Property Managers - are they worth it?

[Ryan Hurst]

I've recently began looking at multifamily properties (1-4 units) in Long Beach, California and was curious to understand your opinions of property managers. My partner and I work in the finance industry and regularly work 50-60+ hours weeks. While we don't necessarily have the time to manage the properties 100% ourselves, we at least do have the flexibility to be moderately involved and plan to keep the property manager accountable and regularly undergo thorough audits of incurred expenses (i.e. request bigger ticket items $150-$200< to be submitted etc).

Through a mentor (very large SoCal real estate investor involved in large Industrial, retail, and with vast experience in SFH-MF), I've been seriously advised against hiring a property manager - he's warned that while the baseline fees appear to be a good deal, the inflated repair bills, stalled evictions, and mismanagement will eat up cash flow and money out of pocket will be needed to make mortgage payments - even with the best PMs.

Out of curiosity, what has your experience been like with property managers? Assuming having more properties under management may potentially affect the bottom line as well? 

[Dave Poeppelmeier]

Property Managers are like any other profession: You need to sort the good from the bad. Talk to other investors in your area and see who they like and who to stay away from. Your first question when you speak with one should be are they a member of NARPM: National Association of Residential Property Managers. Being a member holds them accountable to a higher standard than someone who is just a Brokerage "doing" property management. Also, see what their communication methods are. How many people do they have on staff? Are they just one or 2 people in a shoebox who subcontract all their work out or do they have W2 employees and do their work in-house? How do they handle leasing and evictions? How specific of a monthly statement are you going to get? You want someone who is going to be a partner with you, not someone who is trying to simply make money off you. If they are doing their job in keeping tenants happy, that is going to keep people from moving and keep rent coming in to you, which makes you happy.