Building an Unconventional Real Estate Business

[fluffhead]

Hey all--

Haven't been here in a while--happy to be back! Here's a little backstory on me and my current situation. I'm a late 20's finance guy. I work at a bulge bracket bank and do okay for myself, however, not okay for new york city standards (plus I hate working for other people)!! I've been dating the love of my life for about 2 years now (she's a lawyer in NYC) and we're about to move in, however, we've quickly realized that any sort of apartment we would like to move into is well out of our price range, which has led both of us to the conclusion that extra money needs to be made! An additional piece of info on this is that as my GF is a lawyer in NYC, that automatically makes her a real estate broker as long as she pays the fees and applies (which she has). This helps with any fee-based apartment searches.

Fortunately for us her father owns a fairly sizable real estate property management company outside of the city, which he wants us to take over when he retires (wouldn't be until we are married, and not for a few more years).

My GF and I sat down Friday and really started talking about what we can do to earn some money and then it hit us! Most of these buildings we're looking in in NYC have a single broker who does that VAST majority of all the rentals/sales in the building (typically its someone who lives in the building already and has a relationship with the mgmt company). Well seeing as my GF's father owns a property management company (and has another corporation setup for realty that's just sitting there), she wants for become the sole broker for some of his complexes. So with that backdrop I have a few questions I would love to float your guys' way.

1) First and foremost, what are the best resources for me to start to learn about the industry dynamics, marketing, etc. of the brokerage business?

2) What are the financials like? 6% of sales price?

3) Can my GF be the broker for the seller AND also be the broker for the seller for their new purchase?

4) Why don't many brokers run their own shops?

5) What's a typical payout for a broker that works for like a Compass or another real estate brokerage in the city?

6) What else would we need to know/do before getting started (company is already incorporated, etc.)

THANK YOU ALL SO MUCH!

 

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[fluffhead]

So I'm taking next steps here. Pivoting (for now) from the above post. Given the resources I have in my GF's father, I'll be starting a property management company. I won't get into specifics yet, but I have about 500 or so leads right now that I will be mailing professional letters to (handwritten envelopes) and have 1 likely client already (before even setting up a website).

In addition, I've approached my current landlord about property management and he actually suggesting I help him sell the property. This could help JUMP START this business as it would be a pretty sizable commission should it happen. I'll keep everyone in the loop here, but there is a language barrier there--so taking it very slowly with him.

 

[fluffhead]

Update here. Had some hiccups since I last came to the forum. The 1 client I was referring to didn't end up closing. He rented our his apartment as a short-term rental and due to the legality surrounding it in NYC he decided to just sell. That said, the SHOW GOES ON!

My website has been developed, www.totalcitymgmt.com (critiques welcomed). I have begun drafting some blog posts so I can have some content on there (1 published, have another 2 that should be uploaded by Friday). I am in the midst of creating a letter to send to ~200 prospective clients (purchased a list from a source of people that would be my target market). I will also be sending one-off e-mails to other potentials via other marketing channels. I'm worried about the content of these messages. Do I want to short/succinct? I am a halfway decent writer, but haven't had much training in the realm of sales copy. Is there a quick and dirty checklist anyone can point me to in what to include/not to include?

My thought process behind this is, there are well over 5 mn apartments in NYC. If I can land just 20 apartments that will pay me ~$300/month in management fees, that equates to an incremental $72,000 per year in income. That's just 20 apartments! I'm aiming much higher, but have to start somewhere.

My landlord is still interested in me selling his property. Its a 6-unit building in Manhattan, and he wants $8mn for it. The best part--I have people that are interested. The hold up? He's currently signed to another broker, so I'm trying to figure out a workaround (he also doesn't speak any English so my conversations with him have been limited).

 

[fluffhead]

Here's my marketing copy that I've put together. Please rip it apart.

Hi INSERTNAMEHERE,

I couldn't help but notice your lovely home in AREA, so I wanted to reach out!

I am one of the founding members of Total City Management, a short-term rental property management company. We work with a plethora of units across the five boroughs to maximize revenues, ensure guest (and host) happiness and optimize listings and reviews. We take care of EVERYTHING, including key drop off/pickup, guest correspondence, pre and post-stay walk throughs. You name it, we do it! We even leave each and every guest a thoughtful welcoming gift (based on what they tell us they like to do in our vetting process). We work tirelessly to monetize your asset while you relax and collect the payments. Remember one thing though, we don't get paid unless you do!

I would love to setup a time to chat about our services further and hope that we can work together in the near future. Our consultation is free and I would be more than happy to give you some helpful pointers on how to improve your listing. Please stop by our website as well! www.totalcitymgmt.com

I hope to hear from you soon.

