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Updated over 1 year ago, 03/27/2023
Self management property tools
Looking to start renting out my current home this summer as a long term rental when my new build is finished. I really want to self-manage to learn the most about process. I would also love to expand next year to more long term and even short term rentsls locally and possibly even out of state.
I'm looking for some solid tools that give me the most potential for running an effect growing rental buisness. If you strongly suggest property management companies that is also something I'd love to hear.
Thanks!
I currently manage 4 SFH rentals in addition to having a very demanding full time job. There are many free resources out there for smaller investors. I am going to list them:
- TurboTenant
- It is completely free to advertise your rental, screen your tenants.
- You upload your pictures, write a description and it posts to 20+ websites for free
- Takes about 24-48 hours for leads to come in.
- Once you select a tenant, they pay for the background check, upload documents (paystubs, ID, W2) and it is all set to you.
- It even helps you build a lease after you select a tenant (there is a $30+ fee for the lease)
- My referral code (https://turbotenant.com/r/T3du... disclosure. I do not get any money from TurboTenant, nor am I an owner or investor in the company.
- They have a referral program where they will send me a $25 home depot gift card for a referral - you don't have to use the referral code
- Stessa
- Stessa is a website that I use to track all my expenses.
- It is another free site and you can pull reports
- You even can upload receipts.
- Roofstock recently purchased Stessa
- Completely free
- Zillow Rental Manager
- I use this to collect rent.
- Free for the landlord
- Tenant only pays a fee if they use a credit card to pay rent. ACH is free
- Takes about 5-7 days for the funds to hit your bank account
- Excel
- I use an excel spreadsheet to track my check register. You can download a free template online
Other free websites I haven't used.
- Avail.co
- This is another free website that I learned about this week listening to a podcast (may have been a BP podcast). I haven't used it and cannot speak to it.
- Zibo.com
- This is another free website where you can collect rent electronically and have an interest checking account.
- I am still looking at this, because not all my tenants pay electronically. 2 like to mail checks. I haven't looked at how to deposit those - I don't like mobile deposits.
There are many free resources to use before you start paying for services. Out of my 4 rentals, I have placed 2 tenants with TurboTenant - one tenant is on year 3 and the other tenant is on year 2. I listed the properties, took some pictures (they weren't the greatest pictures) and had it rented in a week. I was able to recycle the leases upon renewal and didn't pay any commissions for the rental, which is a savings of over $4,000 if you consider the rental commission to be 1 month rent. I highly recommend it.
Zillow, I have to wait 5-7 days for the money to hit my account. I don't mind it. For some that may be an inconvenience that they do not want.
Stessa - I haven't used any of the reports for the accountant, yet. We can see how that goes.
To best answer that question, I ask this-- How much is your time worth to you? The time it takes to advertise your property, vet tenants with credit checks and references, and deal with maintenance calls...Yikes. Not to mention, what happens if the tenant doesn't pay rent? That used to be bad enough, but after COVID?! I'm not saying to abandon the idea of self management of your property, but, the right property management firm can give your priceless time back, a peace of mind, and you will make money as a great side benefit. Best of luck which ever way you choose!
Quote from @Donavon Coley:
To best answer that question, I ask this-- How much is your time worth to you? The time it takes to advertise your property, vet tenants with credit checks and references, and deal with maintenance calls...Yikes. Not to mention, what happens if the tenant doesn't pay rent? That used to be bad enough, but after COVID?! I'm not saying to abandon the idea of self management of your property, but, the right property management firm can give your priceless time back, a peace of mind, and you will make money as a great side benefit. Best of luck which ever way you choose!
@Jeremy Thomas - there it is... the fear porn that a PMs love to post on self-management questions and I feel the need to controvert this because of any of the new or prospective landlords reading this and getting nervous. They always go to the whole "is your time valuable" thing. I can tell you that my 4 properties in addition to a very demanding full-time job are not that difficult to handle. I have been self-managing my properties since 2019. I had a PM in 2018 that I had to fire. The PM caused me more headaches and money than handling the issues myself. As I said, I have 4 SFHs that I own and manage.
I go to the properties when I need to be there. I haven't been to the properties in months. I have handymen, electrician and a plumber that I can call if I need to and I don't get a maintenance call every month either. Oh and I am going through an eviction on one of my properties as well....
Let's talk about value of my time vs the cost of a PM and time. 2 of my properties were BRRRRs, so a PM doesn't handle that and if they do, chances are they are adding 10% onto the construction costs. You didn't have to get your hands dirty but paid 10% more than the cost, plus you didn't make connections with the handyman used or assess the work.
