Property Management? Waste Of money?

Question

Own 3 homes, at what point did you outsource to a property management company?Did they rip you off? ( Not care For your home effectively)

Danny Webber · Answer

Depends on how valuable your time and emotional energy is

Llewelyn A. · Answer

@Dmitriy K.For rent collection, because I have over 15 apts, I use https://www.avail.co/They charge me $75 for 27 apts. $75 / 27 = $2.8 per apt per month.While a lot of investors don't want to pay for rent collections, I think $2.8 per month per apt is quite acceptable for the turnaround time that Avail.co gives me, which is 3 business days. They notify me when the money gets withdrawn from the tenants account and is on it's way to my account. They do all of the expected email notifications such as when a tenant's rent will be late, when it's due, etc.More importantly, they handle all the roommates in a given apt incredibly well. Many of my apts have young gentrifiers living together. One of my apts, a 2 level apt with 5 bedrooms have 6 roommates! No problem with Avail.Alternatively, I have seen a lot of recommendations on BP for Cozy. I have recommended Cozy to some friends and family who have less than 10 apts since it's free.For my CRM, I actually use Salesforce. I'm a partner in a Salesforce Partner Company and have been a Programmer in my past.I have been developing a Property Management Salesforce Software to be released in a year or so and have been testing it out on my own Portfolio to make sure it's robust enough to handle all the things I need it to do. Here is a snapshot:I bring in the information from Avail.co that has the tenant's payment information. I lay it out on my screen and color coordinate whether or not the full lease payment has been made, who made their payments, Green is Good, Red is Bad, The Dates may be in Blue if the payment has been scheduled but has not been deposited just yet because of the 3 business day gap, etc.When I started using Electronic Rent Collection, the one problem I had with doing it this way is make sure that the service deposits what they say they will deposit in the right bank account. I have one bank account for each of the 8 properties.So it was time consuming at some point to look at what Avail.co was telling me would be the deposits and match it up with the actual bank deposits. So I programmed a Bank portion of my PM Software to accept Bank Transaction Data. It will then summarize all the the major categories such as revenues collected per month such as the following:So in the above example, for this one property, I know I collected $9,695 in Revenues for April 2019. Now I just have to match the rents collected from my report from Avail.co and see if there is a discrepancy between the both and why. Once they match, I know that I'm fine that the rents that Avail.co claimed they are collecting and depositing into my account is exactly what was deposited. This is just verification.Also, with this software, I can quickly turn out my Tax Return numbers. Here is a snapshot of this past year's tax return report for one of the properties:All I have to do is give this report to my CPA and that's it. Done. Tax work is very simple. If the CPA has a problem with a particular amount, say $60 for Advertising, I can click on it and see the details and re-categorize it if needed, right on the fly and my CPA will see the numbers change in real time.For the Building Automation, some of my partners really don't like spending the money. I told them that I charge a fee to go to the buildings and I won't charge that travel fee if I can do something remotely, such as letting Contractors in and viewing their progress during a renovation.The Locks that I use is this one: Yale Z-Wave Lever LockI love this lock because I like using a Lever lock for the front door with a Door Closer.I don't know if this happens to Deadbolts, but I'm afraid that a tenant will hold the door open too long and the Electronic Deadbolt will open it's bolt. The tenant leaves and doesn't check to see if the door is actually locked.With the lever lock, you can't have that problem. I can also see if the door is actually locked or not. I have a Camera on the door. This is the one I am using so far: REOLink Solar CameraI wanted to do the work myself and I am not HANDY. So I want everything battery powered. I installed the above Camera because it's completely battery operated, Z-Wave and has a Solar attachment. That's key so I don't need to charge or change the batteries at any time. It's also motion detection, etc.To control my sensors and lights, I use Samsung Mesh WiFiI use it so that I can extend the Automation Hub throughout the building which is generally around 3k to 5k sqft. So you will need something that acts as a BIG HUB.These automation stuff is so good, I can see who is coming to the door, who uses what code on the locks, when did they use it, record a video of the person, etc.This is important for the kinds of buildings that I have, which are in a dense urban area. Amazon packages tend to get stolen quite a bit and if they are not dropped off in the front yard, it's a pain for the tenants to get it picked up somewhere.So I give my tenants EACH a lock code. I also give them a code for the delivery instructions. The code for the delivery will be deleted once the delivery happens. I will get notified that the delivery person accessed the lock and then check to see if he just put the package inside and left via the indoor camera. The tenants can also access the camera as well.Lights are automated to turn on so that the delivery person knows he's being monitored and recorded.I will say there is a LOT of things you can do for automation. This is the way to go for self-managed PM.I have it set up so well, than when I need to do some renovations to a tenant's apt, in this case, the backyard, the tenant did not want my landscaper to come in without him. BUT, after giving the tenant a wifi camera and installing a lock, he can see exactly what the landscaper is doing and whether or not he roams around the apt. The landscaper also knows he's being monitored.I will say that without doing self-management, how would you get to know all of these kinds of technology?!Maybe I'm just a geek and just love all of this stuff. But really, there is so much I fully believe that you will be able to automate PM work very shortly in the Future.I even think that the RE Brokerages will be able to do showings where all they do is install voice cameras and smart locks. You take a tour and the cameras and locks can automatically direct you where to go, what to see, etc.I forgot to mention that I use Wifi Thermostats! They are AWESOME! I really recommend every PM to have them. They can save you things like busted frozen pipes, etc.Time is changing. Tech is the way to go!

