12 month property management for a friend

Real Estate Agent · Orem, UT · Member since 2021 · 98 posts · 80 votes

You've thought through a lot of good benefits to doing this. Make sure you look into your state's laws regarding managing someone else's rental. A lot of the time you need an active broker license. Sometimes close friends and family are an exception to this rule though. Here are my thoughts on each of your points.

1) Great reason, it's always good to help a friend even if it's never paid back

2) This isn't always valid, but I can't speak for your friendship obviously, I just know that it always gets difficult when money and stress are involved.

3) Great property management experience for self-managing your own properties which I think everyone is capable of doing.

4) Great reason, although it doesn't always happen. I've closed one deal in the last two years from a tenant and I have 11 doors.

5) Similar to #1

One more thing to consider is the liability if something were to happen to a tenant or the property while you're managing it. Make sure it's legal or else insurance has an easy out and your friend/you could be stuck with a big problem. Hope some of this helped, and good luck!

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Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

3y

Quote from @Ben Marshall:

Consider the pros and cons, then make an informed decision.

PM is pretty easy . . . until it's not.

A friend will be easy to manage . . . until they're not.

Your cop friend will appreciate your service . . . until he doesn't.

Your close friend will be a great tenant because he's dealing with a friend Landlord and a friend PM . . . until he isn't.

I've seen great friendships, and even family relationships, be torn apart over something minor. Make sure you know how to keep business and friendship separate in case things go sideways. Odds are really good that this will be an easy gig, but there's a chance it could go sideways and you need to be prepared to deal with it and risk the loss of two friendships.

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Nathan Brown

Property Manager · Phoenix, AZ · Member since 2023 · 101 posts · 77 votes

3y

Quote from @Ben Marshall:

1. because he's a close friend.

2. since the new tenant is also a close friend, and fellow cop, issues should be minimal.

3. this would give me "official" experience in property management.

4. There's potential opportunity with the temporary tenant after the 12 months is up to be a buyers agent to find him a new place.

5. I would have an awesome reference from the property owner/friend since I did him a solid.

Thoughts?

1. consider how your life would be if he ceased to be your close friend. Don't take the bait if you can't live with this potential outcome.

2. see #1

3. Nothing about this deal is professional or "official". Not saying it's a bad situation, just that I as a property manager who occasionally hires new PMs wouldn't view this experience as a strength if I saw it on a resume. I like your willingness to learn though and would encourage you to try it anyway.

4. I've managed well over 4,500 single family homes, and have seen a tenant actually go through with buying the house they rented exactly once.

5. please for all that is holy, put this "solid" deal in writing.

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Greg WeikBusiness Member

Property Manager · Denver, CO · Member since 2020 · 264 posts · 327 votes

3y

Quote from @Ben Marshall:

I'm a former cop-turned Realtor who has a police friend who is temporarily moving out of state since his wife landed a nursing residency program. So, for the next 12 months, he want's to rent out his house to another friend...but he's unsure if he should use a property management company for this set up or if he should deal directly with his buddy to make sure the mortgage and everything else gets taken care of. I'm a Realtor with little experience. While I don't have any property management experience per se, I'm thinking there's opportunity here for everyone. I could offer to manage the property - for a discount or even for free(?).

1. because he's a close friend.

2. since the new tenant is also a close friend, and fellow cop, issues should be minimal.

3. this would give me "official" experience in property management.

4. There's potential opportunity with the temporary tenant after the 12 months is up to be a buyers agent to find him a new place.

5. I would have an awesome reference from the property owner/friend since I did him a solid.

Thoughts?

Hey Ben, as a 15 year professional in the field, I would stress that property management is not something anyone can simply start doing. I'm consistently surprised at some responses I see on BP acting like property management is just something one starts doing. My background is in law and I consistently draw upon that in the daily execution of my duties.

No offense intended, but I strongly believe that no Realtor without experience and training should try to handle PM. It's one of those things where maybe you get lucky and everything works out, but quite possibly things can go off the rails. People can end up hurt if properties are not appropriately rent-ready, and it's the area of real estate people are most likely to end up in court.

It's an incredibly difficult profession in which to become an expert. The legal landscape alone is daunting to those paying attention to existing laws and proposed legislation.

My advice for you and your friend is twofold:

1) Hire a property manager. They are not that expensive and it is worth every penny. Check google reviews, find one you're comfortable with.

2) Never rent to a friend unless they are thoroughly vetted by the property management company. I've seen so many relationships implode over renting houses. The PM in this scenario is a much-needed filter to ensure the lease goes smoothly. After all, who knows if this will just be a 12-month gig or much longer.

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Richard F.

Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes

3y

Aloha,

Although I am not familiar with Denver's laws, it is not uncommon for States to have a requirement that you work under a Broker, who also has the actual Business license. In that case, you would need to first ask the Broker if this is something they are willing to let you do, and work out the details of that. When working for a Broker, they become responsible for everything you do related to RE. Some do not want the liabilities that come with Property Management. Also, in states I have held a license, only the Broker can be paid by others for RE activities. The Broker, in turn, pays you your commission.

You state that you have "little" experience, which to most Brokers equates to "a loose cannon". Unpredictable and dangerous. You must have a good understanding of a variety of Federal and State laws that are specific to Real Estate transactions and housing in general.

As to your friend, my advice is that he find and interview a reputable PM to manage the property, and be sure to inform the PM of the plan to return in 12 months or so. This will be critical to ensure the home is available when you need it. For him to rent to a friend is potentially a nightmare, but at minimum he must use a proper Rental Agreement and treat it as a business....not a "Bro, just pay me when you can" situation. I always advise clients, if they want to help a friend or family member, just write them a check every month. That way you are only out the money, and not stuck with repairs AND a broken relationship.

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12 month property management for a friend

12 month property management for a friend

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