Hey guys, Ive been putting my mind to work as far as brainstorming ideas to get into real estate. Can anyone point me to the right direction to starting a property management business? Pros and Cons? Is it profitable if you grind your butt off? Too competitive?
I live in Michigan, Metro Detroit, and when I start this I know out of state investors will be glad to have someone to work hard and be serious about doing an awesome job managing properties and I am it.
Love you guys on here and hoping to get some help in starting a property management business in Michigan but if anyone has blogs, youtube videos, people, anything to steer me in the right direction I would love you like Kanye loves Kim Kardashian and we all know that he loves Kim or maybe himself who know lol
In Texas you need a broker license to do 3rd party property management. I assume it is the same throughout the USA.
Personally, I've never thought 3rd party property management was worth the hassle. Yes, you can build a property management business and thus create equity in that business. But, I'd much rather own the underlying assets (the property being managed). That is why the real money in real estate is in buying and holding properties.
I don't mean to completely poo-poo the idea of doing property management. I think it is a good idea if you can make the numbers work. I'd just make sure I used property management as a way to eventually get into ownership of property.
@Jonathan Towell No go ahead and express your honesty I am looking to get into real estate at a young age (22)
I want to hear all the goods and bad with starting a company like a 3rd party property management business i want to create a business and use that business to make money to buy more buy and hold units
Jamiel, the first step is getting enough experience working for another real estate company to be qualified to apply for your State of Michigan Brokers license. You can also gain the same experience working for yourself but for a lot of people that is more difficult. Once you have a Brokers license you can start a 3rd party property management business. I currently have 150 3rd party clients and I also own 50 of my own properties. I have to tell you that managing properties is definitely not the most exciting part of real estate. It is more like a job, and a very difficult job at that. Often if feels like you are not being properly compensated for the time and effort you are putting in and often your clients treat you very badly. They may not intentionally do it but they make you feel like it is your fault the hot water heater died, the furnace went out, things like that. That's my 2 cents.
Timothy and Stewart are right. If you don't have experience in real estate, then what are you offering to your client. Owners hire property managers precisely because they are more experienced and have learned over many years the best way to deal with tenants and have systems in place to handle rent, maintenance requests, tenant screening, etc. A newbie jumping right into a manager role is just setting themselves up for failure.
Sales person license is the first step. 40 hour class, take test, get license, place under supervising broker. Three years of active license under that broker. Complete 3 transactions per year for those three years, take another 90 hour class, pass test for broker, now you have license. You are now able to be the property management company owner. You can manage properties under the supervising broker if he allows it. most wont because of the liability. Do the research first on who will hold your license and let you create the business you desire.
As the others have stated, lot of eiser ways to make money in this business than doing the management. In my opinion the best management companies are the ones that are not in the business to do Real Estate, but have owners who are brokers...Management business is more about processes than Real Estate. Most investors are not good at processes.
@Ron Walraven Thanks for the info being from Michigan do you suggest a different route for a young guy like me to get active in real estate? Ill work for free, scoop poop, lift a car, it doesn't matter I need to get active but thanks for the advice.
Your hearts in the right place and you sound like you are ready to go out and make things happen. You are on here stratigizing and that is really awesome. Taking action is what most people are not doing and you are!!
Talk to some property management companies. Since you are will yo work for free, tell them they can pay you for what they think your results are worth. Managers love people with your attitude.
Another tip. Owners like to buy foreclosures at your local courthouse. Find them there, introduce yourself. Let then know you want to learn and will start by running errands or whatever. Owners love people with your attitude.
@Tim Steele I appreciate the good comments thats a good idea that i will take if i show my face enough and show them i can put the time in and bring forth good value Im sure they will atleast here me out
@ Jamiel Strickland as you know I was HOA president in Los Angeles, CA for eight long years. I watched our management company grow with me. I got to know the owner well. They gained several credntials such as a real estate sales person license, Certified Apartment Manger certification, National Board of Certification for Community Association Managers among others. I got to learn the Davis Sterling Act (California specific) and some basic legalities about exterior Master Policy insurance for buildings. When I first got started I was scared, lots to learn, but I must have asked every question in the book to our management company. Most of the time they had an answer, sometimes they said, I don't have an answer but I'll get back to you. Be supportive in your role to keep the client.
The take always are as follows:
1. Its a numbers game. Fees are competitive so you'll be juggling accounts.
2. You might get spread thin across accounts so make sure you cover the essentials.
3. Get an attorney as you'll have lots of liability when advising the lamen.
4. Make friend with an insurance company as a Master Policy is mandatory in most HOA, commercial property and apartment buildings.
5. Hire a good accountant and tax professional as you will be handling lots of money.
6. You'll be constantly working with vendors to do work at a fair price, only recommend good contractors otherwise you might get angry calls from clients.
This is not legal advice. Consult an attorney, CPA, tax professional, Real Estate professional as you'll be wearning many hats and have lots of responsibility juggling work orders
Good luck. Management companies make a killing so if your good and fair priced you'll do just fine. That's my two cents.
There is more and more competition...but the trend seems to be to hire PM's instead of doing it all yourself. You'll need a real estate license under a broke in order to do property management in Michigan. If you want to do it all on your own, you'll have to eventually become a broker yourself.
I'm from Detroit as well and yes property management is very lucrative and profitable to say the least. When you don't have a ton of listings or deals closing you still have a paycheck coming in.