Second - I didn't pay an on-boarding cost with a PM. The PMs charge an on-boarding costs to enter your information into the system.
Advertisement. I literally take seconds to advertise my properties. I upload the pictures, write a nice description on TurboTenant and hit the publish button. The leads start rolling in. I schedule appointments as my schedule allows and usually have the unit rented no longer than a week of showings. Other landlords use a lockbox where people can see the place on their own, but I don't. I want to meet and talk to the prospective residents.
Once I find a prospective resident, I invite them to apply. They upload their documents pay TurboTenant and I get a credit report sent to me. You do the review. It takes about an hour if you really want to study their report. I am sure a PM doesn't spend that much time.
You select the tenant, get a signed lease, collect the security deposit, first month's rent and hand the keys over and open a landlord-tenant savings account at the bank. Your work is done now. You worked for about a week and saved money. Even if it cost you 2 weeks that is $1,000 a week. So, $1,000 a week and you aren't putting in 40 hours a week.
The PM would cost you 1 month's rent. In my case that is $2,000+. So just doing that in between my job I saved $2,000 plus 10% additional they would have charged me in repairs.
Now, lets go to the monthly cost. I collect the rent either by Zillow, where the money is direct deposit into my account or a check mailed to me (I don't do Zelle, Venmo, PayPal or anything like that). Right off the bat, it would cost me over $200 Every month (on one property) for that. Not only would it cost me $200, the PM would hold a month back, so you have another out of pocket cost when it comes to your monthly expenses. You have to layout another month's expenses. So you are now out $2,200+ for the rental and a month behind in expenses.
Repairs, yeah, I will admit that when things break, it is never a convenient time. Even if it when you are sitting on your couch, sipping iced tea on an idle Saturday or Sunday afternoon. When things break, you get a call/text and you assess what you need to do to repair it. The issues with newbie investors is realizing that not everything is an emergency. Some PMs don't answer the phone on Saturday or Sunday and some PMs, if you have a $300 repair there is going to be a 10% charge on top of that.
So now I am at $2,230+ for a PM cost. I spent maybe another hour dealing with the issue calling a handyman. If I feel like saving the cost of a handyman and have the time, I may make the repair myself. I think as an investor you are robbed from that opportunity to manage the issue.
Fast forward to a year later and renewal time is here. You now invested $2,230+ another 11 months of rent which is an additional $2,200 for a total of $4,630+ and this doesn't include the month of expenses you had to lay out because you are behind or the 10% added to your repair bills. I spent almost $5,000 in a year for a company just to collect my rent electronically like I do for free and handle phone calls and charge me 10% on top of repairs.
Renewal time is here and the tenant re-ups for another 12 months. (oh, did I forget to mention when you selected the tenant you could have signed a longer lease if you wanted). The PM charges you another fee for the lease renewal. That's right. Some charge another full months rent and others charge you 50% rent. All just to e-mail a lease to a tenant for them to sign and send back to you. I am averaging about 3 years for my residents staying with the properties.
As for eviction, I have a tenant (one that was placed by the PM I fired) that I am in the process of evicting. I hired the attorney that other LLs used at my local REIA. He was the most economical. I cut him a check and he is dealing with it.
Yeah, I had to deal with some aggravation, but think of all the money I saved self-managing that helps with the carrying costs, while rent isn't being collected right now. $200 x 36 = $7,200 alone plus the $2,000 initial rental fee and the $1,000 x2 for the renewal fee. So $7,200 + $2,000 + $2,000 = $11,200 over the course of 3 months. I don't know about you, but $11.000 is real money. This doesn't account for the 10% added onto repairs that have been made over time. Now multiply this over 4 houses. You are saving real money that can be reinvested.
I haven't gotten the proverbial 2:00 am phone call and my properties are all in A/B neighborhoods. If I was a C/D neighborhood investor, I would have a PM deal with those issues. There is nothing wrong with using a PM, just do so knowing the costs. I hope this helps people reading.
Great post. I own 3 rentals right now about 1.5 hours from my house. I've got 2 rentals under a PM and am about to start self managing my 3rd rental, and will eventually bring the other 2 under me. Everything you have said is truth. My only thing is showing the property since I'm over an hour away. I got my current PM to show the property and they get 1 month rent and then I take over management from there. I'm leaning towards Innago or tennant cloud for PM. I like that they both have an app.
Quote from @Brett Hoover:
Great post. I own 3 rentals right now about 1.5 hours from my house. I've got 2 rentals under a PM and am about to start self managing my 3rd rental, and will eventually bring the other 2 under me. Everything you have said is truth. My only thing is showing the property since I'm over an hour away. I got my current PM to show the property and they get 1 month rent and then I take over management from there. I'm leaning towards Innago or tennant cloud for PM. I like that they both have an app.
