I'm not trying to take a position on whether small multifamily investors should use a PM or self-manage, just generate discussion. This question came out of the analysis of a duplex I just walked away from because expenses were just too high for rents I could get from it. I realized that if I would have been able to self-manage the property, my estimated CoC (theoretically) could have gone from 8% to 11.5%--a pretty handsome increase.

The property managers here will point out all the extra benefits of a good PM, but many of those are hard to quantify precisely except for rent and vacancy.  For the sake of discussion, I asked just this narrow question: How much less vacancy and more rent would a PM have to generate to recoup a 10% charge on collected rents?

Here's the specific scenario.  I assumed a self-managing landlord who could get $1200/mo each for 2 units of a duplex (gross of $28800 annually).  I compared 2 different vacancy rates, one with a very proactive self-managing landlord who keeps vacancy costs at 2%, and another at 6%.  I assumed that a good property manager could keep vacancy at 2%.  

What I found was that, according to this analysis (which does not take into consideration the value of time, potentially being able to get maintenance and repairs done better and for cheaper, the benefit of a PM insulating an under-informed landlord against avoidable mistakes, and all the other benefits of a competent property manager), was that if a landlord can keep vacancy as low as a PM (at 2%), they would have to bring in an extra 11% of rent to offset a 10% PM charge.  And if the self-managing landlord has vacancy at 6% and the PM could also bring that down to 2%, then the "break even" point is 7% more rent than a self-managing landlord could bring in.

Calculations are below.  Interested to hear everyone's thoughts.