If your goal is to stay passive and hands-free, using a property management service would be a reasonable choice. If your goal is to become financially independent and successful in the long run, self-managing rental properties are essential. In this article, we discuss the real value proposition of a property management service and how is applicable to you, as a landlord. So, you can make a better-informed decision on how to manage your rental properties.
The correct answer is “significantly more than my property manager”. Because then it would make sense to delegate the management job to someone else and free up your “more valuable” time. But as you may find out sooner or later, your property manager makes a decent amount of money as well.
So, what are we missing here? What makes a property manager that can do his/her job more efficiently and scalably than a landlord? This question should really be at the heart of all your considerations.
A better question to ask yourself is “Is my management process inefficient and not scalable, or I do make so much more than my property manager that it makes sense to delegate.” For a lot of landlords, it is actually their processes causing them to spend too much time. So, by fixing their process, we can potentially increase their hourly rates to $50-100, surpassing most W-2 jobs available on the market.
The reason that a property manager would manage a large portfolio is because of their tools and processes that help them to automate a lot of things landlords do manually and a bit more familiarity with the leasing cycle and compliance.
For self-managing landlords, there are tools that can automate a lot of tedious and time-consuming tasks, from payments and accounting to turnover and compliance. The existence of those software solutions for individual landlords has greatly leveled the playing field, making self-managing rental property scalable for individual landlords. For our company, PortfolioBay, the founders of the company self-manage all their rental properties in addition to running a software company, demonstrating both the feasibility and practicalities.
There is no shortcut to success. And for those who look to become financially independent through rental property investing, not only does the extra 30%-40% cash flow self-managing properties get you to your goal faster, but it also provides you with the understanding and perspective of running a rental portfolio and makes you more likely to succeed in the long run.