Becoming my own Property Manager

[Shane Short]

Good Evening/ Morning, wherever you are on the planet.

I'm currently saving for my first Multi-family investment in December. I've done a few minor flips in the past for profit, but I'm looking to get into Passive income from Rental Properties. I try to practice daily by doing 2 property analyzations. The other day, I was having a discussion with another investor about Turnkey rental properties (he is not a fan of Turnkey companies) and one thing he mentioned was about how Turnkey companies make their money, he was saying they aren't just going to do everything for you and hand you a great deal or else they would just invest themselves, which I believe to a point, but that got me thinking.

No matter how "passive" my future income may be from Real Estate, I have to be doing something. It's impossible that I'll be job free, which I didn't expect anyways, but after he said that it actually really hit me, whether it be Property Management, Deal Analysis, Management of some sort, or accounting, I have to do something or else I won't be making money.

So why aren't more people doing their Property Management? Especially those with Real Estate Licenses like me? The average charge I come across when talking to Property Management companies is 10%, and the average property I analyze at 10% comes in at about 200-300 dollars per month in Property Management, not including the one time, one month rent fee each company seems to charge. So let's say $200 per property, and I accumulate 30 doors. That's 6k a month, or ~72,000 per year that I am paying someone to manage my properties... So why aren't more people just managing their own? If you own an LLC and hate math, couldn't you just hire a booky/ assistant an hourly salary for 20 hours a week to do the math portion and contracting scheduling for all the repairs, and use your license to oversee the company? Better yet, hire a licensed assistant and they can do all the contract work as well. At 72,000 a year you could save yourself from having to accumulate another 20 properties just to make up for the loss that you're paying a property management company? Even if you're paying your assistant 40k a year to work virtually part-time and you'd still be saving 32k plus per year.

I guess I just don't see why more people aren't doing this? What are the downsides other than the obvious basic hassles of dealing with tenants? 

Thanks for all of your responses!

[Peter Tverdov]

Shane, in short, you don't understand how much your time is worth to you yet. I'm guessing your responsibilities are light at this stage in your life, health is good.

My own personal hourly rate is $50, meaning if I can pay someone less than $50 an hour to do any task in my life, then I am paying them, because my time is more valuable. It's why I laugh at people who change their own oil. Congrats on spending an hour to save $7, below minimum wage.

Managers make the most money when we're resolving emotional landlord/tenant disputes, or going to court, or showing the property, screening people or getting it rent ready. How much is that worth to you?