Couldn’t handle it...why I just hired a property manager

They wanted to charge me seven dollars to change a lightbulb. Seven dollars! That's basically a footlong Subway sandwich straight up for changing a lightbulb. So as soon as I saw that, I'm like, no way am I ever paying seven dollars to change a lightbulb. If there's any takeaway from this video, you will never...

What's up, you guys? It's Graham here. So the time has finally come; it happened. People ask me all the time, "But what are my thoughts on property managers?" And I explained that it's pretty easy; it's not so hard. I spent maybe 1 to 2 hours per month managing my properties, and I have five in them. I have three houses, a duplex, and a triplex.

Now, since 2011, early 2012, I've handled it all myself—from fixing up units to renting them out, to managing anything that breaks to just accounting. Everything was pretty much just me. But the time had come, and I broke down and hired a property manager.

So anyway, here's the backstory. Why you would want to manage a rental property yourself, why you wouldn't want to manage it yourself, and why I ultimately decided to hire a property manager in my experience so far. So stay tuned with this one because this will be a great video. And as always, if you enjoy videos like this, just make sure to hit that like button. Don't forget to do that, otherwise you're going to get League mufe!

So let's start here. I ended up buying two houses and a triplex in late 2011, early 2012. Now, of those, two houses were vacant and one of the units in the triplex was vacant. So in order to rent them out, those units had to first be fixed up and remodeled, and then I could get a tenant in there.

Now, at the time, I really wanted the experience of learning how all of this worked firsthand. So I found the contractor myself; I picked out a lot of the materials myself. I drove down like every other day just to visit the site and make sure everything was going smoothly and staying on schedule and also staying on budget. So about three weeks later, all three places were pretty much fixed up, and I decided I would just rent them all myself.

Now, it was half financial because I just wanted to save the money, but I also really just wanted the learning experience and felt that I could do a better job because it's my own place than hiring someone else to do it where maybe they just didn't give it the same attention because they didn't own it.

There's just some background here for anyone who's new or just doesn't know. I began working as a real estate agent when I turned 18 years old, and I really began my career by doing leasing. So I had some pretty decent knowledge already about California lease agreements, photography, marketing, how to find tenants, how to somewhat vet them. So I had some basic knowledge on this already.

Now, with that in mind, I figured why spend $500 and 8% of the gross rents hiring someone else to do it when I could pretty much just do it all myself? And this is pretty much what I've already done for a living. So I took pictures of the units, I put them up on Craigslist, and the calls just rolled in. I scheduled open houses over the weekend, I handed out applications, and that was that.

Now, besides just one bad experience, with this video that I made explaining it all—if you guys have not seen that video, the link is in the description—I highly recommend you watch that. That's the example of pretty much everything not to do. Besides that one bad experience, all the tenants that I had picked have been amazing.

Since then, managing them has been extremely easy. Between five tenants, it really only took me about an hour, maybe sometimes an hour and a half, two hours at most per month to manage these properties and tenants. Most of the time this really just consisted of making sure the rent has been paid, cashing checks, looking over expenses, keeping accounting of everything, and if something breaks, just hiring the appropriate person to come and fix it. It was honestly just a really pleasant experience.

Now, if something were to break, because keep in mind at the time, I was really like 60 to 90 minutes away from these properties depending on traffic and time of day. All I would do is simply take the call or email and then do some research and find the appropriate person to go and fix it.

For instance, if there was a plumbing problem, I would then go on Yelp, find a top-rated plumber, call them, put them in touch with the tenant, and they would go out and fix the issue. Or if there was like a roof problem, I would go on Yelp again, find a top-rated roofer, call that person, and just coordinate with them to go out to the property and fix it. The contractor would then call me, let me know what the issue is, how much it's going to take to fix it, and if that's ok with me. I then pay them, and they go and do whatever work they need to.

By doing that, I could pretty much manage these properties remotely with very minimal effort, pretty much no matter where I am—whether I'm an hour away or whether I'm in the country, really didn't make any difference whatsoever—and honestly, it was just really easy work. When everything is running smoothly, I would rarely ever get any like inconvenient 3 a.m. phone calls or anything, unlike Sunday mornings at 5:00 a.m. Most of the stuff was fairly minor, little things that needed to be fixed that were done over email and, I mean, just little tiny things that didn't make much of a difference.

