What about time commitment? What is a realistic estimate of hrs/year needed to manage a single rental property?
Well, I can only tell you what we do: we only have one property that qualifies as a ‘single rental property’, one little condo in a complex of about 16 units that we do not own, near the beach …
…. and, while we live in the USA, that beach is in Melbourne, Australia!
Also, it’s my wife who manages this one, so I asked her:
It takes about 2 hours per year.
Now, we have another residential property that is a quadruplex; it’s also in Australia and my accountant takes care of that one while we are in the USA.
I checked and it takes him less than 2 hours per month … at least, that’s what he bills me for, so the whole thing probably also takes him about 2 hours per year!
Simple: we always hire property managers and get them to take care of everything:
1. Finding tenants
2. Negotiating leases
3. Handling repairs and maintenance
4. Collecting the rents
5. Paying the bills
Doesn’t it cost money?
Sure. 6% – 9% of the rental income (plus usually the first month’s rent for any replacement tenancy after a tenant leaves).
Would it be cheaper doing it ourselves? Of course: we could ‘pay ourselves’ that 6% to 9%, but then:
1. We would eventually suffer burnout. It can be very stressful handling retail tenants.
2. We would be trading (our) time for money.
Trading time for money is exactly the wrong way of looking at it: time is a finite resource; money is an infinite resource, why trade the finite one for the infinite one?
In other words, they keep printing money, but nobody is giving away more time.
So, every time that I can find an opportunity to ‘buy’ time with my money that’s exactly what I will do.
It’s why I give my shirts to the dry cleaners; my mowing to the landscapers; and my property management to the experts. It’s why I outsource practically everything to do with my investments, too – except picking the investments themselves, or managing any issues to do with risk.
If I didn’t outsource my property management, I would eventually stop buying real-estate because every property that I bought would add to my workload, and who wants to do anything that makes you have to work harder? And, I would eventually get what Dave Lindahl calls “tenant burnout” …
So, I may lower my return on each property somewhat, but I reinvest the ‘saved time’ into purchasing more investments … the whole shebang is much greater than the parts.