Crazy Idea to get started. What do you think?

Question

Hi guys. I'm looking to break into my local market of Central Maine. While I'm on the lookout for my first deal I've been building a small network. It sounds like there's a bit of a vacuum in reliable local property managers.

I was originally thinking of setting up a property management company to take care of the properties that my partner and I purchase. However, now I wonder if it might be a good idea to set up the property management company first to take on local clients and propel us into the space faster. Thoughts?

Nicholas L. · Answer

@Sarah Moore

I think there are 2 separate questions here - should you manage your own properties?  And should you provide property management services to others?

1 is something you'll have to decide for yourself.  I'll give you a partial answer on 2.  A lot of people come on the forums and ask "Should I become an agent so I can more effectively invest?"  And the answer to that is generally no.  I think that applies to you too - if you want to provide PM services to investors, that's great!  But I wouldn't do it to try to enhance your own investing - I don't think it would be much of a catalyst

Hope this helps

Sarah Moore · Answer

That's a very good point to make. I'm not really certain if I'd be looking at PM as a catalyst so much as a secondary revenue stream and network building tool. But the time commitment issue is a very real one. I'll be carefully considering this as I move forward. Thank you.

Rich Davis · Answer

Sarah,

Went through the same thing in L-A.  Just no decent PMs. So I hired a woman, and coached her up on how to PM well.  She now manages 32 units for me.  The beauty of this approach, is that she manages the exact way I want my properties to be managed.  I don't have to adjust to some other PM's way of management.

Recently bought some properties in Rumford. Being an hour away, I hired local PM there.  Not surprisingly, I've been underwhelmed.

Would LOVE to connect and share Central Maine investing.

Zachary Tracy · Answer

Hey @Sarah Moore

There really is a void of reliable (and trustworthy) property managers in the area. There was some earlier advice to self-manage when under 10 units, and financially that makes sense if you want to run lean and do it yourself. Here are some tips for hiring a PM:

1. Do not select the first Property Management (PM) company you talk to. You should talk to at least 5 of the highest rated, even if it is brief. If they treat you poorly in the sales process, they will treat you poorly when your locked in a 1 year contract. I recommend looking at reviews on their Google Business Profiles to get some selections.

2. Evaluate their pricing. If a PM doesn't have pricing on their website, that is a red flag. In most cases, you won't know their complete pricing until you see a draft agreement. It is common for PMs to stick fees into paragraphs throughout the agreement, this is another red flag. This PM will be trusted with the accounting, collection, and transfer, of tens of thousands of your dollars, or more. They need to be trustworthy with money.

3. Evaluate their term. Many PMs have long term agreements, 1 year or more, with cancellation fees and the works. In Central and Eastern Maine, there is only one I know of with a 30-day contract: Ascend Property Management.

4. Evaluate their capabilities. What does their tech stack look like? Do they even know what "tech stack" means? Most companies in the area are 10-15 years behind on PM technology. Do they have in-house maintenance (this can save you thousands a year)? What is the turnover of their team? Do they have preferred vendors that always answer the phone because it is that PM calling? Does the PM answer the call or return a missed call within an hour? If they can't answer the phone for a possible new client, will they answer if you are already locked-in?

Happy to answer any questions that come up.

Best,

Zach

Lorien Wolff · Answer

Fantastic, that makes total sense- reach out anytime and good luck! :)

Sarah Moore · Answer

Hi @Lorien Rollins,

I'm actually in the Augusta area looking within a 30 mile radius of us. I'd like to keep things relatively close as we get started, perhaps grow out once I get my processes and systems nailed down. I'd be grateful to chat with you sometime.

Sarah Moore · Answer

@Brett A Brockway,

Thank you for the advise. I appreciate it. I may reach out to you soon as we are actually looking in the Waterville area. It would be great to get your insight and advise on what to be on the look out for.

Brett A Brockway · Answer

Hey Sarah, We have a property management company in Waterville, Augusta, Skowhegan (Standard Management Company). We started it for the same reason. Typically what I advise clients is to self manage your first 2-10 units hire your management for 10-100 units and then have the management company scale with you when you get to 100-200 units. We have moved away from C class units as of late and are trying to stay in the class B/A market. Please feel free to message me with any questions about the area! If you decide to self manage and want help with other functions we can totally help out.We also buy and sell real estate (candor realty), have a repair and maintenance company (CMR Construction) (includes snow plowing, lead abatement and full fledged rehabs) If you need any of those support services please let us know.

Michael Smythe · Answer

Be careful!

Managing properties for others can be a huge time suck to do it right. So, it may negatively affect your available time for your own investing.

Of course, you will also be exposed to potential acquisitions when clients choose to sell.

Marcus R. · Answer

I like the idea...it's great to strike gold during the gold rush, but also, it ain't bad to sell picks and shovels either.

Crazy Idea to get started. What do you think?

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