I would encourage you to try it before you don’t do it. You can post your listing on a Sunday and schedule all your showing 30 mins apart a week later. The thing about the self management for me is that I need to get a feel for the people I am getting into a contract with. Unless you really trust your PM or realtor to place someone I would do it myself.
You could even spend the night there if it is ok a location that is where you would want to. Put a blow up mattress in the place or get a hotel. Take the family up and you can probably write it off.
Quote from @Joe Martella:
I currently manage 4 SFH rentals in addition to having a very demanding full time job. There are many free resources out there for smaller investors. I am going to list them:
- TurboTenant
- It is completely free to advertise your rental, screen your tenants.
- You upload your pictures, write a description and it posts to 20+ websites for free
- Takes about 24-48 hours for leads to come in.
- Once you select a tenant, they pay for the background check, upload documents (paystubs, ID, W2) and it is all set to you.
- It even helps you build a lease after you select a tenant (there is a $30+ fee for the lease)
- My referral code (https://turbotenant.com/r/T3du... disclosure. I do not get any money from TurboTenant, nor am I an owner or investor in the company.
- They have a referral program where they will send me a $25 home depot gift card for a referral - you don't have to use the referral code
- Stessa
- Stessa is a website that I use to track all my expenses.
- It is another free site and you can pull reports
- You even can upload receipts.
- Roofstock recently purchased Stessa
- Completely free
- Zillow Rental Manager
- I use this to collect rent.
- Free for the landlord
- Tenant only pays a fee if they use a credit card to pay rent. ACH is free
- Takes about 5-7 days for the funds to hit your bank account
- Excel
- I use an excel spreadsheet to track my check register. You can download a free template online
Other free websites I haven't used.
- Avail.co
- This is another free website that I learned about this week listening to a podcast (may have been a BP podcast). I haven't used it and cannot speak to it.
- Zibo.com
- This is another free website where you can collect rent electronically and have an interest checking account.
- I am still looking at this, because not all my tenants pay electronically. 2 like to mail checks. I haven't looked at how to deposit those - I don't like mobile deposits.
There are many free resources to use before you start paying for services. Out of my 4 rentals, I have placed 2 tenants with TurboTenant - one tenant is on year 3 and the other tenant is on year 2. I listed the properties, took some pictures (they weren't the greatest pictures) and had it rented in a week. I was able to recycle the leases upon renewal and didn't pay any commissions for the rental, which is a savings of over $4,000 if you consider the rental commission to be 1 month rent. I highly recommend it.
Zillow, I have to wait 5-7 days for the money to hit my account. I don't mind it. For some that may be an inconvenience that they do not want.
Stessa - I haven't used any of the reports for the accountant, yet. We can see how that goes.
Quote from @Joe Martella:
Quote from @Brett Hoover:
Great post. I own 3 rentals right now about 1.5 hours from my house. I've got 2 rentals under a PM and am about to start self managing my 3rd rental, and will eventually bring the other 2 under me. Everything you have said is truth. My only thing is showing the property since I'm over an hour away. I got my current PM to show the property and they get 1 month rent and then I take over management from there. I'm leaning towards Innago or tennant cloud for PM. I like that they both have an app.
I would encourage you to try it before you don’t do it. You can post your listing on a Sunday and schedule all your showing 30 mins apart a week later. The thing about the self management for me is that I need to get a feel for the people I am getting into a contract with. Unless you really trust your PM or realtor to place someone I would do it myself.
You could even spend the night there if it is ok a location that is where you would want to. Put a blow up mattress in the place or get a hotel. Take the family up and you can probably write it off.
I used the RE Agent who helped me buy the properties, so their is a good relationship there.
I will say if your new to investing and having a good PM gives you confidence to learn for a year or two and see that its not that bad/hard, then sure use a PM for a little while, learn and give yourself time to get your systems in place.
Quote from @Joe Martella:
Quote from @Donavon Coley:
To best answer that question, I ask this-- How much is your time worth to you? The time it takes to advertise your property, vet tenants with credit checks and references, and deal with maintenance calls...Yikes. Not to mention, what happens if the tenant doesn't pay rent? That used to be bad enough, but after COVID?! I'm not saying to abandon the idea of self management of your property, but, the right property management firm can give your priceless time back, a peace of mind, and you will make money as a great side benefit. Best of luck which ever way you choose!
