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My contractor called me last week and said "you know your manager just approved that without even seeing the unit

monica_tran3monica_tran3ServicePRO15

I own two units in Sacramento, I live in Austin, and I have been trying to figure out if I can cut the manager out when I buy the third one next spring. The fee is 9% plus a leasing fee of half a month every time someone new comes in, so on a $1,850/month unit that is $166 a month plus roughly $925 every turnover. I ran the math and thought okay, maybe I save $2,000 a year if I self-manage. Then my contractor said that thing and I stopped. He had done a repair, billed the manager, the manager approved it, and nobody had looked at the work. The repair was fine, this time. But I am in Austin. If it is not fine I am on a plane or I am trusting someone I found on Yelp from 1,500 miles away to tell me the truth about a job they already did. That is not a position I want to be in on a property I do not know yet. I think the fee is actually buying me something real, I just did not frame it that way before. What I am trying to sort out now is whether the answer changes when I have four or five doors in the same market, because at that point maybe the coordination cost gets shared across more income and a part-time local person starts to pencil out differently than a full PM company does.

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2 replies

dwayne_prattdwayne_prattAA2APRO11

The "I'll save $2k self-managing from out of state" math almost never survives first contact with an actual emergency. What I've seen happen instead is the owner saves the fee for 14 months, then eats a $4,800 water heater replacement that a boots-on-the-ground manager would have caught earlier on a routine visit, and the math just reverses quietly.

On your four-or-five door question, I'm in a similar spot across two counties right now and the honest answer is the threshold is less about door count and more about whether you can get one reliable person to hold a key and have actual judgment. I found a semi-retired property owner in my secondary market who does informal oversight for $300 flat a month across three doors. No license, not a PM company, just someone who knows contractors and will walk a unit. That is not legal in every state so you'd have to check California specifically, but the structure changed my numbers more than adding doors did.

The leasing fee is the one that quietly kills the savings calculation and people keep ignoring it. Two turnovers in a year and you've spent $1,850 on top of the monthly, and turnover frequency in Sacramento C-class product right now is not cooperating with anyone's spreadsheet.

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kevin_lombardkevin_lombardPG3BPRO13

The math flips pretty fast once you hit four or five doors because you can negotiate the percentage down. I have seen owners in secondary markets get to 7% with a flat leasing fee cap just by bringing the PM a small portfolio instead of a single unit. The thing I would want to know before dropping a manager is what your vacancy rate has actually looked like over the last two years, because that leasing fee exposure is the number that can eat a whole year of savings in one bad stretch.

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