To Manage Or Not to Manage?

Question

I've found a management company that takes 10% of the monthly rent, plus the first month's rent for newly found tenants. Have any of you used similar services? What were your experiences with and without property management companies? I'm essentially trying to evaluate the relatively immeasurable time/money spent without a manager against the measurable expense of having one.

Scott M. · Answer

To add a thought after reading @JD @JD Martin excellent (per usual) feedback is this also depends on the the type of home you are buying.  If you are buying in low income, class c or d properties you probably want to partner with someone with experience.  Those, class D in particular can be too much to cut your teeth on.

If you are in middle/upper income and in class A/B areas then, assuming you have time/desire it is a different story.

Also like @JD Martin we found local management blows and that is why we started our own company for both our own investments as well as help solve a market problem.

Joe Splitrock · Answer

@Joey Gorombey in my experience 10% and first months rent is on the higher side of property management. It could be a fair price depending on location and property class. Self management is a good way to learn the business and save some money. If you do a good job screening, the month to month effort should be minimal. The other piece is would you enjoy it and would you be good at it? Only you can answer that.

I have self managed for 15 years and I have done most of the maintenance and repairs. I have done a good job and saved considerable money self managing. Whether I should have done that is another question. It is far easier to scale if you are not doing everything yourself. I am not here to tell you my way is the right way, just weigh the pros and cons.

JD Martin · Answer

There's a lot of factors, but mostly you have to weigh your ability and desire to manage versus not. We have always managed all of our units, and on most of them I spend less than 1 hour per month total. Some units I won't spend 3 hours on in a year. That differs if there's a turnover, obviously, but we have more long term tenants as time goes by and there's just not a lot of managing to do there. We do full rehabs on our properties before we put them on the market, so there's very few calls to begin with.

Where I am, property managers suck. They aren't worth 5 cents. Matter of fact, in 2023 we're going to open our own brokerage and put all of our units under our own in-house PM and take on other properties to solve that market problem.

Tracy Scanlon · Answer

Hi Joey,

It all depends on what your property management company does for you.  10% is steep in my area, which is between 6-8% depending on the buildings, number of units, etc.  If they’re taking care of routine maintenance in that 10% it could be a great deal.

This is what you generally get with a property manager:

- a licensed professional who completes ongoing education and stays on top of new laws

- Someone to handle all maintenance requests, complaints, tenant-tenant issues, and communications

- A routine inspection ensuring the building is up to code

- A quarterly report showing the life cycle of all assets, roof, bricks, windows, a/c, heating, etc.

- Troubleshooting any maintenance issues or building upkeep, gathering estimates from multiple vendors when there is a larger repair to be made

- Following up on all repairs & maintenance that was done to ensure it was handled properly.

- Following up with tenants so they understand and are happy with the repairs that were done

- Staying on top of the market, knowing where to price rents, renewals, etc.

- Lease renewal offers, negotiations, and signing, along with any addendums

Each housing provider needs to determine for themselves whether they want to spend this time, or if they want to spend money.  Shop around, get quotes from some other companies.  See who your neighbors use, and ask if they’re happy with their managers.

Good Luck!

Syed H. · Answer

No. Honestly anything under 10 units takes maybe 5 hours of your time monthly to manage. It’s not that hard.

Derrick Aragon · Answer

@Joey Gorombey

Management all day...

They can be such a resource if you have the right PM...

Depending on your market might be little high but you probably are doing SFR in low rent market..

Kevan Baum · Answer

I have two doors locally and two doors in a neighboring province (Saskatchewan).  Bear in mind I've only owned the ones in Saskatchewan for 2 months.  Locally for a little over a year.  I have no issues managing the local ones.  I've had a couple of issues.  One was a leaking dishwasher and the other was a washing machine going down.

I hired a local property manager in Saskatchewan.  It just wasn't going to work for me to try to manage remotely.  I don't have enough contacts there yet and also there was more than enough cash flow to account for the 12% I'm paying the manager.  The ones they manage actually cash flow better than the local duplex I have.

JD Martin · Answer

Thank you! Excellent point as well - all of our units are High C-High B areas. Anything in low C and below, you may have to self manage because anyone managing D properties is going to work for that money.

Scott M. · Answer

To manage or not to manage is a question only you can answer.  If you have the time, desire knowhow, connections (crews etc) then you might want to tackle it yourself.  If you have the time and desire but not the knowhow or connections you may want to invest the time and desire into learning how and getting the connections.

If you don't have the time or desire then hire it out.

Christopher Cole · Answer

I always keep at least 1-2 units to manage myself, and hand the rest off to the property manager. I find it makes me a much better landlord to understand the problems and how to handle them. 1-2 units isn't much of a burden (usually!), and I know exactly what is reasonable to expect from a property manager for the rest.

To Manage Or Not to Manage?

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