Starting a small property management company

Homeowner · HI · Member since 2008 · 9 posts · 1 vote

I hope I'm posting this in the correct section.

I am going to start a small business with property management. I wan't to focus on single family residential and charge landlords either 10% or 15% of the rent.

I have tried looking for books on Amazon on how to start this up but haven't had much luck.

I do know that here in Georgia I need to have a Real Estate License to do this, and that's not a big deal. I'll be starting the classes soon, in fact.

I'm just not sure what sort of business insurance I would require, and also what a good way of handling payments would be. In other words, when I collect rent from a tenant, take out my cut, and then pay the owner of the property, how is that handled.

Thanks in advance.

0 Reply

87 views

Most Popular Reply

Chris ClothierBusiness Member

Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes

15y

Matt -

We started a private property management company about 7 years ago with a partner and went through a heck of a learning curve. @ years ago we broke off and started our own property management company in Memphis called Premier Property Management Company. I will tell you that this will be a struggle like most businesses until you reach critical mass. As you build toward critical mass you will be lucky to break even and find yourself doing the workload of several people before you are able to provide the best service possible. That was the bad news. The good news is that after reaching critical mass, this can be a very profitable business.

By the way, we currently manage 714 properties for 257 investors from around the country and charge 9% monthly plus 1st month's rent and 15% mark up on maintenance. In return, our clients will tell you they receive remarkable service and communication. Feel free to contact me and I will share anything you need including mindmaps we used to organize our business, our growth plan and the paperwork we use to run our company.

Best of luck,

Chris

Podcast Guest on Show #224

REI Nation4.576 Reviews

Website View Page

10 Reply

See this reply in the discussion

54 Replies

Jump to latestLatest

Sort by

Nick J.
Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
17y
Matt, where is Alpharetta in relation to Atlanta?

Also, I could be completely wrong but 10-15% is pretty high, I currently pay 7% and once I get 3 more properties then all my properties handled through the PM company will be at 5% and I pay no start up cost, only 5% placement cost. They take the monthly rent x12 and then divide by 5% and thats what I pay to have the tenant placed.

depending on where Alpharetta is to Atlanta, I would consider giving you a shot at earning some business once I pick up a few properties there, but you'll have to be real good at placing good tenants and seriously consider not charging 10%
1 Reply
Account Closed
OP
Homeowner · HI · Member since 2008 · 9 posts · 1 vote
17y
Hi Nick, thanks for the reply.

Alpharetta is about 20-30 minutes north of downtown Atlanta.

Thank you for the information regarding rates...my research indicicated to me that competitors charge anywhere from 10-15% for their services.

Are you paying 5% management fee in Arizona or in Atlanta? Keep in mind that fees will likely be different state by state.

If you are paying only 5% in Atlanta, than I need to reconsider my idea :)

edit to add an example:

http://www.propertymanagement.prudentialgeorgia.com/prudential_ga/modules/agent/agent.asp?p=text&id=671&acc=21264
0 Reply
Nick J.
Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
17y
I pay 5% in Phoenix I don't have any properties in Atlanta yet, but plan on doing so shortly.

the standard here in Phoenix is 8-10% but with as many properties as I have them handle for me, they give discounts.

1 Reply
Account Closed
OP
Homeowner · HI · Member since 2008 · 9 posts · 1 vote
17y
That makes more sense...I could see a 5% rate if there were a lot of properties with one client.
0 Reply
Ted Harris
Real Estate Investor · Portland, OR · Member since 2009 · 660 posts · 244 votes
17y
I'm paying 7% in Portland, Oregon ... when I researched property management companies last year, I found rates ranging from 7-10%. Cost to bring a new tenant ranged from $250 to half month's rent.
0 Reply
Greg Boots
Real Estate Attorney · Seattle, WA · Member since 2009 · 75 posts · 20 votes
17y
Matt,

You should consider setting up a buisness, either LLC or "S" corporation for the business activity.

