I have been rather outspoken regarding my dislike of outsourced property management. My basic rationale for a long time has been that no one will ever care about my investment as much as I do, and that one of the advantages of real estate as an investment vehicle is precisely the notion that you can indeed manage it yourself in lieu of relying on someone, thus insuring the utmost quality.
As I am discovering after ten years in this business, the above sentiment may or may not be true. First, it may or may not be true that you can manage to better results than someone else, and if results are important then it may indeed be better to hire a manger. As you can imagine, there are caveats all over relative to this conversation.
Most of you know that currently on my agenda is syndication of 100+ units. I’ve isolated the marketplace and have been working to build systems within this marketplace so as to be ready for the eventuality of finding that needle in the hay stack which is an acceptable to me opportunity. As part of this process, I have in fact spoken with a number of management outfits and have isolated the people that I will be working with.
PROPERTY MANAGEMENT on LARGE PROJECTS vs. SMALL
Yes – I’ve become converted! I do believe that on larger projects self management is not a good idea for many reasons. From pre-acquisition due diligence and acquisition of market-specific knowledge, to repositioning, to placement of on-site personnel, to financial reporting, to disposition, a good professional property management is indispensible. I would sure as hell not want to do all of the work myself…
Having said this, however, I am still of the opinion that most of you out there do not need and should not use management for smaller portfolios. For starters, you couldn’t afford truly professional management, and by that I mean a company with 2,500+ units under management, on anything less than about 80 units. Secondly, if you invest the right way, you plain don’t need them! I know that my current 28-unit portfolio definitely does not require outsourced property management…
WHAT – WHERE – HOW
This is a loaded question. I’ve shared some of my perspective relative to this in an article entitled Newbies Take Note: Why You Shouldn’t Buy Houses for $30,000, as well as in Podcast 61. For now, let me just sum things up:
While most people believe that management is about the physical asset, it’s not. What makes management easy or difficult is people – tenants. If you attract the type of tenants who are reasonably easy to manage, then management is not hard and does not take a lot of time. Opposite is also true…
Understand – you can not attract tenants. Your property, where it is and what it is attracts tenants. The ease with which you will be able to manage tenants is a function first of your property! Extrapolate this any way you want; if I get into any more detail this is going to become an e-book…Continue reading on BiggerPockets