the job of property management and the

job of a property manager is a pretty

crappy job but what you come to

understand is that the property manager

a good property manager does more than

just collect rent i actually did some

math on what we saved over the course of

5 years of self-management and on

management fees alone it was close to

$45,000 the business model of property

management is fundamentally flawed

people either have to get really big in

order to make enough profit all right

welcome back to our special podcast

series The 20-minute Investor where we

bring you actionable nuggets and

insights from our real estate investing

journeys in bite-sized 20inut episodes

i’m Aaron Amin my wife and I built a

portfolio of eight cash flowing rentals

across three states while working

full-time and raising a young family and

I’m Nathan i’m a husband father a tech

executive who built a portfolio of cash

flowing rentals across two states from

over 2,000 m away together we co-founded

the Remote Real Estate Academy where we

coach investors on how to build their

own portfolios of cash flowing rentals

from anywhere in the world all right

this week we are going to dive into

mistake number two out of our 5-day

email course on the biggest mistakes

that new remote rental investors face

mistake number two is underestimating

property management challenges so

specifically why investors potentially

overlook some of the complexities that

come along with managing a rental

especially from afar and why that

oversight can lead to your property

going neglected turning into a money pit

of deferred maintenance and potential

issues with tenants and then of course

uh instead of just complaining about

problems we will share our thoughts on

how you might avoid this mistake so one

thing I love about this topic that I

think Nathan and I are going to have fun

with is that we took two different paths

we have very we have a lot of parallels

in our stories but management is not one

of them for the most part my wife and I

managed we self-managed our properties

even remotely for the majority of the

time that we’ve owned them it was

actually only last year in 2024 that we

brought on thirdparty managers in each

of the three markets now Nathan on the

other hand a much smarter person than I

am understood from the get-go that

property management is more complex than

most people think and decided to go with

the third party property manager and set

up kind of a layered system of oversight

so maybe what what we do here is kind of

present our base case for why we did

what we did and uh let’s start with the

with the more measured and probably

balanced approach of uh of what you did

Nathan uh well I don’t know that I’m

smarter but um I also know that I had

constraints in my life that kind of

forced me to go down this path not only

are all of the properties in our rental

portfolio thousands of miles away so I

didn’t have access to them uh but also

and maybe more importantly for for us

for myself and my wife it was really

about not sacrificing our family lives

or our professional lives both my wife

and I have full-time jobs that we love

we have two young kids that we love

obviously we want to be there be present

spend time together her and I as well so

we very intentionally were looking at

ways and systems and whatever options

were available to us to not pick up

another job of managing you know rental

properties especially because we knew

from the get-go we weren’t just buying

the one property and you know the one

and done we knew we wanted to scale we

knew we wanted to get this to you know a

number of properties whatever that I

don’t know that there is a final number

or goal in mind but it was more than one

and it was enough that you know we could

replace over time either one of our

incomes or at the very least provide a

better kind of retirement for ourselves

so we knew that you know potentially

having to manage one would be okay

without sacrificing you know too much of

our you know lives but what about when

we have 10 12 you know 20 would that

still be the case so we from the start

always engaged with you know property

management because we wanted to delegate

as much of that work as we possibly

could and that was by choice and by

constraint because we didn’t want to

sacrifice more time the the other thing

as well is when we started thinking

about this with my wife is like the the

and I’ll be curious to hear what your

thoughts are because you’ve obviously

you know self-managed some of your

properties but if you think about it the

job of property management and the job

of a property manager is a pretty crappy

job if you think about it because

they’re kind of stuck in between you

know a rock and a hard place you know

the rock being the owner investor who

wants to squeeze every last you know

drop of uh blood they can out of this

you know rental property so that it

performs at its best and it brings as

much possible money you know as you

could possibly get from uh a rental you

want to be cheap on repairs you don’t

want to spend any money all this stuff

and then the hard place is the tenant

who are on the opposite side they want a

clean place to live they’re going to

report issues they want you know timely

responses they want a clean you know

safe you know fixed up property so

they’re coming in with the request and

all the these two kind of you know you

know opposite kind of positions are both

going towards the property manager and

we didn’t want that additional stress in

our lives so that’s why we’re delegating

