What happened with my Property Manager…

What's up you guys? It's Graham here!

So first of all, thank you for watching. Make sure to sit back, relax, subscribe, hit the like button, and let me give you some backstory on the situation: my experience hiring a property manager and whether or not all of this was actually worth it.

So anyways, some backstory. Since 2011, I've purchased six properties. That includes three houses, two duplexes, and a triplex. All of those were purchased with the intention of being able to buy them, and then fix them up, and then rent them out. Really, up until about eight or nine months ago, I did all the managerial work myself. I would rent them out any time a unit became vacant. I would manage all of the renovations and repairs. I took every phone call personally. I would make sure that rent is being paid every month and I always ensured, no matter what, that the like button was being smashed.

I was basically a one-man show for everything, but I really took pride in the fact that everything was being done myself because I can make sure it's done correctly, the right way, the first time. But last year, when I had a vacancy from a tenant who was relocating for work, I just didn't have the time to show the property to anybody else. I was just so busy working as a real estate agent and also trying to pump out three YouTube videos every single week that I didn't have the time to personally take each and every phone call. I didn't have the time to go and show it. I didn't have the time to manage all the renovation and repair to fix it up to get it rental ready, and I really had no other option at that point other than to hire a property management company; otherwise, the home was just going to be sitting empty.

So, of course, I went ahead and hired one at the cost of 8 percent of gross rents. That was the first time in seven years that I gave anyone else the authority to manage one of my investments for me, and I was really nervous because I believe that no one is as careful and as diligent as the owner will be. No one else is as careful with the investment when they don't have all of their money into something, so I really had no other choice other than just to give this a shot and see what happened.

And of course, in the beginning, I definitely encountered some issues with this. Now my first complaint was that I absolutely hated the pictures that they used. They basically just went and took like random iPhone pictures. Let's be real, you don't do that when you're renting a property; just using high-quality professional pictures can easily get you an extra 10% in rents! So obviously I brought this concern up to them. I voiced my opinion, we swapped out the pictures for better pictures, and then that.

Now my second complaint was that they added a 20% surcharge on top of all the renovation work the property needed, which on a $3,000 job, that worked out to be $600. And this wasn't for them managing the work either; this was a subsidiary of their own company, and the 20% surcharge was really just for processing the payment. So when I brought this up to them, they allowed me to pay the renovation company directly, which saved me about $600.

In terms of renovation cost, it was expensive! Had I just managed the project myself and then contracted out each individual job, I probably could have saved about $1,200 over a few days. But at that point, I'm really paying for the convenience of not having to do that, so I figured, you know, it's fine. My third complaint was that they aren't as careful about picking tenants as I am because it's just not their place.

Like, they sent me one approved application and they wanted my acceptance before taking that tenant's deposit, but it turned out that tenant was lying about their job and about where they were living. I found out myself when I Googled the company that they said they worked at. I called the company's number directly from Google, and it turned out that they didn't even work there! And that was something the management company didn't catch because they use the number the tenants applied with, which let's be real, tenants lie on their applications all the time. It's up to you to do your own due diligence on that.

Now the second application they sent me seemed a little bit sketchy because the tenant wanted to move in immediately, and to me, that's always a big red flag. Now the tenant listed their landlord and their landlord's number on the application, and of course, the landlord gave them a huge glowing recommendation and they're so sad to see them go. But what's to stop a tenant from lying about their landlord's phone number and putting their best friend on there instead? And then of course, their best friend is gonna lie for them and vouch that they're a great tenant.

So then I used my genius internet stalking skills to find the last time the property was listed and sold. I found the agent who was representing the buyer of the property who was now the owner. I called that person and I asked for the owner's phone number. That buyer's agent gave me the phone number to the owner, and it turned out when I spoke with the owner, they were in the process of evicting that tenant for non-payment of rent! And this is something the management company did not do. It's so difficult to verify that the person you're calling is actually the owner, and I know to look into this because I have seen tenants lie about this a few dozen times over my career.

And then the third application they sent me was a winner! Everything checks out, everything looked great. I went ahead and accepted that lease, and all of that was eight months ago. So here's what happened since then:

Now first of all, I rented out the property for 15% more than the last tenant was paying. Now this is a combination of just the market value going up over time and also that I rent my properties just under market value so that way I can rent it out really quickly and have a very attractive selection of tenants to pick from. And I realized when I say attractive, by the way, I'm not talking about like physically attractive tenants; I'm talking about tenants who have really good income and credit. My tenants are not like supermodels or anything like that. I wish! Maybe one day, but not now.

But anyway, I digress. The 15% increase in rent more than paid for the cost of the property manager and means I get to make a little bit more money each and every month, so this is really good for me. Not only do I make more money, but also I have more free time and less responsibilities.

