Self-managing out-of-state vs. hiring property management company

[Becca F.]

I'm based in California and have 2 properties in the Indianapolis metro area. The first SFH I've been renting out since 2019. My personal name is on the lease (I don't have an LLC yet) and I'm technically "self-managing". I have someone helping me - this person isn't a licensed real estate broker but wrote up my lease and screened the tenants. I pay him 10% monthly management fee and 1 month rent to screen new tenants - are these amounts reasonable? SFH #1 is in Class A suburban area, have had 2 great tenants (on tenant #2 now). I do save some money since he doesn't charge me a renewal fee like a PM company and he did the paint touch up between tenants vs. me hiring a painter to paint entire rooms.

But he leaves it up to me to look up rental comps so I talk to realtors, other investors, etc when deciding on rent, any rent increases (none so far in 2 years for same tenant). I think my rent is slightly low since rents have increased a lot. I also have to call for any repairs, plumber, HVAC, communicate with my "helper" and he calls/talks to the tenants (I don't call/text tenants). So far this has occurred a few times and they were minor, no emergencies (overflowing toilet, etc) but it isn't time efficient for me since I'm on a different time zone.

I recently closed on an Indy SFH that's Class C and is ready to rent out. I've interviewed 3 PM companies and narrowed it down to two. The PM company offers more protection since their name would be on the lease with the tenant not my personal name and they would go to court for me if there's an eviction or other issue, if I pay the eviction fee for them to do that (hopefully that won't happen). I'm also a little apprehensive since I own all Class A properties and this is my first Class C property. They do charge more fees (renewal fee is the major one) than my current set up.

For those of you who have self-managed from out-of-state, what are your pros and cons? Do you have someone helping you? Do you write up the leases and screen tenants yourself or hire out the screening part? I'm trying to save money but I don't want it to come and bite me later with trying to self-manage (I'm self managing a local SFH as long as I can). If there are things I've overlooked, feel free to comment :)

[Vicki X.]

As far as I know, the PM fee is 8-10% monthly + one month of rent for leasing. The fee you are paying, given the amount of work taken off your shoulder, seems a bit high. But it's market specific and I don't know your area, so I could be biased.

I have a slightly different opinion about self managing or working with PMs. Many tools that enable and protect investors are available digitally now. So you can do listing, screen tenants, collect rents very easily, just as a licensed realtor can. In some landlord friendly States, eviction can be handled relatively easily too -- It is a criteria for my investments. 

The things you can't do on your own with OOS investments is showing and maintenance. So you probably still need to hire someone working for you part-time, although not necessarily a PM company. The key question is, how involved you want to be in your rental management, and whether you can afford the time spent or whether it's worth your time. 

I've been managing my local properties myself. It's not hard with a good network of professionals (handyman, and folks who have the knowledge or can direct me to the right person). 

I'm testing to manage one of my remote property for the learning experience. If I could also build a remote network, I could use self-manage + local on-demand tasks + offshore virtual assistant.  Still early in that process though. 

My summary of tools that empower self-managing investors:

- PM software: Azibo, Avail, Innago, Apartments.com, Hemlane, Turbotenant, Rentredi, Tenant Cloud, eRentpayment, Zillow rental manager
- Rental accounting tool: Azibo, Stessa, REIHub
- Rental banking: Azibo, Stessa
- move-in/move-out inspection: rentcheck

Hope it helps. Good luck!