and happily paying part of our rental

income to someone else in this case a

property manager to do that crappy work

for us yeah no fair and I think working

backwards from your constraints is what

we teach right when we work with people

that come through our program is be

aware of and acknowledge your

constraints and then build your business

around that now what I’m about to say

though is that I did kind of the

opposite mostly out of ignorance when we

started i wasn’t part of a mastermind

group or community i didn’t take any

courses i didn’t know what Bigger

Pockets was until after we owned several

houses and the the main model that I had

to build off of was what I saw my

parents do because my parents are also

real estate investors and they mostly

self-managed their portfolio there’s

only a small period of time where they

had a third party manager and that was

when they had over I think they had 13

rentals total at that time and so that

was mostly a load management type thing

but so honestly like I didn’t really

question much i I kind of accepted the

default of what I saw them do and I just

assumed that’s what everyone did they

self-managed their properties because

they lived nearby even when they lived

far away from some of their properties

they still chose to do that it was you

know their systems were not very

sophisticated as far as like using rent

collection tools and all that but they

knew their way around how to solve

problems with stuff like maintenance and

that’s a big difference between them and

I because I’m not that person they’re

much more handy than I am so anyway

where I’m going with that though is that

like when we bought our first property

it was actually only one mile away so I

always talk about now we started as the

opposite of long-distance investors we

started with our property one mile away

and now our closest rental is 1,000

miles away but when it was one mile away

I I just had that kind of again default

assumption in my head that if something

went wrong I would just drive down the

street and take care of it but what you

come to understand is that the property

manager a good property manager does

more than just collect rent and you know

send out leases for signatures once a

year there there’s a lot more that goes

into it and so when you start to think

about like oh the 8% or the 10% that

you’re saving on the base rate uh it’s

it’s really a protection it’s almost an

insurance policy of uh how do you

protect your asset better so I actually

did some math on you know what we saved

over the course of 5 years of

self-management and on management fees

alone it was close to I think it was

$45,000 uh which is a lot of money but

over the course you know eight

properties over about 5 years you know

it’s a good chunk and of course that was

helpful to our bottom line but I also

think about the potential mistakes or

that we made or the things that we

overlooked or the lack of ability to

provide as informed of oversight as

someone who knew that how to take care

of a house better than we do like

there’s definitely some deferred

maintenance and items that popped up

that we if had we been more proactive or

more hands-on or available we probably

could have avoided or at least mitigated

some of that so I do think of property

management as also that 8% yeah it sucks

to pay that right off the top of your

your rent every month but if they’re

doing their job they can prevent far

more expensive things from happening and

coming and biting you and at the end of

the day when you’re running a portfolio

especially of multiple rental properties

you want it to be as predictable as it

can be so like you kind of know when

your roof is going to age out or when

your appliances are going to age out

within a few years like you can prepare

for that so that you can you can set

aside the appropriate money and all that

and that’s something a good property

manager can help you keep a pulse on so

if you’re going to self-manage we would

approach it very differently right now

than we did when we started because we

didn’t have much of anything by way of

systems like we we basically we built

out processes as they became necessary

so when we were going to advertise to

rent to a tenant we looked online and

figured out what were the free tools and

ways that we could advertise that okay

we found a site that allows you to

upload photos and list it great so we

use that and then okay we we got tenant

applications we need to screen those and

run run applications and go through a

review process call references etc we

kind of just made this stuff up as we

went and that was valuable in the sense

that there’s almost no better there’s

never a better way to learn than to do

but at the same time it was very time

inensive and we we made a lot of

avoidable mistakes as a result so I I

think of it as kind of like a university

almost like we we learned a lot of stuff

the hard way but in hindsight we would

have been much better equipped if we had

started with like a proven set of

systems or SOPs even if we wanted to

self-manage just using something that

someone had already successfully used

instead of making stuff up along the way

we would have been much better served

i’ll pause there i definitely have more

thoughts but see if you have anything to

add well well yeah i’m curious how many

do you still self-manage today do you do

any we have two and those two are the

residential assisted living homes that

we lease to an operator so they kind of

have a little bit of baked in management

and that they have a company that we

