Getting into property management? Here is a strategic approach

Property investors have been riding a wild wave during the pandemic, with the short-term rental market stalling and then restarting, and property prices in many second home markets soared. What future for new owners of second homes and for managers of more robust real estate portfolios? We’ll explore that and more throughout May at Inman.

Let’s face it: the traditional real estate investment method is not necessarily synonymous with significant cash flow. This is largely due to the large initial deposits required, as well as the mortgage costs and management fees associated with buying, renovating and renting a home. It’s a long game – and few people will succeed.

So how can you speed up the process and ensure that you will not only win at the game, but also profit from it? By taking advantage of things you don’t have. This removes deposit requirements and often, when done well, can generate returns simply unmatched by any other method of investing.

Tens of thousands of people are already using this strategic method to earn their way to financial freedom. While the average person on the street can tackle such a business, real estate agents have the upper hand. They know all the ins and outs of the business and how to leverage the market to work in their favor.

This is how you can start building your property management portfolio today and how your real estate prowess can propel you to success.

What is rent to let?

Simply put, the rent-to-let property management strategy is all about working with landlords to rent apartments to your clients. This is an ideal property management strategy for real estate agents because it allows you to leverage your pre-existing industry ties, contacts, and hard-learned lessons from years of work.

There’s never been a better time to put the rent-to-rent strategy to work for you. It is not surprising that there are countless struggling and tired owners and developers with too much stock and uncertainty in today’s market.

By leveraging your experience in real estate, you’re in the perfect position to offer them this problem-solving alternative to landlord-tenant agreements.

Identify your gain

Depending on the market in the area where you plan to start your property management business, there are many factors you will need to consider when it comes to acquiring properties under your belt and closing deals.

James Murphy

James Murphy, CEO of UK-based Opulent Living Companies, is one of the pioneers of the rent-to-rent strategy, with over 250 high cash flow properties in his portfolio using this model. He said he started by building direct relationships with landlords and landlords, one of the fastest ways he’s found to build a portfolio.

“We work directly with leading developers and provide high-level relationships to develop high cash flow real estate portfolios,” Murphy said. “I know loads of people who build real estate portfolios in other ways, but they’re not necessarily [promoting] cash flow.”

But even as you identify these properties and owners and work to build relationships, you need to keep these other factors in mind, which will make or break your ability to successfully start managing properties and making a profit.

Determine the legal structure

This is another area where your real estate experience will come in handy. As with any business, there is paperwork to complete, insurance to pay, and taxes to keep in mind.

If you are considering starting a property management business in the same state where your real estate license is registered, then you are in luck! But beware: you may also need a property management license. Do your research early so there are no surprises when you’re neck and neck in your wallet.

Expect expenses

Profits are one thing, but business expenses are another. You’re probably aware of the myriad expenses associated with property management, but it’s always worth repeating.

Although you can make a huge profit from the rent-to-rent strategy, there will be costs associated with this victory, such as:

  • Legal advice and contractual assistance
  • Real estate marketing
  • Customer relationship
  • Accounting and tax charges

Don’t be afraid to go against tradition

The expression “this is how we have always done it” is no longer acceptable, not when you have a family to support and a livelihood to provide. When Murphy and his wife started it was with £5,000 of their own savings and a loan of £10,000. Less than two years later, they’ve grown their company to 60 in-house employees — and Murphy says that’s because they reneged on tradition.

“We went through about three steps, and those are steps that anyone can take,” Murphy said. “If you work to build a real estate pipeline through your real estate connections, leverage an investor pipeline, and use the systems, processes, and automations you know as a real estate agent, you’ll be able to grow your real estate business in no time.”

“[The rent-to-rent] can give 10 times the results you get with older, more traditional methods,” he added. “Language may be a new method, but I started from humble beginnings, renting apartments to landlords and turning them into service apartments, and then after three months we were earning more than our entire combined household income. This was a wake-up call for us. »

It’s your turn to wake up. Whether you plan to manage two properties or 100, there’s never been a time to leverage your experience and contacts to start a cash-intensive business in real estate.

By doing your research, making a few calls, and positioning yourself as the perfect solution to owner woes, you’ll be well on your way to a business boom you’re unlikely to see using any other method.

Victoria Kennedy is CEO of Atman Real Estate. Connect with her via email.