Now my landlord philosophy is this, and I might get a lot of hate on this. I like it. People just like and subscribe, just like it doesn't get their loading Pilate granted landlord; but this is it. This is it. I don't raise the rent unless it's a unique situation or just a cash flow issue. For instance, on my original three properties, I have never once raised rent unless the unit becomes vacant, at which point I just fix it up and rent it out at whatever its market value is at the time.

I've had the same tenants since 2011 that are paying the same rent now as they were back then. Am I leaving money on the table? 100% yes, I am. But on the flip side, I have great tenants that always pay the rent on time, that fix whatever issues come up, that are very easy to deal with. Then I don't have to worry about any vacancy because they're so happy there.

All the tenants I've had since back then just treat the place like it's their own, and they're just all-around awesome people. So they end up paying less in rent, and in return for me, I get a very easy tenant that I don't have to worry about. So I see that as a win-win scenario.

Again, if the tenant moves out, I simply fix up the unit and then re-rent it at market price. I think this has happened three times total over the last seven years. I think it's been almost seven—yeah, almost seven years. It's only happened just a few times, and in those scenarios, I end up getting market rent, which is usually a few hundred dollars more than what the current tenants were paying.

But then, unfortunately, I had one place go vacant when a tenant had to relocate for a job. So I figured, you know what? No worries! I can do it all myself again. I've been doing it before; I can do it again. If anything breaks, I just go to my Yelp people; they fix it. Honestly, it didn't really take much time between working full-time as a real estate agent, investing in properties, remodeling them, and making three YouTube videos a week.

I figured, you know what? I could handle it all because it didn't take that much time. Yeah, I mean that was until recently. I started to think the time it would take me to drive to and from San Bernardino from Los Angeles would take me about an hour, hour and a half each way. The time it would take to then screen tenants, to show tenants, to coordinate these fixes, to do everything else that comes along with managing a property, it just wasn't worth it.

Just spending three hours driving to and from San Bernardino from LA is worth $750 of my lost time. That is time I could be spending doing anything else and make more money than what it would cost to hire someone else to do the same thing. And then at that point, it finally clicked: I got to hire a property manager because I can no longer justify doing all of these things myself.

So I did some research online. I found some personal recommendations from people in the area; I decided on a company. Then I negotiated their price between another competitor of theirs, and then we settled on a flat 8% management fee of gross rent every single month, and we signed the contract, and that was that. So I did it! I hired a property manager to manage one of my houses.

Now keep in mind, that's only one. I still manage the others for myself because they're extremely easy to manage. But I've tested it out on this one home that's vacant. Now I'm sure if I have any other vacancy on anything else, I will slowly shift the property manager over to that. But at this point, I'm testing it out on the first property, and these are my experiences so far.

Overall, I'd say my experience is pretty pleasant. My biggest problem with the management company is just a few things. The first one is the time aspect. I like things to be done as soon as possible. For instance, they took like four days to do the walkthrough on the property, and in my mind, I'm thinking, why wasn't this done the same day or the next morning? Those four days that they waited to do a walkthrough are four days that I'm not receiving money.

Now when it comes to this, I'm extremely impatient, and that could be one of my biggest flaws. I want things done right; I want things immediately, and that's the way I've always run something. If something needs to be done, I don't care if it's like 11:00 p.m. at night; I just want to get it done. I do the same thing for clients, and I expect the same service in return.

But when you're dealing with a property management company that's open from like 9 a.m. until 6 p.m., and you try to reach them on all, you know, off hours, you just can't do it. That, it should—it frustrates me because I know I'm available 24/7, and I expect the same thing in return from somebody else, which I know is just, it's not realistic.

But the biggest issue with all of this is that any one of my properties that's empty is simply losing money, and that is not in my vocabulary. I cannot lose money. I don't even know what that means—losing money? What is that? I don't do that. Now, my other gripe with the management company was their photography.

And again, this is basically me just being a perfectionist and really having like super high standards that not many people can meet. But I am a stickler—you guys know this if you watch my earlier real estate agent videos. I'm a stickler for good photography. I will never accept iPhone pictures ever for taking pictures of a rental property and putting them online.