lease to so it’s a very different

relationship than if we were working

directly with a family or an individual

tenant well I’m curious because where I

was going with that is like how did this

change for you pre and post kids so I

think you were self-managing most of

your properties before you had kids

right yeah so an important part of my

story never to overlook is that you know

we went from dual income no kids to one

income one full-time W2 income and some

partial secondary income and three kids

in the course of three years and uh if

you’re trying to do the math we have

twins in there u but uh yeah I mean that

changed the game and I’ve told this

story before but I think it’s important

to to when you talk about the tipping

point of what made us make the change

during the birth of all of our children

in the hospital I got these petty

annoying calls from our tenants and

Exactly and by the way before that I

hadn’t gotten a call for several months

but it just so happened to perfectly

time around when we were in the hospital

trying to celebrate this beautiful

moment in our lives and uh and I would

argue they probably would not have

bothered you that much if you had gotten

those petty calls before uh if you were

not in the hospital you’d be like “Oh

okay i have rentals i deal with it.” But

it just changes if you’re spending time

with family exactly i didn’t mean to

interrupt but No no i mean the the cost

of those petty moments gets higher the

more you know kind of value you place on

your time around certain areas so like

we talked about you working backwards

from your constraints how you already

had kids and how you already knew that

you wanted to protect the your

priorities your your um obligation to

your employer your your obligation and

and responsibility to your family like

those things were non-negotiable and

they were always going to come first so

for me before we had kids I had a little

more flexibility to lean in and kind of

I was enjoying it frankly like I enjoyed

learning all this stuff and there was

enough cash flow on our properties that

yeah maybe I was making some mistakes or

doing things a little looser but it was

kind of like I was comfortable because

we we were we were just enjoying the

game we were finally rental property

owners we’re building a portfolio just

like I don’t know hooked hooked on the

journey but when you have kids it’s like

that’s a different journey growing in

your career is a different journey yeah

every single one of those takes space

and time and energy and at some point

you just have to start calculating like

what is the highest and best use of my

time and and I think those particular

instances in the hospital combined with

starting to really like look backwards

and say is it the best use of my time to

do this like minute bookkeeping or like

be coordinating calls with vendors or

just like hearing random stories

meaningless stories from my tenants that

want to just randomly vent in my

direction i just I don’t I don’t have

enough space in my in my life for that

right now how do you think about the

$45,000 that you could be saving if you

were still property managing well keep

in mind that was over that was over

almost a 5year period it’s a lot of

money but you Yeah yeah but you could do

the same for the next 5 years right and

be like “Hey we’d be 45,000 you know

plus if I self-managed.” How do you

think about that today so what is that

9,000 a year my math’s probably horrible

um you know can I make more than that

doing something else um and is that

something else you know a better use of

my time that’s how I think about it at

this point I don’t think like the first

period of time in which we were creating

that savings I do think that was a good

use of my time because it taught me all

the skills that I needed and it taught

me how to think about property

management but and at the time I don’t

think I had another lever I could pull

where I could make more money than I was

saving there without taking on a full

second job of some sort but now I think

I’ve you know I’ve I’ve gained more

skills i’ve grown in my at my day job

like there are different levers I can

pull to create more income with less

stress and I’m okay with the idea of

somebody who’s more professional and

better than I am at that job and who

happens to be physically present at

those locations doing that job for me

because the 45,000 is not a um that’s

not a complete stat right you have to

remember there are definitely some

maintenance costs or things that

resulted from me not being there and

from me not being a professional

property manager that certainly drew

that number down not it didn’t get rid

of it it’s still a large savings but

there are things that I bet would have

been handled better and cost less money

had a different manager been running it

how do you apply those skills that you

learned self-managing today with your

property manager well I have less

tolerance for for bad property managers

so you know in Iowa we’ve had quite a

journey we’re on our fourth property

manager right now there are periods

where we had to self-manage and had I

not learned what that looks like and how

to at a minimum navigate the different

motions I think I was saying earlier

it’s like people I think sometimes

there’s an assumption when you don’t

know what a property manager does that

they just collect rent and like maybe

they post a notice on someone’s door

every once in a while and then they like

resign the lease at the end of the year

but it’s a good property manager does so

