Starting a small property management company

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Starting a small property management company

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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.

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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

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  • Adrian Williams
    Residential Real Estate Broker · Atlanta, GA · Member since 2010 · 122 posts · 32 votes
    15y

    Here in Missouri you need a brokers license and E&O insurance , check with your states Real Estate Commission, We just started a property management company in Kansas City and the process of getting everything set up wasn't to difficult now we have more tennents than we have homes !

    Good Luck !

    A.D

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  • Brandon Kamm
    Commercial Real Estate Broker · Memphis, TN · Member since 2010 · 151 posts · 82 votes
    15y
    Originally posted by Zachary Dosch:
    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!

    You will want to check with your state RE board, most likely yes you will need to have a brokersnlicense or work under one and the property management waiver on your e&o insurance.

    1Reply
  • Brandon Kamm
    Commercial Real Estate Broker · Memphis, TN · Member since 2010 · 151 posts · 82 votes
    15y
    Originally posted by Tod Radford:
    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.

    Not to hijack Chris's post but check out rent manager for software it has been very useful for us.

    0Reply
  • Tori Bushman
    Member since 2011 · 1 post · 0 votes
    15y

    Hello Matt,

    So I was wondering when you say you charge 9% for monthly plus first months rent and 15% mark up on Maintenance what does that mean? I took as you charge 9% each month of their monthly rent plus you charge them a one time first month rent and 15% if they want maintenance. I just trying to learn more, because I am very interested in opening my own property management company.

    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

    0Reply
  • Russ Fragala
    Lake Grove, NY · Member since 2012 · 1 post · 0 votes
    14y

    I am starting a property management firm in New York, serving all of Long Island and the 5 boros. I would appreciate some advice on software and referrals in my area....and any advice that can be given.

    0Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    14y

    I don't know anything about the business of property management. However; it seems you need to make sure you're comparing apples to apples. What services exactly are clients getting for the amount they are paying? Are you simply leasing up properties, and collecting rents, or do you handle paying all the bills that go with each property (insurance, taxes, utilities, etc.) Do you schedule minor and major repairs?

    If the property is a vacation rental, with alot more turnover, how do you charge on that?

    I know a lot goes into property management, if done professionally, and it would be great if some of you with the experience can answer the questions a new person might, or should have. I'm sure you can add to my list.

    1Reply
  • Andre Green
    Investor / Agent · NY, NY · Member since 2009 · 97 posts · 20 votes
    13y

    Chris Clothier I want to know what type of obstacles do you think I could expect with an inexperienced investor that is going from managing thier own property to hiring me as their PM. I tried to send you a private message but I was having some issues so I decided to post the quesiton here. I hope that is alright and you can respond to me via a private message if you like.

    Thanks

    0Reply
  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    13y

    Andre Green -

    The biggest obstacle is going to be setting the proper expectations and then determining how you are going to deliver upon those expectations. Property managers have absolutely earned the bad rap over the years and as we all know, disaster stories and bad experiences get talked about the most. So investors are wary of managers and rightfully so. You need to clearly lay out exactly how you assist an investor to have a positive experience. You also need to consider what your central selling point is going to be. What do you do that makes you better, or more qualified than other property management companies and communicate that clearly.

    That could very well be your biggest hurdle to overcome. Properly setting the expectations for yourself and the investor. From there, you simply have to deliver upon what you promise.

    Chris

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  • Andre Green
    Investor / Agent · NY, NY · Member since 2009 · 97 posts · 20 votes
    13y

    Chris Clothier that sounds like sound advice as usual! Thanks for the feedback. I do think that clear communication will and always is the most important part of business. I will keep you posted on my progress.

    0Reply
  • Phillip Cailey
    Coffeen , IL · Member since 2012 · 43 posts · 7 votes
    13y

    Something I just found out, you might want to check on. In Illinois you have to have a real estate broker sponsor you, to get your license. The local broker here wants $1500 a year for MLS access and Insurance. They also want a percentage of the profits you make in your business. I understand there are brokers who don't have these charges, so I would recommend due diligent s, while working out your business plan. Hope this information helps.