@Jeremy Thomas - there it is... the fear porn that a PMs love to post on self-management questions and I feel the need to controvert this because of any of the new or prospective landlords reading this and getting nervous. They always go to the whole "is your time valuable" thing. I can tell you that my 4 properties in addition to a very demanding full-time job are not that difficult to handle. I have been self-managing my properties since 2019. I had a PM in 2018 that I had to fire. The PM caused me more headaches and money than handling the issues myself. As I said, I have 4 SFHs that I own and manage.
I go to the properties when I need to be there. I haven't been to the properties in months. I have handymen, electrician and a plumber that I can call if I need to and I don't get a maintenance call every month either. Oh and I am going through an eviction on one of my properties as well....
Let's talk about value of my time vs the cost of a PM and time. 2 of my properties were BRRRRs, so a PM doesn't handle that and if they do, chances are they are adding 10% onto the construction costs. You didn't have to get your hands dirty but paid 10% more than the cost, plus you didn't make connections with the handyman used or assess the work.
Second - I didn't pay an on-boarding cost with a PM. The PMs charge an on-boarding costs to enter your information into the system.
Advertisement. I literally take seconds to advertise my properties. I upload the pictures, write a nice description on TurboTenant and hit the publish button. The leads start rolling in. I schedule appointments as my schedule allows and usually have the unit rented no longer than a week of showings. Other landlords use a lockbox where people can see the place on their own, but I don't. I want to meet and talk to the prospective residents.
Once I find a prospective resident, I invite them to apply. They upload their documents pay TurboTenant and I get a credit report sent to me. You do the review. It takes about an hour if you really want to study their report. I am sure a PM doesn't spend that much time.
You select the tenant, get a signed lease, collect the security deposit, first month's rent and hand the keys over and open a landlord-tenant savings account at the bank. Your work is done now. You worked for about a week and saved money. Even if it cost you 2 weeks that is $1,000 a week. So, $1,000 a week and you aren't putting in 40 hours a week.
The PM would cost you 1 month's rent. In my case that is $2,000+. So just doing that in between my job I saved $2,000 plus 10% additional they would have charged me in repairs.
Now, lets go to the monthly cost. I collect the rent either by Zillow, where the money is direct deposit into my account or a check mailed to me (I don't do Zelle, Venmo, PayPal or anything like that). Right off the bat, it would cost me over $200 Every month (on one property) for that. Not only would it cost me $200, the PM would hold a month back, so you have another out of pocket cost when it comes to your monthly expenses. You have to layout another month's expenses. So you are now out $2,200+ for the rental and a month behind in expenses.
Repairs, yeah, I will admit that when things break, it is never a convenient time. Even if it when you are sitting on your couch, sipping iced tea on an idle Saturday or Sunday afternoon. When things break, you get a call/text and you assess what you need to do to repair it. The issues with newbie investors is realizing that not everything is an emergency. Some PMs don't answer the phone on Saturday or Sunday and some PMs, if you have a $300 repair there is going to be a 10% charge on top of that.
So now I am at $2,230+ for a PM cost. I spent maybe another hour dealing with the issue calling a handyman. If I feel like saving the cost of a handyman and have the time, I may make the repair myself. I think as an investor you are robbed from that opportunity to manage the issue.
Fast forward to a year later and renewal time is here. You now invested $2,230+ another 11 months of rent which is an additional $2,200 for a total of $4,630+ and this doesn't include the month of expenses you had to lay out because you are behind or the 10% added to your repair bills. I spent almost $5,000 in a year for a company just to collect my rent electronically like I do for free and handle phone calls and charge me 10% on top of repairs.
Renewal time is here and the tenant re-ups for another 12 months. (oh, did I forget to mention when you selected the tenant you could have signed a longer lease if you wanted). The PM charges you another fee for the lease renewal. That's right. Some charge another full months rent and others charge you 50% rent. All just to e-mail a lease to a tenant for them to sign and send back to you. I am averaging about 3 years for my residents staying with the properties.
As for eviction, I have a tenant (one that was placed by the PM I fired) that I am in the process of evicting. I hired the attorney that other LLs used at my local REIA. He was the most economical. I cut him a check and he is dealing with it.
Yeah, I had to deal with some aggravation, but think of all the money I saved self-managing that helps with the carrying costs, while rent isn't being collected right now. $200 x 36 = $7,200 alone plus the $2,000 initial rental fee and the $1,000 x2 for the renewal fee. So $7,200 + $2,000 + $2,000 = $11,200 over the course of 3 months. I don't know about you, but $11.000 is real money. This doesn't account for the 10% added onto repairs that have been made over time. Now multiply this over 4 houses. You are saving real money that can be reinvested.
I haven't gotten the proverbial 2:00 am phone call and my properties are all in A/B neighborhoods. If I was a C/D neighborhood investor, I would have a PM deal with those issues. There is nothing wrong with using a PM, just do so knowing the costs. I hope this helps people reading.
