Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

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jastevenson
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Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by jastevenson »

I like the idea if diversifying into real estate to get leverage. However, I know for a fact that I would hate being a landlord, and would absolutely use a property manager.

Obviously, having a property manager makes owning a rental property easier, but I want something that is easy in absolute terms (5 hours of work and a couple of phone calls per year, let’s say).

Is owning a rental property managed by a property manager easy, or just “less hard” than being a landlord?

Thanks!
Last edited by jastevenson on Sat Apr 11, 2020 11:09 pm, edited 1 time in total.
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tc101
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just relatively easy)?

Post by tc101 »

It is very easy with a very good property manager, but you will pay a lot for the good property manager.
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billthecat
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just relatively easy)?

Post by billthecat »

jastevenson wrote: Sat Apr 11, 2020 10:47 pm Is owning a rental property managed by a property manager easy, or just “less hard” than being a landlord?
Just less hard, and how much less depends on the quality of the property manager, and your luck with tenants, the economy, termites, neighbors, local government, taxes, insurance, etc., etc. It's definitely better than managing it yourself but most of the time, they collect a fee, and don't do much more than contact you to tell you about a problem and ask you what they should do. But on the upside they are more sane than tenants. Mind you, property managers introduce their own issues too - like bad accounting, not being responsive, etc.
jastevenson wrote: Sat Apr 11, 2020 10:47 pm I know for a fact that I would hate being a landlord
Then don't own real estate directly. You're still the landlord even if you have a property manager. Why not look into REITs?
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decapod10
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just relatively easy)?

Post by decapod10 »

It's not that difficult under normal circumstances. Though one time my parents' rental property (a condo on the third floor) had a leaking water heater and caused water damage everywhere. That was a bit painful even with a property manager.
toocold
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just relatively easy)?

Post by toocold »

It's relatively easy if you know what you are doing. The approach that DW and I took was to manage our first four properties to get an understanding of how to market, show prospects, accounting, rent collecting, working with contractors. Once we purchased more properties, we slowly transitioned it to a property management company we trusted. The initial experience was helpful to know how much contractors cost, the ins and outs of managing tenants, etc. We still manage two of them ourselves, because the tenants are very good.

Collectively, we spend 15 minutes total when properties get listed, 30 minutes on bookkeeping at the end of the month, 1 or 2 email communication per 2-3 months usually on maintenance issues, and several hours during tax time with a good property management company.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by gr7070 »

jastevenson wrote: Sat Apr 11, 2020 10:47 pm Is owning a rental property managed by a property manager easy, or just “less hard” than being a landlord?

Thanks!
It absolutely can be easy.

It is not risk or necessarily stress-free. If you're willing to accept those risks and any emotions that might accompany go for it.

If you decide it's not for you sell, potentially at a profit.

Make certain you have a realistic look at the financials including an added business emergency fund.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by capitalG »

jastevenson wrote: Sat Apr 11, 2020 10:47 pm
Is owning a rental property managed by a property manager easy, or just “less hard” than being a landlord?

Thanks!
FWIW that’s an incomplete question. Yes, paying a good property manage means someone else will do the work. But it the risk and stresses of being a landlord stay with you. Having a property manager made it easy to repair water damage in my rental but this had no impact the likelihood of the issue happening in the first place, the cost associated with it, or how much time I spent fretting over it. No free lunch!

CapG
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by frankandbeans »

jastevenson wrote: Sat Apr 11, 2020 10:47 pm I like the idea if diversifying into real estate to get leverage. However, I know for a fact that I would hate being a landlord, and would absolutely use a property manager.

Obviously, having a property manager makes owning a rental property easier, but I want something that is easy in absolute terms (5 hours of work and a couple of phone calls per year, let’s say).

Is owning a rental property managed by a property manager easy, or just “less hard” than being a landlord?

Thanks!
"Less hard." I put the challenges of rental ownership on four axes: time, money, expertise, and risk. Property managers can help with some but not all of these.

Time: Hiring a manager mostly saves you on the first axis, time. They can do showings, do the paperwork, and coordinate maintenance and repairs. That saves you a ton of time. Of course, you still need to keep up with your correspondence with the managers and make major decisions and visit about once a year. So it's not zero time, but can save a ton of time, especially if you're remote.

Money: It doesn't save you any money. A good manager can get repairs done cheaper and maximize the rent charged, but this usually just nets out some but not all of the management fee. (6-8 percent is standard in my VHCOL markets.)

Expertise: Managers can use their expertise to identify problems, troubleshoot, and bring in the right people to address problems. This can be a bit intimidating for a starting rental owner--knowing when to DIY, bring in your all-purpose handyman, or the skilled tradespeople. They can do this for you. But you still need to bring some common sense and BS detection skills to managing your manager, no matter how good they are, so you can't be totally deferential or hands off.

Risk: They can help mitigate risk by finding good tenants, using the right paperwork, dealing with problem tenants, and using good tradespeople. But ultimately the biggest risks of investment property ownership--market downturns, vacancy, legal liability, and property damage--are going to be on you and you need to decide whether or not you want to take it on.

