I fired my PM, now I self-manage remotely
As PMs scale their business, they start caring less about yours.
Most mom-and-pop landlords choose to manage their rentals themselves. This decision, however, eats into their free time and prevents them from scaling. I realized this wasn't the path for me very early on. While I did manage my first few rentals myself (mainly to understand what to expect when hiring a PM), I've outsourced my other rentals to professional management companies. This in turn allowed me to scale to other cities, where I would have no hope of self-managing.
This was in 2015, with the first few remote rentals I bought in Chicago. My first PM was instrumental to helping me understand the market. He invested in the same market and knew the area really well. Chicago has a lot of war zones, places like Englewood where you can buy a seemingly good deal for under $30,000, only to have your house broken into and plumbing salvaged for scrap metal. It's really hard for an outsider to tell apart a C-class neighborhood with good cashflow from a D-class with tenants from hell. My PM helped me buy right, and admittedly I got lucky that I didn't buy from a shady turnkey operator.
Unfortunately, I ran into a common problem with my PM. As they scale their own business, they start caring less about yours. This PM happened to have an odd policy regarding payment disbursement. Rather than transferring the money to the landlord on a monthly basis, he would accumulate funds until the amount clears a certain threshold to mail an "owner draw", as he called it.
As his portfolio grew, owner draws became less frequent, until it took him over a year to send the rent owed to me, despite multiple follow-up emails. He was using my money to make downpayments on his own portfolio (effectively a short-term interest-free loan at the expense of my own growth). The property manager became the deadbeat tenant he was claiming to protect me from. This was the last straw. I fired him. Even after I confronted him, the last check was several thousand dollars short from the rent that should've been collected (he claimed he couldn't collect it from the tenants, despite the same tenants still renting from me and paying every month).
Now that you know the why, let's get to the how...
How to Replace a PM
Back in 2015, my options were limited. Property managers had a bad rep even then, but there were no other options. Even property management platforms like Buildium and Appfolio were in their infancy. And these solutions don't solve the boots-on-the-ground problem, they're basically just for book-keeping.
Fortunately, things have changed since 2015. Companies got better at integrating service economies into their platform. Today, there are a number of options if you want to self-manage remotely. Hemlane is an all-in-one hybrid property management platform, that combines the book-keeping functionality with tenant and contractor communication. Their complete package (which is the one I transferred my remote properties to) has a team of VAs that respond to tenants' support tickets the same day and schedule local handymen/contractors to come out. Admittedly you don't get as good of a price as having your own handyman who's used to working with you, but Hemlane does have a concept of "preferred contractor" if you're good at making friends on BiggerPockets.
And while I was initially apprehensive about having them manage C-class areas (where tenants are notoriously high-maintenance), they've handled my Chicago properties rather well so far. When it comes to evictions, you're still on your own for those, but Hemlane does help landlords chase down non-paying tenants... somewhat. My only pet-peeve with them so far is that they're not as price-competitive in rural areas, where rents are lower (while PM fees stay the same), and their contractor network is less reliable there.
Other solutions, like TaskRabbit, allow more bare-bones approach to remote property management, and you'll have to bundle them with your own book-keeping platform (as well as your own VA). The benefit of TaskRabbit is that you only pay for the service when you use it, there is no monthly premium. However, given the monthly cost of book-keeping-only platforms like Buildium, you might as well pay Hemlane for a more complete solution. TaskRabbit could be a great platform, however, to make friends with that handyman you later put on the "preferred contractor" list.
In the future, I will probably do a more-detailed write-up on my experience with Hemlane, but for now I'm just treating it like an experiment. I must say, I'm impressed both by how well this solution is scaling so far, as well as how well my tenants are handling it. I was expecting a lot of resistance from my otherwise non-tech-savvy tenants about being forced into an electronic system both for reporting issues as well as for payments, but the transition was smooth.
Maybe I have COVID to thank (never thought I'd say this), maybe services like Venmo, maybe banks who have normalized chatbots, but people have become a lot more comfortable with everything being electronic than they were just a decade ago. This is great news for landlords who invest remotely.