Couldn’t handle it...why I just hired a property manager

The time has finally come. I finally hired a property manager while I invest in real estate, after 7 years of managing the my rentals myself. Here’s why and what led me to that choice - enjoy! Add me on Snapchat/Instagram: GPStephan

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I ended up buying two houses and a triplex in late 2011 and early 2012. Since then, managing them has been extremely easy. For the most part, it took me 1-2 hours per MONTH of work to manage 5 tenants at the time. Most of this time was spent making sure rent had been paid, cashing rent checks, making sure bills were paid, and just generic accounting. If something broke, I’d just call a contractor to go out and fix it. I also rarely had vacancies..

My rental landlord philosophy was this… I generally don’t raise rent, unless it’s a unique situation or cash flow issue. For instance, on my original 3 properties, I’ve only raised rents when a unit becomes vacant. I’ve had some tenants since 2011 that are paying the SAME rent since back then. Am I leaving money on the table? Sure. But on the upside, I have really, really great tenants that take really good care of the place, treat it like their own, always pay on time, and are all around really awesome people, making it easy for me to manage. They have zero desire to move since they’re paying so much less than they would if they went somewhere else and in return, it’s easy for me. It’s a win win.

But recently the unthinkable happened…a tenant had to move and relocate for work. And now my vacant place needed a little work - just minor fixes, re painting some stuff, etc. And finally, at that point, I thought about it…the time it would take for me to drive an hour each way just to go there, the time it would take to coordinate a walk through, meet and screen tenants, handle payment, etc…just wasn’t worth it. My time was better spent doing just about anything else. And finally, it clicked…I gotta hire a property manager, I just can’t handle it myself.

So I did some research online, found a recommendation…did some negotiating back and forth for a day on prices between that and another company, and settled on a flat 8% management fee, everything included, and I moved forward. My reasoning now is that my time is way more valuable doing anything else other than managing a place, and the money I spend will save me more money that I can make elsewhere.

So I did it…I hired a property manager for my first house. Now remember, I’m still managing my other 4…that’s really easy. But if I have another vacancy, the management company will get that one too. And eventually I’ll slowly phase the management company in to replace all the work I currently did.

I’m only a month into this so far, but overall I like it. It’s amazing to be “Stress free” and have that distance between you and the tenant. I like that someone else handles it all, and all I have to do is simply just collect the check…I’m a little paranoid that something might fall through the cracks if I’m not micro managing it, but I’m doing my best just to let someone else take over.

So that’s the story, and that’s why I hired a manager for one of my properties. If this goes well, I’ll slowly phase it in to everything else and have real estate investing become 1-2 hours per month more passive.

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[olegs]

Screw real estate, changing light bulbs - where the real money are!

[danielesbordone]

Treating good tenants well is always a wise move. Greed doesn't get you anywhere.

[emilylam]

always measure any amount of money in subway sandwiches

[clallen]

When you have to send a $15/hr worker to replace a $2 bulb and it takes him about 20 minutes to drive to the property using about $1 in gas you begin to realize that the cost of the worker is costing you $5 and the product and gas are costing another $3 then you realize the true cost of doing this.

Why not eliminate this expensive task from your management by requiring the tenants to change their own lightbulbs when they burn out. You could buy a box or two of bulbs and put them in the house before the tenant moves in and tell them that all the lights are working when they move in and they are now responsible for changing the bulb when it burns out. Tell them that you have provided them with a few boxes of bulbs to get them started.

The only time you should be responsible for bulb replacement is when it is a difficult bulb to replace or requires a ladder or a chair and in those instances, you should use a long life LED bulb.

[IHasTM]

You not raising rent is the same thing my Grandfather did, and it works.
Tenants are happy, you're still making a profit, good stuff.

[johnarnoudse]

Landlord 10yrs: Son of Landlord 45yrs: My father taught me that same landlord philosophy and it has served me well as I have a 10yr plus tenant in the first house I bought back in 2008 who is still paying the same rate as when he first moved in. Is it far less than market value yes, to the tune of 30%, but the guy never misses a payment and has even improved the property over the years. Treat your tenants with respect and they will grateful in return

[andreo]

When I owned rentals every tenant I had was like babysitting a kid. How they functioned as an adult I'll never know.

[tonygonzalez]

I couldn't hadle it... so i subscibed to Graham

[elebea]

I like your landlord philosophy. I have a friend whose rent never been raised, she new even got a dishwasher for the unit with her own money, she fixes everything herself. Just as a sign of appreciation for not raising the rent. I’d do the same.

[grindhouserob]

I could understand your point on not raising rents too often when you have good tenants. We've done the same with our good tenants (one of them has been with us for 12 years while the other has been with us for 35 years).  Friends of the family would pester my Dad on why he didn't increase the rent EVERY year! However, they never questioned their greed when they would have a couple of their apartments vacant during a renter's market.

[MichaelJayValueInvesting]

Having a property manager should allow you to scale without losing your sanity. Worth the bit of profit upfront to make it up big later down the road.

[Radnally]

I've had prop managers over the years and have been mostly disappointed. From getting bad tenants to overcharging for services, etc. The key is tenant selection. The main problem with prop managers is that they can make a lot more money from you if there are problems with the property. I agree, get a good tenant and handle it yourself.

[GotLearn]

Best real-estate/money videos on Youtube, hands down.

[MichaelP-ketm]

"Losing money. I don't do that."

Except with bitcoin (; lol.

[Austin_Patrick]

Ligma is the worst.. ruins lives every single day..

[truthspeaksgroup]

Good point. I just have to deal with it. I will have to manage the first house myself. I cant imagine having a property manager for one home unless it is a multi unit

[iFunktion]

Your rent philosophy is absolutely excellent. I wish all landlords had that philosophy!!

[petemitchell]

Sounds like you’re good at finding good tenants. Mostly. I‘d like to know what your interview and screening/pre-screening process is.

[EK]

I really enjoy your talks. I've watched a few of them full length, and actually thought right on! You're years ahead of anyone I've ever seen your age. I'm 56 and just saw the light on real estate investing 5 years ago. I wouldn't want to be a broker or realtor, but enjoy buying and fixing up and cash flowing so far. Your candid and transparent methods are exemplary and your success, inspiring. I've been self employed for 28 years, so I can relate (to everything except your massive financial success) to your outlook. Kudos and please keep the content about your personal experiences about earnings, rentals. Really, all of your stuff is produced incredibly.

[SDSunriser]

In the 1980s, I rented an apartment in a building in West Hollywood. There were retail stores below on the ground floor and apartments on the second floor. The landlord used a property management firm. All they did was collect our monthly rental checks by having us either drop off the checks at their office or mail them. They never swept the dirty and dusty hallways or replaced broken windows, etc. After years of this my neighbor tracked down the landlord and told him what was going on. He immediately started making improvements. You probably can guess what I think of "property management" firms...