That's just how I think through it, anyway. I use a good manager (and manage him carefully) for almost all of my remote properties but manage my local properties myself.
quantAndHold
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by quantAndHold »

A good property manager can save a lot of time, for reasons mentioned above. But it’s still up to you to identify and buy appropriate properties, and to stay on top of the money. It’s also not cheap to pay a manager, and I wouldn’t expect to be able to go out and buy a property, immediately hire a manager, and have it be profitable.

The other thing is that my experience as an accidental landlord was that even though I hired a manager with a very good reputation, she didn’t take care of my money like I would have myself. I had to go through each month’s expenses with a fine toothed comb, looking for irregularities. She had one handyman who was charging for 4 and 5 trips to the house to repeatedly do basic jobs that would take a semi-competent DIYer 10 minutes, painters who were capable of painting two properties across town from each other at the same exact time, etc. Her people never caught this stuff. Apparently the handyman had been doing this for years until I was the client and started paying attention to the invoices. To their credit, they fired him after that, but it took several months of me asking what I was paying for for them to look at what was going on. And no, I didn’t get any of that money back.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by bltn »

Good managers for rental houses in my mcol area charged 10% when I attempted to invest a number of years ago. That was enough to turn a small positive cash flow into a negative cash flow. I managed my property for a while and then sold.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Abe »

It depends on the property manager. Most of them will not manage your property the way you would. I recently turned over one of my rental houses to a manager just to try it out. The tenant called the manager and said the A/C was not cooling properly. The manager calls an HVAC man and all he does is clean the outside condenser unit. Anybody can do that. All you have to do is take a water hose and wash it out. About a month later, the tenant calls the manager again with the same problem. Same thing happens, she calls HVAC man and he cleans the unit again. There is no way the unit needs cleaning again that soon. Then the tenant calls the manager again and says the a/c drain is draining water on to the carport, so the manager calls HVAC man again for this. All he had to do was extend the PVC drain pipe a little out to the yard. Any handyman could have done that for a lot less cost. It's extremely hard to find a manager that will manage the property the way you would. It's not their money, so they don't care as long as they get their fee.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by rgs92 »

You started by saying you wanted to own real estate to get leverage.
Could you elaborate on this? Real Estate is an investment vehicle with returns (or losses) like any other investment.

Leverage as a factor by itself is not necessarily an advantage, but it could be if there are large capital gains or a very high positive cash flow that lasts, but those are certainly not a given. Possible, of course, but easier said than done.

Remember, you are paying interest (and principal back to yourself) each month on that leveraged amount.
And leverage can sting badly if prices drop (which can easily happen, especially in the non-long-term).

You could get leverage in investing by borrowing money and using it to buy stocks, bonds, gold, whatever. Pay back the loan when your investments go up and pocket the difference. Risky? Sure, but the same thing can happen with an investment property.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by srt7 »

jastevenson wrote: Sat Apr 11, 2020 10:47 pm I like the idea if diversifying into real estate to get leverage. However, I know for a fact that I would hate being a landlord, and would absolutely use a property manager.

Obviously, having a property manager makes owning a rental property easier, but I want something that is easy in absolute terms (5 hours of work and a couple of phone calls per year, let’s say).

Is owning a rental property managed by a property manager easy, or just “less hard” than being a landlord?

Thanks!
Easy and RE investments don't go together ... property manager or not. It's nothing like investing in the stock market. Completely different beast.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Johnsson »

Less hard. We've been doing this for about 28 years. At the end of the day YOU are the only one married to the property, for better or worse. It's your money and their aggravation. You need to pay attention and inspect the property periodically to make sure it stays in good shape (and the tenants aren't trashing the place).
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Sandtrap »

jastevenson wrote: Sat Apr 11, 2020 10:47 pm I like the idea if diversifying into real estate to get leverage. However, I know for a fact that I would hate being a landlord, and would absolutely use a property manager.

Obviously, having a property manager makes owning a rental property easier, but I want something that is easy in absolute terms (5 hours of work and a couple of phone calls per year, let’s say).

Is owning a rental property managed by a property manager easy, or just “less hard” than being a landlord?

Thanks!
A top level reputable, "honest", and "highly professional" property management company can be nearly "hands off" to an owner/landlord. But, they will cost you.

Of course, there are a high percentage of barely competent to lousy property management companies that cost as much as good ones, or more.

How to tell the difference?
Tough

Like finding a good Realtor, most sound really good but results vary.

Of course, property management company owners in an area know who the bad ones are.

*There is nobody that will have the same vested interest in a property than the owner of that property. And, nobody that will screen the tenants and take care of them as well either. Why? Because the "buck stops at the owner".

