In the classroom today, Pete Neubig talks to us about what you need to consider when deciding if you should hire a property manager or not.
There are numerous questions to ask yourself that will help you figure out if it would make sense to hire a property manager for your rentals. Depending on the level of involvement you want to have with the property is an important factor to consider, along with how close you live to the property and what your goals are as a real estate investor.
Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Pete: Hi, my name is Pete Neubig, Co-founder of Empire Industries Property Management and I am the host of the REI Classroom. And today, our topic is, “Should I hire a property manager?”
Mike: This show is sponsored by passiverental.com.
Pete: So hiring a property manager is not right for just anyone. There are some items to think about to determine if a property managing company is right for you. So when my business partner and I talk to investors like yourselves, we always ask them what their goals are and we also determine if a property management company is right for them. And so one of the things that we talk about or one of the things you should think about is are you a landlord or a business owner. There is a different mindset between someone who is building a real estate business versus someone who is a landlord.
So if you want to spend your time performing low-level, low enjoyment activities and you find landlording are those low-level, low enjoyment activities, then a property managing company might be right for you. For example, changing out a toilet, showing your property, screening a tenant are all examples of low-level, low enjoyment activities. So where is your time better spent? Is it better spent networking? Is it better spent getting educated, creating strategic alliances or just spending time with your family on some high-level, high enjoyment tasks?
I always ask people, you’ve hired a realtor to find you a property, you’ve hired a mortgage company to help with the mortgage, you’ve hired an insurance broker to insure your property, you buy this great asset and then you want to learn how to be a landlord or learn how to be a property manager. Most residents have been residing or have been leasing for years and years and years and most landlords have only been in the business or most investors have only been in the business a couple of years. I think that a resident, someone that’s been leasing their whole life, knows a little bit more of what’s going on than somebody who just started investing.
That’s the first thing they think about. Another thing is do you own a couple of homes? Are they rented by long-term residents and you don’t have any issues? If so, maybe self-managing is good for you. You’ve already had them for a while and you’re not having any problems, then maybe a management company is not for you. Maybe when a problem does arise, you hire a management company. Are you looking to purchase more investments? A management company typically has investor deals that their current investors are selling and who offer deals to their existing clients before they hit the MLS.
So, for example, we have one right now. We call them pocket listings in the biz, but we have one right now where one of our investors is looking to sell a property. As a management company, we know the history of the property, we know who we put in there. So we have good historical data and we sent that off to our owners first, our clients. And now, our client is going to get a great deal on a property. So it’s not just the management fees that you have to pay, but you have to look at who the management company is and they have potential deals, which could be worth thousands and thousands of dollars.
Another thing, are you a do-it-yourselfer? Do you do your own taxes, and you fix your own car, do you clean your own house, etc. etc.? So basically, you have trust issues and no one can do a good job as you. And we get that. There are people out there like that. If you’re a do-it-yourselfer, then most likely, you’ll not be able to let go or allow someone else to manage your property. That’s somebody who should self-manage. Believe me, the property manager does not want you to manage your property through them like a puppeteer and they’re the puppet.
It’s almost impossible for us to manage properties of these type of owners when they’re involved at every aspect. They want to know every little thing that’s going on with the property and then they want us to do it a certain way because that’s the way they want it done. That is not the right person for a management company. At that point, it would be better to learn all of the legal aspects and manage your own property.
Do you live in town? If not, definitely you get a property manager. It’s very difficult to manage a property when you’re outside the city or outside a state or outside the country. I have an agent who goes to properties for me for free when I need something. You get what you paid for and if an agent is there enough to work for you, they are giving you property manager service that is worth what they are charging. What I mean by this is you’re an investor, somebody, a real estate agent, helps you buy the property, they may even help you lease the property. The next thing you know, you’re asking them to collect rent or take on maintenance and stuff like that and they don’t charge anything for that.
Well, you have to remember that cheaper is not always cheaper and they’re not charging because they don’t really know the laws. They’re not property managers. And so there is a little bit difference of hiring a property management company and having somebody manage a property for you. Having a property management company who is certified, who has continuing education, that is somebody you want on your team, especially when you’re going to court. So you want to make sure if you have somebody that’s just managing your property and they’re not really charging you, they’re probably not doing a very job and you may want to hire a management company.
If you are familiar with fair housing and you understand your local property codes, you’re familiar with the tax code, and you have a bunch spare time on your hands, and a bunch of partners from landscaping to insurance, and you do not want to grow your business, then self-manager is definitely for you. If you want to grow your business and create leverage and be a CEO of your business, believe me, the city believes you’re a business, the resident believes you’re a business, the state believes you’re a business, the taxing authority believes you’re a business. Everybody says you’re a business. The only person who doesn’t believe they’re business is typically the investor, the business owner.
So those are my tips and tricks for, “Should I hire a property manager?” Again, my name is Pete Neubig, Co-founder of Empire Industries Property Management. And if you want to learn more about us, you can go to our website. We have a blog page with hundreds of videos and lots of great information for free. We don’t even ask you to sign up for anything. Or you can email me at [email protected]empireindustriesllc.com or give us a call at 888-866-6727. And if you have homes in the Houston area, we’d be more than happy to talk to you.
Mike: passiverental.com is your source for turnkey done-for-you rental properties. If you’d like to be an investor and not a landlord, please visit passiverental.com to learn how to purchase cash flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today and get started by visiting passiverental.com.
Please note, the views and the opinions expressed by the individuals in this program do not necessarily reflect those of flipnerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
Are you a member yet of flipnerd.com, the hottest real estate investing social community online? If not, you can join for free in less than 30 seconds and get access to hundreds of off-market deals, vendors in your market to help you in your business, and you can start networking with thousands of other investors just like you. Get your free account now at flipnerd.com.
Please check out the FlipNerd family of real estate investing shows, where you can access hundreds of expert interviews, quick tips and lessons from leaders across the real estate investing industry. They’re available at flipnerd.com/shows or simple search for FlipNerd in the iTunes store.