Question about the Property Management expense for self-managed

[Brian H.]

Hey all!

So I have been doing a lot of analysis lately on possible SFH in the area to buy and hold. I do not plan to pay someone to manage my properties anytime in the near or even somewhat distant future. When I take the property management expense out of my analysis, every home I am looking at seems a lot more approachable in terms of cash flow and ROI... should I still be leaving it in there? I take nothing out of my business at this point. I have a full time job that pays me well. I reinvest everything into the business to keep growing. Thanks for any help/advice!

[Travis Hughes]

Yes - leave your PM expense in there.  The deal MUST work with professional property management expense.  You're setting yourself up for failure if you own a rental home and you can't afford to have it managed.

If you do not believe that professional management provides more value to you than the cost associated with it, then you can self manage and capture that additional cashflow.  

There are countless situations that could cause you to revert to professional management, however.  Owning an investment property that doesn't make sense without professional management is a time bomb waiting to go off.

What if some medical condition or accident comes up?  What is a terrific job opportunity comes up - 1200 miles away?  What if you simply decide it's not worth your time, and you'd rather invest more time with your family than your tenants and toilets? 

What if the rental properties that were intended to contribute to your personal freedom instead became a ball and chain that you could not escape?