Author Topic: Real estate management companies for non-handy Mustachians?  (Read 4113 times)

champion

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Real estate management companies for non-handy Mustachians?
« on: August 07, 2012, 11:58:03 AM »
What advice do you guys have for someone who:

* Likes the idea of real estate investing
* Wants an inflation hedge
* But isn't handy, doesn't like hassles, and lives in an expensive city where buying is not a good deal vs. renting

Is there a good way to invest in real estate and have someone manage it for you?  How can you find a good management company?  Can you trust them?  How much do they charge?  Will they really take care of everything?  Etc.

totoro

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Re: Real estate management companies for non-handy Mustachians?
« Reply #1 on: August 07, 2012, 01:21:06 PM »
Doesn't make sense to hire a property manager (8% of rents plus taxes) where I am which is also in a marginal buy/rent market.  Maybe a REIT is a better option? 

Other than that, I would look to buy non-locally where the numbers are much better and hire a property management company in that market based on recommendations.  There are a number of people on this board who are in the US in Las Vegas, Phoenix and Florida which have better ROIs.  They might be good resources.

You might want to consider buying where you would vacation and turning your vacations into business trips to check on your property.  This is permissable in Canada.

arebelspy

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Re: Real estate management companies for non-handy Mustachians?
« Reply #2 on: August 07, 2012, 05:58:13 PM »
It's not worth the 8-10% for me to have a property manager, so I view it as a side-gig that pays me a few thousand a year.  Most of what a property manager does is collect rents.  I can do that (I.e. wait for checks to show up in my mailbox.)

I do use a company to help me find tenants, but I also look on my own.

I'm not handy at all.  I don't even know where to plug in a hammer.

So the repairs part of my management includes calling a plumber, electrician, HVAC guy, whatever.

I have a few handymen that do work for me (especially when renovating a property).

One certainly does not need to be handy to be a landlord.  If you are, then you're getting yourself a job as a handyman.  Some would like that and be good at it, but it's not a prerequisite.

Honestly, I don't even like to pick up a paintbrush, and avoid that as much as possible.
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mcneally

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Re: Real estate management companies for non-handy Mustachians?
« Reply #3 on: August 08, 2012, 04:31:59 PM »
Interesting, areberspy. I had basically ruled out landlording as an option because I'm worthless as a handyman. I wouldn't have a problem with doing the tenant search and rent collecting. I'm still not going to get into it anytime soon because I'm 26 with not a lot of funds outside of retirement accounts, and I'm not ready to commit to the city I live in. Maybe I'll look into it rental property more seriously in a few years. (I recently argued the 'rent' side of what was basically a 'rent vs. buy' thread, but my position could more accurately be stated as 'apartment over single family home').

arebelspy

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Re: Real estate management companies for non-handy Mustachians?
« Reply #4 on: August 08, 2012, 06:05:51 PM »
Interesting, areberspy. I had basically ruled out landlording as an option because I'm worthless as a handyman. I wouldn't have a problem with doing the tenant search and rent collecting. I'm still not going to get into it anytime soon because I'm 26 with not a lot of funds outside of retirement accounts, and I'm not ready to commit to the city I live in. Maybe I'll look into it rental property more seriously in a few years. (I recently argued the 'rent' side of what was basically a 'rent vs. buy' thread, but my position could more accurately be stated as 'apartment over single family home').

I wouldn't do a deal where if it would rely on me doing work to make money.  Any work I do is side income, not a result of the deal.

I collect rents, and I call someone to fix problems, and someday I'll outsource those tasks as well, that's basically a side job for me right now.

MMM loves that stuff, and more power to him.  I'm not a fan of painting and I'm much more likely to make a problem worse than fix it.

But I can hire those people that love to do that stuff, and then it's win-win.  I get my properties taken care of and make a nice return while getting to spend my time on stuff I enjoy, they get to do stuff they enjoy and get paid for it. 
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HeidiO

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Re: Real estate management companies for non-handy Mustachians?
« Reply #5 on: August 09, 2012, 12:42:52 AM »
We use a management company with 2 of our 3 rentals.  We initially planned on managing themselves, but had a very unpleasant interaction with a renter, and I decided it was worth it to me.  Both of our 2 rentals cost $100 a month, a piece.  For me it is worth it.  If I made minimum wage it probably wouldn't be, but I am not looking for a new part-time job.  I am hoping to get our third house on a real estate contract soon.
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champion

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Re: Real estate management companies for non-handy Mustachians?
« Reply #6 on: August 09, 2012, 01:42:23 AM »
So if I do want to go the HeidiO route, and I do think it's worth it to sacrifice a portion of rent to pay a management company, how do I do it?  Where do you find management companies?  How do you know if you can trust them to do a good job?  Etc.

rtrnow

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Re: Real estate management companies for non-handy Mustachians?
« Reply #7 on: August 09, 2012, 07:55:58 AM »
I have used a few management companies and had fairly bad luck with all of them. They will never care about your investment as much as you. I now manage the property myself. Like has already been stated, if you find good tenants then you're mostly collecting rent. I use erenter to run background checks on new tenants and I have had good luck. I also don't do any handy man work myself. Angie's list is great for finding good repairmen when you need them. Another trick that can help when managing your own property is to act like you are the management company in front of tenants. They don't have to know that you are the owner. Most companies will charger one month's rent to find a tenant and then 8-10% monthly. Since I found myself having manage the management companies, it seemed like a huge waste to me.

shadowmoss

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Re: Real estate management companies for non-handy Mustachians?
« Reply #8 on: August 09, 2012, 08:59:06 AM »
When I left the area due to taking a job across the country I asked a friend to manage the property for me.  He is a professional, and purported to have done it before.  Put a young couple, the daughter of his handy-man and husband, and a 2yo and a newborn.  Ok, it's a 3 br house.  Suddenly when I was gone the kids multiplied to 5 because the husband had 3 daughters from a previous marraige and a sob story.  Major damage, and no money for rent.  They left when I said they needed to pay rent, only leaving me with 1 month not paid, along with the damage.  It sat all summer.  I asked the property manager of the apartment complex where my Mom lived to manage it.  He was also my landscaper who rescued my yard from the neglect over the summer.  He is also a part time minister.  He knew someone who needed a break and who would be great to live in the house and fix it up and appreciate a nice place to live.  6 months later, no rent, I paid the utilities until the temperature got above freezing because it was going to take 'a couple of months' to get the deposits saved up.  Not paid for them yet.  I turned off the utilities in May.  I had a lawyer send them an eviciton notice last month.  This month we go to court.  I'm in Honduras, the house is in Tennessee.

arebelspy

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Re: Real estate management companies for non-handy Mustachians?
« Reply #9 on: August 09, 2012, 09:25:10 AM »
So if I do want to go the HeidiO route, and I do think it's worth it to sacrifice a portion of rent to pay a management company, how do I do it?  Where do you find management companies?  How do you know if you can trust them to do a good job?  Etc.

Good question.  I prefer the collect checks myself, call someone else to fix problems method for now, but once I have 10+ units, I'll likely pass off management completely.

In that case, you have two options, as I see it:
1) Hire your own property manager.
2) Hire a property management company.

Here's a good article on option 1: http://buildbankroll.com/2012/08/the-joys-of-insourcing-property-management/

Here's a decent resource on option 2:  http://www.managemyproperty.com/articles/hiring-a-property-management-company-25
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.