Quote from @Carol Mendrygal:
Quote from @Joe Martella:
I currently manage 4 SFH rentals in addition to having a very demanding full time job. There are many free resources out there for smaller investors. I am going to list them:
- TurboTenant
- It is completely free to advertise your rental, screen your tenants.
- You upload your pictures, write a description and it posts to 20+ websites for free
- Takes about 24-48 hours for leads to come in.
- Once you select a tenant, they pay for the background check, upload documents (paystubs, ID, W2) and it is all set to you.
- It even helps you build a lease after you select a tenant (there is a $30+ fee for the lease)
- My referral code (https://turbotenant.com/r/T3du... disclosure. I do not get any money from TurboTenant, nor am I an owner or investor in the company.
- They have a referral program where they will send me a $25 home depot gift card for a referral - you don't have to use the referral code
- Stessa
- Stessa is a website that I use to track all my expenses.
- It is another free site and you can pull reports
- You even can upload receipts.
- Roofstock recently purchased Stessa
- Completely free
- Zillow Rental Manager
- I use this to collect rent.
- Free for the landlord
- Tenant only pays a fee if they use a credit card to pay rent. ACH is free
- Takes about 5-7 days for the funds to hit your bank account
- Excel
- I use an excel spreadsheet to track my check register. You can download a free template online
Other free websites I haven't used.
- Avail.co
- This is another free website that I learned about this week listening to a podcast (may have been a BP podcast). I haven't used it and cannot speak to it.
- Zibo.com
- This is another free website where you can collect rent electronically and have an interest checking account.
- I am still looking at this, because not all my tenants pay electronically. 2 like to mail checks. I haven't looked at how to deposit those - I don't like mobile deposits.
There are many free resources to use before you start paying for services. Out of my 4 rentals, I have placed 2 tenants with TurboTenant - one tenant is on year 3 and the other tenant is on year 2. I listed the properties, took some pictures (they weren't the greatest pictures) and had it rented in a week. I was able to recycle the leases upon renewal and didn't pay any commissions for the rental, which is a savings of over $4,000 if you consider the rental commission to be 1 month rent. I highly recommend it.
Zillow, I have to wait 5-7 days for the money to hit my account. I don't mind it. For some that may be an inconvenience that they do not want.
Stessa - I haven't used any of the reports for the accountant, yet. We can see how that goes.
@Carol Mendrygal I don't use Turbo Tenant because I am already setup with Zillow. I do not believe TT was offering rent collection services when I started using them in 2019, or maybe I missed it back then. I am aware they have that service, but I am already setup with Zillow at this point and didn't see a need to change since they are both free and pretty much the same thing.
I found out about Zillow and TT via BP Podcasts.
- Real Estate Broker
- Cody, WY
- 40,414
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@Joe Martella brings up some good points. But you should also notice that he has four rentals and he's evicting one of the tenants.
Look, there are pros and cons to everything. If you have the right personality, the time, and the smarts, you can manage property on your own very successfully. I have managed for hundreds of different Landlords. The majority of them make more money after hiring me, and they don't have to spend time or stress over decision-making. I screen around 1,000 applicants a year vs. Joe that probably screens less that ten. I know all the rental laws for my state and stay current on them. I deal with 400 rentals a year and know my local market better than anyone. I demand higher rates than private landlords, keep vacancies short, place better tenants, deal with problems quickly and surely, etc.
On the other hand, there are many mediocre or downright terrible property managers. You'll hear a ton of horror stories on BiggerPockets, but I will tell you that most of those are the fault of Landlords that hire property managers without properly screening them. There are bad tenants everywhere, but you can dramatically reduce the likelihood of getting one if you screen properly. Property Managers are the same.
I have two recommendations:
1. If you can learn the market, learn the law, screen applications, deal with maintenance, and handle problems quickly and professionally, then you should try managing your own rentals. I highly recommend you start by reading some books on management, particularly "Every Landlord's Legal Guide" by NOLO. You should also familiarize yourself with the laws and have a good attorney on standby for really ugly stuff.
2. If you don't have a lot of time or are uncertain, take the time to find a good property manager. Get the ball rolling, learn from them, and then see if you want to step in and take over later.
- Nathan Gesner
We recently switched to RentRedi.com for rent collection/management. I like it because I can easily send rent reminders to tenants, and am trying to get all maintenance requests done through the website too, so that way we get fewer texts/emails and it will be easier to track.
