I need advice on starting a Property Management business
Hi! I'm new to the site and I need some advice from sound property managers who are in the business. I am laying out the framework for a property management LLC I want to start in the Denver area and I hoped some of you could share from your own experiences the things I should consider or shy away from.
I am good at networking and I feel I could quite easily build a base of contractors and real estate agents to help me get my first tenants and services laid out; however, before I sign my first deal, I want to have every contingency planned for.
I am working on purchasing a second home that I will occupy so that I can rent my first. My own home will be the first property I manage and will give me the opportunity to learn from trial and (hopefully not too much) error what I need to account for, before I manage other people's homes.
I plan to take a COS course and get my certification within the next year, but I will already be managing my own property prior to that, as the next course in Denver isn't until September and I plan to buy my next property within the next month. Do I need my COS to manage my own property if I intend to write the management expenses off on my taxes?
The big items I think I need to plan for are as follows, although I haven't filled in the blanks on all of them yet:
-Advertising/Marketing
-Tenant Screening
-Contractor Networking
-Legal Considerations (Liability Coverage, Evictions, Collections)
-Financing (Handling Rent, Disbursments, Emergency Repair Payment)
-Property Management Software (Thanks to the forum, I've found TenantCloud)
These are the big items in my outline which, of course, have several sub-bullets. Can anyone spot any considerations I have left out? Offer any advice on those I have listed? Offer any life lessons learned in your own experiences?
Thank you in advance!
Adam
Most Popular Reply
@Adam Lendi so just to clear the air about the situation raised by Matt M. Just because someone does it doesn't make it legal and there are ways to skirt the license requirements. The number one activity that will get you beat down from the real estate commission is if you handle someone else's money. You can't take the security deposit and you can't collect rent or repair reimbursements. You also can't negotiate lease terms. It must be clear to all parties that you are only a "go between" and have no agency affiliation to either party. Personally, it would be very hard to run a quality PM company without a license and stay clear of the real estate commission rules.
As @Tyler Howell mentioned, most large RE firms don't allow PM. If you read the real estate commission minutes, 90% of the case against brokers are PM related. No one wants an audit by the state and there is no money in PM when compared to sales. Tenants often report things to the state when they are bent out of shape about how much security deposit they got back. IMO trying to fly under the radar means it's only a matter of time before you get found out.