Is now a good time to start a property management company? WHY OR WHY NOT?
Aug 23, 2009
in
Commercial Property Loans
My wife and I are working as property managers at a 68 unit apartment complex. We’re looking at starting our own company managing residential and commercial rentals. Is now a good time in our economy? It seems like a perfect time when home loans are hard to get… Why or Why not?
We have a couple years experience in leasing and screening and maintenance. I’ll be getting my Property management license this next year and starting an LLC.
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3 comments
AllCourt on August 23, 2009 at 2:12 am
I definitely see a rise in rentals in a lot of areas due to the large number of displaced homeowners (and renters) due to foreclosures and related evictions. In the right area, I’m sure you’d have your hands full.
Keep in mind that the economies you get from having apartment and commercial rentals differ significantly when dealing with single family rentals – the level of administration and overhead increase. One of my former property managers had his hands full when there were torrential downpours on the east coast with a large portion of the single family homes he managed having roof leaks and basement flooding. That’s a lot of calls and different sets of repairs to manage…many roofs, multiple addresses, commuting around town to verify work completion, etc….
Standardize as much as possible and automate wherever possible…maintenance will likely be your biggest challenge with single family rentals…
glenn on August 23, 2009 at 2:12 am
I started one in 1988 when Texas real estate was slow. A lot of home owners were forced to become landlords because they could not sell their houses.
I got a lot of houses that way. But I did not like property management. Partly because I just like to sell houses and partly because the homeowners were not happy to be landlords and so were difficult to work with.
I got out of that business. But I bet it would be a good time for the right person.
Warning- plan ahead that some of your landlords may not make their house payments and may not approve repairs because they may spend the rent instead.
Paul in San Diego on August 23, 2009 at 2:12 am
Rentals are in demand right now. A lot of people who are displaced by foreclosure need a place to live. And, they are going to rent. Also, there are a lot of people and businesses out there with money to snap up foreclosures as income property and rent them out. So, property management is in demand.
I have a rental property that I just rented out through a property manager. She has a real estate license and knows all about the laws pertaining to property rental and management. She didn’t charge me anything to do the tenant search. But, I’m locked into paying her 8% of the rental rate per month as a management fee for the duration of the 1-year lease with the tenant. After that, I’m free to drop the management services and keep the tenant. And, that’s a pretty standard arrangement.
The only thing I would think you’re lacking in experience is the real estate experience. I also don’t know what kind of licensing a property management business requires. And, you’re going to start out slowly as you build a client base. So, just make sure you have some other form of steady income as you start out in the property management business.