There are a couple of reasons why you may choose to start a property management business. Besides creating a consistent monthly income, you may get into it to gain hands-on experience in real estate or raise capital for your own personal real estate investment.
This career can be quite lucrative, especially if you’re systems-oriented and can deliver results to your clients. You can also make major steps forward if you can be analytical and organized.
In this article, we’re going to look at some of the benefits of starting a property management business, potentials in the field, and some of the recommended technologies for newbies and investors in the field. Let’s dive right in.
What are the Benefits of Starting a Property Management Business?
Earning a consistent income from property management sounds like music to many people’s ears. Compared to real estate agents, property managers have a better chance of earning consistent income over a long period.
Think about it; an agent only eats what they can kill. They have to go out, find buyer and seller clients, close deals and earn a commission. This commission will feed them depending on how big it is and their expenditure. They might have a difficult client, but once the deal sails through, they’re done and they have to go find another one to keep the income flowing.
On the other hand, property management is more like a marriage. When you onboard a client, you want to make sure that they are a good fit. In the beginning, you might be willing to work with anyone who walks through the door because you don’t want to starve.
However, soon enough, you get to a level where you only want to surround yourself with the right property owner clients that share a similar mindset. You start reviewing client profiles as you review their goals and mindset. This will plug you into a better quality of life in your career.
There are basically two types of client profiles that you might want to work with. They are:
- Entrepreneurs: Entrepreneurs will give your business leverage and trust you enough for your business to achieve success. You might find entrepreneurs being your favorite clients to work with.
- 9-5 Job Investors: These are people who actually enjoy and want to keep their day jobs. They want to venture into real estate on the side. They might also be a great profile of clients to work with.
Like it applies in many, if not all, types of businesses, it’s important to know your target demographic. This helps you a lot to hone in your marketing to attract the ideal clients.
With client selection, you’ll be able to identify their needs and wants. You can tailor your business around these needs, and if a client doesn’t fit into what you’re offering, you can let them go.
Of course, there are many property managers locally, and not everyone is a great fit for every investor. Creating your ideal client avatar helps you know which clients you work with best, and that should be the investors you target to work with.
How Many Units Do You Need To Make a Full-Time Income?
If you’re trying to build a full-time income in property management, you must first know what the average rent is in that area. This is because the rent is a huge factor in what your rates are. Management fees range anywhere between 7 and 10%, based on size and relationship.
For example, if you’re trying to target $48,000 a year, you have to get to $4,000 a month. This is the gross revenue for your company because you have to factor in operational costs as well. If the average rent in your area is $1,000 and you charge 10%, you’re going to earn $100 from each unit. This means you’ll need 40 units under management to achieve your income goal.
This is not crazy math, but it proves you have to go out there and get new clients for your business.
How Can I Grow as a New Property Manager?
As a new real estate property manager, you’re going to experience slow growth during the first two years. It takes time to build brand recognition and fully develop the systems you need to scale your business. Your business might start to take off during the third year.
As your business grows, you should start gaining referrals from your network once yo
u get to 100 units. Your network is mainly people who’ve already gained trust in working with you, whether it’s a client, friend or another realtor you work with.
Realtor referral partners are huge in the business, and you shouldn’t undermine their power. Earning street credibility among other industry professionals is going to get you a lot further than you think.
Growing your business really goes back to building a strong brand, gaining trust, and getting referrals from the local community and people that know you and trust your business.
What’s a Typical Day In The Life of a Property Manager Like?
In a nutshell, the typical day in a property manager’s life starts early and ends late. However, your day can really vary because you’ll be dealing with tenants, owners, and unforeseen real estate emergencies.
If you want to succeed in the property management business, you need to ensure that you coach the property owners and tenants to communicate on the right level. For example, it’s not as effective if the owner will call you every time they need something. A phone call is great if it’s an emergency or a live deal that you’re trying to close.
You can coach them to send anything that has a 24 to 48-hour deliverable through email. They can text anything else between that, and you’ll catch up when you need to.
For tenants, try and have a support team available all the time. This enables you to provide real-time support for emergencies. They can put anything else that’s not an emergency into their portal.
If you own a property and see your property manager constantly pushing through maintenance, you’re probably going to ask some questions. Getting the tenants used to using the portal and performing tasks, such as uploading photos, will help the client gain more confidence in your team. On the other hand, it helps your team go to the property more prepared instead of going back and forth to fix an issue.
