It’s a valid question. Let’s say you have day job and buy houses on the side. Regardless of whether you manage the properties yourself or have them managed, there is a management cost involved. If you take care of them, it’s an opportunity cost … if someone else does, it’s an out-of-pocket expense. Either way though, there’s no getting around the fact that property management costs money.
Imagine with me for a minute that eventually you buy enough houses to be able to quit your day job and manage your properties full time. Is that something you would want to do? Property management, as you know, is difficult, grueling, and sometimes risky work. There are late-night phone calls, renters missing payments, maintenance, and potential legal pitfalls, especially when you have to go through with an eviction. If you’re good at it and have developed your own management system, then it very well could be that the best option is to manage your own properties. You will be working for yourself which could be very rewarding, you can work more or less your own hours, and you can deal with your rentals exactly like you want them to be dealt with.
The purpose of this post is not to hash out the pros and cons of property managers or to talk about how to find the best ones out there. The purpose is to give you a framework for making the decision on whether or not to hire one. Just remember this, your time is valuable. Time is a very finite commodity and not something that should ever be undervalued. When you have a job, you are selling your time to your employer. If your goal is to break free from your 9-to-5 job, in other words, to stop selling your time to someone else, then at least consider whether you want to trade one job for another which is effectively what you are doing if you choose to manage your own houses.
Again, I’m not advocating one route or the other. Trading a soul-sucking 9-to-5 job for the relative freedom of running your own real estate / property management business may be just what the doctor ordered.
If you do decide to manage your own houses, don’t ever lose sight of the time you put into management. If you use Quickbooks or some other accounting software, consider entering the time you spend on the properties as an expense. You won’t be able to write it off for tax purposes but it will at least give you an idea of the cost in terms of your time of property management.
Time and energy are finite …. treat them as such!