Rental Strategies by Rob Massey
RISMEDIA, Oct. 13, 2008-With many local real estate sale markets remaining slower than usual, numerous Realtors today are considering a transition to part-time or full-time property management. While there are many types of real estate property management, the focus here is on residential property management.
Even this segment of the business can be further broken down into single-family home and smaller apartment building management and large multifamily property management.
The former is usually operated out of a real estate office, necessitating numerous trips directly to property locations. The front-line management of the latter type is handled from an onsite office at an apartment community with higher oversight coming from the management company’s regional or main office.
Even though in most states having a real estate license permits professional property management activity, there are many aspects of this type of real estate practice that vary considerably from brokerage, such as: Fair Housing; landlord and tenant laws; established procedures that allow a property manager to work more efficiently; professional designations; and specialized software.
Regardless of the type of residential management that may be under consideration, be aware of the following prior to making a decision to switch to or add a property management division to your company:
1) The need to get property management training-Fortunately, there are several great sources of education for property management that allow for online and classroom training. The top three are: the Institute of Real Estate Management (IREM), the National Association of Residential Property Managers (NARPM) and the National Apartment Association (NAA).
2) Consider professional association membership-IREM, NARPM and NAA also offer both national and local chapter membership, which can tremendously ease the burden of getting started. Visit www.irem.org, www.narpm.org and www.naahq.org for more information on membership and education.
3) Understand that property management should not be an activity that’s only considered during slow sales market periods. Before entering the business, make the decision to stay in it indefinitely, at least as a part-time activity. It is too costly both in time and money to only remain involved when the sale chips are down.
4) Recognize both the steadiness and limitations of the income potential from this activity. While the income does not typically fluctuate like the brokerage side of the business, the earning potential is lower. Property management is a detail-oriented and time- consuming business.
After one has maxed out on what can be comfortably handled personally, the options for increasing income become more complicated including, hiring employees to assist, starting up a maintenance division, and/or increasing efficiency. Other than becoming more efficient, the options for generating more revenue once a certain volume level is achieved do not come without significant challenges.
5) Property management frequently provides leads to the brokerage side of the business. Whether it be assisting someone to find a place to rent or helping them find a home to buy after a period of renting from your company, good effective property management usually assists in increasing sales volume. An organized program to capture those leads is the most effective method.
Property management can be a rewarding part of a real estate career but it’s not for everyone. Be sure to understand the special aspects of the business before making the leap.
Rob Massey, Jr., CPM, is founder of RentalHouses.com and a consultant for Rentals.com.
For more information, please visit www.rentals.com.