Retired R/E businessman and "R/E Development and property mgt. company"
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Sandtrap »

Abe wrote: Sun Apr 12, 2020 11:59 am It depends on the property manager. Most of them will not manage your property the way you would. I recently turned over one of my rental houses to a manager just to try it out. The tenant called the manager and said the A/C was not cooling properly. The manager calls an HVAC man and all he does is clean the outside condenser unit. Anybody can do that. All you have to do is take a water hose and wash it out. About a month later, the tenant calls the manager again with the same problem. Same thing happens, she calls HVAC man and he cleans the unit again. There is no way the unit needs cleaning again that soon. Then the tenant calls the manager again and says the a/c drain is draining water on to the carport, so the manager calls HVAC man again for this. All he had to do was extend the PVC drain pipe a little out to the yard. Any handyman could have done that for a lot less cost. It's extremely hard to find a manager that will manage the property the way you would. It's not their money, so they don't care as long as they get their fee.
+1
Unfortunately, this is the "norm" rather than the exception.

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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Sandtrap »

jastevenson wrote: Sat Apr 11, 2020 10:47 pm I like the idea if diversifying into real estate to get leverage. However, I know for a fact that I would hate being a landlord, and would absolutely use a property manager.

Obviously, having a property manager makes owning a rental property easier, but I want something that is easy in absolute terms (5 hours of work and a couple of phone calls per year, let’s say).

Is owning a rental property managed by a property manager easy, or just “less hard” than being a landlord?

Thanks!
R/E is a "business".
If you "hate being a landlord" then, even if you delegate, you will be a poor R/E businessman.

In any business, the owner must be able to; sweep the floors, open for business, greet the customers, cook the food, serve the food, and clean up. (metaphorically). Then, be able to delegate any of those tasks and have it done as expertly as he/she would have done themselves. This is a successful manager, businessman, and so forth.

If it were easy, any business, then anyone would do it and all would prosper.

Similar to hiring a Financial Advisor or other professional services for a business. If one is not fairly versed in the position then how would one know if there's cheating going on?

OTOH: done well, R/E can be a great vehicle to FI and wealth.

j :happy
Last edited by Sandtrap on Sun Apr 12, 2020 6:04 pm, edited 1 time in total.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Flextruck »

The two keys to successful real estate investing is to buy at a reasonable price/entry point and SCREEN potential tenants. If you are skilled at those two areas, there's absolutely no reason you can't do well in RE investing.

My rental house is located 185 miles away and I've spent less than three hours total the last four years dealing with it. This is a property that I make roughly 10k per year off of...I have a fantastic tenant that has lived there for the last 5+ years.

I spent money up front by putting in a new hot water heater, new gutters and new pex plumbing. It was money well spent and it's been on cruise control since then.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by tvubpwcisla »

One lawsuit will wipe you out. It could go awesome for years and years and then all of a sudden you lose everything while sitting before a judge trying to get out a bad tenant out of your property. Usually followed by, "I'll never buy another rental!" Very stressful!

:shock:
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by RevFran »

I value the psychological gain I get by knowing I have some university town rental property as a diversification. I have managed myself and used a manager, and will never go back to managing myself, even though, as had already been noted, managers don’t tend to shop around for the lowest repairs, so you are paying more than the 10% fee the manager charges. In terms of time, for me the biggest time suck is when I have an upcoming vacancy. That’s because I choose to get involved in the tenant search, posting on listserves etc that are closed to management companies. This can be modestly time-consuming but to me is worth it. I have properties with two different management companies. One is ok, the other is very good. Both came to me via realtors — one from an ok realtor, one from a very good realtor.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just relatively easy)?

Post by Watty »

tc101 wrote: Sat Apr 11, 2020 10:53 pm It is very easy with a very good property manager, but you will pay a lot for the good property manager.
Even if you can find a good one you will periodically need to find new ones as they retire, change jobs, or you become unhappy with them.

Be sure to think through how this will work when you are elderly when picking a new property manager may be more difficult.

If you are married then you spouse may also need to manage the rental property if something happens to you.

One of the reasons that I do not own any rental properties is that even with a property manager I do not want to be dealing with it when I am 85.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just relatively easy)?

Post by gr7070 »

Watty wrote: Sun Apr 12, 2020 9:44 pm Be sure to think through how this will work when you are elderly when picking a new property manager may be more difficult.

If you are married then you spouse may also need to manage the rental property if something happens to you.

One of the reasons that I do not own any rental properties is that even with a property manager I do not want to be dealing with it when I am 85.
All of these are pretty poor reasons to not hold RE. It's not that hard, nor takes very long to divest oneself of traditional real estate.

There's plenty of significant reasons to not hold investment properties. Your spouse spending hours(?) hiring a real estate agent isn't one of them.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by carolinaman »

Sandtrap wrote: Sun Apr 12, 2020 5:32 pm
A top level reputable, "honest", and "highly professional" property management company can be nearly "hands off" to an owner/landlord. But, they will cost you.

Of course, there are a high percentage of barely competent to lousy property management companies that cost as much as good ones, or more.

How to tell the difference?
Tough
+1. The operative word in many responses is a "good" management company. The reality is they are more the exception than the rule, and finding them may be trial and error.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by denovo »

jastevenson wrote: Sat Apr 11, 2020 10:47 pm I like the idea if diversifying into real estate to get leverage. However, I know for a fact that I would hate being a landlord, and would absolutely use a property manager.

Obviously, having a property manager makes owning a rental property easier, but I want something that is easy in absolute terms (5 hours of work and a couple of phone calls per year, let’s say).