 

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[NYCGoblin]

@fluffhead

Greetings man, and great to see a fellow New Yorker here. I am a real estate broker in NYC, and was interested while reading through your post, but I am a bit confused at your angle here.

Are you contacting individual owners in condo/co-op buildings to manage there properties and rent them short term? Or are you contacting owners of smaller rental buildings ( 6,8,10 units etc)

In either fashion renting out an entire apartment for less then 30 days is illegal in NYC (Unless it is a hotel of course) And a new bill to be passed is going to add teeth to the current law with pretty hefty fines included. Obviously these rentals happen at the moment, but it is definitely at the risk of many and soon I forsee a dip in AirBnB listings happening. Can there be a way for you to make this work? Sure I think so, but it is becoming more and more risky.

 

[fluffhead]

@fluffhead

Greetings man, and great to see a fellow New Yorker here. I am a real estate broker in NYC, and was interested while reading through your post, but I am a bit confused at your angle here.

Are you contacting individual owners in condo/co-op buildings to manage there properties and rent them short term? Or are you contacting owners of smaller rental buildings ( 6,8,10 units etc)

In either fashion renting out an entire apartment for less then 30 days is illegal in NYC (Unless it is a hotel of course) And a new bill to be passed is going to add teeth to the current law with pretty hefty fines included. Obviously these rentals happen at the moment, but it is definitely at the risk of many and soon I forsee a dip in AirBnB listings happening. Can there be a way for you to make this work? Sure I think so, but it is becoming more and more risky.

Hey @NYCGoblin and thanks for the reply. This has been a concern of mine as well but the more I read about it, the less likely I think the bill will be signed. Will I be right? Who knows, but for now the listings are happening and there are people in the management game here in NYC. Worst case is I would have to limit it to people renting for 30 days or longer, but that's still has yet to be decided. Right now I'm contacting individual owners.

What type of properties do you sell?

 

[Anon1351z]

I couldn't help but notice your lovely home in AREA, so I wanted to reach out!

I would start with something like "I found your property at {address} by/on {how you found it} and I've done some research on it. I'd like to tell you how we are helping owners of similar properties in {area} improve their short term rental business." It sounds much more targeted.

We work with a plethora of units across the five boroughs to maximize revenues...

Take out plethora. Based on your previous posts, and the general diversity of NYC, there are a lot of landlords that aren't strong English speakers.. better not to alienate them. Once again, might be better to state the specific borough that their property is in, it seems more targeted.

Remember one thing though, we don't get paid unless you do!

There's a lot of value here, I would elaborate a little. Maybe something like "And here's the best part: we don't get paid unless you do. Unlike others who charge a flat monthly fee regardless of what they actually do, our success is fully dependent on improving your business."

I would love to setup a time to chat about our services further and hope that we can work together in the near future. Our consultation is free and I would be more than happy to give you some helpful pointers on how to improve your listing.

"We only work properties that we believe have the potential to be one of the top rental properties in {borough}, and I'd like to tell you how we can make your property one of the best. Our consultation is free and we can quickly identify whether there is an opportunity to work together. Feel free to stop by our website at www.totalcitymgmt.com.

I hope to hear from you soon.

Look at that sentence.. it's dripping with weakness. With the value you're going to provide to these people, they are lucky to have the chance to speak with you. "I look forward to speaking soon."

All that said, my opinion could be wrong. A/B test all your messaging to see what resonates. Hope my 2 cents help.

 

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[fluffhead]

I would start with something like "I found your property at {address} by/on {how you found it} and I've done some research on it. I'd like to tell you how we are helping owners of similar properties in {area} improve their short term rental business." It sounds much more targeted.


Take out plethora. Based on your previous posts, and the general diversity of NYC, there are a lot of landlords that aren't strong English speakers.. better not to alienate them. Once again, might be better to state the specific borough that their property is in, it seems more targeted.


There's a lot of value here, I would elaborate a little. Maybe something like "And here's the best part: we don't get paid unless you do. Unlike others who charge a flat monthly fee regardless of what they actually do, our success is fully dependent on improving your business."



"We only work properties that we believe have the potential to be one of the top rental properties in {borough}, and I'd like to tell you how we can make your property one of the best. Our consultation is free and we can quickly identify whether there is an opportunity to work together. Feel free to stop by our website at www.totalcitymgmt.com.


Look at that sentence.. it's dripping with weakness. With the value you're going to provide to these people, they are lucky to have the chance to speak with you. "I look forward to speaking soon."

All that said, my opinion could be wrong. A/B test all your messaging to see what resonates. Hope my 2 cents help.

Now that's the type of ripping apart I needed! Thanks so much for this. Makes total and complete sense. Appreciate it!!!

 

[Samuriscimi]

@fluffhead
Hey man,

I'm interested to see how you've pivoted given the recent scandal in the city.