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.
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.
I agree with what most of what you said, but it also sounds like you actually do a good job managing yourself-- a lot of people don't. People are often surprised when I say "You may not necessarily need a PM" given that I do Outside Sales for a PM company. I agree, many owners can self-manage, but there ARE some people who need a PM because they are not personally equipped to properly manage the property, and I'll give you a recent example I had.
Back in July, I had an owner call me because he was living abroad, had a tenant move in, and not pay rent. He was so eager to fill the property that he sent the tenant the lease before collecting any funds, which were "in the mail." Long story short-- the money never came. I put him in touch with our eviction attorney and had MANY calls to help walk him through the situation. I gave him advice on what to do with the next tenant because he did 0 vetting on this tenant... who had an eviction 2 months prior, and multiple on his record. He was then countersued when he finally filed the eviction, which was finalized in end of October. When the tenant vacated he stole appliances and there was some damage. The owner estimated $10,000 in damage. So what did he do? He moved the first person he could find into the property because he had 4 mortgage payments out of pocket, repairs to complete, and needed the money.
Now, how would that have been different with a PM? First, that tenant would have never qualified with our tenant criteria. Second, that tenant would have never moved in because we did not receive certified funds. Third, the eviction would have been finalized in probably half the time -- He waited almost a month to place the 3 day notice, we would have done so on day three. Fourth, he had no vendors in his network, but I was able to put him in touch with someone to remove the trash and property left by the tenant, an appliance guy I know who fixes and sells appliances so he could replace the stolen ones, and a flooring guy to repair that damage.
In my experience, the owners that hire a PM after self-managing do so because of some incident that occurred, that led them to say "It's not worth the headache, I'd rather pay the ~$140 a month to not have to worry about it." Most owners, after the situation I described above, who have changed how they operate - OR - hire a PM. However, this owner repeated the exact same mistake. He is the exact type of person who should hire a manager.
