If you work under a broker then he/she is the responsible party for the management company and will likely want a % of any fees you collect. Legally speaking if anything goes wrong and you get sued he's on the hook.
Sorry, I know this is an old thread but I was searching for info on this topic.
I'm not sure what specifics are in your state, but in Illinois you need to be a licensed agent for two years before you are eligible to become a licensed broker. It might be worth getting licensed with the long term goal of starting your own brokerage for the purpose of managing properties. Have you looked into this further since your initial post? I am thinking about going the same route here.
I formed a start up in 2009, in Jacksonville, FL. Still going strong. Happy to answer any questions you guys might have. We now manage over 250 doors
@Mario Gonzalez , What was you technique to get clients? Did you network through REA's or advertise? How many units would it be feasible to manage with just myself and my wife (I work full time, she stays home) before needing to add assistants? What software are you using? buildium? appfolio?
My idea is to have two seperate LLC's, one for owning rental properties, and one for managing my own as well as growing to manage others. Do you see any pros and cons to going using this method? Right now I have 3 rentals but have not yet formed an LLC. Its on my to do list. Thanks for any insight.
@Nathan Waters, I boot strapped the entire start up and built is slowly. Times were different then. Now you have plenty of people looking to get out of the PM business, as sales are picking up. Essentially, you could look at taking over someone else's business. Otherwise, I would suggest looking into classifieds and seeing people that are managing themselves, ie looking for tenants. Offer your services to them.
Most people can manage 75-100 doors themselves. Any more than that becomes very cumbersome, even with proper systems and procedures. I would advise using a PM software from the get go. It is much easier to learn with a few homes than to implement with a larger inventory. We use Appfolio but it is cost prohibitive for most smaller start ups. Buildium or Propertyware offer good products. Propertyware is right up there with Appfolio.
Feel free to call if you have more questions 904-900-4766
Thanks for the input. I'm going to keep your number. I'm sure I'll have questions throughout the process. I've heard that about appfolio. My concern is switching software after I've scaled the business and having to transfer/ relearn everything in the middle of a tax year. I'm might be willing to cash flow a little less upfront to get the better software and stick with it. I have plenty of income from my primary job. The real estate is for long term goals anyways.
@Nathan Waters I am also trying to bootstrap a PM company. Let me just drop my two cents about appfolio; I signed up and started going through the implementation phase, and pulled the plug on it because it wouldnt work for me.
Here is what I found out:
1- Check if everything will work as you expect for you before you sign up. You are not signing up for a software, you are signing up for a system that will change how you operate. Make sure to take your time and learn as much as possible. You will need to adapt to follow the software, don't expect vice versa.
2- We do a lot of rehabs, and a lot of our expenses that come out of credit cards and bank accounts directly. Their accounting system is not great for someone that has a lot of transactions. You must reconcile your bank account/credit cards statements manually. If you have a bookkeeper and is OK taking that extra cost, it works, but for me, I want it just like Quickbooks, where I download and tag the transactions and done.
3- I found that their online leasing workflow to be top notch. The fact I can have the tenants sign leases online was really cool. Saved a lot of back and forth and driving to the properties. I've heard screening is good too, but I didnt use it.
4- If you are going to use it, you need to use it 100%. It wont be as effective if you skip using parts of it.
5- Their system is complicated, since it has to accommodate a lot of sizes of companies, and types of companies. From apartment complexes to owner operated PM's.
6- Their implementation people are VERY helpful. I didnt get to use their support, but the implementation people were on top of it. If you decide to sign up at a later time, they will hold your hand through the transition. It wont be easy but it will work.
7- They emailed all my tenants without my permission, asking them to sign up for their portal. I asked them not to, but something went wrong and they did not disable that automated email.
8- Be careful too. If you sign up and later decide that it wasnt what you wanted, they will want to keep 1/2 of your commitment. I signed up for a year, because I really thought it would be such a home run. When I decided to pull the plug, they wanted to keep my $400 and half of a year's worth of fees. That is $1600! After a little push back they refunded my $400 dollars and didnt charge me. But beware.
Oops, that was more like 8 cents.... :) Dont get me wrong, I think they are probably the best out there, but dont just sign up without checking it out first. I like buildium where you can at least get some hands on preview of the system.
Thanks for the information. I had no idea they were that expensive. Their pricing online said something like $200 startup fee plus one dollar a month per unit. I had someone contact me about the pricing but haven't had a chance to call them back. I've heard good things about buildium as well. Do you have any idea how that works for property managers? I wasn't sure if it was aimed more towards landlords.
I havent found something that does what I want. I am now back with quickbooks. I am a computer programmer and I have been developing some of my own tools. I wish I had the time to program an accounting software to deal with real estate rentals.
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