And sure enough, why did I get? They took pictures of my place that made it look like a piece of crap, so I was not into this whatsoever, especially when I had taken like professional pictures of this place that looked amazing. So I sent them my pictures to use instead of theirs. But just why they would ever use just crappy pictures to begin with, I just don't understand that.

But again, that's just me being like super particular about the way I like things. But that—that's an easy one! You just get good pictures, you just get good pictures once, and you can use those pictures for years. But anyway, they used my pictures, and within a week, we ended up renting it for 15% higher than what I had it rented for previously.

So that alone pays for the management company a hundred percent and also gives me an extra eight percent every single month in rent. And I just realized now there's a third issue I had, which was with their repair bills. Now, I'm not a big property manager person; I don't know too much about this. I've heard some stories of people online, friends and such, that have had issues with property managers charging for work that needs to be done and basically inflating whatever repair bills by like 10 to 20 percent because they take that as their management fee.

Well, you can't let anything escape by me, especially if it's money-related. I go down line by line, and I will nickel and dime. Like I just expect I will pay a fair price for a fair service. There's no way you should overcharge me for something that I shouldn't be overcharged for.

Case in point: I looked over my bill, and I realized they wanted to charge me seven dollars to change a lightbulb. Seven dollars! That's basically a footlong Subway sandwich straight up for changing a lightbulb. So as soon as I saw that, I was like, no way am I ever paying seven dollars to change a lightbulb. If there's any takeaway from this video, you will never—never! I forbid you from ever paying seven dollars to change a lightbulb!

No! So I'm like, dude, that's three bucks. That's three dollars, max for the cost of a lightbulb, and just simply starting unscrewing it and screwing it back in, it's like three bucks right there. So I just went through everything—line by line by line—and just really worked out what the item would cost, what a reasonable amount to charge for labor is, and then I came back with a much lower price that we eventually finalized on, and they did the work.

Now, right now I'm only a month into it, and so far, the experience has been fairly positive. I would say the best part about it is just not having the stress or worry and having the mental clarity of really not having to deal with any sort of tenants or repairs or walkthroughs or really anything that goes on with that.

Now, I am a little paranoid that a few things might fall through the cracks because I'm not micromanaging it, but like that's just something I have to learn to deal with and just be okay with someone else just taking control of it. Part of this is really just learning to delegate out to other people so I can focus on bigger and better things.

Because again, that's one of my issues is that I like to have little micro managerial control over everything that I do, and I like to do it all myself because no one could do it as good as I do. But again, that just takes up so much my time that's probably spent doing something else.

So I'm learning how to do that. For most of you watching, I think it is a great experience to learn how to manage the properties yourself if you have the time, if you can show it, if you like learning how to do this stuff, if you want the experience. I would recommend doing it yourself because when you do it yourself, you care about the property like nobody else.

I just think it's really hard to find someone who has the same level of care as you do simply because it's not theirs. It's just mentally they're not going to take care of it the same way you would because it's yours, and you care about it like nobody else. So sometimes when you manage the property yourself, you tend to do a little bit of a better job in most situations.

Then by doing that, you're better able to hire out somebody to do it because you already know what to look for; you already know your expectations and what's realistic and what's not realistic, and you're able to better pick the right manager because you've already had all of that experience.

But if you've already learned those things or you have no desire to do it, or you simply just know you wouldn't be doing as good of a job as a professional who does this—and keep in mind, part of the reason I was able to do this myself was because I was a real estate agent and somewhat knew what to expect. I knew the contracts and really what to do—but if you're not that type of person, you have no interest in doing that, and your time is better spent doing anything else, then I do think it makes sense you hire a property manager.

Even though it might cost you anywhere between six to ten percent of gross rent, it could just save you a lot of time to go and make up that money just about anywhere else. So with this said, you guys, that's my backstory. This is why I decided to hire a property manager and a little bit about my thoughts about property managers in general and what might be right or wrong for you.

So as always, thank you so much for watching; I really appreciate it. If you guys did not hit that like button, like I said, you might get League mufe if you don't do it. So make sure to hit that like button. Also, feel free to subscribe if you haven't already. I post three videos a week: Monday, Wednesday, Friday, 3:30 p.m. Pacific Standard Time.

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So if you guys want to be a part of it there, just add yourself to that. Thank you again for watching, and until next time!