Is owning a rental property managed by a property manager easy, or just “less hard” than being a landlord?

Thanks!
This is a bad idea for you. Buy an REIT Index instead.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Sandtrap »

carolinaman wrote: Mon Apr 13, 2020 7:45 am
Sandtrap wrote: Sun Apr 12, 2020 5:32 pm
A top level reputable, "honest", and "highly professional" property management company can be nearly "hands off" to an owner/landlord. But, they will cost you.

Of course, there are a high percentage of barely competent to lousy property management companies that cost as much as good ones, or more.

How to tell the difference?
Tough
+1. The operative word in many responses is a "good" management company. The reality is they are more the exception than the rule, and finding them may be trial and error.
+1
Good points.
The "trial and error" part can be costly.
Like finding out that a Realtor that you signed a 6 months contract with is lousy. Agents that go after "listings" not sales.
Some property managment companies promise the moon to get a signed contracts. Then do little beyond rent to anyone.

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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by David Jay »

jastevenson wrote: Sat Apr 11, 2020 10:47 pmI would hate being a landlord...
That is your answer. Invest elsewhere.

Been there, done that, have the tee shirt (metaphorically speaking).
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Sandtrap »

denovo wrote: Mon Apr 13, 2020 8:00 am
jastevenson wrote: Sat Apr 11, 2020 10:47 pm I like the idea if diversifying into real estate to get leverage. However, I know for a fact that I would hate being a landlord, and would absolutely use a property manager.

Obviously, having a property manager makes owning a rental property easier, but I want something that is easy in absolute terms (5 hours of work and a couple of phone calls per year, let’s say).

Is owning a rental property managed by a property manager easy, or just “less hard” than being a landlord?

Thanks!
This is a bad idea for you. Buy an REIT Index instead.
+1
Perfect!
"Easy" is not synonymous with "business".
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Sandtrap »

denovo wrote: Mon Apr 13, 2020 8:00 am
jastevenson wrote: Sat Apr 11, 2020 10:47 pm I like the idea if diversifying into real estate to get leverage. However, I know for a fact that I would hate being a landlord, and would absolutely use a property manager.

Obviously, having a property manager makes owning a rental property easier, but I want something that is easy in absolute terms (5 hours of work and a couple of phone calls per year, let’s say).

Is owning a rental property managed by a property manager easy, or just “less hard” than being a landlord?

Thanks!
This is a bad idea for you. Buy an REIT Index instead.
+1
Perfect!
"Easy" is not synonymous with "business".

Aloha
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by DVMResident »

Real estate is a business.

Real estate with a property manager is a business with an employee*.

You have to manage the manager. You don’t know you have a good manager unless you manage them. You don’t know that a formally good manager is still good unless you continue to manage them. Overall, they can and should reduce your work load, but IMO with modern technology (smart phones and list of professional plumbers, painters, etc.) it’s not a meaningful reduction in hours until you hit a scale I’ve never reached.

———
* not an employee in the legal sense of the word, but the mindset is useful.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by HomerJ »

frankandbeans wrote: Sun Apr 12, 2020 10:14 amMoney: It doesn't save you any money. A good manager can get repairs done cheaper and maximize the rent charged, but this usually just nets out some but not all of the management fee. (6-8 percent is standard in my VHCOL markets.)
Sometimes property managers will cost you MORE in repairs, because it's not THEIR money, so they will send out a plumber or an electrician for an easy problem that you could fix yourself.

Of course, you could tell them to get your approval for all requests from the tenants, but then you just lost one of the benefits of having a property manager.

Finding a good one can be hard. It's probably as hard as finding a good investment adviser.

Once you know enough to pick out a good property manager or a good investment adviser, you know enough that you no longer need one.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by hudson »

Sandtrap wrote: Sun Apr 12, 2020 5:39 pm In any business, the owner must be able to; sweep the floors, open for business, greet the customers, cook the food, serve the food, and clean up. (metaphorically). Then, be able to delegate any of those tasks and have it done as expertly as he/she would have done themselves. This is a successful manager, businessman, and so forth.
j :happy
I agree with Sandtrap! It's a business.
If you end up with an extra house and want to rent and make some easy money on the side, it could work for you.
It wouldn't work for me; I don't have the personality for it. One little setback would make me bail. I don't want even one phone call.
I have several friends that do this as their full time/part time jobs. They love it. They have many houses. They've been doing it for 30 years or longer. Some do high end houses; some do low end. Some have a trusted person to take care of the property, others do it themselves. They have the right personality; they've got the details figured out. They are all great communicators/leaders; I'm sure that their tenants like and respect them. I'm sure they can be firm if need be.

They think that I'm crazy for not doing the same.

I'm not going to mention a friend that keeps fixing up houses and renting them and keeps losing money.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by bovineplane »

"Less hard"

Cant emphasize enough the good property manager portion if you plan to be hands off. We owned 3 rentals at a time and none of them were local to us. Each was in a different state which necessitated 3 different property managers.