    0Reply
  • Dick RosenPro Member
    Property Manager · Gilbert, AZ · Member since 2009 · 1k+ posts · 451 votes
    12y
    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

    Chris,

    I just stumbled onto this thread while cruising Google. I am a BP member and I am somewhat familiar with you so I thought I'd ask you a question.

    In AZ you have to be an active agent for 3 years prior to testing for a brokers license, so I have been slowly building a portfolio of properties and owners that I am managing under another brokerage. I intend on getting my brokers license this October with the intent of opening my own brokerage for the purpose of property management as well as my own investments.

    Everyday I come across little things that the brokerage has or will take care of for me and the thought of knowing everything that needs to be known is scaring me a bit. I've been managing my own rentals since 2005 and started ,managing for others in 2011 so I am a somewhat experienced manager but all the legal stuff, trust accounting etc. has me nervous.

    Where can I go to learn what I don't know that I don't know?

    0Reply
  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    12y

    Hey @Dick Rosen -

    Great question! I'm not sure there is a place to learn everything you need to know. Much of it comes with experience. You would be surprised by how much you actually know, but may just want to get confirmed. I would say that two advisors are going to be key for you. One - a great tenancy attorney. You will want to have all of your paperwork and procedures reviewed for compliance. Two - a great CPA who understands real estate investing. Tax advice is going to be critical. If both of these consultants are there in your area, then they will be able to help direct you as you get started and make sure you are compliant and setting up your business the correct way.

    Lastly, I would be happy to talk to you. Send me an email if you want and maybe we can set up an appointment.

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  • Tj Noye
    Investor/Real Estate Developer · York, PA · Member since 2015 · 10 posts · 2 votes
    11y

    Do you need a license if you are managing your own properties? I do not think you do. 

    I am in PA and you need a Brokers license of you are going to market to clients. 

    We would like to do this eventually but we need the Broker license - a broker may hang his/her license so you may operate. Anyone correct me if I am wrong. 

    0Reply
  • Dick RosenPro Member
    Property Manager · Gilbert, AZ · Member since 2009 · 1k+ posts · 451 votes
    11y

    @Tj Noye

    These are state specific rules/laws that you are referring to and I'm no attorney but... you can generally manage and market your own properties without a license. When you manage or someone else's properties a license of some sort is usually required. Check with your state department of real estate for more details, it should be online.

    0Reply
  • David Briley
    Real Estate Agent · Amesbury, MA · Member since 2012 · 65 posts · 32 votes
    11y

    We're starting a small property mgmt company (that will eventually be humungous!). @Brian Ortins and I are just getting one off the ground. 

    As far as software, I chose Buildium. It does "nickel and dime" you a bit, but you only pay for what you need. It also plays well with 3rd parties, has an app for you and tenants, websites, click to print mail notices/checks, etc and the great customer service to boo

    One thing I haven't found is a checklist that you would go through to enter a new property. We have a few investors who have already given us a handshake agreement for their properties with tenants in place so any suggestions on how to do a checklist with those properties/tenant would be greatly appreciated!

    t.

    0Reply
  • Angelo Armanios
    Charlotte, NC · Member since 2015 · 4 posts · 0 votes
    11y
    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

     Hi Chris, 

    Awesome post thank you for sharing!! We are looking to open a PM firm in Charlotte NC, and had a question about the maintenance and repair part of the business. 

    1.  Do you go out and get quotes for the property owner to use , or do you have in-house maintenance on staff? 

    2. If you use outsiders, are you disclosing the name and contractor to the property owner and presenting a line item 15% fee, or just marking it up and presenting to the property owner to decide? 

    3. Are rent late fees included in the management fee as well?

    4. Any out of the box software you can recommend, are is it all in-house? 

    Sorry for all the questions, I'm trying to make sure we are steering in the right direction.

    0Reply
  • Gregory Walter
    Charlotte, NC · Member since 2014 · 101 posts · 40 votes
    11y

    "or just marking it up and presenting to the property owner to decide?"...This would be an violation of NCREC rules and regs., you can't not disclosure your fees.  If you recieve a referal fee or mark up a vendor's price, you have to disclosure to your client.  You could lose your real estate license if you don't. 