If there is an injury on the property due from failure to cure the defect wihthin the alotted time period set forth by the State you are opening yourself up to personal liability exposure not only from the tenant but also from the property owner.
2 Reply
Jeffrey K.
Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
17y
Does anyone know if you need a license to do 3rd party PM in Wisconsin? I cant find it on google.
0 Reply
Account Closed
OP
Homeowner · HI · Member since 2008 · 9 posts · 1 vote
17y
Originally posted by Greg Boots:
Matt,

You should consider setting up a buisness, either LLC or "S" corporation for the business activity.

If there is an injury on the property due from failure to cure the defect wihthin the alotted time period set forth by the State you are opening yourself up to personal liability exposure not only from the tenant but also from the property owner.

Thank you. I did plan on either an LLC or S-Corp. I Will probably go with an LLC.
My first step is to get the real estate license which will likely take several months.

Second, form the LLC/register with the state. Use the EIN to open up a business checking account as well as open up a business line of credit.

Third will be securing business/liability insurance, as well as purchasing an umbrella policy that will cover my personal assets just in case.

Fourth will be opening a "merchant" account so that I can receive credit card payments.

Finally, marketing my services and taking on clients.

Sound about right?

0 Reply
Account Closed
OP
Homeowner · HI · Member since 2008 · 9 posts · 1 vote
17y
Originally posted by Jeffrey Koenig:
Does anyone know if you need a license to do 3rd party PM in Wisconsin? I cant find it on google.

Best I could find:

http://www.allpropertymanagement.com/propertylaw/property-management-law-in-wisconsin.html

1 Reply
Jeffrey K.
Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
17y
there is a lawyer in the lcc, but she does not have a license in real estate. idk what to do
0 Reply
Ryan Wardlow
Investor · Tempe, AZ · Member since 2009 · 11 posts · 4 votes
17y
Nick,
I would like to know who you have manage your properties in AZ. I have a 4 properties that I might want them to manage. Thanks Ryan
0 Reply
Matt Batson
Inspector · asheville, NC · Member since 2008 · 43 posts · 8 votes
17y
Just for info,
In charlotte NC the going rate for PM is 10-12%.
And I called several to make sure.
We are getting out of our rental up there and selling it after a horrible experience with the PM handling our single family home
0 Reply
Denise NA
Real Estate Investor · CA · Member since 2008 · 61 posts · 19 votes
17y
I am currently working with 6 PMs. My best suggestion is to call upon a management company and ask for a copy of mgmt agreement to sent to you. You'll then get a feel of the nature of the business including fees and conditions.

An organized PM companies are doing great in Atlanta! Have a goal in your mind. Many of these PMs has over 200+ properties just started 2 yrs ago.

Good luck!!
1 Reply
Account Closed
Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
16y
matt, i'm curious how this is working out for you...jeffrey koenig had said something to me about starting his own pm company to manage first his rentals, and then others to make more money...i was thinking about pursuing that this year...how is it going for you? thanks--bryan
1 Reply
David J.
Investor · Houston, TX · Member since 2009 · 210 posts · 261 votes
16y
5% plus a 5% placement fee is just the same as 10%.
0 Reply
Trevor Brunckhorst
Property Manager · Berkley, MI · Member since 2010 · 25 posts · 4 votes
16y
Originally posted by David Jackson:
5% plus a 5% placement fee is just the same as 10%.

In Michigan, our standard rate is 10% monthly management fee. The placement fee is 1 month's rent and that is standard. This of course is always negotiable depending on several factors - proximity, volume, condition of property, etc...
Our services range from simply advertising the property all the way to complete management oversight. The key is to be flexible and offer the investor/landlord exactly what they want.

Trevor Brunckhorst
1 Reply
Richard Burton
Residential Real Estate Agent · Alpharetta, GA · Member since 2010 · 1 post · 0 votes
15y
Matt,

Your post caught my eye as I also live in Alpharetta. Not sure if your original question was answered. In Georgia you will need a Brokers license and one requirement for a brokers license is that you are an active real estate agent for three years before you can become a broker
0 Reply
Jason W
Real Estate Investor · Warren, NJ · Member since 2010 · 7 posts · 1 vote
15y
Denise,

Could you recommend a PM that you like in the Atlanta area to manage 50+ units?

