It depends on the properties you buy. Some properties based on location, age of mechanical equipment, and property health are incredibly costly upfront if nothings been updated. Having a PM that has preferred vendors/contractors and an internal maintenance staff typically save you money because your pm gets discounts for the business they provide the vendors/contractors. If your properties are older than 10 years, I'd hire a PM and hang on for a bumpy 5 years it'll be expensive even if you do BRRRRR there's always something wrong. Additionally, if you've never livid in that market a PM is a Pro in that area and can better provide insight on what rents really should be and what type of tenants to market to for your property types. Your PM also has the advantage of seeing the tenants before leasing it out were as it might not be advantageous for you to spend two hours commuting just to let a prospective tenant view your property. A PM would also have more experience dealing with bone heads that maybe aren't the best of people to rent to based off a single conversation. My wife and I manage our rentals in Indiana but not in Texas, but we currently live in Arizona. the biggest reason is my experience in property management and high expectations of property managers puts me in a position to think most of the PMs in Indianapolis are garbage and or incompetent at their jobs... I have tons of horror stories in dealing with 3 different property managers in Indianapolis. However, the ones in Texas are great and will never manage my rental their as long as they keep up the great work.
I will tell you though when you start interviewing PMs you need to ask these questions.... When I found out that some states charge these things, I realized I overpaid for my rentals, and it made my propeties immediately lose money.
Do you have an in-house maintenance team? How many people are the team? How do you charge for their repairs? Is it included in your property management fee or additional?
What does your fee structure look like? Is it a flat fee ie 100 dollars a door or 10% of rents? Do you charge for new leases and lease renewals? If so how much? Do you offer discounts for the more properties I provide you?
How long are your unit turns taking at the moment? What's the average cost of the turns?
What are your new tenant qualifiers that you look for? IE does the tenant have to make 2x rent or higher? IE what does an acceptable criminal history look like? What credit score gets a new tenant accepted? What do you charge for a class C security deposit? 2x rent? What type of properties do you currently manage?
These questions in my opinion are the most valuable. How the pm treats their rental requirements will determine if they are good at managing your assets. I had a property sit vacant for 3 months because the PM required a 3x deposit and income requirement in a class C minimum wage neighborhood. You don't charge that for class C. At most security deposit should be 1 month rent, and gross income should be 2.5x income tops, but not less than 2x income. Obviously, it depends on local laws, but knowing your local micro market makes the difference when marketing.
