I’m looking to become a Property Manager, now I have never managed properties, of any type and have yet to purchase my own rentals. The market in my area is very hot, and for a newbie, is very daunting and competitive. So in the mean time while I build my knowledge and skills, I was thinking of property management. This would allow me to gain contacts and have good deals come forth to myself if I prove worthy and valuable. This would also give me excellent insight into my local market ie; rent pricing, fair list price, rental demand, common practices, tenancy rights, and so forth.
My question is whether I brave the hardships, and attempt to start managing properties of close friends myself, or to join on a Property management company to learn the skills and systems before beginning my own business?! I’m leaning towards the latter, because I don’t believe I can learn everything I need to from books and other sources, without a lot of trial and error in my business. I’m only 19 and working full time, so I have plenty of time in my life to learn while earning, before dipping my toes into the depths.
Any and all responses are welcome, I want to hear what everyone thinks, and help is much appreciated!
To be a property manager for other people's properties, you have to be a licensed broker or be a licensed agent working under direct supervision of a broker in property management.
You can be a property manager on property you own or if you are doing in-house property management for a company as a salaried employee.
There are a lot of risks and liabilities with property management like fair housing issues, so states require licensing and training.
In addition to what Christopher stated about licensing, you really don't want to try and figure this business out not knowing what's going on. If you get a few clients, you want them to bring on their friends and business partners. Don't put them through trial and error because it will just damage your brand.
If you're serious about this I would suggest a few different approaches.
1) Buy your own properties and do that for a while to understand the business
2) Work for a PM company full time and try to flex around to different positions
3) Start networking asap. You need a lot of people on your team, including vendors, marketer, etc. Figure out how you will attract owners.
I I always recommend you get your license and work as a property manager for an existing Property Management Company. Try it on to see how it fits and then decide whether you want to break out on your own.
Thank you for your advice, I will be looking into licensing!
Great advice, I will start working on your points ASAP!
That’s the best strategy I feel to start, thank you!
Property management laws and licenses vary from state to state and country. While most U.S. States require RE Brokers license, some have specific PM licenses, that may be less intensive as the RE one and even some states with no requirements at all.
You should absolutely try and work for a established property management company, so you can learn and make mistakes on their dollar, and even get paid to build your knowledge base.
You are 19, and have years ahead of you, So taking some time now to "pay your dues" will help you to avoid those same mistakes later, when they will directly impact your investments bottom line.
You already seem more squared away than I was at that age, so, maybe you can jump in the deep end and just start investing and learn the management aspects on the job.
Best of luck and always keep learning.
Thank you! I’ll be looking for a company to join with soon!
You learn a lot by being a manager but it is the hardest business to build in the real estate world compared to other strategies. It takes a lot of attention to detail, processes and the ability to scale before you see any real money.
@Lance Hitz that is awesome man that is pretty similar to my idea when I started. I'm 23 now was 19 when I started looking into it. I would he careful and when you do work for other property management companies cause some may have you sign a non compete agreement. But make sure to get a good understanding of the requirements for a property manager in your area. Some states require you be a real estate agent prior to being a manager. As a manager there are plenty of responsibilities and liabilities you have to be aware of to make sure you don't leave yourself or your clients in harm's way. If you ever want to talk more in depth feel free to shoot me a message.
Very understandable! I am definitely in it to learn a lot, that’s my main goal! Thanks!
Oh absolutely, I’m starting to understand the concept of becoming a manager a lot better and I’m definitely not deterred by the work that needs to be put it!! I have lots of reading to do in the next while, as I prepare to look for a job for a Property Management company! I’m sure I’ll have some questions for you very soon, thank you!
@Lance Hitz good luck man! I can't wait to hear about it.
I'm currently managing one for a friend to learn the ropes and highly recommend it. We went through The Book on Managing Rental Properties together chapter-for-chapter and then delegated responsibilities accordingly. You don't need to get a license. It's not complicated. A friend of mine manages 39 of his own while doing all the rehab and repairs. I wouldn't recommend that, but you'll be amazed at what you can do once you get your boots on the ground.
You're clearly driven (19 years old), understand follow-through (as evidenced by your replies to every post on here), and know what work is (currently working full-time while learning a new trade). I would start with your friends' properties and if you really enjoy it, sure...go for the licensing if you want. But until then, why not start today?
@Lance Hitz I Think @Ian Walsh , @Isaac S. , and @Mike Fontaine hit some very good points.
There are ton of little elements you need to account for that your standard buy & hold investor normally doesn't take in account here are a few. Here are somethings to consider if you decide to transition to your own business.
1. Insurance - You need a bunch of it as a Property Manager. You'll need E&O, general liability, building (if you have an office), and workers comp (if you have employees).
2. Banking - You'll need a bank that has a large enough escrow account to hold all tenant deposits without co-mingling funds (each state is a bit different so look into your specific regional laws). Furthermore you going to want to be able to move those escrow accounts without too much headache and paperwork. Additionally as a property management company you are going to blow away the transaction limits of many banks. Make sure to find one that knows your business and will work with you. Lastly, check into your real estate commissions rules on bank accounts for property management. Some states dictate that the escrow account must be the one that is tied to the RE brokers license.
3. Contacts - You'll want two types of lawyers on retainer. One to handle the contracts between you and the owners of the property. The second to handle the landlord-tenant contracts (leases, addendum, etc...). Working in multiple counties? You may need a landlord-tenant lawyer for each county (talk to a lawyer to see if that is necessary the laws should be the same but you want someone who knows the norms of how the law is practice in each county).
Best luck! Getting started this early and learning will help you crush it later!
Those are great points, definitely things to keep and mind and figure out before hand! Thank you, your advice is much appreciated!!
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