Hire a property manager or not?

[Alex Goodwin]

Hello,

My partners and I are having a disagreement about if we should hire a property management firm for our portfolio.  We have a goal in mind of a hundred units or so.  My thought process that while hiring a manager will have a cost of 10% or so, the time saved not dealing with tenant's (replacing tenants, setting up payments, phone calls, etc...) will allow us to scale to the desired number at a faster rate. 

My partners can only see the cost of 10% and what that equates to from dollars we "give up" by not managing ourselves.  I would rather have a professional do it than people with little to no experience - especially once we have dozens of properties.

Can anybody give some advice on why to or not to hire a manager?  Success stories?  Am I thinking logically? 

Best,

[Greg Weik]

Quote from @Alex Goodwin:

Hello,

My partners and I are having a disagreement about if we should hire a property management firm for our portfolio.  We have a goal in mind of a hundred units or so.  My thought process that while hiring a manager will have a cost of 10% or so, the time saved not dealing with tenant's (replacing tenants, setting up payments, phone calls, etc...) will allow us to scale to the desired number at a faster rate. 

My partners can only see the cost of 10% and what that equates to from dollars we "give up" by not managing ourselves.  I would rather have a professional do it than people with little to no experience - especially once we have dozens of properties.

Can anybody give some advice on why to or not to hire a manager?  Success stories?  Am I thinking logically? 

Best,

 I'm biased because I own a PMC, but I also own rental properties.  No way in hell I'd DIY property management. 

I have a million reasons, but here's the biggest one: Tenant Placement. 

There is zero chance the DIY weekend warrior landlord can identify quality tenants and place them as well as a PMC.  Literally, zero chance.  Unless the landlord just gets lucky. 

Landlords will never scale experience like a PMC can.  I laugh when I hear a client say "I've been managing this property for 25 years, I know what I'm doing."  

25 years of experience is about what we do before lunch on a Monday based on the scale of our operation.  

Landlords selecting their own tenants:  

1) We're desperate and bleeding money, lets take a chance on these people. 

2) They don't have great credit, but their story is so relatable about the divorce, etc. and I want to give them a chance. 

3) They have cash and can pay for 6 months up front.  This is going to be great to help with our liquidity right now. 

4) Even though they have 800 credit scores, they have a dog.  I really don't want any pets, so I will keep looking. 

5) I can't afford to do new paint and carpet right now, so I will just lower the credit score requirement to 500. 

I could go on.  Hire a PM.