SS83: Why Should You Hire a Property Manager?

Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing, why should you hire a property manager?

New investors and growing investors alike commonly wonder why and when they should be hiring a property manager. In this episode, Charles explains his thoughts on why you would want to hire a property manager and what the right time is to hire one.

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Talking Points:

I was speaking to a new investor a few weeks and they were asking if they should hire a property manager for their first rental property; a 3-unit property that was located about 15 minutes from where they lived, and my initial response was that it depends.
It depends on a number of factors; the number of units you own, your schedule, your income from your main job, your goals, on contractors and handymen you know, and the amount of time you want to spend on those properties.
The main benefit of hiring a manager is saving time. When I started investing, I managed the properties all myself, I was in my early 20s and lived within a couple of blocks of all properties so it was pretty simple to manage. As I got older, I hired a 3^rd party manager and it allowed me to spend more time on higher-level activities like finding properties, buying properties, and speaking with investors.
Another benefit of hiring a 3^rd party manager is decreasing your stress. You need to be glued to your phone 24/7 when you manage properties and you need to have people you can call to resolve issues or you need to resolve them yourself; a potentially stressful situation.
3^rd party managers are also a wealth of knowledge that owners can tap into if needed. An experienced property manager brings you a problem and they will also tell you how they suggest you fix it. When I have had newbie managers; their suggestion is usually the most expensive and easiest for them but not always the best for the property manager. For example; calling a licensed plumber to snake a drain where a handyman can easily do that for a 10^th of the cost.
There are management solutions that do not involve hiring a 3^rd party management company. There is not an all-or-nothing approach to property management. You can handle certain aspects of management and then hire others to assist you.
You might hire a handyman yourself (full-time or part-time). You can handle incoming inquiries and calls from tenants and then reach out to your handyman to have the issue addressed. Set up an online payment system to accept payments from tenants. Hire people to handle most if not all recurring work at the properties; landscaping, janitorial, etc. Make contacts with local contractors when a licensed professional is required.
Good managers will assist you BEFORE the sale; not just during your ownership of the property. They will tell you what you should pay, details about the neighborhood, etc. Are these expenses and rents in line with the market?
If your goal is to build a portfolio that you own by yourself or with a couple of partners; I would put management in place early on, maybe 1-2 years after your first purchase or from the beginning, and focus on scaling. Once you hit 50-60+ units, you can afford to hire a full-time handyman which will make it much easier to handle issues when they arise. You put together an online payment/tenant portal with your own handymen and you will start to decrease the time per unit you are speaking. You will still need to visit the properties regularly or someone else on your team will need to because you need to see what is happening and since a handyman is not always proactive; they are really just fixing things that break. The main point here is as you scale, your management costs will decrease per unit.
If you do choose to hire a property manager; make sure you have all of their fees upfront. Make sure you know exactly what costs will be charged to you for services around your properties.
It is important to understand that no one is going to treat your property like you the owner will and you need to be comfortable with that. That is just the reality and no matter who manages your properties; you will need to perform asset management; managing the manager.
I believe, that starting with 3^rd party management and then moving management in-house is a great strategy if you are planning on scaling your portfolio. Even self-managing is fine in the beginning; what you learn there will assist you throughout your life as a real estate investor.

Transcript:

Charles:
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing, why should you hire a property manager?

Charles:
Have you always wanted to invest in real estate, but didn’t have the time, didn’t know where to find the deals, couldn’t get the funding and didn’t want tenants calling you. Since 2006, I’ve been buying income producing properties and great locations that provide us with consistent passive income. While we wait for appreciation in the future and take advantage of tax laws while we’re waiting and unlike your financial advisor, we invest alongside our investors in every property we purchase. Check out to investwithharborside.com. If you like the idea of investing real estate, if you like the idea of passive income partner with us at investwithharborside.com, that’s investwithharborside.com.

Charles:
I was speaking to a new investor a few weeks back, and they were asking if they should hire a property manager for their first rental property, a three unit property that was located about 15 minutes from where they lived.

Charles:
And my initial response was that it depends. It depends on a number of factors on the number of units you own on your schedule, on your income from your main job on your goals on contractors and handymen, you know, and the amount of time you wanna spend on those properties. The main benefit of hiring a manager is saving time. When I started investing, I managed the properties all myself. I was in my early twenties and I lived within a couple blocks of lot properties. So it was pretty simple to manage. As I got older, though, I hired a third party property manager, and it allowed me to spend more time on higher level activities, like finding properties, buying properties, and speaking with investors. Another benefit of hiring a third party property manager is decreasing your stress. You need to be glued to your phone twenty four seven, when you manage properties and you need to have people you can call to resolve issues, or you need to resolve them yourself.

Charles:
A potentially stressful situation. Third party managers are a wealth of knowledge that owners can tap into if needed and experienced property manager brings you a problem, and they will also tell you how they suggest you fix it. When I’ve had newbie managers before their suggestion is usually the most expensive for me and the easiest for them. For example, calling a licensed plumber to snake a drain where a handyman can usually do that for one 10th of the price, but there’s also management solutions that are not all or nothing. You can handle certain aspects of management and then hire others to assist you. You might hire a handyman yourself full-time or part-time, but you can also handle all those incoming inquiries and calls from tenants, and then reach out to your handyman to have the issue reasons addressed, set up an online payment system to accept payments from tennis, hire people to handle most, if not all recurring work, the properties like landscaping, janitorial, et cetera, make contacts with local contractors.

Charles:
When a licensed professional is required now, good property managers. Third party managers will assist you, not just while you own the property, but before the sale. And they’re gonna tell you what you should pay. Is that neighborhood good? Are these expenses and rents in line with the market? You know, will I be able to reach this rent potential here? They’re really the voice of reason, cuz they’ve been there for so many years and they have rentals or should have rentals in that area. If your goal is to build a pro portfolio that you own by yourself or with a couple of partners, I would put management in place early maybe one to two years after your first purchase or from the beginning and focus on scaling. Once you hit 50, 60 plus units, you can afford to hire a full-time handyman, which will make it much easier to handle issues.

Charles:
When they arise, you put together an online payment tenant portal with your own handyman and you will start to decrease a time per unit. You are spending. Now you will still need to visit the properties regularly or someone else on your team will need to because you need to see what is happening. And since the handyman is not always proactive, there are really just fixing things that break. The main point here is that if you scale your management costs will decrease per unit or they should decrease per unit. If done correctly, if you do choose to hire a property manager, make sure you have all their free fees upfront, make sure you know exactly what costs will be charged you for services around your properties is important to understand that no one is going to treat your property like you and the owner, and you will need to be comfortable with that.

Charles:
That is really the reality and no matter who manages the properties, you need to perform asset management, which is managing the manager. I believe that’s starting with a third party management company and then moving management in house is a great strategy. If you’re planning on scaling your portfolio even self-managing is fine in the beginning. What you learn there will assist you throughout your life as a real estate investor. So I hope you enjoyed. Please remember rate review, subscribe, submit comments, and potential show topics at global investors’ dot com. Look forward to two more episodes next week. See you then

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