Dmitriy K. · Answer

Hi @Llewelyn A., Very inspiring post. Can you share the technology that you are using - software/apps, electric lock systems, rent collection service...etc. My concern with rent collection service is potential chargeback, specially if it's paid by credit card.

Charlie Moore · Answer

owning 28 is an amazing achievementThis was such a nice detailed responseYes, i think investments should stay as investments and businesses should stay as businesses.

Jim Robertson · Answer

I have properties that I self manage and properties that are under management. Anything within a 20min drive from home I feel comfortable self managing. I own properties in San Antonio TX that are over an hour drive away. I went with a property manager because I don't have the network of contractors or the time to drive back and forth. It works for me. @Charlie Moore You could always hire out property management on one home and test the waters.

Peter Tverdov · Answer

Depends on how you value your time. Most people have no idea of the concept. I own rentals and have a property management company in New Jersey. We focus on residential, student housing and some commercial. At least monthly I cold call people for new business and I always get the feedback of it's too expensive, I only have one property so on and so forth. Those people don't understand time value.My company is damn good and we have yet to have someone cut us loose, in fact, it's the other way around. How much is your time worth to drive 30 minutes to the property just to have a client no show and do that repeatedly each weekend?How much is your stress worth to have a client call you in the middle of the night that there was an attempted home invasion?Do you want to handle a burst pipe call in the wee hours of the morning on Super Bowl Sunday?(All of that has happened to me BTW).It's more than just answering a phone. Good PM companies are a massive asset to investors.

Dmitriy K. · Answer

@Llewelyn A. Thank you for great info.Looks like a great software that you are working on. I believe you can integrate ACH service in it as well and fully replace avail.Are you paying for internet service in your buildings? Any experience with chargebacks from avail?Thank you for your valuable info.

Llewelyn A. · Answer

21 years ago I decided that I didn't want Property Management to a full-time job even though I was going to self-manage each property.Now I have 28 apts with 60 or so tenants in 8 multi-family buildings in Brooklyn, NYC.I use a LOT of technology including electronic rent collection, electronic locks, internet controlled Thermostats, WiFi Cameras, Cloud Based CRM, Electronic Signatures (DocuSign), automated expense payments, etc. All controlled on my Phone Apps.Additionally, it's been 18 years since I had to do an eviction, which I did myself.I normally get tenants who have at least a 700+ FICO. In fact, my last tenant which I signed a lease with in March had a FICO score of 822.I look at the time you will be spending on management as a function on the kinds of properties you buy AND your skill as a PM and if you are willing to research and buy technology.I probably spend less than 15 hours a week on average involved in Property Management issues.When I taught Real Estate, I often told my students to be careful of buying yourself a full time job when looking for an Investment. Remember, the difference between an Investment and a Business is the less time you spend on the operations of the business, the more it is an Investment. I don't want to buy a Business, I want to buy an INVESTMENT. Therefore, I look for properties that will require less of my attention if I am self-managing it.Properties that require a lot LESS management comes with a high initial cost. HOWEVER, over the 21 years as a buy and hold, self-managed Investment Property portfolio owner, it's an incredibly acceptable job for me! :) One that gives me raises every year as the consistent increases in cash flow and appreciation continues every year except in the financial crisis for a few years.I will probably continue to buy properties and self-manage them until I see it will take more than 20 hours a week.BUT, with all the automation, smart sensors and leak and smoke detectors, wifi cameras and locks, etc., I am wondering if the only time consuming event will be bad tenants that need eviction. Since my screening process is so difficult in a place where the vacancy rate is below 5%, I'm ensuring that doesn't happen much if at all.I may even find that my time spent on PM will actually go down due to technology advances despite increasing my portfolio. We'll see!

Ali Boone · Answer

I outsourced mine to a PM immediately. I never wanted to be a landlord. When you do it is completely up to the individual--comes down to preferences and workload, etc. I've been through bouts of bad PMs, and they certainly can neglect your property, but it's up to you to do your due diligence, find a PM you trust, keep an eye on them, and be willing to make a change if something isn't working.At the end of the day, the headaches of dealing with PMs are far less stressful than dealing with the headaches of tenants, imo.

Larry Turowski · Answer

@Charlie Moore As a rule of thumb you'll find that once you get over 20 units it get difficult self-manage in your spare time. I have about 30 or so units and I sort-of self manage. I have an assistant I pay who helps me out.You'll see all sorts of posts and hear in the podcasts about problems with management companies. There are good ones, too, but you just have to be careful.