Hire Property manager or start your own PM company?

Question

"If you want something done right, do it yourself." That's why Gpa always told me. Now while I know this doesn't apply to everything in life I'm curious what you guys think when it comes to managing your properties. I am aware of some of the pros and cons to each side. My thoughts is to maybe meet somewhere in the middle when I'm big enough by bringing on an assistant and grow from there rather than paying the fees of having someone else do it. I can keep a better eye on everything that way I think. What are your thoughts? Does anyone here follow a similar strategy when it comes to managing everything? Look forward to your comments! Thank you.

Bruce Scannell · Answer

@Brandon Hall, it’s funny how different peoples opinions are. How many units do you have? I’ve read the previous posts, and although you won’t make enough to support an assistant with only a few properties, you won’t need one. And who’s to say managing a few units is hard work, that all tenants are nasty, and there’s no money to make? First, a little background on me to qualify my response. I have a graduate degree from USC in engineering, still work full time, and do well, but working the 9-5 and trading my time for a set amount is what bothers me, I would say for any amount, but that’s not exactly true, but close. Instead I would prefer to leverage systems I’ve created to scale how much my time is worth. In other words, how much I make at the office is linear, the more hours I work, the more money I make, linearly. However, if I can create a system managing one property, then apply that to another property, it will take less of my time on the second than it did on the first, and so on, making my time effectively worth more.So, I currently have 57 units that I self manage in Michigan from California. My tenants are blue collar, and my properties are C+. The tenants are probably more maintanence than A’s, but I wouldn’t call them nasty. I was a tenant at one point and I try to sympathize with their situation while enforcing the lease. Because of this a relationship is formed and most tenants do all they can to fulfill their end of the deal.Coming back to your question, I am leveraging what I’ve learned with dealing with people and forming a property management company, partly because I don’t think it’s hard work, secondly because I think their is an opportunity to make money, and most importantly because there are a lot of crappy property management companies, both from the perspective of tenant and owner and I hope I can do a better job.Sorry for the rant, but the property management stigma as being too hard and dirty drives me crazy. If you want to be a successful real estate investor, hard work is part of the deal. Good luck, hope I gave you a different perspective and actually added some value and depth to your situation.Bruce

Caleb Heimsoth · Answer

Sure if you have 90 plus units in an area then go for it. An assistant probably costs 35-40k a year. Not sure how much that saves you over the long run. Gives you a lot more control though that’s for sure

Peter Tverdov · Answer

I work under a broker as a realtor. I think I will eventually just start my own brokerage in a few more years. Yes, you can be a fractional owner, but I can't imagine many people wanting a person they don't really know to now have an equity partnership in their investment just to skirt a law.

Ceril S. · Answer

@Peter T. That sounds awesome! How do you get around NJ laws for being a broker - or are you already a broker? We have discussed this many times and thought that a fractional ownership would be one way to bypass the NJ laws on property managers/rent collection.

Peter Tverdov · Answer

That's basically what I did. I manage student housing for clients near Rutgers University in New Brunswick. I think it's important to learn how to manage them yourself but I quickly learned that I am a very good property manager, so I created a company and started getting clients all while working full time. I have barely marketed that I do it, it's mainly word of mouth, referrals, etc but I am very good at it so news spread pretty quickly.

Brandon Handel · Answer

@Bruce Scannell, you're absolutely right lol. I'm still trying to find my first deal. I am fully aware I am in no need of an assistant this early on. I was just curious what others choose to do. My mom managed her own properties for 40+ years. I know it's possible. She couldn't (or didn't want) to grow past a small number though because she could only personally handle so many. She had a really bad experience with a PM and now doesn't want anything to do with them. I'm sure there are good ones out there and you just have to do the research to find them, but I don't really believe they'll care as much about the property, who lives in it, the cost of repairs, etc as much as I will. My thoughts on the matter were in line with yours I think. I would want to create systems that I can scale and teach others and slowly build a team around me to manage everything as I acquire more properties. Perhaps I could even manage other investors property to make more money on the side. Just really wanted to see what others are doing. Thanks for your input!

Antoine C. · Answer

What is the best way to screen tenants.?.? What app, agency, website etc.?.?