One was very good/long term and made ownership nearly hands off. Her fee was 10% monthly plus 10% of any work/repairs done to the house. This was a local RE firm.

One was mixed bag via one of the larger nationwide RE franchises. Essentially the property manager changed out every 6 months it seemed. After two years we figured out they assigned the new person to property management until they built up a big enough portfolio to sell houses. They charged the same 10% plus portion of the work/repairs performed on the house. They were good at screening and keeping the house without vacancy for 10 years. Despite the fees the house was profitable. When we took possession of the house back (and moved in for a bit) we found just how much of the house had been neglected and damage that had never been charged to tenants.

The third we could never keep a good manager and ended up switching it seemed every 6-12 months. Terrible at screening, vacancies, etc.

We sold the three homes and decided we were not interested in RE any longer other than our primary home.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by carolinaman »

HomerJ wrote: Mon Apr 13, 2020 9:00 am
frankandbeans wrote: Sun Apr 12, 2020 10:14 amMoney: It doesn't save you any money. A good manager can get repairs done cheaper and maximize the rent charged, but this usually just nets out some but not all of the management fee. (6-8 percent is standard in my VHCOL markets.)
Sometimes property managers will cost you MORE in repairs, because it's not THEIR money, so they will send out a plumber or an electrician for an easy problem that you could fix yourself.

Of course, you could tell them to get your approval for all requests from the tenants, but then you just lost one of the benefits of having a property manager.

Finding a good one can be hard. It's probably as hard as finding a good investment adviser.

Once you know enough to pick out a good property manager or a good investment adviser, you know enough that you no longer need one.
Just like finding a good property manager is hard, finding good trades people and handyman is equally hard. Also, they have to be managed. You can not just turn them loose without proper oversight.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just relatively easy)?

Post by Watty »

gr7070 wrote: Sun Apr 12, 2020 10:21 pm
Watty wrote: Sun Apr 12, 2020 9:44 pm Be sure to think through how this will work when you are elderly when picking a new property manager may be more difficult.

If you are married then you spouse may also need to manage the rental property if something happens to you.

One of the reasons that I do not own any rental properties is that even with a property manager I do not want to be dealing with it when I am 85.
All of these are pretty poor reasons to not hold RE. It's not that hard, nor takes very long to divest oneself of traditional real estate.



There's plenty of significant reasons to not hold investment properties. Your spouse spending hours(?) hiring a real estate agent isn't one of them.
It depends on you and your spouse.

If you have much contact with relatives that are in their 70s older try picturing them interviewing and picking out a property manager to hire a good one. Sure some of the could do it but even they could end up in a nursing home later on and not being capable of it anymore.

Selling off a rental home that you have owned for decades can also generate a huge tax bill that would all hit in one year so that might not be as simple as it sounds.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by tibbitts »

Sandtrap wrote: Sun Apr 12, 2020 5:35 pm
Abe wrote: Sun Apr 12, 2020 11:59 am It depends on the property manager. Most of them will not manage your property the way you would. I recently turned over one of my rental houses to a manager just to try it out. The tenant called the manager and said the A/C was not cooling properly. The manager calls an HVAC man and all he does is clean the outside condenser unit. Anybody can do that. All you have to do is take a water hose and wash it out. About a month later, the tenant calls the manager again with the same problem. Same thing happens, she calls HVAC man and he cleans the unit again. There is no way the unit needs cleaning again that soon. Then the tenant calls the manager again and says the a/c drain is draining water on to the carport, so the manager calls HVAC man again for this. All he had to do was extend the PVC drain pipe a little out to the yard. Any handyman could have done that for a lot less cost. It's extremely hard to find a manager that will manage the property the way you would. It's not their money, so they don't care as long as they get their fee.
+1
Unfortunately, this is the "norm" rather than the exception.

j :happy
But I think this represents unrealistic expectations for a property manager. In another thread I mentioned that a realtor I had fixed some things around my house at no cost, did some cleaning for no cost, even did a garage sale for me, etc. I don't think that's normal to expect.

When most homeowners I know - maybe not most Bogleads - have an hvac problem, they call an hvac company - with their own money. They don't think about it that much, wonder whether a handyman could fix it, etc.

I would say the second call and resulting cleaning of the hvac might be an issue the manager should follow up on, but other than that, no you don't call a handyman when you have water draining on the carpet from the hvac. If the unit had never ever done that before after being installed for some time, then it doesn't seem likely that the only problem is the drain line terminating in the wrong place.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by hand »

Flextruck wrote: Sun Apr 12, 2020 5:51 pm The two keys to successful real estate investing is to buy at a reasonable price/entry point and SCREEN potential tenants. If you are skilled at those two areas, there's absolutely no reason you can't do well in RE investing.
Disagree strongly - unless you have a large diversified portfolio of rental properties, you are exposed to undiversifed risk and subject to the very real (if small) risk of failure. Many successful RE investors get rewarded for this risk, but some pay the price *despite* doing everything right.

Model tenant marries a lawyer who decides you're a soft target?
Global pandemic means your 800 credit rating tenant can't/won't pay?
Tenant sublets to a meth cooker and now your property is a toxic waste site?
Rental law changes making your property worthless?

