If you've done a Google search for this question or a similar one, you've probably encountered tons of contradictory information.
The Bigger Pockets forums and other investor networking sites are full of self-managing owners proclaiming their horrible experiences with property managers and the waste of money that they are.
You can also find the self-managing landlord turned property manager promoter telling of their horror stories when they tried to do it themselves. They would never go back to self-managing based on their experience with a great property manager and the fees they pay are more than worth it.
Then there's blogs and property management websites (like this one) written by property managers trying to justify why they're worth the cost.
So which do you believe? The multiple-property-owning-investor who has successfully managed his own properties for years and never had an issue? The horror-story-owner singing the praises of their property manager that swooped in and saved the day? Probably not the property manager (of course we're going to promote ourselves).
Without a baseline, deciding whether property managers are worth their fees is impossible. Before you can make a determination, you really have to figure out what exactly property managers do.
If you're like me then it's back to Google to start searching what services property managers provide. If you can understand that, maybe you can decide whether the property manager's fee is worth it.
You'll probably land on some management company websites making claims like this: We're the number one company! We manage the property as if it were our own! We've been in business the longest!
What do those statements even mean?
This doesn't tell you whether the management fee is worth it. It doesn't answer the question of what property managers do. It's just a bunch of baseless claims that lead you to believe the online-forum-DIYer ranting about how property managers are a waste of money.
With a little bit of common sense and some further research, you can start to figure out that property managers provide several services such as advertising your property, finding a tenant, executing a lease, handling maintenance issues and performing inspection
You can do that yourself. You have a smartphone that can take pretty good pictures. You can upload those pictures to a free rental listing site like Zillow. You can also find a pretty good lease online and Yelp and Google will connect you to vendors with great reviews if you ever have maintenance issues. You can inspect your own property.
So why pay a property manager to do it for you?
Maybe you don't have the time for that though or maybe you've been trying to do it yourself with little success, so you keep searching, having decided that all property managers are basically doing the same thing.
If all property management companies do the same exact thing, the only logical solution would be to shop around until you find the absolute cheapest one. If services are identical, the lowest bidder should win.
Now all that's left is to find that company charging the lowest amount and go with them.
This is probably the point where you pick up the phone and start calling management companies and immediately asking "how much do you charge?"
Here's where I want to try and reframe your thinking, you, the lowest-fee-seeking-rental-property-owner.
Your research has led you to believe that all property managers do the same thing. It has led you to believe that property management is a series of commoditized services that are more or less identical from company to company. It has led you to believe that you should expect similar results no matter which company you go with.
Your research has also probably led you to believe that nightmare tenants are unavoidable. That evictions are just a normal part of owning rental property. That long vacancy times and expensive repairs are the norm. That rental properties are frequently trashed after tenants move out. That property managers are terrible at communication and even if you hire a professional, your rental property will still be a major headache in your life. That no property manager can help you avoid all the generally accepted risks that come with owning rental property.
And if it's true that nightmares are unavoidable and all property managers are doing the same thing, (which is basically nothing to protect your most expensive asset or help you avoid said nightmares) you should just cut your losses and either manage it yourself or go with the cheapest one.
I propose that none of this is actually what you want.
You don't want to hire a company that is going to do everything you could do yourself but just don't have time for.
You don't want to pay the lowest possible fee so you can turn over your most expensive asset to a manager who may or may not get lucky with the tenant they decide to put in your home.
You don't want a manager that you are going to have to manage. Is my property listed for rent yet? Did my tenants pay rent? Did that maintenance issue get taken care of? Are there going to be any other hidden fees this month?
You don't want to have the experience that every other landlord on the Internet claims is unavoidable.
You want a very specific outcome.
You want peace of mind.
You want to go weeks or even months without even thinking about your rental property.
You want to be able to trust the judgement of the person you put in charge of it more than you trust your own.
You want someone that is going to act as your fiduciary, find you a great tenant, find that great tenant in record time, perform great inspections, create a bullet-proof lease, handle security deposits correctly, minimize vacancy and keep up to date on all of the recent real estate laws and every other little detail of investment real estate.
And you want all of this happening without having to worry that it's being done in accordance with the law. Or being done at all.
You want to achieve landlord nirvana.
Whatever it is that's specifically important to you, you want results.
But here's the problem. Results aren't a commodity. Outcome isn't a list of services. The outcome that you seek can only be gained by the person you hold accountable for achieving it.
I can't tell you the exact questions to ask a property manager to be able to tell what kind of outcome they are going to be able to deliver for you. I think you'll know it when you see it. The passion, the commitment to service and the strong desire to see you, the landlord, win.
I can tell you that you probably won't find the results you are looking for in the cheapest property management company.
I can tell you that the property manager that competes on fees and is willing to be the lowest bidder doesn't have the margins to pay their staff well so that they are motivated and happy to come to work and to provide you, the landlord, with great service
I can tell you that the lowest bidder won't be able to provide great service to your tenant as well so that they stay longer and put more money in your pocket over time.
I can tell you that the lowest bidder won't be able to use their profit margin to innovate. To research new technology to serve you better. To obsess over customer (your) experience. To have the capital necessary to provide the service that you are expecting and that contributes to the outcome you now realize you want.
I can tell you that the lowest bidder attracts the type of owner, property and tenant that will consume their time and energy, leaving little or nothing left over for you.
I can tell you that you are probably willing to pay more than you think for the outcome you desire.
You shouldn't overpay for property management services by any means. But instead of looking for the cheapest company, figure out what you actually want out of your property and then find the company that can help you achieve exactly what that is.
Find the manager that wants you to win. That has the passion and commitment and drive and motivation to generate the absolute best outcome you could have possibly imagined.
Because that property manager, is more than worth their fees.