Author Topic: Do some extra property management on the side?  (Read 1799 times)

Bjorn

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Do some extra property management on the side?
« on: May 22, 2015, 05:53:04 AM »
So I was thinking about this side hustle idea and looking for input...

I want to make some extra money on the side by helping other people renting out their property. Being that I already am renting out an apartment I wouldn't mind having a few others to tend to. E.g. 10 extra properties could raise my total income by 25-50%. I realize I'm setting myself up for a potential full time job here, but I want to have a go. My idea is this:

1. Finding customers
First of all, I think my biggest "market advantage" is that I live in a city with 200k citizens (10% students) and there is only one big competitor to these kind of services. This company works on a national scale and is present in other bigger cities. Among renters, they are known to be a bitch to deal with. So I'm assuming any renter would be more than happy to deal with me instead. It's personal and simple. Renting out to students is a common thing here and I'm thinking there must be landlords out there who would be happy to not have to deal with everything?

I was thinking of approaching people who have put up online rental ads, either by calling them on phone or writing them an email describing the services I wish to provide for them. I'm pretty good at cold calling, but maybe an introduction email a couple days prior to calling them would be best? I'm also having trouble deciding between laying out the terms/prices right away or try book a meeting/coffee with them and discuss it face to face. The latter might make me look more polite and not like the average phone salesman, but also seems very time consuming overall. What do you think?

2. What services to provide
- Advertise the property, finding/screening tenants
- Handle contracts and deposits
- Handle tenants requests, questions, complaints etc and deal with any conflicts
- Handle necessary maintenance
- Make sure rent comes in on time
- (Handle bills)

Are there other obvious services I could/should provide?

And regarding rent: How should this be done practically? I can see these possible solutions:
A) I take full responsibility, meaning I charge rent from tenants to be paid to me, and I pay rent to the landlord (puts great financial risk on me - a no way, or the only way?)
B) I get full access to the specific bank account, allowing me to know if rent has been paid and to also offer another service: Handling and paying bills on the landlord's behalf (not likely the landlord would be comfortable giving me access)
C) I get limited reading access to the landlords account, so I can see whether rent has been paid or not (again, they might not be comfortable giving me even this access)
D) The landlord keeps an eye on the bank accounts and reports to me if rent is late. I handle it from there.

3. What rate should I charge?
It seems like most property managers charge about 8% and upwards of the rent plus some fees, like startup fee. Plus VAT (25%). I'm thinking of charging 8% of rent, no extra fees and no VAT. If something needs fixing and I can do it myself, I will propose to the landlord a reasonable price for the job or outsource it. Landlord chooses.
Basically, I will charge a fixed price for a certain set of services to provide and any extra stuff comes on top of that. Like if they need help filling out their tax papers I could charge an hourly rate for that. Sounds good?

Is this idea feasible? Am I setting myself up for a full time job here? I could expand gradually... Any other suggestions or feedback from you experienced landlords out there?

zephyr911

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Re: Do some extra property management on the side?
« Reply #1 on: May 22, 2015, 08:13:52 AM »
I'd do it for the right price, but I'd rather be paying someone else to do it. My only suggestion is to make sure you accurately estimate the time requirements (it's always way more than you think) so you're being realistic about the hourly earnings and the number of properties you can handle.

Another Reader

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Re: Do some extra property management on the side?
« Reply #2 on: May 22, 2015, 08:22:52 AM »
Many states require that a licensed broker oversee property management and there are lots of state-specific requirements for handling tenant and owner funds.  Check your state's requirements before agreeing to manage property for anyone else.

zephyr911

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Re: Do some extra property management on the side?
« Reply #3 on: May 22, 2015, 08:28:33 AM »
Many states require that a licensed broker oversee property management and there are lots of state-specific requirements for handling tenant and owner funds.  Check your state's requirements before agreeing to manage property for anyone else.
+1
My state doesn't, but they do require certain training in Fair Housing Act rules and other things.

Bjorn

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Re: Do some extra property management on the side?
« Reply #4 on: May 22, 2015, 08:59:47 AM »
Some side notes.

1. Norway is abit different. I don't have to do this on a licenced level per se so it all comes down to the agreements I make with the property owner. For example, you will find alot of old people who have handed over property management to their son/grandson/nephew etc where they act as the go-to-guy for the tenants on the property. The nephew will typically handle everything, and it could just as well be a family outsider in that role. Now, commercial real estate is an entirely different world with its own set of rules, which I will not get into yet.

2. Houses are generally way smaller here than in the US, which generally means less maintenance and "ground work". Of course that doesn't eliminate the risk of dealing with b..tchy tenants, or the risk of something breaking that needs immediate fixing. But I think conditions are slightly easier here and maintenance costs tend to be lower simply because there is less to maintain. That being said, I take the advice about time/cost to heart.

3. A rant. It is practically impossible to find investment deals even remotely close to the 1% rule here. The one I have comes in at 0.5% and that was a very good deal. I've browsed through more than 100 property deals this past couple of weeks and none of them came out with positive cash flow. None. That is accounting for a 15% downpayment, financing at 3%, 10% vacancy and estimated rent. Some very few came out positive with 5% vacancy and rent estimated on the high end.