Starting a Part-Time Property Management Company-RJayTeel Property Management Post 1

[RyanJDenman]

Hey all,
I'm documenting some progress steps towards launching my part time property management company. Feel free to chime in with suggestions or critiques.

Why
Property management can be done by one person up to ~100 units with the right systems in place.
Revenue comes from:

• % of monthly rents (8-10%, Denver Metro average rent is 2250/mo)
• Finding new tenant (50% of one months rent)
• Lease renewals ($50-$100/yr)
• Tenant benefit packages ($20-$100/mo)
• Lates fees, etc. (variable, but I hate late fees, so I would structure my systems to prevent late fees in most situations)

I see a strong market for good property managers based on:

• Most real estate investors don't want to manage their properties
• Short term rentals (STR) are converting to long term rentals (LTR) since jurisdictions are becoming tighter on where STRs can be and how many fees/taxes are assessed, as well as running an STR take a lot of time and effort.
• People holding low interest mortgages don't want to sell if they move, so they rent former houses
• Wealth is built in real estate by owning properties versus transacting in real estate (wholesaling, flips, sales)

Barriers to Entry

• Increasing tenant favored legislation across Colorado, especially Denver and Boulder, is making it harder to operate for Average Joe Slumlord (AJS)
• Knowledge of how to screen for good tenants
• Knowledge of how to handle situations that arise with tenants (conflicts, repairs, lease violations)
• How to maintain a home to keep tenants happy, attract good tenants, and avoid preventable capex

What I Bring to the Table
I've managed two rentals that own for the last six years and have done well with it. Since I've always had a time constraint, my systems are built to minimize how much of my time needs to be spent, which differs from the way property management is traditionally run. I increase my knowledge of real estate and property management on a regular basis, so I use that knowledge to continue to operate successfully and add value to others.

Income Potential
Theoretical Part-Time

• 15 properties are under management
• 8 have one pet
• 3 unit turn overs occur per year
• 12 units renew their leases
• 8 subscribe to a tenant benefits program

Revenue Sources

• Denver Metro Average Rent = $2250/mo
• Pent Rent = $35/mo
• Lease Renewal = $75
• Management Fee = 10% of rent ($225.00/mo/door)
• New Tenant Fee = $1125

Total Yearly Revenue = $46806
Estimated Time (with established systems) = 10 hours per week average

Taking those numbers and scaling to 100 units by multiplying (100/15) and assuming no time savings from operating at scale give:

Total Yearly Revenue = $312040
Estimated Time (with established systems) = 67 hours per week average

Initial Steps

1. Build an estimate of start up and recurring yearly costs to see how many doors would need to be managed to cover costs
2. Get a real estate license
   1. Online school
   2. About six weeks of study
   3. Passing test
3. Hang my license in a brokerage
4. Implement software needed for 1-50 rental properties
5. Write down SOPs for most common practices
6. Gather needed tenant forms
   1. Leases
   2. Notices
   3. FAQs
      1. How to submit maintenance requests
      2. Paying rent
      3. Caring for a property
      4. Other
7. Gather needed client forms
   1. Management agreement
   2. FAQs
      1. What to expect for a property being managed
      2. When payments will be sent
      3. How the property will be maintained
      4. Other
8. Build a marketing strategy
   1. Location
   2. Demographic
   3. Property type
9. Build a simple website

 

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[Lex DeVille]

@SzepKFipnep Epz aqfevit up vjot?

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Nz qsuqisvz nhv dunqepz velit 10% ug vji $1,500 mieti qeznipv (tu $150). Egvis vji nusvhehi ot qeof, O liiq katv uwis $400.

Ov vuul eqqsuyonevimz 2.5 nupvjt gus vji dunqepz vu qav vji gostv sipvis op, epf vjisi xet upi nekus neopvipepdi ottai (nodsuxewi jef vu ci siqmedif) vjev dutv $500 op vji metv zies.

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1) Vji mefz op vji uggodi ot e jahi covdj apvom tji siemobit zua'si ep uxpis epf puv e gomvjz sipvis...
2) Vjiz etlif gus eavjusobevoup vu siqmedi vji nodsuxewi. O deqqif vji enuapv, cav vjiz xipv uwis vji deq epf commif ni epzxez.
3) Vjios ineom sitqupti vonit esi ecztnem.
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7) Dmiesis, getvis upcuesfoph gus pix juni uxpist.

O djuti vjin cideati vjiz xisi upi ug vji upmz qsuqisvz nepehist op vji esie, epf vjiz xisi vji upmz upi xju huv cedl vu ni getv ipuahj vu tidasi vji fiem.

Dassipvmz, O'n mowoph op e sipvem epf tunivjoph O siemmz moli ecuav uas dupvsedv ot vjev ov tvoqamevit xi xup'v hiv uas fiqutov cedl ev vji ipf ug uas visn, cav xi emtu xup'v jewi vu fiem xovj iyvse desqiv dmiepoph, qeopvoph, ivd. fasoph nuwi uav.

 

[JordanK]

$500 gus e nodsuxewi jumz tjov.

Nz gamm voni kuc epf catopitt ot op nepehinipv (Op Osimepf) epf vjev ot dsebz.