Also, IMO background checks are not very thorough--- the only way to really know someone's history is by checking the court websites. Do you know how many smoke detectors are needed, where, and how often they legally have to be checked? I was mentoring a new investor with screening, and she was like "I want to pick this person, they make X of money.... I took a look at the pay stub and immediately knew it was fake. Can you spot a fake pay stub? If this stresses you out, hire a PM because who you pick as a tenant determines everything!
If you can handle the extra work, then yes-- you can do it yourself. There are always ways to mitigate risk-- if you're worried about someone being locked out and calling you at 2AM-- get a lockbox or hide a key. Only self-manage if you can devote the time/energy as it is absolutely work, and if you don't do a good job with screening-- it will be HORRIBLE. There are A LOT of horror stories of people losing money and houses getting trashed when people are relaxed self-managing. I have also heard horror stories of PMs wasting money on stupid stuff, like if a tenant complains of 1 of 4 burners being out-- I'm sorry, but you have 3 other options-- I wouldn't replace the stove or pay someone hundreds of dollars to fix 1, but I have a friend who did just that.. and hated his PM.
Be cautious with anything that's free, free likely isn't the best.
Whether you chose a PM or self manage just depends on what's best for you. Hope this helps!
Quote from @Nathan Gesner:
@Joe Martella brings up some good points. But you should also notice that he has four rentals and he's evicting one of the tenants.
Look, there are pros and cons to everything. If you have the right personality, the time, and the smarts, you can manage property on your own very successfully. I have managed for hundreds of different Landlords. The majority of them make more money after hiring me, and they don't have to spend time or stress over decision-making. I screen around 1,000 applicants a year vs. Joe that probably screens less that ten. I know all the rental laws for my state and stay current on them. I deal with 400 rentals a year and know my local market better than anyone. I demand higher rates than private landlords, keep vacancies short, place better tenants, deal with problems quickly and surely, etc.
On the other hand, there are many mediocre or downright terrible property managers. You'll hear a ton of horror stories on BiggerPockets, but I will tell you that most of those are the fault of Landlords that hire property managers without properly screening them. There are bad tenants everywhere, but you can dramatically reduce the likelihood of getting one if you screen properly. Property Managers are the same.
I have two recommendations:
1. If you can learn the market, learn the law, screen applications, deal with maintenance, and handle problems quickly and professionally, then you should try managing your own rentals. I highly recommend you start by reading some books on management, particularly "Every Landlord's Legal Guide" by NOLO. You should also familiarize yourself with the laws and have a good attorney on standby for really ugly stuff.
2. If you don't have a lot of time or are uncertain, take the time to find a good property manager. Get the ball rolling, learn from them, and then see if you want to step in and take over later.
@Nathan Gesner so in your statement you mention that I am going through an eviction. Every landlord has an eviction at some point, but to give you some context is that those tenants have been there since October 2018 and paying without issue until recently. People's situations change and they aren't able to keep up with living costs. No PM or LL could predict what someone's life looks like in 3+ years.
The key here and reason why I mention the eviction for the OP is that they can see that it can be done. In fact, my eviction costs are lower than that of a PM since I am dealing with the attorney directly. Nothing more than a 10 minute call to the attorney and several e-mails and the attorney, who is used by the other LLs in the REIA I am a member of, is doing all the work. I probably have about an hour invested in time getting the documents prepared for the attorney.
I will give you that you screen more tenants than me, but what is your average turnover? I don't screen every year because I don't have turnover. Tenants stay for longer periods of time with me because as the LL I am able to develop that rapport that a PMC cannot develop. I don't go to my properties every day or month. I haven't been to my properties in the past 6 months. If there is an issue, I have several handyman companies to send to fix the issues. I also have options to do repairs on my own, if I choose. If it is a simple fix and I want to do it, I will do it. The latest repair I did was ramping a sidewalk in July, 2021. It seemed easy and the cost of materials was about $10, and I learned how to do something that took 30 minutes. If I had a someone do it, they would have charged me $200+. So, I learned something and saved $190. Not that I needed to save the $190, but $190 in 30 minutes isn't so bad.
If I have a leaking drain, I know how to repair it, but in addition to fixing the leaking drain, I get to walk into my property and see what is happening on the inside without the tenant feeling like it is being inspected. I can get a sense on what is happening. No one taking pictures of the property and sending me a report which makes the tenants uncomfortable. Of course, there is general conversation with the tenant and I am able to further develop my rapport with them. This is business and business is all about relationships and customer service.
I have it setup where I can either be actively or passively involved. It didn't happen overnight, but everyone starts somewhere to include PMCs.
I believe that every LL should manage at least one of their properties. It will give them invaluable experience. Perhaps that is why LLs don't screen PMCs properly. They don't know the questions to ask because they don't have the experience themselves managing a property.
