Any Benefits for Having a Property Management Company?

Question

I have 7 units across NY and NJ and planning on adding more in this area. The properties are all under my personal name, and I manage them on my own. Are there any benefits to creating a property management company and having the company represent me in tenant communications, rent collections, and tenant requests?

The idea is to keep all the communications under the property management company letterhead and have the tenants pay the rent payable to the property management company. I'd pay the mortgage and all necessary expenses out of the management company's account. I'm personally a licensed real estate agent with a proper broker although I'm not active being an agent and I'll continue managing properties on my own.

Nathan Gesner · Answer

There's little or no benefit. It will take time, money, and effort to set up your company, then time, money, and effort to maintain it. The same is true with an LLC. And what's the benefit? You may sound a little more professional, but that's just appearances.

I think you're trying to solve a problem that doesn't exist. If your current process works, stick with it.

Alecia Loveless · Answer

@Eric Jun I have 7 properties and 25 units. I self manage. For the most part it’s fairly easy. I’ve participated in REI in various areas for 27 years but in the multi family market seriously now for the past 4 years. I’ve only had one needy tenant and it’s gotten to the point that mostly I ignore her. I get on average 5 texts per week and at least 2 phone calls from her. None of my other tenants ever bother me.

The only benefit to me having a PM would be eliminating the time spent on this one tenant. But it would cost me about $1000 per month in management fees. For the 8 hours a month I spend actively managing the business side of the real estate I feel that’s a pretty good return for my time.

I spend a lot of physical time managing the projects and the properties but to me that’s the fun part!

Nathan Brown · Answer

Yeah no don't do it. You'd need to set up separate brokerages in each jurisdiction. Not to mention get a real estate broker's license in each jurisdiction first. You could hire a designated broker to run things, but now you're talking about some serious overhead for salary, office space, etc. It's possible to do, sure, but the economies of scale don't make it worthwhile unless you have like 500 homes. Even then, still easier to hire local PMs.

Michael Olmstead · Answer

I suppose you could set up an LLC or a DBA to handle the rentals. Would keep the finances separate from your personal accounts. Might provide more legal protections from your personal assets, also. Would recommend speaking with an attorney or CPA to discuss the legal and tax ramifications.

Bob S. · Answer

Of course, 1st it frees up your time. 2ND why do you want to deal with tenants? I live in FL my phone never rings. All my business is in the Cleveland markets, I never want tenants to call me, heck they do not even know who I am,

Any Benefits for Having a Property Management Company?

Any Benefits for Having a Property Management Company?

Most Popular Reply

6 Replies