This article discusses whether starting and developing a Property Management Company could be for you or not. There are some personalities that this business is suited for, and equally some that are not. I will discuss each characteristic that lends itself well towards being a Manager, and more importantly doing it as an Entrepreneur. Below are the Top5 characteristics that will help you become a successful Property Management Business Owner:
1. Attention to Financial Detail. This characteristic is perhaps the most important detail for this business. Managing properties, especially once you start growing and increasing the number of properties that you manage, requires the ability to keep track of every penny. And believe me, as you grow, there will be a lot of them.
Think about it, if you have 50 properties averaging $1,000 per month in rent, you are then collecting $50,000 every month to deposit into bank accounts. Then from that $50,000, you are paying some utilities, mortgages, then disburse the remainder to the owner, etc. Now, I haven't even mentioned that 10% of the rents you have to collect will not pay on time. So you have to be very good at keeping records of those monies received and not received as you progress through the monthly rental cycle, not to mention applying the appropriate late charge to the specific account. As you can see, having a background in financials or accounting can go a long way in property management. And don't let this article scare you, just consider this more of an awareness of the field.And don't worry, it can be learned the hard knocks way, we did.
Once a month you will be required to reconcile your bank account statements to your accounting programs. If you are off even 1 penny, that is a problem. You will need to find all errors and maintain your books on track 100%. Many states actually regulate this activity with random inspections.
2. Excellent Communicator. This characteristic is just as important because Property Owners rely on you to communicate to them the status of their property more than just receiving a monthly property operating statement. They should be contacted by you personally at least once a month to let them know, at a minimum, that everything is going well with the property. Also, keeping in good contact with them allows you to further develop your relationship with them. Because if you don't, your competitor will.
This business deals with many time sensitive matters. If you are someone who procrastinates on getting back to people, then you will make enemies fast. Property Owners want to be heard back from you relatively quickly. In fact, this is the number 1 reason why we have picked up a lot of business. Larger companies allow their Managers to take on far too many properties than they should and they become bogged down and are not able to give the personalized service to Property Owners that they deserve. Tenants also, need to have a certain level of customer service in getting maintenance items repaired, etc. A good Property Manager will promptly return phone calls and emails.
3. Are you a people person? Kind of a vague question, but the bottom line is that you will be around all kinds of people 24/7. You will challenged with domestic problems, money problems, families that just had a baby and now cannot afford the rent. There will be a new challenge almost every day. Are you the type of person that can take on these issues and help solve them without getting too involved. Can you, at the same time, be able to file an eviction on that new family? This is a 'for profit' business and you cannot be in the business of charity. I know that seems harsh, but it is the reality of the property management business.
Lastly in the people person section, you will be making "sales calls" on Property Owners. And as such, you will need to be able to modify your personality to fit that of your Prospective Property Owner.Many people are good at being a Property Manager, but they are not so good at the people and sales skills and as such have a hard time getting business. However, let me say too that sales in this industry is a learned skill, it does not come natural.
Building and fostering long term relationships are very important in this business. You will be taking care of properties for your Owners for hopefully years and years. This is not like being a Realtor in that you will work with people for a couple months and move on. You will need to work on earning trust in your Customers and continuing to build on that relationship over time.
4. Are you a problem solver? As a Property Manager, all you have is problems. Tenants call you for one reason and one reason only: they have a problem. Either the window is jammed, or the neighbor is bothering them, or they can't pay rent. Either way, you will be plagued with problems. You will need to be someone who handles these "problems" as opportunities and deals well this type of stress.
Additionally, as you build your number of properties, you will need to be an excellent multi-tasker. More properties equals more Tenants which equals more phone calls. However it also equals more money, so bear that in mind as well! When you get big enough you can then look to delegate these responsibilities, but starting out many times it is a one person show.
5. Are you OK with paperwork...and lots of it?The first of the month is a very busy time for Property Managers, this is when you are collecting rent monies and disbursing funds. Also, you are creating monthly reports and sending them out to the owners. On top of that and throughout the month, you will have discussions with Tenants that will need to be documented. Discussions that relate to tenancy, following up on a request you made to them, or financial matters will need to be documented to properly protect yourself and the Owner. If you are not good at follow up with your communications, you could lose that conversation and if the Tenant took you or your Property Owner to court, since you didn't properly document the conversation, you could lose. The courts always favor Tenants when the Landlord or Property Manager don't follow the laws (or appear to not follow the laws because of lack of documentation). Documentation and administration is again a critical part of the communication aspect and can sink your ship if not percormed correctly.
There is one more characteristic that is paramount in any business, not just Property Management. That is being very positive and not listening to the nay-sayers. Other people will always try to burst your bubble. You will have plenty of days when it doesn't seem like building your own business is even possible. Persistence is the key to any business, and it can only happen when you are positive.
In summary, I wanted to highlight those characteristics that could become a challenge in becoming a Property Manager. If you see some of these qualities as being a challenge with you, it doesn't mean you couldn't become a Property Manager, it just means that you have an opportunity for improvement. Property Management definitely is not for everyone, is it for you?