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If you are thinking of using a management company, know that they have it pretty well figured out. Their fees will take almost all of your rental income after m

by ams6110 10y ago

If you are thinking of using a management company, know that they have it pretty well figured out. Their fees will take almost all of your rental income after mortgage and taxes and insurance. So you'll end up with property that the tenants paid for (no small thing) but no real cash flow.

irishcoffee 10y ago
I use one now, 80 bucks a month. I only used one because I was a brand new landlord and wanted training wheels. Turns out all I need them for is a rent-collector broker. I interface directly with my tenants to address all issues. While I still make a small profit even after the $80 fee, I think whenever these tenants decide to leave, I may strike out on my own, maybe make a little more money.
- phil21 10y ago
  That's not what most folks use them for. If you use them for maintenance and generally fielding complaints they get expensive quick. You are in the very extreme minority of people able and willing to perform maintenance and repair work yourself. We're a dying breed it seems. For most it's simply not a realistic option, due to the lack of "real world" experience/skills most in the position to buy an investment property are in. This is why it's generally considered a poor investment choice for most people just looking to put money somewhere. If you are willing to roll your sleeves up and have some handyman skills? You'll certainly enhance the return on your own capital that way. I see such businesses (and they are businesses - not remotely passive) as a means to ensure your money is working for you, which feels much more satisfying and honest to me than just stuffing it into some ETF somewhere.
  - icebraining 10y ago
    It's not just skills, though, it's also the time it takes. Like all side businesses, it'll consume quite a bit of your "free" time until you can live off it and quit your job. Many people aren't interested in getting a second job, they just don't realize that's what they're doing.
  - irishcoffee 10y ago
    I agree, I wouldn't be very pleased with the current state of affairs if I didn't enjoy being a handyman. Heh for instance, the day before my first tenants moved in, a pipe burst. I always assumed pipe welding and drywall patching was hard, but not so much. A tree fell in my yard and thru my fence, twice. Bought a chainsaw, grabbed a hammer and nails, trees are cleaned up, fence looks fantastic. Tenants have let the oil run out twice, learned how to prime an oil line. Closet doors are jacked up, learning how to do some carpentry. Fortunately I lucked out with tenants. I am a working single parent and I live an hour away from my property. I'd really like this to work out in the long run, but so far what I've learned more than anything else is, you can't beat having excellent tenants.
nradov 10y ago
Besides that there is a high level of fraud in small-time property management. Crooked managers have kickback arrangements with their preferred vendors for landscaping, appliance repair, painting, etc. The property owner pays full retail price for the work and then the manager gets cash back under the table. Many managers are 100% honest but it's difficult to know whom to trust and there's no way to really be sure.
- FireBeyond 10y ago
  Hah, know what's even better than that, when the PM company outright owns (or their owner owns) a whole arm of companies like that, AND has "exclusivity arrangements" with those.

by ams6110 10y ago

irishcoffee 10y ago

I use one now, 80 bucks a month. I only used one because I was a brand new landlord and wanted training wheels. Turns out all I need them for is a rent-collector broker. I interface directly with my tenants to address all issues. While I still make a small profit even after the $80 fee, I think whenever these tenants decide to leave, I may strike out on my own, maybe make a little more money.

phil21 10y ago
That's not what most folks use them for. If you use them for maintenance and generally fielding complaints they get expensive quick. You are in the very extreme minority of people able and willing to perform maintenance and repair work yourself. We're a dying breed it seems. For most it's simply not a realistic option, due to the lack of "real world" experience/skills most in the position to buy an investment property are in. This is why it's generally considered a poor investment choice for most people just looking to put money somewhere. If you are willing to roll your sleeves up and have some handyman skills? You'll certainly enhance the return on your own capital that way. I see such businesses (and they are businesses - not remotely passive) as a means to ensure your money is working for you, which feels much more satisfying and honest to me than just stuffing it into some ETF somewhere.
- icebraining 10y ago
  It's not just skills, though, it's also the time it takes. Like all side businesses, it'll consume quite a bit of your "free" time until you can live off it and quit your job. Many people aren't interested in getting a second job, they just don't realize that's what they're doing.
- irishcoffee 10y ago
  I agree, I wouldn't be very pleased with the current state of affairs if I didn't enjoy being a handyman. Heh for instance, the day before my first tenants moved in, a pipe burst. I always assumed pipe welding and drywall patching was hard, but not so much. A tree fell in my yard and thru my fence, twice. Bought a chainsaw, grabbed a hammer and nails, trees are cleaned up, fence looks fantastic. Tenants have let the oil run out twice, learned how to prime an oil line. Closet doors are jacked up, learning how to do some carpentry. Fortunately I lucked out with tenants. I am a working single parent and I live an hour away from my property. I'd really like this to work out in the long run, but so far what I've learned more than anything else is, you can't beat having excellent tenants.

nradov 10y ago

Besides that there is a high level of fraud in small-time property management. Crooked managers have kickback arrangements with their preferred vendors for landscaping, appliance repair, painting, etc. The property owner pays full retail price for the work and then the manager gets cash back under the table. Many managers are 100% honest but it's difficult to know whom to trust and there's no way to really be sure.

FireBeyond 10y ago
Hah, know what's even better than that, when the PM company outright owns (or their owner owns) a whole arm of companies like that, AND has "exclusivity arrangements" with those.