Property Management Company

1 Reply

To give some background, I work as a commercial credit analyst with a bank. Unlike most getting started I don’t have any trepidation going through the financing and legal process to get up and running. My initial fear was dealing with tenants, chasing rent money, having my property destroyed by a tenant, getting 2am lock out call, or the dreaded broken toilet and flooded hallway call. After reading the forum here on BiggerPockets and chatting with some of my clients, I’m beginning to see opportunity in the very thing I feared the most, property and tenant management. Bear with me I would like your input. My idea is to start off by creating a property management company. I wouldn’t just wing it but rather build a company that would capitalize on technology and automation from an administrative and accounting side. The other component would be providing handyman and contracting services all subcontracted out to a third party. This would allow me to get into the real estate game without holding interest rate risk or asset risk, all while slowly building a cash flow to eventually invest in real estate myself. I realize initially I wouldn’t be building any equity and I would also be doing all of the work for a small % of gross rents. What are your thoughts is there a market for property management companies? What other things do I need to consider? I realize my idea isn’t new but most property managers and even real estate investors I meet still use very antiquated processes that only exacerbate their daily headaches. Best regards, Zac

@Zac Armstrong   So I can applaud your energy and wanting to get something going for yourself but just going out and starting a property management company isn't quite as easy as one may think.

Start with needing a brokers license. Next do you know anything about rental real estate? Real estate management is incredibly more complex than most assume. You will need to know and fully comprehend all the local, state and federal laws pertaining to housing. You need to understand residential home systems inside and out (plumbing, electrical, HVAC, etc), you will need to know landlord tenant law for your state, you need a LOT of insurance (GL, E&O, etc.)

Now your idea of capitalizing on technology and automation in an otherwise "old" industry is a good idea but I'm not sure what better mouse trap you are thinking of creating or what technology you think will bring automation that isn't already being utilized. I'd actually love to hear what your ideas are on that subject.

Anyway I could go on and on. I hope you dive in and get started but just know where you are diving or it's going to be carnage for you and for your clients. To me the better way to get started in real estate is start by buying deals. Zero overhead, no license, very little cash outlay, etc. plus you get to actually understand how the process works, you make money, gain experience and actually get to see the inner workings of the business of real estate. Just to be clear; you DO NOT need money or credit to buy real estate. It's easier to buy with those but you can absolutely get in the game with nothing but your wits. 

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