about a dozen times without finding a qualified tenant. My thoughts are that a property management company would have the years of experience and knowledge to properly find tenants, manage paperwork and handle repairs more effectively than i could which would mean a better experience for the tenants overall. This would also help me kick start my path to purchasing more rental properties by freeing up my time and focus.

Am i thinking about this all wrong? Should i just focus on filling and managing the few units that i have for now, or should i be thinking ahead and let the pros do what they're paid to do? Any thoughts or experiences with this that you could provide would be much appreciated!

Am i thinking about this all wrong? Should i just focus on filling and managing the few units that i have for now, or should i be thinking ahead and let the pros do what they're paid to do? Any thoughts or experiences with this that you could provide would be much appreciated!

Robert Gilstrap · Answer

@Ray Harrell Property Managements goal like all businesses is to satisfy it's customers needs and if they accomplish that then they make money. The way you word your response as though PM's are definitely going to screw you one way or another "they make it up in repair costs and service calls".

You have a terribly skewed view of how real business works if you think that. A good PM will not only run circles around any efforts an owner can do on his own but they will save you far more money than you ever pay them. A good PM will lease property faster, for more money, their tenants will stay longer and when you do encounter a repair a good PM can get the job done faster, cheaper and for less $$ than you can achieve on your own. Clearly not every PM fits into this category but my point is don't lump us good ones in with whatever bad experiences you may have had or heard of.

James Wise · Answer

PM is just like any other business. The #1 goal is profitability but as in all business you can only achieve that goal by satisfying the needs of the market.

Anyone thinking that an established management company has time to sit around & figure out how to make up bogus repairs on one random landlord is nuts. The amount of time, effort & money that goes into building a management company is astounding. Multi million dollar companies are not going to risk their licensing & the livelihood of the principals & the many employees just to rip off some Joe for $100 bucks.

Ray Harrell · Answer

Keep in mind that a property management company's goal is to make money. They are not doing it for benevolent reasons. That being said, their best interest is their bottom line, not yours. What they can't make up in management fees they will make up in repair costs and service calls. You live there. Manage it yourself. Figure out why you aren't finding tenants. Price too high? Are you having showings? Maybe it's your listing. Figure that out.

Ryan Evans · Answer

Once you get a few more properties it might make sense to bring on a PM, but for the building you live in? Nah. If anything that might turn the tenants against you if they already know you own the place and refuse to deal with them.

You'll find a decent tenant sooner or later and you'll get in the rhythm and then managing 3 units will be a breeze. I might suggest month-to-month leases if you don't have them already. It will be much easier to deal with any potential neighbor issues if you can give notice without having to wait another 10 months!

Brandon Ingegneri · Answer

I'd like to weigh in on this with a somewhat unique perspective.  I have owned rentals for quite some time now, and a separate property management company for rentals not owned by me grew because other owners saw the quality of work that we do, they saw the efficiency in which we operated real estate, and ultimately they came to us because we were fair and had favorable reviews.  The only way to have longevity in business is to operate it like a legitimate business whether your in real estate, own a dumpster company, or anything from A to Z.  Warren Buffet said, "It takes 20 years to build a good reputation and 20 minutes to destroy it or build a bad one".  I try to remember that with all of my interactions.

Having said that, as an owner and someone who manages the rentals of others, I would have to say that my first inclination is for the owner of the property to self manage, especially early on.  Learn the business, understand what you know, what you don't, what you are good at, and what you are not.  Make those improvements in the weak areas and learn all aspects of the business.  Ultimately, the time you spend in the trenches taking grenades will help in your ability to problem solve.  At the end of the day, thats all this business really is... problem solving.

After you have gained some experience and have grown a little, understand the day in and day out of things, if you still want to utilize PM, then at that point I would say it is something to consider.

James Wise · Answer

I would recommend managing it yourself. You are already living there. You are much to close to the situation to effectively remove yourself from it. By having a PM run a property you are living in you will run into the "too many cooks in the kitchen" syndrome. At Holton-Wise we won't even take on accounts like this. Just to big of a pain in the butt & it just doesn't make sense.

I would adjust your rental price & keep at it. Gotta remember it's Jan right now. It's very hard to fill units during this time of the year. You'll get a tenant in there eventually. Then it should be smooth sailing. Once your ready to move out into another property & this becomes a non owner occupied rental that would probably be the right time to step away from the day to day & bring in a PM.

Matthew Silvestri · Answer

thanks for that @Robert Gilstrap this is the debate I’m having with myself. I guess the right decision comes from proper vetting whether it be tenants or pm

Matthew Silvestri · Answer

thanks @Ray Harrell I probably need to do some more market research.

Too new for property management??

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