How to scale are business? Set with property Management and focus on financing and acquisitions?
Me and my wife run are business now and we do it all we have 18 sfh's and 3 duplex's. Going on 4 years in december since we started. So a new property management company came into are area now and we have always done are own stuff since starting. We currently make around $6,000 in cashflow a month and if we stuck with management would only make $3,000 but could focus on finding the deals and getting financing. Whats the best way to grow this business? Ive heard your time is best well spent finding the deals and such, i mean we are into are properties around 50% of value. So it makes sense but whats everyone think?
Would be hard for me to let go honestly and hope property management is doing there job.
@Joshua D. I would say you need to step back a bit first. You and your wife need to think about what the goal is of why you are in real estate and what you want the outcome to be. Many people (myself included in the begining) are so focused on finding deals and making money now you end up with a job and burnt out. Many people do not get into real estate for a job, they do it for the future of what the safety and security of real estate will give them. The goal is to have it maybe as cashflow after it is built up, maybe create a legacy and pass it down to your children, do a 1031.. there are as many different answers as people on these forums. The challenge is those are their goals or what they think are goals. ANd they are not your goals.
Once you know what your goals are as a result of owning the real estate, then you create the strategy of what types of properties do you buy, flip, wholesale, syndicate etc.... all those are not goals those are strategies to get you to your goals. The end destination not the freeway that gets you there.
Once you know the goal and the strategy, the numbers will dictate if you the deal aligns with your business model and strategy. Then you find team members (PM companies) that are aligned with your strategy based on your goals.. Not theirs
So when you mentioned the cashflow difference, my question to you would be whats your goal. If its to have a job and make $6000 per month then you are on target. Eventually you will run out of hours in the day and you will need to learn the value of leverage and team. Make less but get a lot more done to get you to that goal. We manage over 1000 houses in 3 cities.. the only way that can happen is leverage of staff for my business. Same holds true for your business.
I have never read a book where successful real estate people or any business owner says you should do it all your own. The one thing you will never get back is your time, and you have to ask yourself what is the opportunity cost that you are losing my saving $3000 per month... If you do not have time to find a $1 million dollar deal you really have not gained but lost.
Sorry for the rant :-) I am huge believer of setting the goal and end destination before you start the journey. I was never given that advice and I bought a lot of wrong properties that almost bankrupted me.
Below is some thoughts to finding the right PM company that fits your business model not thiers
It is very important that you make sure you take the time to interview and have candid conversations with a PM company. Let them know your strategy, your goals and what your business plan is to ensure that your business plan aligns with theirs and you can both work towards the same goal. If they are not aligned then simply keep looking till you find one that is.I would look up NARPM and start with them..Below are some questions I would think would be a good starting point for you to see who really treats their company like a business or a hobby.
My business partner is a regional VP for NARPM and I am happy to help if you need anything please reach outQuestions to Ask prospective management companies
- What are your average days on market for vacant homes?
- What is your average rent amount for all properties managed?
- What is your average work order cost for the owner?
- What is your average make ready cost for the owner?
- Are all my invoices uploaded to my owner portal?
- How do you advertise your vacant units?
- Do I receive video of my pre and post make ready?
- Do you have a setup fee?
- Do you upcharge on maintenance?
- When do you make owner payments? How often?
- Are you a Certified Property Manager?
- Are you a member of NARPM?
- What is your Guarantee?
- Do you provide move in and move out reports
- How many pictures do you take of the property prior to tenant moves in and after the tenant moves out
- Do you get weekly reports when the property is vacant what prospective tenants are saying about your home
- Do you provide monthly newsletters to your tenants
- Do you hold investor education classes to help me become a better investor
- Do you have single point portfolio based management services?
- How many properties do the owners actually own themselves?
- What do you do to ensure that the tenant is responsible for security deposit disputes since that is the largest reason for owner lawsuits
- How familiar are you with the newly changed laws that can affect you the owner if they are not used correctly?
@Steve Rozenberg Great info!
I am entertaining the prospect of opening property management co and these are great guidelines.