much more than that so I think the

skills that I built of creating

relationships with different types of

vendors staying really organized on that

part doing all the tax and insurance

renewals like a lot of the portfolio

management stuff like that taught me all

the different motions that go into

running and managing a rental property

so when I see things slipping through

the cracks with our managers that were

paying I’m a bit more informed on how to

call them out about it i don’t think

it’s necessary to self-manage in order

to know what a manager is supposed to do

but I do think it made me more keenly

aware when certain things weren’t

happening and I also think that one

lesson we learned and we we’ve waffled

on this a little bit but uh the tenants

also need there there has to be some

sort of check and balance on your

property manager and one one instance in

Iowa in particular there was one of

these property managers that we no

longer work with was giving us the

impression and literally telling us that

they had done things that they hadn’t

been doing and it caused one of our

tenants to the the relationship turned

very sour she had no contact with us and

this was the second property manager

that had been working with her and it

she ended up getting in touch with us

through a Venmo request to my wife and

it was basically this giant note of all

the stuff that like wasn’t happening and

wasn’t supposed to happen and it caused

this huge problem right and so I I

realized basically that there was no

check and balance on this guy like he

was telling us stuff was happening and

it wasn’t happening and then it became

this big story of like the tenant said

this and he said that and so now we kind

of have this idea of like we at a

minimum will establish some sort of

contact with every single tenant we

don’t want a day to be involved in the

day-to-day and we make that very clear

but we at a minimum kind of offer up

this is how you can reach us like we we

want this to be a good hospitalitable

home environment we care about the

quality of um you know of your

experience here you’re in great hands

with so and so but we also would like to

know if something is happening that that

we need to be aware of so I think yeah

the self-management kind of gave us more

confidence to be able to be involved in

a different way than we would have

otherwise and uh and now we have like a

a better better relationship with our

property managers because I think they

understand or they think of us a

different way than if we I think that

the standard person might want to have

their hands completely off and just like

call me if the place is burning down

don’t ever talk to me otherwise um

that’s that’s not really how we are and

I think that has worked to our advantage

so far what’s the story with the four

property managers so obviously this one

here didn’t do stuff they were saying

they were doing but what about the first

and third oh goodness well we these are

we promised 20-minute episodes so that

might have to belong to another but

could be another one then okay in the in

the shortest sense right one of them was

essentially running a fraudulent

business and they went out of business

within 8 weeks of us hiring them that

was the first one the second one uh they

they were an agent and a property

manager and they ended up having to

choose one i think we the next topic to

dig into that will help explain a lot of

this is just the business business model

of property management is fundamentally

flawed people either have to get really

big in order to make enough profit but

when they get so big they have to hire

more people which erodess their profit

then they have to get bigger and these

companies just end up either getting too

big where the service suffers or they’re

too small and they don’t make enough

money and they decide to move on and so

we have had people that are too small

and we have had people that are too big

and in both scenarios it it didn’t work

out they weren’t doing what they said

they were going to do and they weren’t

able to deliver uh on the quality

service that we would want reflected at

the homes that we own maybe another

episode you’re right a lot to dig into

there yeah but I think the the point we

want to drive home here and why we

listed this as one of the five biggest

mistakes that new remote investors make

is property management is a little bit

more complex than people might think on

the surface when they’re first getting

into real estate and the decision of

whether to self-manage or hire a

property manager is one of the biggest

ones you’ll make that will determine the

lifestyle that you have as a rental

property owner being very conscious of

your constraints like how Nathan was and

being more conscious like I am now of

the potential cost of the burden of

property management is something worth

considering and spending some time on

before you make a decision hopefully we

gave you two good viewpoints on on kind

of our experience and uh some of the

pros and cons and uh you know hit us up

if you have any questions or or thoughts

we we welcome any comments or emails we

we respond to every single one with that

we will catch you next time thank you

for making it to the end of today’s

episode as you may know podcasts are

very difficult to grow organically if

you’re getting value from today’s

episode I’d deeply appreciate if you

could take 30 seconds to leave my show a

five star rating and review this will go

a long way to helping me reach more

listeners just like you thank you so

much in advance