So secondly, it's been really, really nice just to have the peace of mind of not having to think or concern myself with this property at all. Previously, when I managed this property, I would get the occasional call like, "The garbage disposal isn't working. Can we call someone to come and fix it?" or "The sprinklers aren't turning on in the backyard. Let's go and get someone to fix it." Now that didn't happen often, and it was pretty rare, but just knowing that I'm not gonna have to take any more of those phone calls is very nice.

I also instructed the management company to handle any repairs that come up under $200 automatically without telling me, so that way if anything minor comes up, they're just gonna go and fix it. Now so far, in about eight months, they have not once used this. But you know what? It's there if they need it.

The third, it's really nice that they handle all of my income and expenses for me. I don't do a single thing except take their end-of-the-year statement, give that to my CPA who then files everything on my tax return. Now prior to this, what I would do is have each of my rental properties with its own checking account online, and then that way each account would have its own income and expenses for me to extrapolate from.

Now, I have to admit that I do like the distance between myself and the tenant. I've never met the tenant before, but I'm happy knowing that there's an intermediary between us because at the end of this, it's a business, and being able to make decisions from a business, not a personal standpoint, is very helpful. Like I'm very much a people person, and sometimes I'll care too much about trying to make the tenant happy. Oftentimes, that's to my own detriment.

So there's definitely a steep learning curve figuring out how friendly you can be with tenants versus how much business I need to be. And here's a very important lesson for all the real estate investors out there that I learned myself the hard way: the more friendly you are with your tenants, the more likely they are to then take advantage of you.

And I really don't like to make generic bold statements like this, but from my experience, every single time, this has been true. If you let a tenant pay you late once without charging a late fee because you're a nice person, you want to give them a break, all of a sudden every single month after that, the rent is paid late. If you pay for a new garbage disposal when the tenant clearly broke it themselves from misuse, but you just fix it because you're a nice guy and you want to make them happy, then all of a sudden, everything else starts magically breaking out of nowhere, and they just demand that you fix it.

Tenants can and will push the limits, and the more that you budge, the more they're going to get away with. And I'm not trying to villainize tenants or say that all tenants do this, because this is not the case. But if you ask any experienced real estate investor, they will tell you that largely this is the case, and you have to set rules and boundaries very early on and stick with them.

So having this faceless business behind things makes it just a little bit easier for it to function as an investment. So my overall experience so far after eight months is that hiring a property manager has so far been absolutely worth it, and I should have done it a lot sooner. Even though it only takes me about one to two hours per month to manage six rental properties, I am realizing that those one to two hours are pretty much better spent doing anything other than sourcing plumbing bids, and keeping track of expenses, and making sure rent gets paid and everything else that goes along with that.

And even though the property manager only handles one of the six properties and I still manage the other five myself, I'm slowly going to be incorporating them into running the others. So that one day, hopefully, I could be fully removed from all of the day-to-day aspects of managing rental property.

Even though this cost me more money up front, I think I could use this extra time towards higher-yielding projects that would more than make up for that. For me, letting go is really one of the hardest things out there for me to do, because I like doing everything myself and knowing that when something is done, it's being done correctly, it's being done the right way, and it's being done exactly how I like it to be done.

Like I film all of these videos myself, I edit all of the videos myself, I reply to all the comments myself, I get to all of my emails myself. I pretty much do everything myself. Same thing with working as a real estate agent; I always show my own properties, I handle my own phone calls, I write my own offers, I do everything myself because I know it's going to be done correctly.

I'm also with the rental renovations that I do now, even though I hire other people out to do the work for me, I'm still there every single day, sometimes twice a day, to make sure everything is going as planned and everything is going correctly. And I'll admit that at a certain point, you start to have too many things going on that you get bottlenecked and things fall through the cracks because you're so concerned over every minut detail out there. And that happens.

So even something as small as hiring a property manager just to free up some extra time is huge for me. And for anyone watching who's thinking about investing in real estate or maybe you have a few rental properties already, this is my advice: my advice is to first learn the business yourself. Learn how to manage tenants, learn how to rent out the properties on your own, and then when you get to the point where your time is really better spent elsewhere, that is the right time to hire a property manager.

See, by that time, you'll know exactly what to look for. You'll be able to spot any inefficiencies that take place, and you'll be able to know whether or not that property manager is really doing a good job. And if not, you'll know about it because you've done all of this yourself.

And when you do get to that point, you could better spend your time in other areas where it's better suited. Like watching YouTube videos and, of course, smashing that like button if you haven't done that already.

So with that said, you guys, thank you so much for watching. I really appreciate it. If you haven't subscribed yet, make sure to subscribe. Make sure to add me on Instagram; I post there pretty much daily. So if you want to be a part of it there, feel free to add me there.

Thank you again for watching! Comment down below for the YouTube algorithm, and until next time!