All these (and many more) are risks that can't really be prevented...
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by m@ver1ck »

rgs92 wrote: Sun Apr 12, 2020 12:12 pm You started by saying you wanted to own real estate to get leverage.
Could you elaborate on this? Real Estate is an investment vehicle with returns (or losses) like any other investment.

Leverage as a factor by itself is not necessarily an advantage, but it could be if there are large capital gains or a very high positive cash flow that lasts, but those are certainly not a given. Possible, of course, but easier said than done.

Remember, you are paying interest (and principal back to yourself) each month on that leveraged amount.
And leverage can sting badly if prices drop (which can easily happen, especially in the non-long-term).

You could get leverage in investing by borrowing money and using it to buy stocks, bonds, gold, whatever. Pay back the loan when your investments go up and pocket the difference. Risky? Sure, but the same thing can happen with an investment property.
The difference is that the rentor is paying the mortgage. It's a long term play to own the property. So with 20% down, and over 30 years, the property will be yours. So - the money is sort of becoming 5x in 30 years. In addition, inflation means that maybe in the last 10-15 years, you'll probably be renting the property for more than the mortgage. And then there is the increase in the property price.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Sandtrap »

tibbitts wrote: Mon Apr 13, 2020 2:01 pm
Sandtrap wrote: Sun Apr 12, 2020 5:35 pm
Abe wrote: Sun Apr 12, 2020 11:59 am It depends on the property manager. Most of them will not manage your property the way you would. I recently turned over one of my rental houses to a manager just to try it out. The tenant called the manager and said the A/C was not cooling properly. The manager calls an HVAC man and all he does is clean the outside condenser unit. Anybody can do that. All you have to do is take a water hose and wash it out. About a month later, the tenant calls the manager again with the same problem. Same thing happens, she calls HVAC man and he cleans the unit again. There is no way the unit needs cleaning again that soon. Then the tenant calls the manager again and says the a/c drain is draining water on to the carport, so the manager calls HVAC man again for this. All he had to do was extend the PVC drain pipe a little out to the yard. Any handyman could have done that for a lot less cost. It's extremely hard to find a manager that will manage the property the way you would. It's not their money, so they don't care as long as they get their fee.
+1
Unfortunately, this is the "norm" rather than the exception.

j :happy
But I think this represents unrealistic expectations for a property manager. In another thread I mentioned that a realtor I had fixed some things around my house at no cost, did some cleaning for no cost, even did a garage sale for me, etc. I don't think that's normal to expect.

When most homeowners I know - maybe not most Bogleads - have an hvac problem, they call an hvac company - with their own money. They don't think about it that much, wonder whether a handyman could fix it, etc.

I would say the second call and resulting cleaning of the hvac might be an issue the manager should follow up on, but other than that, no you don't call a handyman when you have water draining on the carpet from the hvac. If the unit had never ever done that before after being installed for some time, then it doesn't seem likely that the only problem is the drain line terminating in the wrong place.
Very true.
Good points.

j :happy
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by rgs92 »

Right, but the key is long-term, not flipping as a lot of people think. Good explanation; thanks.
Yep, the key is make the renter pay the cost of holding the property, and when it's paid off, the rent is gravy (net of taxes and maintenance of course).
Thanks again.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Sandtrap »

hand wrote: Mon Apr 13, 2020 2:10 pm
Flextruck wrote: Sun Apr 12, 2020 5:51 pm The two keys to successful real estate investing is to buy at a reasonable price/entry point and SCREEN potential tenants. If you are skilled at those two areas, there's absolutely no reason you can't do well in RE investing.
Disagree strongly - unless you have a large diversified portfolio of rental properties, you are exposed to undiversifed risk and subject to the very real (if small) risk of failure. Many successful RE investors get rewarded for this risk, but some pay the price *despite* doing everything right.

Model tenant marries a lawyer who decides you're a soft target?
Global pandemic means your 800 credit rating tenant can't/won't pay?
Tenant sublets to a meth cooker and now your property is a toxic waste site?
Rental law changes making your property worthless?


All these (and many more) are risks that can't really be prevented...
Good ones!

Model tenant spinster single lady meets fast talking guy who moves in with her. Drug dealer.
Two single lady "room mates" move in. Pay rent on time. All manner of interesting fellows visit the unit at all hours.
Older senior lady tenant of many years gets a tiny barking dog, produces medical document for a "service animal". Adjacent tenants move out due to the 24/7 barking dog.
etc, etc.
Military couple moves in. Husband on deployment overseas. Wife comes home from the nightclubs drunk and falls down the stairs. Sprains her ankle. Breaks her high heel shoes. Hires a lawyer. . . . . .

j :happy
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Wricha »

