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Why Real Estate Brokers Should Consider Offering Real Estate Management Services

ByWillie M. Evans

Jan 14, 2019

In a given market, approximately 60-65% people live in a house they own. This means that at least 35% to 40% live in homes they do not own. Most brokerage firms choose to serve just two-thirds of the population, buyers and sellers. What about the remaining 35-40% of people who still need a roof over their heads?

Renting makes sense to more people than you might think

My own experience last year is a good example. I wanted to buy a new home for my wife and I in the Short North area of ​​Columbus, Ohio. Like so many metropolitan areas right now, the real estate market and the local economy are on fire. None of what we looked at made any sense. On a whim I decided to check out the local rental market. We ended up signing a two-year lease in a new building with closed parking. I expect to buy here someday, but want to wait until the current frenzy subsides.

Providing real estate services to everyone who needs a roof over their heads can be a key differentiator for you as a brokerage owner in your market.

Synergy pays off

There is great synergy in bringing together the sale and management of real estate under one roof. The reason this synergy exists is that many real estate investors will regularly expand their portfolios if they have reliable professional management. In our firm, relationships with our property management clients are among the most rewarding and profitable that we have. (The commissions we earn on their new purchases are also quite rewarding.)

To start

Property management is not an easy business. However, with the right systems and support staff in place, it can become a self-managed business that could cover a large percentage of your current overhead. Over the past 10 years, we have put in place systems, partners and technologies to make this possible. Here are some tips and suggestions to get you started if you decide that offering property management services is a good way to grow your brokerage business.

• Browse your database and identify all the people you and your agents have helped purchase rental properties over the years. Find out what their management situation is now and find out how you can help them. This is a great reason to reconnect with members of your sphere of influence who you may have lost track of over the years.

• How do you manage your personal investments? You might already have processes in place that you can formalize and develop that you haven’t even thought of.

• It should be relatively easy and inexpensive to alert your database to your new services. Again, this is a great reason to make calls and send personal notes.

• You will probably start with only a handful of units. Your current receptionist should be able to handle some additional incoming calls. If you have an accountant who manages your operating account, they should be able to manage an additional trust account for the owner’s funds.

• We tried several property management software solutions before landing on our favorite. Test the waters and sample solutions until you find the one that works best for you.

• As your business grows, you may want to consider hiring an accountant who specializes in using this platform to manage your accounts receivable and monthly reconciliations.

• The licensing law is in your favor. However, you will be handling other people’s money, and the real estate division in your state will want to make sure you are in compliance with all applicable laws and regulations, so do your research and consult with your legal team.

• Starting small with a few key clients who already know and love you is the way to go. As the business grows, you can add more staff. The key is not to let this new business take over your business – see this as an addition. It is “found money”. Your sales and your business, and more importantly, the activities of your agents cannot be affected.

• Housekeeping staff is another consideration. At some point you will need one or two employees to handle issues in the occupied units. In the meantime, take another trip to your database and use social media to find independent contractors who will take care of any issues that arise, until you reach a point where hiring additional staff makes sense.

• Getting paid is important. For example, our standard charge is 10% of any rent collected, including late fees, plus up to one month’s full rent as a rental fee. For new clients with a larger portfolio – over 20 units – we may charge a nominal listing fee to cover the costs of adding their properties to our system and closing the gap until we actually collect. the rent and money paid the first time.

Providing property management services has transformed my business in three main ways. First of all, the business covers a huge amount of overhead in good and slow times – it’s overhead that I should have covered anyway to support my agents and sales. Second, property management allows us to differentiate ourselves in the market as professionals who understand investors and their businesses. And our sales activity has grown as our owner clients are eager to expand their portfolios, knowing that they can count on us to take care of their property. To take advantage of these benefits in your own brokerage, consider expanding your services to include property management.

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