How I Saved $25k In Property Management Fees Over 3 Years
Our System For Self-Managing 4 Long-Distance Rental Properties
Happy Thursday, fellow Hybrids!
In today’s newsletter, I will share the system I’ve used to self-manage 4 (out of our 8) rental properties from 1,200 miles away. This decision saved us $25k in Property Management fees over 3 years!
(Today’s issue takes ~3 minutes to read)
As a hybrid real estate investor juggling a full-time job with managing a portfolio of rental properties, having an efficient and effective property management system is crucial.
This is especially true when you invest in multiple long-distance markets like my wife & I do.
We own 4 properties in Las Vegas, which we have self-managed since moving away from Las Vegas to Washington State almost 3 years ago.
The choice to self-manage was difficult, but we built a system to ensure our bases were covered.
Today I will give you a peek behind the curtain at our self-management system.
Let’s dive in.
The decision to self-manage (rather than hiring a PM)
First, consider some general deciding factors when choosing whether to self-manage or hire a property manager.
Pros of self-managing rental properties:
Cost savings by eliminating property management fees (we have saved over $25k in PM fees over 3 years!)
Full control and direct involvement in property operations.
Flexibility to make decisions and adjustments promptly.
Potential for stronger relationships with tenants, leading to better communication and tenant retention.
Increased knowledge and understanding of property management processes.
Cons of self-managing rental properties:
Time-consuming and demanding, especially for owners with multiple properties.
Limited expertise in legal and regulatory requirements, leading to potential compliance issues.
Handling tenant conflicts and difficult situations can be challenging and stressful.
Lack of a dedicated support system for emergencies and maintenance requests.
Limited access to a network of professionals (e.g., contractors, real estate agents) for specialized tasks.
These pros/cons would hold true in any situation; however, a few other factors played into our decision.
Other unique factors
Everyone’s situation is different. Here’s some additional context that guided our decision:
These were our first 4 rental properties, so we had a greater capacity to deal with self-managing.
We wanted a system with multiple lines of defense and as much streamlining as possible.
We lived in Las Vegas for 5 years and had a good understanding of the local market.
We had several trusted contacts in the area who could help us in dire circumstances.
We moved from Las Vegas to Washington in September 2020, with COVID restrictions still in effect in many places and a lot of upheaval in our personal lives.
Put another way, we had things going on in our lives other than managing rental properties.
With all that said, let’s jump into our system.
Our current system for self-managing 4 rental properties from 1,200 miles away
Here’s a breakdown of our system as it exists today:
Tasks we manage directly:
Rent collection
Automated through Apartments.com Rental Manager.
The days of receiving paper rent checks by mail are LONG gone. Automating rent helps both sides feel more secure and even prevents late fees for tenants.
Tenant applications & screening
Apartments.com also has an online tenant screening platform.
Reviewing applications & calling references yourself will give you peace of mind that you have the right tenants in your property.
Tenant communication & repair coordination
Up to this point, we handle this via phone, text & email.
This personal connection ensures tenants have a white-glove experience. For example, we send holiday gifts every year with personalized cards.
Bookkeeping
We leverage Stessa for day-to-day bookkeeping & reporting (see related reading).
Until November, we did this ourselves, but now we outsource this task to our VA (see below).
Lease & contract management
Our VA or I draft & review all contracting, depending on the complexity.
We utilized a local law firm to review our lease template. There are also free resources to download state-specific lease templates.
All signatures are handled remotely via DocuSign.
Tasks we outsource (as needed):
Handyman
We paid a monthly retainer to an old colleague of mine with whom we have extensive experience working together. He acts as our “first line of defense.”
He knows all 4 houses, provides a familiar face to the tenants, and helps us troubleshoot minor issues without involving (expensive) specialists.
Lawyer
A relationship with a local law firm can help prepare you for evictions or other tenant-related issues.
You do NOT want to learn the hard way that you accidentally broke the law.
Virtual Assistant
We hired a VA firm (see related reading) last November to help handle the repeatable administrative tasks from the list above.
Fractional VA services make it easy & affordable to outsource specific time-consuming tasks. We use Accelstone and couldn’t be happier.
Each component of that system required research and time to set up. But once everything was in place, this has been a well-oiled machine for us.
Important Note: This system is constantly evolving!
As with anything, there will always be opportunities to improve this system, especially as we scale.
New tools
Changing life circumstances
Large-scale projects or rehabs
Taking on additional properties (which reduces bandwidth to self-manage)
The cost-benefit will change as you scale your portfolio.
This system worked well for us when we had 4 properties, but now that we have 8, we’re considering adding new support layers (such as Hemlane’s Essential hybrid property management solution).
Bottom line: Stay nimble and ready to adapt as your life & investments progress.
Conclusion
The system I mentioned above has worked wonders for us over the last 3 years and even saved us over $25k in property management fees.
By choosing to self-manage, we built a baseline knowledge of property management & tenant relationships, which has served us well as we expanded into more properties & new markets.
With that said, there is NO one-size-fits-all solution for property management, and every investor’s situation will have unique variables.
You will likely even have different property management systems within your portfolio.
To prove this point, I will spend next week’s newsletter explaining why we chose NOT to self-manage our 3 rental properties in Iowa.
I hope you found this breakdown useful.
See you next week!
-Aaron
PS: If you have questions about this system, hit “Reply” and let me know. I’d love to hear from you.