Property Management Start Up

[Ryan Miller]

I have heard it a dozen times...create your own property management company in an effort to service your personal assets and those of local real estate investors. I currently manage my portfolio in house but I have communicated with multiple PM companies and conducted substantial research on the topic to help gauge the amount of work required to form a company that could help offset PM costs and potentially create another income stream that could then be used to purchase additional properties.

From 2013-2018 I was co-owner of a real estate development company that built spec homes from the ground up. My primary role was in marketing, communications, negotiations, website management, etc. Essentially, everything but the actual construction. I mention this as I believe this prepared me for my next venture. The idea would be to partner with someone (I already have vetted a few individuals) who compliments my skill set and would be able to oversee the hands on labor portion of the company. My question revolves around the structure of the agreement. My initial thought was to form a 50/50 partnership/LLC where we split work, profit, etc. We would start with my modest portfolio but immediately work on outreach/marketing as to expand our reach and service additional units/properties. I have working capital to support the business early on and could use profits to recoup my initial investment.

I am not naïve enough to believe that this would be easy or overly successful in the beginning but I do see potential as there is a need for quality PM in my area. The most overwhelming aspect of this idea is the technology side. This is something that I would hope to outsource...after assessing the feasibility. I currently use free PM software but understand that I would likely have to find a program that is more comprehensive and allows us to automate everything from the onboarding process to tenant communications....and everything in between. This is not my forte so finding something or someone to implement systems would be beneficial to my personal holdings as well as the PM business itself. Ideally, I would bring the capital required for the start up and be involved early on and then take on a more passive role as my partner manages the day to day and our systems/employees manage the rest (to a degree). I had my RE license, when were developing land as to help us secure building lots, so I could re-up and use that to list vacant units on the MLS.

I would welcome any feedback you may have to help us do our due diligence during the research stage. I am someone who plans substantially to help ensure that my ideas have the best chance for success. I promise not to take advice in a negative manner as my goal is to create a think tank that will allow me to analyze the merit of this idea and decide if it could be a viable business. Any help would be appreciated.