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Starting a small property management company

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Account Closed

Homeowner from Hawaii

Apr 01 '09, 04:46 AM


I hope I'm posting this in the correct section.

I am going to start a small business with property management. I wan't to focus on single family residential and charge landlords either 10% or 15% of the rent.

I have tried looking for books on Amazon on how to start this up but haven't had much luck.

I do know that here in Georgia I need to have a Real Estate License to do this, and that's not a big deal. I'll be starting the classes soon, in fact.

I'm just not sure what sort of business insurance I would require, and also what a good way of handling payments would be. In other words, when I collect rent from a tenant, take out my cut, and then pay the owner of the property, how is that handled.

Thanks in advance.


Edited Jun 26 2010, 07:48


Nick J.

Real Estate Investor from Scottsdale, Arizona

Apr 01 '09, 05:40 AM


Matt, where is Alpharetta in relation to Atlanta?

Also, I could be completely wrong but 10-15% is pretty high, I currently pay 7% and once I get 3 more properties then all my properties handled through the PM company will be at 5% and I pay no start up cost, only 5% placement cost. They take the monthly rent x12 and then divide by 5% and thats what I pay to have the tenant placed.


depending on where Alpharetta is to Atlanta, I would consider giving you a shot at earning some business once I pick up a few properties there, but you'll have to be real good at placing good tenants and seriously consider not charging 10%


Edited Jun 26 2010, 07:48 by Nick J.


Account Closed

Homeowner from Hawaii

Apr 01 '09, 06:27 AM


Hi Nick, thanks for the reply.

Alpharetta is about 20-30 minutes north of downtown Atlanta.

Thank you for the information regarding rates...my research indicicated to me that competitors charge anywhere from 10-15% for their services.

Are you paying 5% management fee in Arizona or in Atlanta? Keep in mind that fees will likely be different state by state.

If you are paying only 5% in Atlanta, than I need to reconsider my idea :)

edit to add an example:

http://www.propertymanagement.prudentialgeorgia.com/prudential_ga/modules/agent/agent.asp?p=text&id=671&acc=21264


Edited Jun 26 2010, 07:48 by Account Closed


Nick J.

Real Estate Investor from Scottsdale, Arizona

Apr 01 '09, 06:30 AM


I pay 5% in Phoenix I don't have any properties in Atlanta yet, but plan on doing so shortly.

the standard here in Phoenix is 8-10% but with as many properties as I have them handle for me, they give discounts.


Edited Jun 26 2010, 07:48


Account Closed

Homeowner from Hawaii

Apr 01 '09, 06:42 AM


That makes more sense...I could see a 5% rate if there were a lot of properties with one client.


Edited Jun 26 2010, 07:48


Ted Harris

Real Estate Investor from Portland, Oregon

Apr 01 '09, 08:09 AM


I'm paying 7% in Portland, Oregon ... when I researched property management companies last year, I found rates ranging from 7-10%. Cost to bring a new tenant ranged from $250 to half month's rent.


Edited Jun 26 2010, 07:48


Greg Boots

Real Estate Attorney from Seattle, Washington

Apr 01 '09, 08:21 AM


Matt,

You should consider setting up a buisness, either LLC or "S" corporation for the business activity.

If there is an injury on the property due from failure to cure the defect wihthin the alotted time period set forth by the State you are opening yourself up to personal liability exposure not only from the tenant but also from the property owner.


Edited Jun 26 2010, 07:48 by Greg Boots


Jeffrey K.

Real Estate Investor from Milwaukee, Wisconsin

Apr 01 '09, 10:26 AM


Does anyone know if you need a license to do 3rd party PM in Wisconsin? I cant find it on google.


Edited Jun 26 2010, 07:48


Account Closed

Homeowner from Hawaii

Apr 01 '09, 11:20 AM


Originally posted by Greg Boots:
Matt,

You should consider setting up a buisness, either LLC or "S" corporation for the business activity.

If there is an injury on the property due from failure to cure the defect wihthin the alotted time period set forth by the State you are opening yourself up to personal liability exposure not only from the tenant but also from the property owner.


Thank you. I did plan on either an LLC or S-Corp. I Will probably go with an LLC.

My first step is to get the real estate license which will likely take several months.

Second, form the LLC/register with the state. Use the EIN to open up a business checking account as well as open up a business line of credit.

Third will be securing business/liability insurance, as well as purchasing an umbrella policy that will cover my personal assets just in case.

Fourth will be opening a "merchant" account so that I can receive credit card payments.

Finally, marketing my services and taking on clients.

Sound about right?


