The 1 thing property managers NEVER want you to know

It doesn’t feel like that long ago that I started my journey into real estate. I left the tech startup world to get rich in real estate.

I studied everything I could get a hold of. Books, podcasts, YouTube videos. I wanted the dream. I wanted to get Scrooge McDuck rich with passive income.

Passive income. Passive…that means not working. A property manager seemed like the only way to go.

I started interviewing property managers. I started learning how they charge. I learned what service they provide. I learned that…they make most of their money when I lose a tenant.

Wait. What?

Yeah...I lose a tenant and they make their bag.

Yes they charge me 15% of my rent every month, but that only covers their expenses. I lose a tenant and BAM! They get a whole month’s rent for placing a new one.

If my property is renting for $1,500 a month. They make $2,700 a year from management fees. When the tenant doesn’t renew, they make an extra $1,500 to place the new one. I go from paying 15% of my rent to paying 22% of my rent.

Why would I ever think they’d try and keep a tenant?

When I’m paying someone for a service, I want their fee to tie them to good behavior. I want a sales guy to make more when he sells more. I want my CFO to make more money when the business makes more money.

Why then does my property manager, the person “keeping the tenant happy”, make more when the tenant isn’t happy?

It makes no sense.

Needless to say, I didn't hire a property manager. I manage my rentals myself and it’s almost passive. My tenants love the experience and have stuck with me from the beginning.

I continue to improve and automate my processes and I don't see that stopping.