START YOUR OWN SUCCESSFUL PROPERTY MANAGEMENT COMPANY: Part I
Smart investors know that real estate offers a unique opportunity for long-term returns with minimal risk. The prospect of paying 25% of an investment while someone else (rent paying tenants) pays the remaining 75% just can’t be beat. Let’s make sure that math is clear: The buyer pays 25% down initially, call it $75,000 on a $300,000 building, and then as rent is collected, the property owner uses that money to pay off the remaining loan for the next two decades. It really is that simple, if you have the rest of your affairs and systems in order. As more and more people begin to take advantage of this opportunity, the more demand there is going to be for property management companies to help in creating those systems and improve property values as owners continually scale up.
Property Management is a great avenue to create purpose and identity for yourself. With favorable history and a promising future, starting your own property management company could be the single best way to maximize the opportunities that the real estate market has to offer. Take the first steps by learning more about why this might be the industry for you and what important steps you’ll need to take before you sign your first client.
FOUR REASONS PROPERTY MANAGEMENT IS THE RIGHT CAREER CHOICE FOR YOU
IT’S REWARDING (BOTH MORALLY AND FINANCIALLY)
Property Management is a service industry that, when done right, leads to win-win situations for all stakeholders. If you think of it as a pyramid, it’s you (and your team) at the very top, and the people your team interacts with the most, the tenants, at the bottom. By doing your due diligence, your maintenance and management most directly impacts those tenants so by aiming to make them happy, you naturally increase the length of tenancy and decrease the amount of hassles. Happy tenants make happy owners, and happy owners continue to pay for your services and recommend you to others in the investment world. So there is a natural financial cycle that works for all involved, as long as your pricing and value addition is fair and consistent and everyone up and down the pyramid benefits. If you do the job well, you will be justly compensated. You’ll then be able to provide appropriate and incentivizing compensation for your employees as well…which is a huge moral piece for you as a team leader. At Nexus, we’re proud to offer unique compensation, health insurance, 401Ks, paid vacation time, and incentives to help our team members purchase investment properties of their own. Again..the goal is win-win situations for all parties.
But let’s return to the tenants. If you follow the Nexus model, which targets properties with three units or more, the reality is that your management is directly improving the lives of those in the community with the least financial flexibility. There are people out there who manage like slumlords and it’s not OK. There are people out there who just do the minimum to meet federal regulations in exchange for guaranteed rent. If that’s your approach, you’re not going to stay in the game long. If you truly want to be successful in this service industry you need more purpose than just profit. Aligning your interests and services with improving the lives of those in need of a reliable place to live is (in our opinion) one of the best ways to make a living. And by operating your own property management company, you provide that opportunity for countless others.
[ Learn More: PROS AND CONS OF BECOMING A PROPERTY MANAGER ]
IT MEETS MODERN LIFE’S DEMANDS
The world is a bit different today than it was a decade ago…or really pre-2019. More and more people are leaving their jobs or starting new careers…and we get it. According to International Bestselling author Josh Kaufman, Americans are looking for “a greater sense of autonomy, flexibility, and security from their work”. This is exactly what property management provides.
As a business owner, you’re in the driver’s seat. You have the freedom to create your own hours, work from where you’d like, and really tailor your business to meet your own needs, as long as you can be reached reliably by your clients. You’ll need an office but it’ll be as much for marketing and visibility as it will be for office tasks. In today’s technological world, a smart property manager and his/her employees can do much of their work from anywhere with a wi-fi connection.
And if you really want a greater sense of security, explore the opportunities that exist by entering into a franchise rather than starting from scratch on your own.
It’s been said that real estate investment is a recession-proof industry. The housing bubble of 2007-2008 still lurks in the shadows for some investors, but the market has rebounded and lenders are more cautious…which helps reduce risk on our end. The short of it is: people own homes, people invest in homes, and people need those homes managed if they want to make money.
Despite fear generated from the effects the pandemic had on people and businesses alike, 2021 was a very good year for the housing market. We saw the highest number of home sales in 15 years and historically low foreclosure rates. And we know supply is still lagging well behind demand so prices are expected to stay strong. Again…people are buying homes, people are investing in homes, and people need those homes to be managed efficiently if they want to maximize their profits.
[ Learn More: THE U.S. RENTAL PROPERTY MARKET OUTLOOK ]
When we first opened our doors we had one employee. Nexus’ founder, Nick D’Agnillo, was able to manage about 10 units on his own and because he had nearly zero overhead, he turned a profit quickly. As a business, the goal is growth, so naturally a maintenance expert was brought on board because 10 units didn’t align with Nick’s ambitions. But that need didn’t arise immediately so there was no strain on the budget. And then when there was more demand than Nick could keep up with, he hired a leasing agent to help out with those responsibilities, and in time, additional maintenance technicians. A decade later, that original office in Pawtucket, Rhode Island employs 16 full-time staff and manages over 725 units in a 30-mile radius.
In property management you grow as quickly as you’re able to based on demand. Throughout that growth you should always be able to turn a reliable profit. If you do it right, you should never have to mortgage your future to weather the present. To do it right, you’ll need to do your homework about the area you choose to service. Reaching out to local property managers to ask general questions is a good first step. Inquiring about available franchise options is another strong option when trying to envision and create your business plan.
Mick Lefort is the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
Your Property, MANAGED®
The Real Estate Investing Authority®
Connecting You To Better Living®
You Could Own A Nexus Property Management® Office For Less Than You Think!