Yet another call from an investor that wants to buy income properties because they see we do property management also. Six months ago I wrote a blog about starting a property management division for our company. We had resisted for a long time but felt that it might be necessary to have other income streams in the projected rough market. The rough market in Oklahoma has not shown up yet and we had the best February ever in retail sales. We have only advertised for properties once in six months and have added 12 properties with two more being added on April 1st. I am currently working on a $5,000,000 apartment deal because I probably showed up as a property manager as well as a Realtor. Organization is the key to success in property management. We developed a free online application and included links to all the required disclosures. We don't meet anyone at a vacant property unless they complete an online application. Our contracts are clear and concise on responsibility of the landlord and the renter. We qualify a renter as if they were purchasing a property. One commented that if he could provide all that information he would just buy a home. I responded he was getting keys to a $90,000 home and the owner wants to know that he can and will pay his rent every month - just like the bank wants to know he's going to pay a loan on time every month. One thing I learned quickly - renters will test you. Got a call that the boyfriend took the rent money to buy groceries for his mother. Once she fully understood I was going to evict her if the rent was not paid on time, she magically found an Aunt who would loan her the money. If you want to learn more "excuses" for things get into property management - the creativity is astounding. We treat our renters like they are our customers. We stay in contact and thank them when they pay their rent. We ask if there is anything wrong with the home and if so, take care of problems right away. All our renters understand that nothing breaks on Friday at 5 p.m. and if it does, it will stay broken until Monday unless they get it fixed (water leaks excluded.) Experience taught us that most things actually break earlier in the week but they just got around to calling on Friday so someone could come out on Saturday when they are at home. I think we will continue adding properties and possibly bring on a full time manager when the position will pay for itself. It's a great branding tool for a small company like ours.
Ed,
Very interesting post. Property management is very difficult, but is an integral part of a successful investment strategy. I will checkout your more of your posts on the subject matter
Ed * I will re-blog this to the property management group(s). I actually wrote a blog about how brokerage businesses can start an effective(profitable) property management division with proper resources and software.
Ed - great post! As A Certified PM/Realtor and Rental Investment Specialist, I've been trying to break into the property management field without much success. Although Palm Bch Cty has a surplus of PM companies, it seems that I randomly get the single family homeowner looking for a renter & someone to drive by the property each week. Any start-up secrets you can share, just to break into the business? Thanks
Stephen,
The first thing I did was let all our previous multi-family buyers know we were managing properties. Two of them switched their properties to us at the end of their contracts. We did do a discount for them for the first year because they already had renters in them and it was simply a matter of receiving money. Know what your competition is doing. Complaints from owners consisted of management companies adding fees to maintenance bills; not keeping them informed of maintenance problems; over charging for "make ready"; not encouraging renters to stay long term so they could collect another 1st months rent. I wrote a few blogs and updated our profile on every site I could find and calls started coming in. Knowing the area and giving a realistic quote on the phone helped secure a couple of properties. We picked up a four-plex that had been vacant for over a year. It was a mess and the owner did not know it. Two of the units are now occupied and I'm pretty sure we'll have the other two within the next two months. I use Twitter occasionally but I don't over do it. Get your online directory updated and get some of your customers to write comments on your service. We answer our phones 7 days a week from 9 a.m. to 9 p.m. Nothing here is a big secret - just hard work and a desire to succeed.
It's great when you can have a dedicated person in the Property Management role. When you have another full-time job and are trying to manage properties . . . it's not so much fun!
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