Real estate owner/investors are a self-driven group.
I can think of few other professions so full of ambitious, determined and motivated people.
Outside of satisfying those ambitions, there are other great joys in building ownership as well.
I got into this business partly because I like the physical representation of my hard work: the actual, tangible property filled with satisfied tenants. I know I’m not the only one.
Which is why it strikes me as a little surprising that we don’t see more self-managed buildings. Instead, owners often choose to farm out that responsibility to third parties and pass on the responsibility of running the property to someone else. Needless to say, "someone else" usually won't run it as well as you do.
I’m not knocking the management companies themselves, which are generally run by capable people. But there are a few distinct advantages to self-management that seem to get overlooked by otherwise meticulous and capable minds. These are four of the reasons building owners ought to consider managing their own properties.
1. Keep A Close Eye On Your Investment
If you’re like me, you want to have your eyes on everything that your organization is doing. Some might call it micromanaging, but when done correctly, it’s simply a more thoughtful, hands-on form of leadership. You’re the one in charge, so why shouldn’t you be aware of everything that’s happening in the company? There are fewer opportunities to be blindsided when you manage in a hands-on fashion.
Constant awareness is another distinct advantage of self-managing your building. There’s no room for misunderstandings between you and your manager when you’re the manager yourself. The building is run exactly the way you want — your vision is what guides the property, and while you certainly put some stock in the ideas of your employees, you’re the one responsible for making final decisions.
2. The Best Crash Course In The World
You’ll be faced with a lot of varied tasks as a building manager, but at the end of the day, knowing you’ve given yourself completely to the functioning of your property is the most gratifying feeling there is. Not only are you running the show, you’re putting together a bulletproof playbook of building expertise.
Maintenance, marketing, bookkeeping, rent collection, even taking out the trash is your job now. While that might sound daunting, it’s the kind of tough work that equips you for the future.
Once it’s time to branch out and buy your next building, even if this time you do hire a management company, now you’ve got the knowledge and experience of someone who knows exactly how to get the (many) jobs done. If the management company isn’t cutting it, you’ll be able to make the next move with authority. That’s the kind of self-determination you can’t put a price on.
3. Save Money
This probably isn’t breaking news, but it’s a fact that I’ve seen too many of my peers neglect. While self-managing certainly doesn’t save you any time, it reduces expenses in a major way. Management companies, for all the great work they do, aren’t cheap.
In fact, property management would likely be your next-highest expense after paying for the property itself. If you’ve got the time and the ability to manage the building, why not let your tenants pay you for all that work and cut out the middleman?
Building management companies are allowed to be pricey for a reason: The type of work they handle simply isn’t to the tastes of many entrepreneurs.
The paperwork, the tenant interactions, and the challenge of keeping a building running scares off plenty of people who see property ownership as just another financial instrument. If you’re like me and many other self-managers, you’re not afraid of getting your hands dirty if it means running a great building with lower overhead costs.
4. Accountability Counts
When you self-manage, there’s no passing the buck. The life of your properties is your own life, and there’s no room to share responsibility. It might seem daunting, but it’s actually liberating.
The freedom you get from being the one in charge is maximized when you self-manage. You’re running the type of building you want to run, with nobody between you and your clientele. There’s no bureaucracy or red tape, so any issues that need addressing get addressed by you, not by a self-interested middle manager.
Of course, you’re not 100% alone in keeping things running. The hires you make, like your super, doormen, porters, contractors and the like will all be vetted to your exact specifications. The vital support system that keeps your tenants (i.e., your customers) happy is the lifeblood of your building, and the self-manager has a heavily vested interest in keeping that blood running that a third party simply doesn’t.
Getting into the real estate business isn’t easy, but once you do, you should have a decent idea of what kind of leader you are. If you’re the kind of person who isn’t OK driving a car without a clue how the engine works, self-managing is a natural step to take.
Look at it this way: When your car has a flat tire, do you call AAA and sit helplessly by the roadside, waiting for help? Or do you pick up the tire iron and do the job yourself, without paying some tow company to do it for you? If you’re not afraid of getting your hands a little dirty (and saving money in the process), self-managing is the building ownership route for you.
