I am creating a third party management company focused on 30+ unit apartments initially with the real goal of 100+ units. I am a recent JD/MBA graduate who LOVES business development (certainly more than the alternative - working at a big law firm) and have experience building companies from scratch. Recently, the head of operations at a nationally ranked owner/management firm approached me about this opportunity. He has 7-10 years of experience overseeing redevelopment projects, ground up development, and repositioning.
Being new to the third party property management market myself, I am concerned about the barriers to entry. We may have a couple opportunities in the Northeast through family/close friends to get things off the ground, but I would like to know a bit more about our ideal client to gauge this opportunity over the long-term.
My experience has been that the best businesses are created from people solving their own problems. The next best alternative is getting a fundamental understanding of your target audience and their pain points.
Please respond to this post if you have experience as an investor seeking out a third party management company to handle your 30+ unit apartment complex (or have created a third party management company in the multifamily space):
1. What are the common pain points that arise from working with a national property management company like Greystar, Lincoln, etc?
2. Have you chosen to work with a local/regional property management company? What was your rationale behind that decision?
3. Obviously, experience plays a huge factor in deciding on a management bid. What would you need to see in terms of staff estimates, expense comparables, and expense estimates to give a relatively new property management company a shot?
4. Do you believe a company entering this industry must have a point of differentiation/ a unique service offering? (Outside of the latest vendor software, a competitive operating budget, and confidence they will increase NRI)
5. Generally, what has been your best and worst experiences with your third party property management provider?
6. What are the three biggest or most common problems you see with third party management providers? What would be your proposed solution(s)?
7. Other than the base management fee, what are the deciding factors when choosing which firm will manage your asset?
8. Does it make sense to use third party management in some markets v. others (suburb v. urban and/or markets with high supply v. stabilized)
9. What missteps would need to occur with your current management firm to consider replacing them with a firm you've never worked with?
I know these are a lot of questions. Feel free to answer as many as you would like. Any additional thoughts/information could also be helpful. I understand a lot of people believe that property management is a lot of headaches for little pay. I am optimistic that this business will put us in a great position for vertical integration (networking, finding great deals to ultimately acquire our own rentals, and managing them at cost).
Thank you in advance for the support!
Hey guys - this post didn't get any traction on the first go around, so I figured I would bump.
Responses are much appreciated!
My experience dealing with PM is limited, but I'll give you the insight that I've gathered so far.
1) Building a reputation from day 1 should be your highest priority
2) Most people that work in property management business have lower pay and very little incentive to outperform. Think of ways to add some sort of incentive to bump up their interest to perform better
3) While it is absolutely essential to follow the law, paying attention to property owner's request and actually following up on them makes a huge difference
4) Being flexible when it comes to agreeing on the contract terms with the property owners
5) Performing your job as if the property was your own, in other words, showing that you care about the tenants and the property
6) Keeping up with the latest technology trends and leveraging social media when looking for potential tenants and then keeping up with the existing tenants
7) Promptly responding to tenants' request (especially in the emergency situations like water leak f.e.)
If you'd like some more, feel free to PM me.