Also, you can get your tenant used to using your text lines. Monitor these texts in your system and keep everything to online communication. This can really come in handy during a lawsuit when you might need to get evidence. It would be best if you had a backup for any scenario you might face.
What’s the Best Technology for Property Managers?
When it comes to technology for property managers, AppFolio is the best platform most managers recommend.
For any DIY landlords that want to use technology for their property management, one of the top platforms that can help their businesses is Zinspector. Zinspector is a condition statement software that could really help many investors and property managers looking to get started in the game.
The platform shows the property’s condition, including bulbs and faucets, from when the tenant moves in up until when they move out. It includes a picture of everything with the time, date, and geo stamps. You can tell what worked when the tenant moved in what was broken when they move out. It’s not expensive as you only pay $65 a month when you subscribe to the enterprise level.
Do I Need a Team to Work With?
When deciding whether to hire people, you need to figure out what you’re good at and the roles you want to play. For example, you can transition from a day-to-day manager and focus on sales if that’s what you’re good at. This means you’ll need to hire a property manager for the hands-on tasks.
When you focus on the business’s sales side and talk to a prospect on the phone, you can see whether to help out with property management, buy their property or lease their house. All these activities come back to the property management business’s main income engine and can generate multiple income opportunities.
In the beginning, if you’ve got a knack for handling maintenance stuff, maybe you can get someone who’ll be focused on the day-to-day office activities, such as photocopying, scanning, and talking to clients on the phone.
You should also factor in the costs because you might not have a budget big enough to hire an in-house professional. For example, if you need to hire a customer support agent to answer incoming maintenance calls you can hire a virtual assistant. This is way cheaper compared to hiring an in-house live support team.
You can begin by making a list of your daily tasks each week. On your list, you’ll notice you don’t enjoy some of these tasks. These are the tasks you should delegate so you can focus on what you’re good at.
How Can I Manage Liability?
Insurance is the best way to manage liability, especially when you have a large team and hundreds of properties under management. You need to pay a lot of attention to insurance.
Also, you need to have your systems in place. Ensure that everyone’s role is clearly defined and they perform their tasks. Create checklist for your staff and systems to follow so they can work effectively throughout the day.
How Do I Build My Brand?
In this digital age, a well-defined social media strategy is the way to go if you want to build a strong property management brand. You may not always have to make posts about business but know that someone is watching everything your post.
Most times, people use interactions on their posts as a metric to measure their social media performance. However, there are a lot of people following those posts, and you may never know about them.
Another strategy is the $1.80 strategy coined by GaryVee. If you’re trying to get started, the first step is always to get people to know you. This strategy involves leaving your 2 cents on nine posts within ten hashtags a day. In this strategy, you simply interact with relevant posts and professionals within your industry by commenting. This will be the first step to building brand credibility as you prove that you’re a real person.
What Are Some Of The Unexpected Challenges I May Face?
There’s no remarkable thing that goes without a few challenges. The most common challenge that new property managers face is finding quality maintenance technicians.
Finding office staff may, in fact, be way easier than finding quality maintenance technicians. You may find yourself firing more technicians than you hire. Some of you may come across technicians that ask for a high salary, yet they don’t know how to change a toilet.
To counter this challenge, you may have to refine your screening process and their applications to ensure they score a certain level of proficiency on their tests before they move to the next level. You can ask very specific questions in the interview to make sure you hire the right folks.
Coaching is also quite important when it comes to finding professional maintenance technicians. For example, you can set up a plan where you bring them in at a certain level, and once they hit certain milestones, you can increase their pay and responsibilities.
You’ll realize that the maintenance professionals salaries are rising because they’re becoming more sought after.
Should Property Managers Buy Property Themselves?
In any field, it’s recommended that you should own whatever you’re selling. Look at it from an investor’s perspective. If a property owner is looking for a property manager, they’re more likely to hire one who already owns multifamily properties. Besides, why would anyone pass up a chance to own assets that generate passive income?
How can you help them out if you can’t relate to the pain they go through when trying to find a quality tenant? You have to know how it feels to own that property and go through some of the pains involved. This is going to help in sales and also improve the value you bring to the market.
The best thing you can do as a property manager is eventually become a investor and build your own portfolio of cashflow properties.
Bottom-line
Now you have a small taste of what it takes to become a property manager. Remember that massive action drives tremendous results. Many people get stuck because they don’t really want to take action, yet it’s the most important thing. You have to wake up every day and keep grinding. This will help you get over the failures quickly and achieve the kind of results you desire.