Property management and cash flow

[Michael Bacile]

Hey BP, I’ve got a question about PM companies and their costs. I know it varies based on the company and region but I’m a bit confused. I’m planning to buy a single family home with some value add potential, rent the spare rooms out while I’m renovating common areas to help save money and hopefully find some hidden equity there. When all said and done I’d move on to a new project and rent the whole house out to a tenant. While running numbers I couldn’t help but realize all the PM companies in my area end up costing roughly the same amount annually as I would be making in cash flow. (Adding up the 8-10% monthly fee, 50%-100% of first months rent, and leasing fees.) This is after buying an under priced home and a 10% down payment giving me about 150-200$/mo cash flow. What am I missing? 

[Aaron K.]

You aren't missing anything, it costs what it costs, don't use a PM if you don't want to.