Budgeting for Property Management When Self-Managing

[Ian Livaich]

Hey everyone,

I am actively searching for my first small multifamily property in South Jersey, primarily duplexes. I am going to self-manage the property. I am admittedly in that "analysis paralysis" stage. When I am analyzing the deals, I am including the cost of local property management to account for my time and to make sure the deal still makes sense if I choose to hire PM later down the road. For those who self-manage, do you make your offers depending on how cash flow, CoCROI, and ROI look WITHOUT accounting for PM but still analyze the deal with PM to make sure it makes sense if you hired PM in the future? Or, do you base all of your offers with PM budgeted for no matter what?

I am considering placing an offer on a duplex, which I will posting about on this forum. With PM as an expense, the monthly cash flow is $417/month, CoCROI is 7%, and total ROI is 10.18%. Without PM accounted for, the monthly cash flow is $664/month, CoCROI is 11.2%, and total ROI is 14.4%.

Am I allowing the non-PM numbers persuade me that this is a better deal than it actually is?  Is it ok to use the non-PM numbers if you are self-managing as long as the deal still makes sense for you if you decide to hire PM later?  

Thanks everyone.