“You don’t know what you don’t know.”
Socrates
It has been a life-long learning process for appreciating
professionals in my adult life. Most of
the time, this teaching did not come easily to me.
From fixing cars and watching them break down at inopportune
times. Feeling physically poorly for
months until I went to a doctor who had me better in days. Using bug spray to get rid of termites only
to see them come back with a hungry vengeance until a proper exterminator was
employed.
To be fair, fixing things on my own outside of my sweet
spots isn’t always a losing effort. I’m
always proud of myself when I can pull off some repair successfully in my house
or submit some legal paperwork without any help. Go me!
Likewise, in property management, there is some definite positive
reinforcement for self-managing:
“The last tenant I placed paid on time and left my rental
home spotless!”
“No one is going to love my property like I do.”
“I do a lot of the repairs myself and save money.”
“Property managers are expensive!”
“The house is right by my house.” (writer’s note: that’s
a double-edged sword…)
It is estimated that around 50% of all rental properties are
self-managed, so it is prevalent. But despite the “tenant domination” stories
told by some landlords at parties, it is not all roses. There really are midnight calls for stopped
up toilets, tenants not paying rent that need to be evicted, and disgusting
houses dropped into a landlord’s lap when a tenant leaves in the middle of the
night. There is actual effort and stress
in managing rental properties; to do it well requires time, sweat, and
educational investment. No one can say
it isn’t doable, though.
The biggest driver for self-management is saving money. I get that!
There is a certain joy when all the money generated from the rental home
goes directly into the bank account without any property management fee
deductions. Months (or years) that this
happily goes on is certainly a case for self-management; it probably comes to a
few thousand dollars in potential savings per rental house a year.
But where things sometimes go awry in this calculation is
that there is the “One Mistake”; this one miscalculation erases all accrued
property management savings. Whether it
is a legal one where a security deposit dispensation is not sent out in 30 days
and the tenant who destroyed the house has the legal right to get it all
back. Or when needed (or, sometimes it
turns out, unneeded) repairs are made and the time and monetary investment keep
ballooning due to unfamiliarity. Or a
trusted vendor was employed who actually shouldn’t have been trusted. Or a tenant court date that keeps being
pushed farther out due to not sending out proper notices while, concurrently, no
rent is being paid.
The one-offs of learning the property management business
can erase all the realized monetary savings and just leave uncompensated time
that could have been better spent. That
can be frustrating! And that’s the tough case against self-management.
The problem with avoiding the costly “One Mistake” is that
it could happen in so many different areas.
And sometimes things turn into “Two Mistakes” or more…
Property
managers aren’t full-proof, but experience does offer some benefit for
steering clear of these costly errors.
Happy Landlording!
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