6 Reasons Teams Should Get into Property Management

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Scaling a real estate business is a huge undertaking. After you’ve established systems that help you get the most out of agent success, lead generation, branding, and even your own leadership skills, you might say, “Wow, we really nailed it!”

But there is actually another level for your team or brokerage. For us, this next level has been made possible by expanding our business to assist with all facets of a real estate transaction.

Our goal is to be the Amazon of real estate by creating a one-stop-shop. We handle a variety of services including title, mortgages, movers, storage, new home construction, granite, HVAC and – perhaps most overlooked by other team leaders – the property management.

Property management is a sector of real estate that few teams or brokers are talking about in 2021, when they should be. Why? Most team leaders and brokers – unless they’ve really dug into it – don’t really know how lucrative this branch of our business can be.

Real estate is a market share. If you really want to grow your business by leveraging what you’ve already built, I highly recommend taking a look at property management. Here are six reasons why.

1. There’s not much competition

What you will find in most housing markets are two types of property management services. There are the big national players who usually have hundreds or even thousands of accounts in a given market, usually managing units that they also own. And then there are the one-time or mom-and-pop services, which also usually run the units they own.

These vendors don’t handle a lot of third-party business, if any. However, people who are already successful real estate business operators can take advantage of what they have learned and seek out that common ground. It’s a niche, but it’s huge, and it can pay off for a long time.

In fact, your real estate knowledge can give you an edge. Other companies don’t offer the same prospects and don’t have the same customer databases. As a broker or team leader, you have the opportunity to enter and gain massive market share by combining your real estate expertise with the needs of the property management market. It’s a blue ocean, and it’s truly untapped in most markets.

2. You are halfway there

If you are a successful real estate operator, you already have the basics and building blocks to start a property management company. You have a database. You have market share. You have people you’ve sold houses to for years. You have expertise in local marketing.

After establishing our property management division, we went to our clients who we had dealt with for years and offered our services. We had 200 property management accounts almost overnight.

How can you enter this world? First, for property management to work well, you need to scale it. To make it really lucrative, you need to aim for 100 or more accounts. But before jumping in with both feet, take a course in real estate management.

Next, hire really good people. You will need to master efficient leasing, easy online statements and bill paying for tenants, property maintenance and marketing. (You can find my property management course at eliteopspm.com.)

Model what you have already learned and used in your sales business and duplicate it in property management. Although property management is a different business, there are many crossovers and economies of scale you can achieve by already managing a real estate business.

3. It increases your market share

With property management, you can help your buyers and sellers solve the inevitable problems they will encounter with real estate. For example, if one of your clients suddenly needs to move to California for work, and they don’t want to sell or don’t yet have the equity to make a solid profit, you can instead keep them on. as a property management client by offering to turn the property into a successful rental.

You already know what it’s worth, who potential tenants might be, and how to position it in the market. If you say to that customer, “We can’t help you. We don’t manage that,” the person’s business will go to someone else, putting you at risk of losing that customer to the future list or buyer side.

For our team, property management helps us win new business all the time. New customers will say, “We know you rent. We know that if you can’t sell it, you can rent it for us. The more problems you can solve with a real estate transaction, the more clients you can find and retain.

Once you reach a certain size, you can eventually control the real estate economy. Amazon was once nothing more than books. Now that’s it. Likewise, your agency can sell homes and do so much more.

A huge segment of the market is also made up of investors, and we have become the benchmark in our market for investors because they know we know the management side and have access to many investment properties. It was a segment of the market that we missed before we got into property management.

4. It expands your pipeline

In residential real estate, everyone is trying to find those “magical” moments when buyers and sellers are about to move. If you manage properties, you will know if tenants are going to renew their lease.

We will have conversations with our tenants ahead of time – especially with our single family home tenants – to ask them if they want to buy or how we can help them moving forward.

As a real estate professional, you have consumer data that others don’t. You also have the opportunity to reach a buyer before anyone else. This is a real pipeline opportunity.

5. It opens doors to investing

With property management, you also get an overview of investment property portfolios that you can possibly buy yourself. Before I started investing in real estate, I decided that I wanted to learn about property management first.

In fact, the first property I bought was a multi-family site that I was already managing. Over time, I became familiar with the property and the owners — and ended up buying from them.

Right now we’re seeing a lot of investors buying more multi-family properties because interest rates are so low. Often these rental properties put up for sale never hit the market. It’s kind of like a secret club, and we were lucky enough to get into it by managing assets.

Our biggest single sale was a $7 million apartment complex. We managed it, got the listing and bought it. This came from another group of investors, whom we found while managing one of their properties.

6. It creates passive income

I’m a big believer in real estate that helps you build wealth. Property management is one of the avenues that not only helps you build wealth but also creates passive income cash flow. Sales commissions may go up and down from year to year. But with property management, at a certain level, income fluctuates little.

Most people who own rentals are there for the long term. Your average landlord owns a property for 7-10 years. And that means you’re going to earn consistent income for 7-10 years if you do a good job.

Once you hit around 100 units that you manage — but not necessarily own — it’s the same amount of money each month. This is what I call “mailbox money”.

Property management expands your network, your database, and ultimately your business. The brokers and teams of the future will offer more services – and you can be sure property management will be one of them.

Brandon Brittingham is the CEO and Team Leader of the Maryland & Delaware Group of Long & Foster Real Estate in Salisbury, Maryland. Connect with him on Facebook or Instagram.