Now, the next thing that is going to be pointed out is scaling. That I can't possibly keep up this pace, and maybe you are right. Eventually, I am going to have to hand the management off to a PMC as I buy my 1-2 properties a year and the management gets to be too much, but right now I am going to save my $10,000+ a year and if it takes me 5 years to get to needing a PMC that is $50,000 that I saved in the process. Oh, BTW, $50,000 is the down payment on another property.
What I haven't included in my post is that my properties are in A/B+ neighborhoods and the furthest one of my properties is at is an hour and 10 minutes away. If I had properties in C/D neighborhoods, which I am not that kind of investor, I would have PMCs manage those properties as it requires a different management process that I am not willing to partake in.
At the end of the day the tenants are our customers. I don't want them to have to call an office and leave a message if I have a leaking pipe or go online to fill out a service request that will get someone to repair in a couple of days. While I believe that PMCs are necessary in some situations, I think that all the tools available to LLs that are willing to front load the work and knowledge can be successful. It is my opinion that the PMC cost structure remains from back in the day when PMCs had to knock on doors to collect rent. That is the 10%. Now, everything is done online. The only thing that PMCs have right now is placement and contractors. If an investor can get that lined up, then he should be good to go. Then again, that is just my opinion and only for A/B neighborhoods.
You don't need to waste one penny purchasing Quickbooks or using any service you need to pay for just to manage a few rental units. All you need is a simple database or spreadsheet to track money coming in and money going out so you can send your accountant or CPA your records at the end of the year.
The most-important thing you need is a thorough rental (Lease) agreement that protects you for every possible situation. You need to have policies you adhere to in regards to late rent payments and other tenant problems. Then, when you stick with your own policies and guidelines you will not let tenant problems make you emotional. Just stick with your rules and realize that you are running a business like a business.
A few months ago, someone on BP posted a lot of free software for analyzing rental properties and for bookkeeping, etc. for the rental business. Search Google for Bestline Plumbing, scroll down the home page until you see MS Access software and you can download all the software you will ever need for single-family to multi-unit properties. If I remember correctly, the owner of the software posted a large rental agreement, but I don't know where it is on BP. You may want to ask for a copy.
@Joe Martella. There is a piece you are missing here. You seem to be an A class investor in single family homes. These are traditionally the easiest homes to manage, with high rental rates, great tenants, and low delinquency.
That all equates to way less labor for you or a PM. A good PM company would treat an account like yours with flat fees in my opinion. Single family homes that rent for $2,000-$3000 have people with high credit scores and good jobs apply. Since they take way less time to rent, less screenings to process, and a low probability of collection calls I would bet you can find a one time flat leasing fee and flat management fees instead of a %.
When it comes to vendor mark ups and maintenance… again a good PM will get a 10-15% vendor discount due to volume on everything so if they charge you 10-15% mark up it should almost be a wash and they take care of checking the work and screening the vendor.
Lastly maintenance… a good PM will have highly trained maintenance guys that although they bill for an hourly rate are professional, do a good job, and most importantly are covered on the PM’s workers comp.
When you find that PM company you will be a happy camper. They are out there, and it becomes a mutually beneficial relationship.
You had the wrong company.
- Matthew Irish-Jones
Quote from @Jeremy Thomas:
Looking to start renting out my current home this summer as a long term rental when my new build is finished. I really want to self-manage to learn the most about process. I would also love to expand next year to more long term and even short term rentsls locally and possibly even out of state.
I'm looking for some solid tools that give me the most potential for running an effect growing rental buisness. If you strongly suggest property management companies that is also something I'd love to hear.
Thanks!
@Jeremy Thomas, I am just checking to see how you made out. It has been 7 months since your post. Just curious about your progress.
Quote from @Joe Martella:
Quote from @Donavon Coley:
To best answer that question, I ask this-- How much is your time worth to you? The time it takes to advertise your property, vet tenants with credit checks and references, and deal with maintenance calls...Yikes. Not to mention, what happens if the tenant doesn't pay rent? That used to be bad enough, but after COVID?! I'm not saying to abandon the idea of self management of your property, but, the right property management firm can give your priceless time back, a peace of mind, and you will make money as a great side benefit. Best of luck which ever way you choose!
@Jeremy Thomas - there it is... the fear porn that a PMs love to post on self-management questions and I feel the need to controvert this because of any of the new or prospective landlords reading this and getting nervous. They always go to the whole "is your time valuable" thing. I can tell you that my 4 properties in addition to a very demanding full-time job are not that difficult to handle. I have been self-managing my properties since 2019. I had a PM in 2018 that I had to fire. The PM caused me more headaches and money than handling the issues myself. As I said, I have 4 SFHs that I own and manage.
