Property management strategy that will save a lot of $$$$

[Patrick Flanagan]

My mother owns a very successful property management company. She manages 400+ properties from commercial to residential. I’ve never heard anyone talk about this strategy

But you can go to a property management company and use them just to fill your units. They charge a half a months rent but once your unit is filled you can go back to managing the property your self. For me the hard part would be picking the correct tenant.

I’m 100% for property managers and I’ll be using them on all my out of state deals. I’m a electrician so working on the building is not a problem for me. So if you are close to your properties and don’t mind working on them this might be a good thing to do.

For me that saves me a $400 a month bill, because the property management company will do what they do best and find a great tenant through their screening process.

[Joe Martella]

@Drew Sygit I own and manage properties.  I think your position is valid depending on the neighborhood invested in.  If you are in a class A/B neighborhood, and you place the correct tenants, you really don't need a property manager to all that stuff.  In some areas a property manager is a necessary evil.  The fair housing act is easy to read on and learn.  BP is one of the greatest resources.  

The reality is that if a PM places a tenant that is sour, the PM still has no expense.  The PM still adds onto their cost on eviction services along with the added attorney costs.  There are so many ways that you can easily manage your property (if you so choose) on your own.  Rent collection is easily done online for free (Zillow Property Manager), real estate associations will have attorneys and handyman references, BP/FaceBook groups provide additional information/resources.  

The hardest thing to do remotely is selection and placement.  I look at PM processes needing to be revamped.  Remember the 10% of rent collected was when PMs had to knock on doors and actually collect rent.  Now with easy and free apps/websites there is no need for a fancy software to give the tenant the option to pay online.  When there are repairs needed, the PM hires the company needed and some PMs either get a discount on the services and charge the owner the market price or add 10% on top of the bill.  These added costs are tough on investor's cashflow and just don't make sense.  I have 3 SFHs that I personally manage.  They bring in over $2000 a month each gross.  I would be paying over $600 a month to a PM that handles a text message (on average) 2-3 times a month when my tenants pay via mail/online?  What is that expense for?  What do I get for that $600 I am paying?  I am not getting any piece of mind.  I am not getting anything for the $600 a month ($7,200) a year for that.  If a repair is needed, I am paying the repair plus the added PM costs plus the 10% rent collected fee.  A PM can destroy the cashflow on an investment.

The scary stories of the tenants not paying or destroying the properties or the 2am phone calls aren't the norm if you invest in A/B neighborhoods.  I sometimes go months without talking to my tenants and I have one tenant that thinks he is my pen pal.  I have a demanding full time job and sometimes it is difficult to do both, but for me, that additional $7,000 in my pocket is worth the management trouble I have.