Thanks a lot.
1 Reply
Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
15y
Matt -

We started a private property management company about 7 years ago with a partner and went through a heck of a learning curve. @ years ago we broke off and started our own property management company in Memphis called Premier Property Management Company. I will tell you that this will be a struggle like most businesses until you reach critical mass. As you build toward critical mass you will be lucky to break even and find yourself doing the workload of several people before you are able to provide the best service possible. That was the bad news. The good news is that after reaching critical mass, this can be a very profitable business.

By the way, we currently manage 714 properties for 257 investors from around the country and charge 9% monthly plus 1st month's rent and 15% mark up on maintenance. In return, our clients will tell you they receive remarkable service and communication. Feel free to contact me and I will share anything you need including mindmaps we used to organize our business, our growth plan and the paperwork we use to run our company.

Best of luck,

Chris
Podcast Guest on Show #224
REI Nation4.576 Reviews
Website View Page
10 Reply
Dave Charron
Investor · Syracuse, NY · Member since 2010 · 165 posts · 75 votes
15y
Originally posted by Chris Clothier:
Matt -
We started a private property management company about 7 years ago with a partner and went through a heck of a learning curve. @ years ago we broke off and started our own property management company in Memphis called Premier Property Management Company. I will tell you that this will be a struggle like most businesses until you reach critical mass. As you build toward critical mass you will be lucky to break even and find yourself doing the workload of several people before you are able to provide the best service possible. That was the bad news. The good news is that after reaching critical mass, this can be a very profitable business.

By the way, we currently manage 714 properties for 257 investors from around the country and charge 9% monthly plus 1st month's rent and 15% mark up on maintenance. In return, our clients will tell you they receive remarkable service and communication. Feel free to contact me and I will share anything you need including mindmaps we used to organize our business, our growth plan and the paperwork we use to run our company.

Best of luck,

Chris

WOW Chris, that is quite a large number of properties. Impressive to say the least. You must have many employees to manage showings, repairs, and general tenant issues.
Do you use an attorney to do evictions or is that something you do in house?
0 Reply
Matt Nackino
Astoria, NY · Member since 2011 · 1 post · 1 vote
15y
Chris C.

I am a student at the University of Cincinnati and getting ready to graduate in June. I have been looking into setting up a property management company in cincinnati. I have started working on my business plan, advertising, marketing etc..., but have had some difficulty identifying correct fees to charge. I was wondering if it would be possible to get a look at a sample contract you have with your clients.
1 Reply
David Beard
Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
15y
Here's one from a good sized PM firm that covers most everything:

http://landlordaustin.com/sample_management_agreement.pdf
0 Reply
Tod R.
Investor · Southlake, TX · Member since 2009 · 950 posts · 338 votes
15y
Originally posted by Chris Clothier:
Matt -
By the way, we currently manage 714 properties for 257 investors from around the country and charge 9% monthly plus 1st month's rent and 15% mark up on maintenance. In return, our clients will tell you they receive remarkable service and communication. Feel free to contact me and I will share anything you need including mindmaps we used to organize our business, our growth plan and the paperwork we use to run our company.

Best of luck,

Chris

Hey Chris, congrats on creating a successful company. What software does your company use to for your rents and accounting.
0 Reply
Charlie Simpson
Member since 2011 · 7 posts · 0 votes
15y
Hey Chris ... I.m wondering the same thing ... What software are you using and what feedback would you provide someone looking to start up? Any learning experiences that could have been avoided? Anything you would suggest to do right out of the box? What marketing techniques did you find most successful (Direct Mail, Realtors, BNI, Leads, etc.)?
0 Reply
Zachary Dosch
Bismarck, ND · Member since 2011 · 142 posts · 16 votes
15y
I am also just getting started:

Does anybody know where you can check to see if you need E&O insurance and a Realtor's license?

Also, does anybody have a good template for a Property Management business plan?

Thanks! You guys are a big help and inspiration!
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.