Need advice around prop mgt fees/buying wrong

[Nick K.]

I am going to keep this as short as possible because I feel I could write a book at this point.

I bought a duplex for $60k 1.5 years ago (my first and only property so far). It was ripped down to the studs and remodeled. Brand new everything. The property is in a weird spot, a block north is solid C neighborhood, two blocks south is solid D to D-.

The property has been nothing but issues for me...between tenants being tenants, crappy potential tenants wanting to view, I cant even count the amount of time wasted. Yes partially my fault in the beginning, I was a little anxious to get someone in place and probably should have held out longer. Also the guy who remodeled warrantied nothing and used the cheapest stuff from online he could find, so I have had a heater go out that I had to track down a part online because no one carries them around here, and now I have an evap coil out, and have to replace the entire unit on the other side. Its a write off though right? :)

Lets talk about finances now for a better picture.... I took at loan on $45k of the $60k currently my mortgage/insurance is $425. The unit is full, and I make $475/side ($950 total).

I am at the point of going with two options...trying to hire out the work I find stressful, or selling the property and taking the cash and going after a BRRRR strategy. My goal is for my wife and I to retire in the next 8-10 years.

On the Property Management side I am having a hard time justifying numbers on it...how do you guys make money while paying this? 

Lets say I take $100/side pure cashflow. Thats $2400/year at full occupancy. That leaves $3900, or 34% for capex, repair, vac, and prop mgt. 34% should be plenty right?

Around here, property management fees are 1 full months rent to place a tenant, then 10% per month. So if 1 tenant is needed on each side per year, which I feel might be realistic for this property, thats $950 plus $1140, so $2090 a year to run this property.

$2090 in prop mgt fees drops the $3900 to $1810. Thats without me getting a lawn service to take that off my plate, currently I do all the yardwork on the property. Thats probably another $50-$100, though I havent looked into it for sure. At $50/mo that drops the $1210/a month for capex, repairs, and vacancy....Ive spent that on repairs alone in the last 1.5 years...not including vac, capex, etc.

I feel like if I go someone else managing it I will be in the Red....am I missing something here?? I do know I probably bought either high or over-leveraged...but the ROI is PLENTY with me managing it.

My other thought is the market is still over-priced, I could sell it and move towards a single family house I can BRRRR to grow my portfolio. This was my plan for the next property I buy anyways..having that extra cash from selling this could aid it.

I am in the Wichita, KS area if that helps at all.

Looking for any and all advice here.....

Thanks!

[Corby Goade]

I don't think you are missing anything- the way people get around this is by scaling. Sure, it eats in to your cash flow, but if you do this 50 times, that begins to be a lesser problem.

If I may...how many properties do you own/manage? I hear your stress and my first property or two were exactly the same, but I changed my mindset. For me, there aren't really "crappy" tenants, it's crappy management. If you have a tenant driving you insane, being unreasonable, crazy turnover, etc, that's a management issue, not a tenant issue. Better screening, better systems, more communication, etc- that will change things. Don't get me wrong, I've had tenants with great income, great references and great credit that were still annoying, but in general, better management leads to better tenants, and you can achieve this either on your own OR buy hiring a great property manager.

Best of luck!