In this episode, two local property investors James Loftus & Patrick Spitzley discuss their experiences with using a property manager to take over their portfolios. James owns approximately 130 units with about 60% of them professionally managed. James also happens to be one of our customers, and we are grateful he chooses Compass to be his professional property manager.
The whole podcast is a great listen and we highly recommend downloading and investing the time if you are exploring the idea of using a professional property manger. The topics covered run across the board. If you find yourself time strapped, don’t worry! Below you will find some of the areas we felt stick out as important. So, Is Professional Property Management Worth It? Lets find out.
A reoccurring topic throughout the talk are the benefits of using professional property management. Tenant screening seems to be an area where many do it yourself landlords have issues. It’s a topic we’ve explored in the past with Andy. James Loftus himself comments on his struggles picking good quality tenants. James says “The screening process takes care of a lot of the issues I used to need to clean up.” and “the management company through their screening places a much better tenant in there”. James goes on to elaborate on how this helps his bottom line: “upon move out I find that the places are being returned in much better shape; that’s definite.”
“the management company, through their screening, places a much better tenant in there”
One additional thought on good tenants comes up when James says “What is your property worth if you have terrible tenants in it when you go to sell it versus if you have good tenants?” A point backed up by the host Brain Hamrick – “If a property management company is good, and a lot of them are here in Grand Rapids, they will keep up the value of your property and improve the value of your property.”
“when I get my monthly statement the portion of maintenance costs are generally pretty low.”
Another area that many do it yourself landlords stress over when asking Is Professional Property Management Worth It? are costs. Specifically maintenance costs. James Loftus has some great points, first making the comment “If you turn good properties over to the management company it’s going to go good for you – if you turn something over that’s you know has 5 years’ worth of work you’re not going to have much of a different experience than you were having yourself”. He goes on to say “I don’t think for myself the maintenance expenses have been a big deal. You hear a lot of people that like to talk about the $50 toilet paper holder, but when I get my monthly statement the portion of maintenance costs are generally pretty low.”
Keeping up with maintenance is also about preserving value. James points out “When you hire a management company you’re building your team. And that team is a system. And if they’re a good team they’ll allow you to go off and do your own thing and not have to worry about your properties. And they take care of your properties so if you do go to sell them they’re in better shape and you get the value that you should get.”
Speaking of going off and doing your own thing, one of the biggest areas you will see improvement in your life if you choose to hire a professional property management company is in free time. You get your time back. For James this was important – “the management company is a necessity, I want my life back.”. What is your time worth? For James, “I think for what I pay on a monthly basis it’s well worth it.”
James follows up by saying “I’m at a point in my life where my time is worth more than anything to me right now and just being able to take time off whenever I want is worth a lot to me. And I don’t really feel that the management expense is that big a deal. It’s of value to me to have my time. Ultimately, I’m going to continue giving properties to the management company and I wouldn’t be giving them to them if I didn’t have a good feeling about it.” So, Is Professional Property Management Worth It? It sounds like a great way to get your time back.
“I’m going to continue giving properties to the management company”
“you have to pick a management company that you have trust in”
Another important topic is how to choose a good professional management company. There are many ways to choose between one company over another. For James, it came down to him trusting Compass Property Management.
“Well, one big consideration for me is you have to pick a management company that you have trust in. You have to really be able to trust them. Myself, I’ve heard of people that hired other management companies and then the management company went out of business or whatever, and they lost all of their security deposits. The management company holds all of the security deposits, they go out of business, you owe the deposits to the tenants. So I mean, trust is a big deal. For myself, they’re holding $50-60k dollars in deposit money that if I just went out a hired someone that didn’t have good footing and they went out of business that would be a big problem.”
A final thought on choosing between the pro’s & con’s of professional management v.s. self-managing – peace of mind.
“you’re not going to live forever”
As James puts it – “One other thing that ought to be thought about is you’re not going to live forever. In my situation, because I have an ongoing relationship with a management company, I get hit by a bus tomorrow; I don’t want my wife managing these properties. You see it time and time again, a landlord that has a handful of properties or whatever, they pass away, they wife says I don’t want anything to do with this, then they have a fire sale. Whereas in my case, if I get hit by a bus, my wife could say ‘I don’t want to deal with this.’ Call the management company, hand over what needs to be handed over and I think that’s peace of mind.”
At this point, we’ll leave it up to you to decide. Is Professional Property Management Worth It? If you need to know more, please feel free to explore the options Compass has for your rental portfolio. A quick summary of our Grand Rapids Property Management Services can be found here. Or, reach out to us for a one on one conversation. We are here to help.