The idea that a REIT’s = being an Real estate owner/developer/landlord is not true. As someone who buys shares in a REIT you are more like a bank without the control/authority.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Abe »

tibbitts wrote: Mon Apr 13, 2020 2:01 pm
Sandtrap wrote: Sun Apr 12, 2020 5:35 pm
Abe wrote: Sun Apr 12, 2020 11:59 am It depends on the property manager. Most of them will not manage your property the way you would. I recently turned over one of my rental houses to a manager just to try it out. The tenant called the manager and said the A/C was not cooling properly. The manager calls an HVAC man and all he does is clean the outside condenser unit. Anybody can do that. All you have to do is take a water hose and wash it out. About a month later, the tenant calls the manager again with the same problem. Same thing happens, she calls HVAC man and he cleans the unit again. There is no way the unit needs cleaning again that soon. Then the tenant calls the manager again and says the a/c drain is draining water on to the carport, so the manager calls HVAC man again for this. All he had to do was extend the PVC drain pipe a little out to the yard. Any handyman could have done that for a lot less cost. It's extremely hard to find a manager that will manage the property the way you would. It's not their money, so they don't care as long as they get their fee.
+1
Unfortunately, this is the "norm" rather than the exception.

j :happy
But I think this represents unrealistic expectations for a property manager. In another thread I mentioned that a realtor I had fixed some things around my house at no cost, did some cleaning for no cost, even did a garage sale for me, etc. I don't think that's normal to expect.

When most homeowners I know - maybe not most Bogleads - have an hvac problem, they call an hvac company - with their own money. They don't think about it that much, wonder whether a handyman could fix it, etc.

I would say the second call and resulting cleaning of the hvac might be an issue the manager should follow up on, but other than that, no you don't call a handyman when you have water draining on the carpet from the hvac. If the unit had never ever done that before after being installed for some time, then it doesn't seem likely that the only problem is the drain line terminating in the wrong place.
No it's not an unrealistic expectation for the property manager. If a tenant calls me and says the a/c is not cooling properly, the first thing I ask them is what the temperature is in the house. If the temp in the house is around 75 degrees and it's 95 degrees outside, I pretty much know that the unit is doing about all it can do, and I wouldn't call an HVAC company in this case, and I would expect my property manager to do the same. But if I did have the unit cleaned and the tenant calls again one month later saying essentially the same thing, I for sure would not call an HVAC company again. But if I did call and HVAC company in the second case like the manager did, I wouldn't let them charge me again for cleaning the a/c when I just paid them for cleaning it one month ago. That's ridiculous. In the case of the a/c condensation drain line, the tenants kids pulled the PVC pipe out away from where the lines comes out of the house so the water was running out on the carport, not on the carpet as you said. All it needed was a new piece of PVC pipe extended out past the carport to the lawn. The manager should have known that. I would have known that for sure and had my handyman fix it. The manager didn't even go look at it or even ask the tenant for details, she just called the HVAC company.
So no, the property manager definitely is not managing the property the way I would.
Last edited by Abe on Tue Apr 14, 2020 3:11 pm, edited 2 times in total.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by 02nz »

As someone who just sold a rental property (and with about a decade of experience with 2 properties) - it's definitely not super easy. You can go for years with very little issue, but then when (not if) something becomes an issue it can be a huge headache even with a property manager. I would not recommend someone get into the landlord business (esp. in the current environment) unless they very much knew what they were doing, which is (no offense intended) not OP, based on the questions asked.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by SandysDad »

It depends on the type of property. If you want something that is “no work”. You need a newer class a property in a top in demand location.

What you will find is that when you look at the numbers profit wise for these types of properties the income after expenses is minimal (or a loss). Possible appreciation, but that should be icing. Not your base case

If this is what you want. You need to wait patiently for this type of investment to fall out of favor and then buy when it is profitable from and income perspective.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by rich126 »

jastevenson wrote: Sat Apr 11, 2020 10:47 pm I like the idea if diversifying into real estate to get leverage. However, I know for a fact that I would hate being a landlord, and would absolutely use a property manager.

Obviously, having a property manager makes owning a rental property easier, but I want something that is easy in absolute terms (5 hours of work and a couple of phone calls per year, let’s say).

Is owning a rental property managed by a property manager easy, or just “less hard” than being a landlord?

Thanks!
I had an excellent property manager who didn't charge much and I had zero problems over 7 years. Of course that isn't a long time and maybe she was just lucky. She had a group of people that did maintenance, lawn work and pool work. And if they saw anything going on with the property they would give her a heads up.

I'm thankful I no longer have a rental property. If the rental was a smaller fraction of my net worth it would be ok, but this was a very nice SFH and I wouldn't want it significantly damaged. When I moved back in, I found stuff wrong but nothing that cost thousands to fix.

Real estate is a good way to make a good amount of money but you need to be careful and have some luck. Think of all of the people who thought they had prime rentals due to great vacation spots, or with a college near by. Now those places are sitting vacant and may be for a while. And if the owners are leveraged, they may be in a world of hurt in the very near future.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by CurlyDave »

carolinaman wrote: Mon Apr 13, 2020 7:45 am
Sandtrap wrote: Sun Apr 12, 2020 5:32 pm
A top level reputable, "honest", and "highly professional" property management company can be nearly "hands off" to an owner/landlord. But, they will cost you.

Of course, there are a high percentage of barely competent to lousy property management companies that cost as much as good ones, or more.

