All Forum Posts by: Brandon Mattila

@Shannon M. Thank you for your honesty! I thought about that as well, but starting from scratch is a little bit more difficult. I guess I was more interested in the mentoring aspect of it and only the down payment would be coming out of my pocket while the rest would come out of the profits from the PM fees. I know little to nothing about the PM business so I will take your word for it haha.

Looking for some advice. A family friend approached me about purchasing his property management "company". It isn't really a company as much as I would be purchasing a line of business. He only manages 11 properties for which he averages about $95/month in gross property management fees amounting to a little of $12,000 annually. He wants $15,000 dollars for the accounts with $7,500 up front (I would try to negotiate down the "down" payment) and the remaining balance to be paid over the course of the next two years, or whatever I decide. All of the properties are pretty high end so they are relatively low maintenance and the investors are all very good at responding to maintenance issues.  I have a couple rental properties of my own, I am a licensed realtor, and I think it would be an opportunity to get my foot in the door with property management as he would also mentor me for as long as I needed. However, there are some pretty legitimate concerns: 

- One investor holds six properties so if that relationship doesn't work out then that is half the value of the business (He will set up meetings with his investors prior to the sale to make sure they are on board and I of course would want to meet them) 

- Everything I have seen says that you shouldn't even consider purchasing a property management company unless it has 50+ properties and is a more established business. 

- He is stating an average of 10 hours of work for managing the companies. As this would be a side hustle, I wonder if I have the time, or if it is even worth the time I would put in for 12-15k a year. I am hoping I would be able to streamline some things and grow the accounts. 

I realize this is limited information, but I am hoping for some honest feedback on if this is something worth considering and if so, how to structure the deals. Thanks in advance. 

I rent a college house room-by-room near the University of Michigan Flint and it can definitely increase your income potential, but you will certainly have higher vacancy rates to deal with. Make sure that they are paying all of the utilities though or that could take away any increase in revenue that you see by renting to students. I would also make sure that the water has been tested and get a filter if necessary. I spend about $15 a month for a Culligan Water Cooler so I don't have to worry about the lead level in the drinking water even though mine tested very very low. 

If you go on the Zillow site, they show a break down of the accuracy for each major Metropolitan area. For example, in Detroit, it states that it is within 5% of the sales price 46% of the time and within 20% of the sales price 83% of the time. That might be useful to check out for your area. As others have stated already, there are factors that the algorithm cannot possibly account for, for example, the extent of a remodel, or other information that is not publicly available. Where I live, just two blocks in a certain direction can make a tremendous difference in the home values and I imagine that the algorithm pulls information from comps more than two blocks away which could inflate the estimate, or vice versa.

I saw one other person mention this, but if you have a Title Company that you work with frequently, or you have a relationship with someone that works at a local Title Company, they can often run a search for this information. Often times they can even tell you whether or not the house still has a mortgage on it. They may charge for this information depending on your relationship with the company.