Anyone have a property management company/department?

If so, how did you get it off the ground?

What has made you successful?

What would you do differently?

I just recruited someone who already had her own company doing property management. I am hardly charging her anything, and I am offering a lot of resources that she didn't have on her own. I am more interested in keeping our property management business in house and getting referrals from her than I am making money off of her- especially since there's not a lot of money in property management. She does property management exclusivly- any buyers or listings she refers to one of our other agents for 25%.

I'd be interested in hearing more about this too. I've often thought that these lake homes which sit empty much of the year would make great weekly rentals. Something to think about...

My impression of property management was that there is a lot of liability associated with it. Best to check with your insurance companies to make sure that you are covered in case someone gets hurt on a property you are managing.

I managed over 500 units myself and consider myself an expert property manager. Knowing what I know, I wouldn't even begin to think of having a property management division if I didn't know what I know! Someone getting hurt is really the least of your worries. You have to document, doment, document everything. I have been to court 3 times over property management disputes- over fair housing and security deposits. I won all 3 times- but only because I kept good records and knew what I was doing. People WILL try and take advantage of you. Just so you know...

Also look through your states diciplanary actions against brokers- 80% are property management related. It might scare you out of it. Be very careful with this.

I would bet that a majority of those homes were purchased as Vacation/Second Homes.

When renting out the properties there are time restrictions if it was loaned on as a second home and not an investment property.

If nobody else in the area is tapping this potential business then perhaps you should consider it. If you do you should hire a full-time experienced property manager to do nothing but handle that phase of the business. A good property manager will be looking for a salary plus a percentage. Explore the idea first. Send out a mailing to all the owners explaining the financial benefits and what you can offer and then see if there is interest!

My broker has this set up as 2 different corporations with an umbrella policy.

If there is a claim that's won against the property management company she will sell and dump that off so it doesn't affect her regular brokerage,it's best to keep property management completely seperate from your listing and selling business.

I really appreciate the discussion so far.

I created a seperate property management company about two years ago. In our area, most of the property management entities are small mom & pop enterprises.

Here's what I've learned:

* Use technology. We were the first in our area to use a web site. Right now, we are updating it.

* Good property management software is a must.

* Market aggressively. We compiled a list of owners of rental properties (from tax lists) and mail postcards to them.

* Staffing is critical --- and hard to do. Finding good, knowledgeable staff has been difficult. Quite a few folks have done property management before --- but either for a single apartment complex or commercial entity.

* As mentioned above, document everything. Insist on good files for every transaction. Insist on a lease for every tenant, a management agreement for every owner, lead-based paint disclosures, move-out inspections, etc.

* Watch the money. We have lots of dollars coming in every month --- but we have to pay the majority to owners and owner bills. Mistakes can be costly. And, embezzlement is a threat.

* Have good insurance. One thing our agent highlighted was that property management firms are often robbed because of cash on hand (all at one time). We went to a "no cash" policy and posted a sign to that effect. We've had no issues.

* Respond aggressively. We've been sued (by the same person) twice. It's a completely bogus fair housing claim (on a property we never managed). The Plaintiff can't get it through her skull that we aren't the property mananger. My sense is that the liability --- if you follow good procedures --- is not overwhelming.

Our little company now has about 300 units. We are starting to really grow. It's not easy. That's why I asked the question originally.

In my area, this seems like a prime speciality to get some traction with.

I currently have a property where I live that I use a property manager for. I had a choice of several and went with the one that I heard was the best.

In short, they stink. Their communication practices stink, they never seem to track issues and frankly the people they have working as their main public contacts can barely put a sentence together using the written word.

With some relatively simple changes to policy, I could completely out service these folks.

While it's tempting, I understand the bigger issues of property management - but with such a lack of service in the local market - I just gotta think doing it better is a profitable possibility.


R

I am considering doing property management as well. As the housing market slows it wouldn't hurt to have some good stable income coming in. Of course I would only do it with a couple staffers. There is no way I am getting up at 3:00 am to do a lock out.
I often hear tons of complaints by property owners about property management companies. It probably wouldn't hurt to put together a mailing list of owners and let them know you are considering starting property management. I would ask them what their main gripes pare with their current company. Follow that statement up with, "If we were to take those matters and correct them, would you consider using our company when your current contract is due?"

I wonder if part of the difficulty is that owners are not willing to pay enough to draw top-notch folks into the field. In our market, management fees vary from 5-10%, often with some sort of lease-up fee. Most companies try to compete on price.

But, if your rent is $500 for a place and you are only collecting a 5% fee, that only provides $25 in monthly revenue. The number is lower for cheaper properties. That makes it hard to justify much effort.

I spoke to my property manager today and he made the point that small properties probably need to have a higher fee than higher priced properties. His reasoning was that cheaper rentals often have maintenance issues and tenants who tend to not pay regularly. His argument was that property under $500 should be charged a fee of 10-12% while a higher priced property could be 8-10%.

Thoughts?