Edited Jun 26 2010, 07:48


Account Closed

Homeowner from Hawaii

Apr 01 '09, 11:21 AM


Originally posted by Jeffrey Koenig:
Does anyone know if you need a license to do 3rd party PM in Wisconsin? I cant find it on google.

Best I could find:

Yes, if a property manager is going to negotiate, or offer to negotiate the rental of an interest in real estate, he or she will need a broker's license. A salesperson working under a broker may engage in such activities.

http://www.allpropertymanagement.com/propertylaw/property-management-law-in-wisconsin.html


Edited Jun 26 2010, 07:48


Jeffrey K.

Real Estate Investor from Milwaukee, Wisconsin

Apr 01 '09, 12:01 PM


there is a lawyer in the lcc, but she does not have a license in real estate. idk what to do


Edited Jun 26 2010, 07:48


Ryan Wardlow

Residential Real Estate Agent from Tempe, Arizona

Apr 01 '09, 05:06 PM


Nick,
I would like to know who you have manage your properties in AZ. I have a 4 properties that I might want them to manage. Thanks Ryan


Edited Jun 26 2010, 07:48


Matt Batson

Inspector from asheville, NC

Apr 15 '09, 06:28 AM


Just for info,
In charlotte NC the going rate for PM is 10-12%.
And I called several to make sure.
We are getting out of our rental up there and selling it after a horrible experience with the PM handling our single family home


Edited Jun 26 2010, 07:56


Denise Y

Real Estate Investor from California

May 21 '09, 03:59 PM
1 vote


I am currently working with 6 PMs. My best suggestion is to call upon a management company and ask for a copy of mgmt agreement to sent to you. You'll then get a feel of the nature of the business including fees and conditions.

An organized PM companies are doing great in Atlanta! Have a goal in your mind. Many of these PMs has over 200+ properties just started 2 yrs ago.

Good luck!!


Edited Jun 26 2010, 08:18


Bryan A. Donor

Real Estate Investor from Charlotte, North Carolina

Jan 01 '10, 09:39 AM


matt, i'm curious how this is working out for you...jeffrey koenig had said something to me about starting his own pm company to manage first his rentals, and then others to make more money...i was thinking about pursuing that this year...how is it going for you? thanks--bryan


Edited Jun 26 2010, 11:03


Bryan A., Carolinas Revitalization, LLC
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David Jackson

Real Estate Investor from The Woodlands, Texas

Jan 01 '10, 09:47 AM


5% plus a 5% placement fee is just the same as 10%.


Edited Jun 26 2010, 11:03


Trevor Brunckhorst

Property Manager from Berkley, Michigan

Sep 20 '10, 12:18 AM
1 vote


Originally posted by David Jackson:
5% plus a 5% placement fee is just the same as 10%.


In Michigan, our standard rate is 10% monthly management fee. The placement fee is 1 month's rent and that is standard. This of course is always negotiable depending on several factors - proximity, volume, condition of property, etc...

Our services range from simply advertising the property all the way to complete management oversight. The key is to be flexible and offer the investor/landlord exactly what they want.

Trevor Brunckhorst



Richard Burton

Residential Real Estate Agent from Alpharetta, Georgia

Oct 06 '10, 11:27 AM


Matt,

Your post caught my eye as I also live in Alpharetta. Not sure if your original question was answered. In Georgia you will need a Brokers license and one requirement for a brokers license is that you are an active real estate agent for three years before you can become a broker



Jason W

Real Estate Investor from Warren, New Jersey

Jan 21 '11, 09:49 PM
1 vote


Denise,

Could you recommend a PM that you like in the Atlanta area to manage 50+ units?

Thanks a lot.



Chris Clothier Verified Donor

Real Estate Investor from memphis, Tennessee

Feb 04 '11, 07:39 AM
3 votes


Matt -

We started a private property management company about 7 years ago with a partner and went through a heck of a learning curve. @ years ago we broke off and started our own property management company in Memphis called Premier Property Management Company. I will tell you that this will be a struggle like most businesses until you reach critical mass. As you build toward critical mass you will be lucky to break even and find yourself doing the workload of several people before you are able to provide the best service possible. That was the bad news. The good news is that after reaching critical mass, this can be a very profitable business.

By the way, we currently manage 714 properties for 257 investors from around the country and charge 9% monthly plus 1st month's rent and 15% mark up on maintenance. In return, our clients will tell you they receive remarkable service and communication. Feel free to contact me and I will share anything you need including mindmaps we used to organize our business, our growth plan and the paperwork we use to run our company.

Best of luck,

Chris



Medium_new_mi_logoChris Clothier, Memphis Invest, GP
Telephone: 901-212-9647
Website: http://www.memphisinvest.com
www.MemphisInvest.com 1(877)-773-9998 Chris D Clothier


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