All Forum Posts by: Queenet Iwu

@Jeremy Thomas - there it is... the fear porn that a PMs love to post on self-management questions and I feel the need to controvert this because of any of the new or prospective landlords reading this and getting nervous.  They always go to the whole "is your time valuable" thing. I can tell you that my 4 properties in addition to a very demanding full-time job are not that difficult to handle.  I have been self-managing my properties since 2019.  I had a PM in 2018 that I had to fire.   The PM caused me more headaches and money than handling the issues myself.  As I said, I have 4 SFHs that I own and manage.  

I go to the properties when I need to be there.  I haven't been to the properties in months.  I have handymen, electrician and a plumber that I can call if I need to and I don't get a maintenance call every month either.  Oh and I am going through an eviction on one of my properties as well....

Let's talk about value of my time vs the cost of a PM and time.  2 of my properties were BRRRRs, so a PM doesn't handle that and if they do, chances are they are adding 10% onto the construction costs.  You didn't have to get your hands dirty but paid 10% more than the cost, plus you didn't make connections with the handyman used or assess the work.

Second - I didn't pay an on-boarding cost with a PM.  The PMs charge an on-boarding costs to enter your information into the system.  

Advertisement.  I literally take seconds to advertise my properties.  I upload the pictures, write a nice description on TurboTenant and hit the publish button.  The leads start rolling in.  I schedule appointments as my schedule allows and usually have the unit rented no longer than a week of showings.  Other landlords use a lockbox where people can see the place on their own, but I don't.  I want to meet and talk to the prospective residents.  

Once I find a prospective resident, I invite them to apply.  They upload their documents pay TurboTenant and I get a credit report sent to me.  You do the review.  It takes about an hour if you really want to study their report.  I am sure a PM doesn't spend that much time.

You select the tenant, get a signed lease, collect the security deposit, first month's rent and hand the keys over and open a landlord-tenant savings account at the bank.  Your work is done now.  You worked for about a week and saved money.  Even if it cost you 2 weeks that is $1,000 a week.  So, $1,000 a week and you aren't putting in 40 hours a week.  

The PM would cost you 1 month's rent.  In my case that is $2,000+.  So just doing that in between my job I saved $2,000 plus 10% additional they would have charged me in repairs.

Now, lets go to the monthly cost. I collect the rent either by Zillow, where the money is direct deposit into my account or a check mailed to me (I don't do Zelle, Venmo, PayPal or anything like that).  Right off the bat, it would cost me over $200 Every month (on one property) for that.  Not only would it cost me $200, the PM would hold a month back, so you have another out of pocket cost when it comes to your monthly expenses.  You have to layout another month's expenses.  So you are now out $2,200+ for the rental and a month behind in expenses.   

Repairs, yeah, I will admit that when things break, it is never a convenient time.  Even if it when you are sitting on your couch, sipping iced tea on an idle Saturday or Sunday afternoon.  When things break, you get a call/text and you assess what you need to do to repair it.  The issues with newbie investors is realizing that not everything is an emergency.  Some PMs don't answer the phone on Saturday or Sunday and some PMs, if you have a $300 repair there is going to be a 10% charge on top of that.  

So now I am at $2,230+ for a PM cost.  I spent maybe another hour dealing with the issue calling a handyman.  If I feel like saving the cost of a handyman and have the time, I may make the repair myself.  I think as an investor you are robbed from that opportunity to manage the issue.  

Fast forward to a year later and renewal time is here.  You now invested $2,230+ another 11 months of rent which is an additional $2,200 for a total of $4,630+ and this doesn't include the month of expenses you had to lay out because you are behind or the 10% added to your repair bills.  I spent almost $5,000 in a year for a company just to collect my rent electronically like I do for free and handle phone calls and charge me 10% on top of repairs.  

Renewal time is here and the tenant re-ups for another 12 months.  (oh, did I forget to mention when you selected the tenant you could have signed a longer lease if you wanted).  The PM charges you another fee for the lease renewal.  That's right.  Some charge another full months rent and others charge you 50% rent.  All just to e-mail a lease to a tenant for them to sign and send back to you. I am averaging about 3 years for my residents staying with the properties.

As for eviction, I have a tenant (one that was placed by the PM I fired) that I am in the process of evicting. I hired the attorney that other LLs used at my local REIA. He was the most economical. I cut him a check and he is dealing with it.

Yeah, I had to deal with some aggravation, but think of all the money I saved self-managing that helps with the carrying costs, while rent isn't being collected right now.  $200 x 36 = $7,200 alone plus the $2,000 initial rental fee and the $1,000 x2 for the renewal fee.  So $7,200 + $2,000 + $2,000 = $11,200 over the course of 3 months.  I don't know about you, but $11.000 is real money.  This doesn't account for the 10% added onto repairs that have been made over time. Now multiply this over 4 houses.  You are saving real money that can be reinvested.

I haven't gotten the proverbial 2:00 am phone call and my properties are all in A/B neighborhoods.  If I was a C/D neighborhood investor, I would have a PM deal with those issues.  There is nothing wrong with using a PM, just do so knowing the costs.  I hope this helps people reading.