How to tell the difference?
Tough
+1. The operative word in many responses is a "good" management company. The reality is they are more the exception than the rule, and finding them may be trial and error.
It can be worse than that.

In my little town, there are NO "good" property management companies. I interviewed, got recommendations and finally went with what was supposed to be the best one. The first experience I had with them was when we had a vacancy and they hired a company to change the carpets in the empty unit. Well, the carpet company left the porch light on one night. Another tenant calls the management company and they send someone over on an "emergency" basis to turn off the light. Then they charged me a $50 "minimum after-hours service call" to turn the light off. Now there are a lot of reasonable things they could have done which would have been much less expensive: tell the other tenant they would get it in the morning, charge the $50 to the carpet company, tell the complaining tenant to go over and unscrew the lightbulb, etc.

And thus began an adventure where every time anything happened, the "best property management company in town" always took the path that led to them charging me the highest possible fee. The management company also owned some rental units. Mysteriously, in the ones they owned the vacancy rate was about 10% of the vacancy rate in ones they managed for outside owners. The only properties they would show were the ones they owned until those were completely filled.

In a few months I got tired of this and tried to fired them. The way their contract was written, I had to pay them for 3 more months of "service". I took one of the tenants, and asked her to manage the properties for me -- this worked much better. I paid her less than the management company and she did a much better job. IN facet we started to get new tenants who wanted us instead of the management companies in town.

If you like managing real estate it can be a great investment, if you think a management company is going to help you do as well, you are barking up the wrong tree.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by sunny_socal »

Super Easy with a property manager. But we have reliable tenants - big factor IMO
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by visualguy »

SandysDad wrote: Mon Apr 13, 2020 5:00 pm It depends on the type of property. If you want something that is “no work”. You need a newer class a property in a top in demand location.

What you will find is that when you look at the numbers profit wise for these types of properties the income after expenses is minimal (or a loss). Possible appreciation, but that should be icing. Not your base case

If this is what you want. You need to wait patiently for this type of investment to fall out of favor and then buy when it is profitable from and income perspective.
Profit is profit - no need to distinguish between appreciation and income unless you need the income. In some (maybe most) VHCOL areas, the profit comes mostly from appreciation, not income, which can be totally fine.
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by abuss368 »

Sandtrap wrote: Mon Apr 13, 2020 3:37 pm
hand wrote: Mon Apr 13, 2020 2:10 pm
Flextruck wrote: Sun Apr 12, 2020 5:51 pm The two keys to successful real estate investing is to buy at a reasonable price/entry point and SCREEN potential tenants. If you are skilled at those two areas, there's absolutely no reason you can't do well in RE investing.
Disagree strongly - unless you have a large diversified portfolio of rental properties, you are exposed to undiversifed risk and subject to the very real (if small) risk of failure. Many successful RE investors get rewarded for this risk, but some pay the price *despite* doing everything right.

Model tenant marries a lawyer who decides you're a soft target?
Global pandemic means your 800 credit rating tenant can't/won't pay?
Tenant sublets to a meth cooker and now your property is a toxic waste site?
Rental law changes making your property worthless?


All these (and many more) are risks that can't really be prevented...
Good ones!

Model tenant spinster single lady meets fast talking guy who moves in with her. Drug dealer.
Two single lady "room mates" move in. Pay rent on time. All manner of interesting fellows visit the unit at all hours.
Older senior lady tenant of many years gets a tiny barking dog, produces medical document for a "service animal". Adjacent tenants move out due to the 24/7 barking dog.
etc, etc.
Military couple moves in. Husband on deployment overseas. Wife comes home from the nightclubs drunk and falls down the stairs. Sprains her ankle. Breaks her high heel shoes. Hires a lawyer. . . . . .

j :happy
Crazy! At what point would you say “REITs”?
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Re: Just how easy is owning real estate if you have a property manager? (super easy, or just “less hard”)?

Post by Flextruck »

hand wrote: Mon Apr 13, 2020 2:10 pm
Flextruck wrote: Sun Apr 12, 2020 5:51 pm The two keys to successful real estate investing is to buy at a reasonable price/entry point and SCREEN potential tenants. If you are skilled at those two areas, there's absolutely no reason you can't do well in RE investing.
Disagree strongly - unless you have a large diversified portfolio of rental properties, you are exposed to undiversifed risk and subject to the very real (if small) risk of failure. Many successful RE investors get rewarded for this risk, but some pay the price *despite* doing everything right.

Model tenant marries a lawyer who decides you're a soft target?
Global pandemic means your 800 credit rating tenant can't/won't pay?
Tenant sublets to a meth cooker and now your property is a toxic waste site?
Rental law changes making your property worthless?

All these (and many more) are risks that can't really be prevented...
My situation is as follows; current renter has been in the house for 5-6 years and typically pays rent a day early. I've spent exactly three man hours on the property since 2016. The property spins off 10k per year, with 8k of that being pure profit.

I've got 30k-35k in said property and could sell it tomorrow for morning for 125k-145k. Hollywood would have a hard time topping your theoretical rental nightmare...
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