Should You Hire a Fee-Management Company?
May 15, 2019
Landlords who opt to collect rent and manage properties themselves appreciate a higher level of control and an easier decision-making process with regard to repairs and renovations than those who contract with outside management companies for those services. A panel of REALTORS® with robust property management businesses made clear there are multiple variables that influence their choice.
“With self-management, I can watch who’s going in and out of my properties that I rent. That’s the biggest thing for me,” Alex Bynam, broker-owner of Wendell Alexander Realty in Dresden, Tenn., said Tuesday at the Single Family Investment Committee meeting during the REALTORS® Legislative Meetings & Trade Expo in Washington, D.C. It was a spirited discussion on the pros and cons of self-management vs. fee-based services.
Using an outside company to handle dealings with tenants, however, provides the anonymity that is paramount for some owners. “I don’t want tenants to know who I am. I don’t want tenants to know where I live,” said Deb Newell, committee vice chair and CEO of Real-Time Leasing in Eagan, Minn.
Avoiding personal relationships with tenants is preferable when issues like collecting late fees arise. “I’d have a hard time capturing those revenue opportunities myself,” said Newell, adding that “the downside of self-management is having a heart. When you care too much, it hurts business.”
Another proponent of fee-management companies, Chip Watts, president of Watts Realty in Birmingham, Ala., noted the value of time as an irreplaceable resource. “Property owners who want to protect time with their family and don’t want calls at night about water heaters and air conditioning” benefit from using outside management companies, Watts said.
Watts said his company has acquired properties from “slumlords” who were supposed to handle building matters themselves and didn’t. “We get those overdue repairs taken care of,” he said.
Tony Smith, NAR Region 4 vice president and broker-owner of Wanda Smith & Associates in Charlotte, N.C., who self-manages eight properties, said he was comfortable handling the interpersonal issues. “I don’t have a problem with telling a tenant [who is behind on rent] that they have to move.”
Self-management may work best with a smaller number of properties clustered within a neighborhood. But Bynam conceded that once an owner reaches 15 properties, it’s likely that a fee-management company is warranted.
But the most vexing issues Bynam has encountered with self-management don’t involve missing rents or the physical condition of properties. Rather, they’re about renters’ dealings with one another. “There is so much tattletaling. It’s like running a day care. It’s the reason I’m shifting away from multifamily to single-family homes.”