Property Managment Company

[John Frank]

Is it possible to make money owning your own Property Management Company? I ran some numbers for my local area and it doesn’t seem profitable. Looking at 100 properties at average rent of $650/unit and a 10% management fee that’s only $65,000/year before expenses. Once you hire administrative help that cuts the profit by 1/2. Just wondering what I am missing.

[Alex L.]

It doesn't sound like you're missing anything in your particular example, along with Josh's additional info, if those are the numbers you're working with. If the median household income is $37k, and you're bringing in $65k as a FT PM working on your own (or $32.5k if you've got an employee that you're paying 1/2 that to), then that sounds about right. So, you would indeed be making a profit owning your own PM company... and as an individual, you'd perhaps even be above the bar for the median household income of $37k. Obviously this is a very simplified example that isn't taken into account taxes and other expenses, plus some PMs often charge additional fees for certain things that would ultimately increase your pay (fees for drafting leases, fees for handling turnovers, etc). Regardless, your earning potential is going to be limited to your particular market, so if that's not enough profit for you, then you'll have to find a way manage properties with higher rents.