    I noticed there is not listed broker with NCREC under the name Armanios.  Accepting compensation in exchange for the services required of a full service PM is a crime for both the person paying and the person paying you.  If your not already a real estate licensee, you should become one before undertaking this endevor, or limit the services you perform and how you market yourself.

    0Reply
  • Angelo Armanios
    Charlotte, NC · Member since 2015 · 4 posts · 0 votes
    11y
    Originally posted by @Gregory Walter:

    "or just marking it up and presenting to the property owner to decide?"...This would be an violation of NCREC rules and regs., you can't not disclosure your fees.  If you recieve a referal fee or mark up a vendor's price, you have to disclosure to your client.  You could lose your real estate license if you don't. 

    I noticed there is not listed broker with NCREC under the name Armanios.  Accepting compensation in exchange for the services required of a full service PM is a crime for both the person paying and the person paying you.  If your not already a real estate licensee, you should become one before undertaking this endevor, or limit the services you perform and how you market yourself.

     Thanks for the insight Gregory, I am in the process of acquiring my license. Besides NCREC are there any resources you can provide to help get me on the right track?

    0Reply
  • Gregory Walter
    Charlotte, NC · Member since 2014 · 101 posts · 40 votes
    11y

    Find an experienced broker to affiliate with to learn the ropes.  Someone you can ask questions when you see conflicting information online.  Property management is not as easy as you may think it is right now.  Often times you can can't see the potential pitfalls until your in the thick of things.  I started managing my own properties and that gave me the opportunity for a couple mulligans before managing property for clients.  When will you be licensed?

    0Reply
  • Angelo Armanios
    Charlotte, NC · Member since 2015 · 4 posts · 0 votes
    11y
    Originally posted by @Gregory Walter:

    Find an experienced broker to affiliate with to learn the ropes.  Someone you can ask questions when you see conflicting information online.  Property management is not as easy as you may think it is right now.  Often times you can can't see the potential pitfalls until your in the thick of things.  I started managing my own properties and that gave me the opportunity for a couple mulligans before managing property for clients.  When will you be licensed?

     Thanks for the tip. I currently manage a condo we used to live in, in Cincinnati OH. My wife was let go last month and she is signed up to take classes in November to get her license. We plan on buying a rental to self manage here in Charlotte, and then to open up to the public. We are in the research stage now so we can make sure we are starting out correctly before we reach out to the public. Once the PM firm gets established and she learns the ropes of real estate I plan on quitting my full time job. Thanks for the insight as always. 

    0Reply
  • Michael Bowie
    Investor · Knoxville, TN · Member since 2016 · 76 posts · 29 votes
    10y

    Do the principals who own property management software have to have a real estate license also? 

    Do the principals who own the company who owns Appfolio or Buildium have to have a license? 

    I'm curious how this works with software solutions. 

    0Reply
  • Dror Shmaya
    Property Manager · Bronx, NY · Member since 2016 · 69 posts · 7 votes
    10y

    Hi. As long as you are not personally involved with rent collection or leasing. You are not have to be licences re.

    We are pm for  investor's always use brokers and agents to deal with tenants.

    Our information system operated by our office call center managed by broker but I don't think it's a must.

    I'd be happy to hear more ...

    0Reply
  • Michael Bowie
    Investor · Knoxville, TN · Member since 2016 · 76 posts · 29 votes
    10y
    So, if I create a piece of software that manages properties for you, I don't have to be licensed?
    0Reply
  • Bob CollettPro Member
    Property Manager · Brecksville, OH · Member since 2014 · 486 posts · 464 votes
    10y

    You do not need a license to make or sell software in Ohio.

    Good luck.

    0Reply
  • Victoria Le
    Beaverton, OR · Member since 2017 · 1 post · 0 votes
    9y

    Hi everyone.

    I'm looking to help anybody out with managing their properties in Oregon- commercial or rental.  Let's chat if there's an interest.

    Thank you.

    0Reply
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