Self Management vs. Property Manager – How do you know when it is time to fire yourself?
The title of this article makes me chuckle because of all the times I’ve wanted to quit managing properties and all the burned out owners I’ve discussed us managing their property when they’ve reached a point that they can’t take it any more.
We just took over management of 20 properties that had been self managed for a long period of time. At some point the owner (a local attorney) made the decision that his time was worth more than what he was saving by self-managing.
Property management is a hard business. Did you hear that? It may make you feel better to know that even a property manager thinks it is a hard business. Being a property manager means you are in the middle of conflict or something breaking all the time.
So, don’t feel bad, you just need to understand that this is what a property manager does for a living. The constant breaking (at the wrong time) or conflict (when you should be working at your day job) is enough to make any self managing landlord burn out.
So how do you know when self managing isn’t right for you anymore and it may even be costing you money (and not just in Advil)? Let’s take a look at the signs I’ve seen . . .
- You become way too lenient with the tenant paying rent. I heard a recent story from Nick in our owner sales department about a lady who was “friended” by her tenant on Facebook. She thought that accepting it was innocent enough.Then Christmas rolled around and her tenant was behind on the rent. Frustrated, she wasn’t getting communicated with, so she got on Facebook to instant message her through their system. Low and behold she did have money, but she spent it buying everyone Christmas presents – and she wasn’t hiding it because the pictures were all over her Facebook profile.Needless to say, she decided she didn’t have the emotional fortitude to be in the collection business any more and called us. This is probably the number one sign of things beginning to slip and you getting burned out. If a tenant is taking advantage of you and you don’t have the time or the emotional energy to do something about it, you probably need to hire a professional.
Lastly, our Nashville Broker, Charles Jeter, says, “If you can’t evict someone on Christmas Eve, then you don’t need to be in the property management business.” This is probably a bit of a stretch, but you get the point.
- The tenant calls and you aren’t motivated to answer the phone. This is also a beginning of the spiral down. You look down at your phone and your heart sinks because you know you are about to deal with a problem. Remember tenants leave when their needs are being met. If you aren’t answering and handling maintenance calls, then you are going to create a problem for yourself. The tenant will leave and you will create more work for yourself.
- You get tired of handling prospective tenant calls and meeting them to show the house. This is perhaps the most dangerous of all, because I really believe that leasing homes is a “numbers game and a people business”. As soon as you get tired of showing the home, you are much more likely to just stick anyone in your home – and that is a problem. If you find yourself becoming slack on the discipline of the leasing process, you need to employ a professional manager (or sell the house)!
- Your time is worth more money than paying someone to handle it. Many times people get into self-managing to save money they need and money is so tight they really can’t afford to have the luxury of a property manager. But, as their income has improved, they take a step back one day and realize being a manager is actually costing them money. Losing money managing property is a crazy.
You can make more money doing other things. This is very similar to the one above, but this is speaking specifically to investors of rental homes. If you enjoy the “art of the deal” and would rather be in the market purchasing more properties, then self managing may be keeping you from finding all the deals. If you purchased one more house per year with your freed up time, then you would be financially way ahead of self managing. Particularly, over the course of 3-5 years.
Firing yourself can be a tough thing. Paying someone else to do something you’ve done yourself for a long time is also a tough thing. “What does a property manager even do?” you ask. We wrote an article describing what services a property manager does and the costs associated with it.
One of the truths I’ve learned in owning a rental property is that you should constantly be analyzing your situation. What are my opportunity costs? What I get property management done for? If you aren’t constantly re-analyzing your situation then you will end up in a place that you never intended on ending up. I suggest you take a hard look at your situation and decided if self managing over professional property management is right for you.