This may seem obvious but, what works for me may not work for you. What’s important to me may not be important to you, and the same holds true in the opposite direction. At this point, I’ve onboarded 9 units with my property management company and have worked with every corner of their team for 3 months. In that time, we’ve run the gamut of scenarios from basic tenant calls to major rehab work. Based on that experience, here’s what I can say with near certainty – I will be self-managing my next property (or two or three), if only to better understand what the day-to-day management is like and to compare that experience against the time and money I spend managing my management company.
Before I purchased my first property I decided that self-management wasn’t for me. Two factors drove that decision. First, I wanted to spend my time finding and evaluating deals, which I’ve found can absolutely be a full-time job (in fact, I can see where this is a full-time job for an entire team of people). My thinking was that my time is more valuable working on my deal pipeline than it would be managing day-to-day tasks. Second, I did not want to get those dreaded 2 AM calls about leaking toilets. That didn’t fit my schedule, so my thinking went. For what it’s worth, that second “fear” is always the first or second reason I hear from others who say property investing isn’t for them – it’s either money or tenant maintenance issues.
So, has my thinking changed? Yes, it sure has. Let me tell you why.
I’ve read many of these, but I suppose I needed to experience some of these issues firsthand. Here are a few situations that led me to rethink my position:
The Vacant Unit
The first property I onboarded with my PM company is a triple with two rented units and one vacant unit. As of June 23, my PM company had acknowledged a request from me to evaluate the vacant unit and get it ready for renting. Getting someone out to the unit and to suggest cosmetic repairs took until 7/13 – 3 weeks. The day I received the proposal to complete the work I accepted it and was told that the work was to begin on 7/28. I hadn’t heard anything by 7/30 so I called my PM company and was told that it was “someone else’s responsibility to schedule the work” which meant the person I was speaking with didn’t know the status. A few days later I was told it was scheduled to start on 8/11. So now we’re not getting rent in July or August. As of 8/17, I’ve not had any update. Finally, on 8/18 I hear it’s ready for leasing…and then nothing. I check my owner’s portal later that week and find it listed but with no applicants. When a listing is created it can be syndicated to various rental sites, zillow, trulia, apartments.com, and a few others so I check each of them – I find the listing on some but not on others, but the best part was that the sites that include the listings have 2 items that scream (we don’t care). First, more than half of all the pictures are rotated 90 degrees so nothing looks right – not to mention the complete lack of care or interest in making the pictures looks inviting. Second, there are no in-person showings. So, if you are interested, pay the application fee and look at 6 crooked, poorly lit pictures – you’re welcome! So here we are on Sept 7 and there the unit remains vacant. No rent for July, August, or September. 11 weeks. I know some flippers who can redo an entire house and sell it in less than 11 weeks. Here, we needed to put down vinyl flooring in we bathroom and kitchen, paint a few walls, clean the unit, photograph it and lease it. 11 weeks.
The Cancelled Insurance
On June 30 I received a letter from one of my insurance carriers that they were requiring a list of repairs to be completed by 8/18 in order to retain the current policy on a property. The list was provided along with a roughly 30-page report which included detail and photographs of the items needing attention. I sent that list and report to my PM company the same day, and on 7/1 it had been entered into their system. In the days that followed there were some email and phone exchanges to clarify items on the list and then, nothing…nothing for weeks. 3 weeks later, and only because I looked at my PM’s internal communication, I saw a note that asked someone to convey some pricing to me – which was for 2 items on a list of about 15 things that needed to be addressed. I won’t get into gory detail about all the items. Fast-forward to today, right now, Sept 7, the majority of the items are still not addressed. The last “update” I can see from my PM’s internal communication (as in, not from them reaching out to me to give me an actual update) was on 8/17 when someone said to someone else, some of the work needed to get scheduled and to let them know so they could order a dumpster. Since then, nothing…So, I’ve had to cancel the original policy and get something new, which is fine – not great, but fine. I just don’t know what’s going on inside my PM.
Sadly, there are more. Actually, there are about four more stories just like these. At one point, I got the owner of the company involved. He admitted that they’d done a poor job and promised big changes ahead. That was just over a month ago and despite those promises, nothing has improved. So I continue to believe that they’re doing a poor job, well below what I’m paying for and well below the level at which they claim to operate.
What happens next?
I’m going to walk a mile in their shoes (sorta). For the next few properties that I acquire, I’m going to self-manage. I want to make sure that my expectations are reasonable. I want to better understand what it takes to provide the level of service I want to deliver. Today, I continue to spend time on the phone and email talking to and managing my PM company. I could just as easily be doing the same with contractors, so we’ll give it a go. If after a few months I realize that self-management is a giant nightmare, at least I know what to expect and have a better understanding of what my current PM company is going through. At that point, I can easily transition my self-managed properties to them and continue on my journey. If, on the other hand, I find that self-management can be done better than my current solution then I’ll transition those units to self-management and (hopefully) reap the benefits and rewards of doing so.