I go to the properties when I need to be there. I haven't been to the properties in months. I have handymen, electrician and a plumber that I can call if I need to and I don't get a maintenance call every month either. Oh and I am going through an eviction on one of my properties as well....
Let's talk about value of my time vs the cost of a PM and time. 2 of my properties were BRRRRs, so a PM doesn't handle that and if they do, chances are they are adding 10% onto the construction costs. You didn't have to get your hands dirty but paid 10% more than the cost, plus you didn't make connections with the handyman used or assess the work.
Second - I didn't pay an on-boarding cost with a PM. The PMs charge an on-boarding costs to enter your information into the system.
Advertisement. I literally take seconds to advertise my properties. I upload the pictures, write a nice description on TurboTenant and hit the publish button. The leads start rolling in. I schedule appointments as my schedule allows and usually have the unit rented no longer than a week of showings. Other landlords use a lockbox where people can see the place on their own, but I don't. I want to meet and talk to the prospective residents.
Once I find a prospective resident, I invite them to apply. They upload their documents pay TurboTenant and I get a credit report sent to me. You do the review. It takes about an hour if you really want to study their report. I am sure a PM doesn't spend that much time.
You select the tenant, get a signed lease, collect the security deposit, first month's rent and hand the keys over and open a landlord-tenant savings account at the bank. Your work is done now. You worked for about a week and saved money. Even if it cost you 2 weeks that is $1,000 a week. So, $1,000 a week and you aren't putting in 40 hours a week.
The PM would cost you 1 month's rent. In my case that is $2,000+. So just doing that in between my job I saved $2,000 plus 10% additional they would have charged me in repairs.
Now, lets go to the monthly cost. I collect the rent either by Zillow, where the money is direct deposit into my account or a check mailed to me (I don't do Zelle, Venmo, PayPal or anything like that). Right off the bat, it would cost me over $200 Every month (on one property) for that. Not only would it cost me $200, the PM would hold a month back, so you have another out of pocket cost when it comes to your monthly expenses. You have to layout another month's expenses. So you are now out $2,200+ for the rental and a month behind in expenses.
Repairs, yeah, I will admit that when things break, it is never a convenient time. Even if it when you are sitting on your couch, sipping iced tea on an idle Saturday or Sunday afternoon. When things break, you get a call/text and you assess what you need to do to repair it. The issues with newbie investors is realizing that not everything is an emergency. Some PMs don't answer the phone on Saturday or Sunday and some PMs, if you have a $300 repair there is going to be a 10% charge on top of that.
So now I am at $2,230+ for a PM cost. I spent maybe another hour dealing with the issue calling a handyman. If I feel like saving the cost of a handyman and have the time, I may make the repair myself. I think as an investor you are robbed from that opportunity to manage the issue.
Fast forward to a year later and renewal time is here. You now invested $2,230+ another 11 months of rent which is an additional $2,200 for a total of $4,630+ and this doesn't include the month of expenses you had to lay out because you are behind or the 10% added to your repair bills. I spent almost $5,000 in a year for a company just to collect my rent electronically like I do for free and handle phone calls and charge me 10% on top of repairs.
Renewal time is here and the tenant re-ups for another 12 months. (oh, did I forget to mention when you selected the tenant you could have signed a longer lease if you wanted). The PM charges you another fee for the lease renewal. That's right. Some charge another full months rent and others charge you 50% rent. All just to e-mail a lease to a tenant for them to sign and send back to you. I am averaging about 3 years for my residents staying with the properties.
As for eviction, I have a tenant (one that was placed by the PM I fired) that I am in the process of evicting. I hired the attorney that other LLs used at my local REIA. He was the most economical. I cut him a check and he is dealing with it.
Yeah, I had to deal with some aggravation, but think of all the money I saved self-managing that helps with the carrying costs, while rent isn't being collected right now. $200 x 36 = $7,200 alone plus the $2,000 initial rental fee and the $1,000 x2 for the renewal fee. So $7,200 + $2,000 + $2,000 = $11,200 over the course of 3 months. I don't know about you, but $11.000 is real money. This doesn't account for the 10% added onto repairs that have been made over time. Now multiply this over 4 houses. You are saving real money that can be reinvested.
I haven't gotten the proverbial 2:00 am phone call and my properties are all in A/B neighborhoods. If I was a C/D neighborhood investor, I would have a PM deal with those issues. There is nothing wrong with using a PM, just do so knowing the costs. I hope this helps people reading.
Great advice for a newbie like myself, thank you!
-Queenet Iwu