First Years of Residential Property Mgmt Business

8 Replies

I see lots of posts on “starting a property management business” in this forum. Many people chime in to say it’s a great idea, lucrative and talk about the 100s of doors managed.

Others question why anyone would want that headache. That said, has anyone started a property Mgmt business recently and would be willing to share their experience?

Did you work for a property management company prior to starting your business? Or did you learn as you grew?

How many properties did you have under management the 1st month, quarter, mid-year, after 1 year?

What would you do differently?

Most the time I either read about or hear on podcasts how someone started a business and then, poof, they fast forward in the discussion 2 years and now they manage 200+ properties.

I’m interested in the in b/n. Those first days of having only 1 or 2 properties under Mgmt of which one may be yours and the other is a friends/relatives. The depressing slow month where you grew 0 doors or the crazy month you grew 15 doors!

Anyone care to share their experience?

If not publicly, perhaps message me and we could discuss.

Thanks!

Keric, there are a hundred different things to tell you. I bought an existing PM company with 100 doors and have grown it to 350 doors, two offices, six employees, and a few sales agents. It's lucrative, but it's also a full-time job and a lot of work. I am constantly networking, learning through self-education, and occasionally wishing I could walk away from it all.   The #1 advice I can give you is to join the National Association of Residential Property Managers (NARPM) There are some 10-pound brains in that group that will help you improve and grow your business if you take advantage of them. I've learned more in one year from them than I have in ten years on my own.

What would I do differently? Nothing. I've learned so much by being a property manager. I sometimes envy the guys that went straight into real estate investing that only manage their own properties. If I had started with that back in 2010, I may have enough properties right now that I wouldn't have to work at all and my life would be simpler. Or maybe I would have screwed up, gone broke, and taken a traditional 9-5 job. I don't spend a lot of time playing "what if" with myself. I am where I am and need to look forward to where I want to be.

I love to help people out. Feel free to reach out to me at any time.

@Nathan G. Thanks for the reply. I’ll be reaching out to you for sure. Going from 0 - 100 doors through acquiring another PM co. sounds like a very steep learning curve. Did you have any PM experience prior to acquiring that company?

Thanks for the pointer with NARPM. I continually get pointed in that direction for resources and education. It is a top priority on my to do list.

No experience but I had one investment property and had read a few books about managing rentals.

in the military I managed an operating budget of $2 million, 120 people, and about $30 million in equipment and facilities. Not nearly the same thing but it did open me up to the idea of managing resources. I'm very organized and I enjoy self learning.

@Nathan G. Very interesting. Sounds like managing a 100 properties may have been easier than your military job! Thanks for sharing!

@Keric Allen , great topic.  It's one I've considered as well.  I self-manage a small portfolio now (not yet at 100 doors....) and have been in the game since 2005.  I've learned a lot by trial and error and now have a system that runs pretty smoothly.

Start with an honest self-assessment.  Do you like being "the person in charge?"  You can hire out a lot, but at the end of the day you will be the captain of the ship and will have to make the tough decisions when things get tense.

Also, I have a friend who owns a property management company around Branson, MO.  We have talked about the PM  biz a lot.  Key insights he gave me:

1) You're dealing with owners, so there are more people you have to keep happy. Avoid the folks who only own 1-2 units.  You want owners who have 5 or more properties.  That way you only have about 20 owners vs. 50-80 owners per 100 units.

2) The quality of the property is important. Class As and Bs are much easier to manage vs. Cs and Ds. They will also PAY better, if you structure your fees based on a percentage of rents.  At 10% fees, you make $50 on a $500 unit; $100 on a $1000 unit, etc.  The effort is about the same either way, so stick with units that are higher $$$.

3) The bulk of profit comes from upcharges for maintenance and leasing fees, not monthly rent percentages.  They pay a full time maintenance man the equivalent of $50K per year plus benefits--which is pretty decent for our area-- but over the course of a year he generates them $100K+ in profits.

I'm still not ready to pull the trigger on it, but I've started experimenting a little with master leasing and subleasing.  This will give me practice with interfacing between owners and tenants and also hopefully get me enough units to where a PT or FT maintenance man would be an option.

Good luck!

Originally posted by @Keric Allen :

@Nathan G. Very interesting. Sounds like managing a 100 properties may have been easier than your military job! Thanks for sharing!

I've never been shot at as a PM. Other than that, the military job was probably easier!

 

@Erik W. Thanks! Lots of great advice to think about! I really need to figure out my approach for maintenance and leasing fees and any other charges I may or should be charging in addition to the monthly fee.

Focusing on the quality of home is a great point and one I have been planning on sticking to. I am in no hurry to acquire doors just to have doors.

Thanks for the insight!