mange yourself or use a PM

[Glen Wiley]

I see a lot of talk about the importance of hiring a property manager (PM) rather than self managing. For 20 years I have managed my own properties so I wanted to offer some thoughts on the advantages of self managing.

midnight maintenance calls for self managed are mostly a myth

Via a well written lease and open communication with my tenants I let them know that they are responsible for things like plugged toilets, leaks under sinks etc. I tell them up front that while I am happy to address non-structural maintenance, I will charge $120 plus $120 per hour if they need me to come fix anything. I handle the homes primary mechanical systems and structure, they handle the small stuff. This has resulted in me having exactly 1 after hours call in 20 years (the hot water heater burst).

tenant selection is way better as a self manager

No one cares more and no one has more to loose from who is in my properties than I do. I make a purposeful effort to carefully vet applicants and as a result we average close to 1% vacancy over the portfolio. Engage with people as a human being, apply what you know about humans to your vetting, use the great tools available for background checks etc and you will do at least as well as a PM.

personally rewarding

I love the connection to the people in my homes, I get to see how I am helping these families grow. I don't get all chummy, we aren't "friends" but I do get to know enough about them that I derive a lot of personal satisfaction from what I provide for them. One of the reasons that I love rental real estate is that I am doing genuine good for people and getting paid for it. I rent at market competitive rates and I am very firm on payment on time and upkeep of the property by my tenants.

I KNOW my properties

By taking responsibility for my properties, I know what's going on with them. I have a good feel for upcoming major maintenance items, ways to tweak things to make them better in the next turnover etc. This is an important aspect of maximizing cash flow long term.

What does a PM do for me exactly?

Over the years I have thought carefully about whether to hire a PM but it keeps coming back to the key question: What do I get for 10% of my rent? Is it worth that much money? And the answer for me is always "no." I am not saying they don't make things a little easier, I am sure they do, but is it worth $200/month on a $2000 rental? Not to me.

I spend so little time in a typical month on rental management that I just can't see it being worth the money.

[Josh Cissell]

Quote from @Glen Wiley:

I see a lot of talk about the importance of hiring a property manager (PM) rather than self managing. For 20 years I have managed my own properties so I wanted to offer some thoughts on the advantages of self managing......

.....I spend so little time in a typical month on rental management that I just can't see it being worth the money.

Everyone makes good points, but I'd like to add a different perspective to your points, Glen. 

Midnight maintenance calls for self-managed are mostly a myth

Maybe not midnight maintenance calls, but maintenance issues or tenant problems often happen at very inconvenient times. Ask one of my clients about how much time he spent during his vacation in Mexico trying to resolve an HVAC issue (in a 4-year-old property) and how having a tenant screaming at him on the phone ruined his day. On top of that, he paid $1800 for a repair that my vendor would have done for $900 max. Or how about when I was at a Christmas party a few weeks ago, and I spent 30 minutes handling an emergency? It doesn't happen every year, but this isn't the first Christmas party I've had to step outside for a lengthy issue.

tenant selection is way better as a self manager

I'm afraid I have to disagree with this. A bad tenant due to inexperience is one of the #1 reasons I have many clients. A good manager has thorough application criteria and should follow them by the letter to ensure you have quality tenants and are not discriminating.

personally rewarding

It sounds like you do a great job and enjoy what you do, but most people own a rental property because they want a passive investment. So, the questions that need to be asked before someone recommends that a person should manage themselves are: Why did you buy a rental property, and did you intend to have a second job as a property manager?

I KNOW my properties

You probably know your properties better, but a good manager knows what matters and should plan for those. I don't think there's probably any substantial advantage here over the lifetime of the investment.

What does a PM do for me exactly?

This statement leads me to believe that you don't value your time very highly or don't realize how much time you spend managing a property. Or maybe you don't spend that much time, but it sounds like you do a great job, so I'm guessing it's the former.

A handyman charges at least $75 to put a flapper on a toilet. My CPA charges me $2,400 for about 5 hours' worth of work for my taxes. A CPA would charge you at least $400 - 500/month to collect invoices, pay bills each month, and email you a report.

A property manager is on call 365/24/7 (even if the phone doesn't ring, they are still responsible) and basically serves as your marketer, secretary, accountant, attorney, maintenance specialist, tenant babysitter, and strategist for your investment that's worth at least a few hundred thousand. You don't think a property manager is worth $2400/year?

After I put a pencil to everything we do for a client and for the price we are doing it, I sometimes wonder why I own a property management company.

I think you have a unique view as someone who wants to manage property, and you also don't give yourself credit for what you've learned and accomplished over the last 20 years that make you a good property manager. I also don't think you're probably figuring how much you've spent learning lessons the hard way.

Another thing to consider is how much extra a self-manager will spend on maintenance out of inexperience or because they don't have the volume with vendors. A client hired us this year and told me he had a 10-year parts and labor warranty on his HVAC and water heater installed last year. A 10-year labor warranty is very rare here, so I told him to send his paperwork. He paid $18,000 for an HVAC system and water heater, so yeah, they'll give him a 10-year labor warranty. It would have been $9,000 on the high end using my vendors. That one repair would have paid my fees for four years.

There are a lot of bad property managers in the industry, so I can understand why you have your viewpoints, but I think your experience limits that point of view.