Posted by Tim Fierro (WA) on November 27, 2001 at 11:52:46:
Check local laws in your area, it may require a real estate license to operate as a property manager.
Another Idea for Beginners…(Not for the weak) - Posted by Marcos
Posted by Marcos on November 27, 2001 at 10:32:15:
So, what happened when you talked to your friends and family about investing in real estate? I’m sure you got the same responses I did.
“Being a Landlord is horrible, you’re going to lose your shirt.”
“Aren’t you going to hate getting up in the middle of the night to fix a leaky faucet?”
“What happens when you have to evict someone and they trash your house?”
We’ve all heard this numerous times right?
You know, I see the makings of opportunity here. What do most people hate to do? They can’t stand the idea of being a landlord. If you can find a way to stomach it, and you can become good at it, there is money to be made. Go to www.landlord.com, there are a few dozen articles on landlording, read every book you can about being a landlord. Get good at it, if you can get proficient people will throw money at you to make their headaches disappear. Trust me 99% of people can’t stand the idea of being a landlord, I know I couldn’t until I changed my ideas about it.
When you’re in property management you normally get from 5-10% of the rents as your fee. You can also usually negotiate for a fee when you place an acceptable tenant. I charge $150 for tenant placement plus advertising fees.
I make a difference with my tenants, I don’t treat them as renters I treat them as future home buyers. I walk them through the process of educating them on how to buy a home. I also give them credit to purchase a home from me when they are ready, it’s amazing how easy it becomes when the tenant has a vested interest in a home buying process. The piddly phone calls for nuisance repairs stop, they start taking pride in keeping their house well kept. I move them towards the point where they can buy a house from me where I will usually owner finance, and the credit that goes toward their down is absorbed by the markup I sell the home for. I try to get the tenants and the buildings that will help me sell more homes in the future. I have some booklets that I have put together to help them piece together their credit. I offer a once every other month mini-seminar/group meeting on purchasing a home. I take the pain out of property management by properly screening my tenants. I feel I have failed if any of my tenants moves on within 3 years(except if they bought one of my homes). Much less if I am forced to evict. I have learned as much as I can about tenant retention, and still feel I have much to learn. If I have any reservations about a tenant, I don’t rent to them period. And it seems my system works. I have 20-30 people waiting to rent one of my properties right now.
Now how do I get properties to manage you might ask. I ask around at investor meetings. I also search for non-owner-occupied homes, and send them letters offering to either buy the home, or take over property management. I usually get about a 5-10% call ratio on the letters. It just depends. I make phone calls to the houses for rent section. I’m not looking at managing every property. The property has to meet my guidelines. PERIOD. I won’t rent a slum. I look for low middle priced homes. Homes that are 3br/2ba, that are in working class neighborhoods that are safe and economical. I have a long list of requirements. It’s not in my interests to take a property that is always going to be a headache and make it into my headache. Trust me, there are plenty of good properties around that would work, and plenty of frustrated wanna-be landlord/investors.
If you can manage 40-50 properties with rents around $800. That would be a cash flow of $2240-2800 a month, assuming 7% management fees. And you could handle that volume part-time if you do it right. Even if you only handle a dozen properties, that’s still almost $700 a month cash flow. And once you get your system in place, you just wait for the checks to come in every month. Is this an easy way to make money, obviously not. But, remember if you can come up with a good system and get really good at it, there is endless opportunity for you. Take what people hate, and turn it into your forte and the sky is the limit.
Benefits/Advantages of this system:
- You’ll get your feet wet in real estate, with absolutely no money down on your part.
- You’ll build up your list of contacts in real estate.
- You will have first crack at many of these properties when the owners are ready to sell.
- You can groom your tenants to purchase properties from you, and sell via owner-financing/wraps etc.
- You bring in cash flow. Each and every month you will get paid, and once you have a good system in place it should be like clockwork.
- When you’re ready to purchase you should have a much better idea of what properties cost, and what rents run.
- If you come up with a bad property, you can walk away from it. The owner can’t. But, if you can solve the problem you will have an ally forever.
- As you become known as a problem solver, you will be one of the first persons that people call when they have a problem. This is where you can pick up your own properties at a huge discount, usually with a seller carryback. They already know you can manage properties so they are less likely to be resistant to making a second note.
- When you graduate to your own properties you will have the experience you need to be able to succeed no matter what the circumstances. If you can properly buy and manage properties, your potential is unlimited.
Disadvantages:
- You will have to learn quite a bit to become good at it. It’s not easy, if it was easy everyone would do it, and would enjoy doing it.
- Time Intensive until you have the system down. Until you have the system in place, you will have to work hard to get good tenants and keep them. Once the system is in place, the tenants will be lined up, and once in they will stay in.
- You’ll have to endure the hazing by family and friends who don’t understand what you’re doing.
Now this is just an idea. But, if you’ve been searching around in real estate and you’re not sure how to get started. This may be an opportunity for you. Granted 90% of you are probably shuddering right now at the thought. But the 1-2% that can grasp this, and make it work for them are destined for great successes. If you want to get into real estate, by all means get into real estate by whatever means are necessary.
Good Luck to you,
Marcos
Re: Another Idea for Beginners… - Posted by Rich[FL]
Posted by Rich[FL] on November 28, 2001 at 10:02:37:
In Florida, you must have a RE license to manage rental properties for others.
Rich