The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: Bearded Man on June 28, 2015, 08:14:30 AM
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I'm considering starting a part time property management business. I manage several of my own rentals, and got to thinking: as passive as this is (I hardly ever get called) and as much as PM's charge on houses like these, I'd be making about 1K a month just by taking on 5 more properties. I could do this now or even as a "retirement job" when I retire.
So half of first months rent, then 10% of the rent for the months thereafter. I think since I could note than I'm an investor and own and manage my own rentals could be a good marketing/sales tactic. "I know how important your investment is and I will manage as well as I do my own..."
Thoughts? Should I get an LLC started, web site, etc.? It doesn't need to be a big add campaign, as all I need are 5 clients to produce the above income. I'm in Washington state in case there are any regulatory issues.
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What's the requirements for your state? In mine you need to be a broker or under one. You can't just randomly manage other people's property because you want to.
I'd start with looking into that requirement.
EDIT: Yup. www.allpropertymanagement.com/propertylaw/property-management-law-in-washington.html
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Some states you need a Real Estate license. If you have 5 properties, you probably have more than most managers.
If you only have one level of tenant class, you may be in for a surprise if you have to manage a low quality tenant building.
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Yeah my state requires a RE license, but I wanted to get one anyways to become a Listing Agent. Maybe kill two birds with one stone.
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I have a friend who started his own PM. Everyone else does 10% fee off of collected rents, so he does 6% off collected rents but $500 fee for new tenant with a 12 month warranty. He points out that most of the "work" is in finding tenant, and undercutting the competition by 40% is note worthy. Good luck.
I believe becoming a real estate professional will also change your tax status as an RE investor, not fully clear on how but maybe worth considering.
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Ouch you sound pricey. PM's locally in central Ohio are usually 7-9% gross rents, and those are experienced groups.
Look into the tax implications if you do go the realtor route. Your rentals may no longer be passive income if you are a real estate professional.
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Honestly, if you think you can do good at it and keep your landlords/owners happy then go for it as long as you meet all the legal requirements of course. Im going to send you a PM with a link of what I think are the most important qualities in a PM. If you think you can provide that, then I would imagine you will be a better PM then most of them out there today.
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I was thinking about going this route too, but sadly, CA requires a broker's license to become a property manager.
Between the fees, classes, and 2 years apprenticeship under a licensed broker, it's getting a lot less attractive.
There appears to be an exemption for managing units on behalf of a HOA.
So maybe if there are condo units nearby, that could be another option.
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http://davidtilney.com/
all you will ever need to be a property manager
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Some states you need a Real Estate license. If you have 5 properties, you probably have more than most managers.
If you only have one level of tenant class, you may be in for a surprise if you have to manage a low quality tenant building.
I take it you meant multi family properties like four unit buildings? I'm looking at doing single family homes primarily. Houses in my area are ritzy, and a lot of the Jones' upgrade every few years leaving behind 500-700K houses that they keep but rent out to manage. A lot of them don't want the hassle, so I will gladly step in to manage the properties for a fee, even reducing it below market, since on a 2-3K monthly rent per house, you're still getting paid well...
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Can you manage properties without a broker's license if you don't collect the rent or list them? I'm thinking people would pay for you to be the person renters call if something goes wrong.