Self-Management vs. Property Manager: Calculating the Break-Even Point
Key Takeaways
- The "8-10% Fee" is just the beginning; consider lease-up fees and markups.
- Calculating your personal "hourly effective rate."
- When software automation beats a human manager.
Should you hire a property manager (PM) or do it yourself? It's not just about the monthly fee. It's about the value of your time versus the efficiency of modern software.
The Hidden Costs of PMs
Most PMs charge 8-10% of monthly rent. But you must also factor in:
1. Lease-up fees: Often 50-100% of the first month's rent.
2. Maintenance markups: Some PMs add 10-20% on top of vendor bills.
3. Vacancy costs: A PM may not be as motivated as you to fill a unit quickly.
Valuing Your Time
If you manage it yourself, how many hours does it take? With modern tools, maybe 2-3 hours a month per unit. If you save $300/month by not hiring a PM, and work 3 hours, you are technically earning $100/hour tax-free (savings). Is your time worth more or less than that?
Tools to Automate
"Agency Over Identity" means acting like a business. Use software for:
- Rent Collection: Automated ACH (no checks).
- Repairs: Platforms that connect you directly to vetted contractors.
- Tenant Screening: Instant background/credit checks paid by the applicant.
The Verdict
For portfolios under 10 units, self-management with robust software often yields a significantly higher ROI. Once you scale beyond that, the operational overhead may justify a full-time manager.