When I first started in real estate, it was a no-brainer that I would self-manage. Like many investors looking to make real estate investing their full-time job, it simply was not feasible to give such a huge cut of my cash flow to an external company.
As a rule of thumb, property management companies charge 8% to 10% of total rent, plus other fees. I wanted to keep every dollar I could so I could reinvest it and run my business full-time sooner rather than later.
Quickly into my portfolio, I also realized that I could operate my rentals with better customer service and a higher level of performance than most companies. In 2021, I bought an eight-unit apartment managed by one of the most recommended management companies in the area. Upon closing, I realized that the PM was leaving a lot of money on the table: not collecting pet fees, deferring much-needed maintenance, renting at under-market rates, and more.
I thought to myself, “How on Earth are people paying for this?” Then and there, I solidified that I would never use a PM company but would build an in-house team.
This is not unique to me. Many investors can run a better-quality business than large PM companies. As long as you can problem-solve, you could be a great self-manager for your portfolio, meaning significantly more cash flow and a higher quality of service to your tenants.
Most of the time, investors opt to hire a professional management company under the impression it will make their investment completely passive. This usually ends up not being the case because you still have to manage your manager. Additionally, a lot of property management companies have to manage hundreds of properties to be profitable, which means you and your portfolio don’t necessarily get the necessary time and attention.
Often, this means self-managing ends up being a better route. If you have to manage the manager, why not just cut out the middleman for a higher profit and a better-quality rental? This is the route I have pursued in my real estate investing business and what has allowed me to quit my corporate mechanical engineering job less than one year into investing.
Rather than hiring a large company that would take a large portion of my cash flow, I opted to self-manage until I could hire an internal property manager—that is, a property manager who is on my own payroll and works directly on my team.
While it might seem daunting, self-managing can actually be pretty straightforward, and thousands of landlords out there self-manage and are very successful at it. If you are on the fence, here are some recommended resources to ensure you are successfully managing your properties.
If you’re more of a listener than a reader, then these three podcast episodes are for you.
This episode teaches you why it is important to remember that you are a business, not just a landlord, and that you can scale, adding systems and processes to your routine—while keeping things in-house and professional.
Having your systems and processes in place is essential to keeping emotions out of your business. It helps you deal with issues that arise systematically, protecting you from making emotional decisions while managing your time efficiently.
The three most important places you can typically streamline your REI business include:
This episode also dives into the benefits of streamlining your property management and the first step you should take.
Caleb was active duty military for 14 years, and once he joined special ops, he was deployed for six months at a time. During those six months, his house would sit unused. That’s when he saw an opportunity.
Caleb decided to rent out his house through Airbnb. As a new landlord and Airbnb host, Caleb had to learn by doing, which was increasingly more difficult since he was self-managing from Iraq, Afghanistan, and Africa. He was able to combat this challenge by building a team that could handle what he couldn’t.
After a few years of investing solo, Caleb joined a partnership to expand his portfolio and increase his profit. His partner was also out of the country, so they switched off who was on call and figured out how to automate their check-in and check-out processes. As the business grew, the partnership adjusted to ensure its longevity. Caleb now hopes to continue scaling his business, adding to his personal portfolio, and building wealth in the background.
Dana Dunford is the CEO of Hemlane, a technology-enabled property management platform. The best properties are not always the ones in our own backyards, which is why Dana is a strong advocate of purchasing properties anywhere.
She empowers real estate investors to do this by identifying the pain points of property management and figuring out ways to make it more efficient. The result: an intelligent process for managing rentals from a distance while connecting them with local, licensed professionals.
In 2018, Dana was named one of the top 20 women leaders and influencers in commercial real estate tech. She brings a unique background to real estate, having previously worked at Apple on its worldwide financial planning and analysis team and received her MBA from Harvard Business School.
By the end of the episode, you’ll be able to self-manage your real estate so well that your tenants will think you’re using a full-service PM!
Whether you are just getting started managing your rental properties or are looking for a way to be better organized and systemized, these resources will teach you how to do just that. Remember, running a great rental property business is important not just for you but also for your tenants, so they are happy and stay a long time in your property, making your management easier and your bottom line bigger.
Save time and money with this refreshing guide to managing your own properties.
In The Self-Managing Landlord, Amelia McGee and Grace Gudenkauf share the secrets of efficient property management, tenant screening and onboarding, and scaling your business—all to help you break free from the 9-to-5 grind and create lasting wealth through real estate.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
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