Considering Starting A Prop. Management Co.
8% for collecting rent, showing the place & advertising.
$x/hr for basic maintenance.
$x/hr for electrical work, plumbing, roofing, etc.
$x/hr for 24hr two hour response.
Now, my idea is to use my current plumber and electrician & mark up the bill. Is that correct?
I collect rent, send the $ to owner & he pays mortgage, or do I do all that?
I have eight properties of my own currently, but I see the potential $ for a good property management firm here. I'm told that my competition is NOT that good.
I look forward to your responses.
Thanks,
OnTheWater
:-D
If you decide that you can handle the additional work of managing property, be sure you thoroughly evaluate the property management competition before you make the move into this area of business. If there are plenty of good, quality property management companies already in your area, there may not be any room in the market for your services. If there are only a few property management companies around and their services leave something to be desired, the market may be crying out for a new qualified competitor.
Along with normal growth and attrition, massive changes in the subsidized housing world will rearrange many property management players, providing both more competition and more opportunities for new property management companies.
Remember:
1. Other nonprofit housing organizations may be investigating growth or entry, for the very same reasons you are considering.
2. Local public housing is being sold to private owners, so that current public housing properties, however they are owned in the future, may be seeking new property management.
3. Public housing management entities may be eager to add private units to their portfolio.
4. New financing and ownership of HUD-owned, -financed, or -guaranteed properties is being widely proposed, especially for those properties with Section 8 rental subsidies.
Keep in mind four bottom line attributes of the property management business when considering whether you should enter the market:
1. You will not get rich managing property. In fact, your organization may find that it needs to subsidize its property management operations, at least in the first few years.
2. Property management start-ups need working capital. Typically between $50,000 and $100,000 can get a property management business up and running. Exactly how much will depend on a host of factors, from the size of the initial portfolio to staff training periods, but it will take some extra cash to start things off.
3. Good property management is good management. Margins are tight in the property management business. Success will depend on applying good management techniques, controlling expenses, doing preventive maintenance, training staff so they can do their jobs well, and so on. If management is not your priority, property management shouldn't be either.
4. There are enormous economies of scale in the property management business. Most administrative costs are fixed within a wide range; administrative systems and staff should be able to handle many units. The economies of scale—dictated largely by automated systems—suggest that organizations entering the property management business should expect to handle at least 450 to 500 units soon after start-up.
JohnMichael,
Thanks for your reply.
My Property Management firm had began the day I bought my first property.
At first we did everything ourselves. Now the plumber plumb, and the electrician runs electric. We handle all landscaping, dry wall, painting, windows, roofs, etc.
We hire our all concrete & retaining wall work as well.
The way I am approaching this is that if we're putting more $ in our pocket each month, then we're doin' fine.
Getting rich (becoming more independent from Just Over Broke) will be accomplished by continuing to flip properties and Subject To deals. At least that's the way I see it now.
Thanks,
OTW :-D
Don't forget to look into your state laws to see if you need a license to do Property Management for others.
Also remember, now you just deal with tenants, in the future you will have to deal with tenants and property owners. Not worth 8% in my book.
On the Water;
I believe most states have similar requirements. In Connecticut, we need to be a licensed broker (not just a licensed salesman) to perform certain aspects of property management for other people. You can manage your own property's w/o a license, but not others. It's certainly wirth doin your due-dilligence.
Financial liability of operating a business without the required professional licensing is extremely painful.
On another topic, we typically charge anywhere from 75% to 100% of one months rent to perform the tenant search and lease execution. Then charge anywhere from 2 to 10% per month (depending upon the # of units being managed within the building) for collecting rents, paying owners bills, etc.. Every market is different and you should talk with some PM companies in your area to see what the goin rates are.
Good luck
Quote:
On 2004-09-02 16:22, dstudeba wrote:
Don't forget to look into your state laws to see if you need a license to do Property Management for others.
Also remember, now you just deal with tenants, in the future you will have to deal with tenants and property owners. Not worth 8% in my book.