I have been asked to manage a property for someone?

Question

I have been asked to manage a property for someone that is moving out of state. I was approaced by him because I have two rentals that are in the same neiborhood of his.  I manage my own properties but was wanting to know what kind of % per month would be appropriate or conditions of what kind to follow?

Shane Waller · Answer

sounds good but, who draws the line and what does'nt make you propoerty manager, and just someone helping?

Shaun Reilly · Answer

While I'm with some of the others that it isn't worth messing around with if you are violating licensing law or taking on someone else's headache there are things you can potentially do.

Both locally and for some out of state properties I have done a "boots on the ground" a la carte type arrangement with people.

Locally I have some places that are about 40min (no traffic) from my house that are close to where I grew up, and about 15min from where I used to work.  When I had that J.O.B. and no kids it wasn't a big deal to show those places and deal with some of the minor things.  Now it is totally unappealing to take 2+ hours out of my day to open a door.  I have some people up there that I pay to open said door when needed and if there is a decent tenant I give them the paperwork to collect signatures and checks and stuff like that.  They don't get a percentage they get a flat fee per time out to the apartment and a per hour rate after the first 30min.  Then a flat fee to deal with those logistics.

In this case I was doing all the advertising (Which was 100% posting Craigslist ads) and did the initial intake calls/emails.  Each week I would ask for his availability and when talking with the potential tenants I would set the first appointment in one of his windows and steer everyone else to that and then the first 1 that couldn't do it set the 2nd time window (We agreed that even though he gave me 4-6 two hour time windows that I wouldn't do more than 2 without talking to him again).  It was something like $25/showing and like $40/hour after the 1st 30min in 15min chunks and $50 to do the paperwork.  This was a friend of mind so it was extra cheap, but I would have gladly paid double all these figures and since we found people pretty fast even at twice what I paid it would have been less than half a typical manager in this case (If they do enough showings they will make more so it is a crap shoot for both parties).

For the out of state they do more.  In this case I pay a flat advertising fee per month which includes them putting out a sign, posting ads in local stores and bulletin boards, posting on their own website and social media and doing the local Craigslist (If I want anything beyond free advertising I need to pay for it).  They charge $25/showing up to 15min and $50/hour after that in 15min chunks.  They are $120 to do the lease and they have the same one that I have since we use the same attorney, but otherwise I would supply my own lease if I didn't want to use the that one or the standard state one.  In this case they also do maintenance, turnovers and up to mid level rehabs, which is one of the main profit centers, and charge for those accordingly.  Works for them since as long as they don't gouge me why and I going to try to find another contractor to do the work right?

In this case they also will go over there when I need someone to, will post notices if I need that, will file court paperwork and actually attend the hearings for an eviction and arrange any of the other stuff if it comes up.  All of these things are a flat fee or hourly rate.

We have no contract and I don't pay anything when they don't do anything.  So any individual incident can cost a lot since none of it is bundled into a management fee.  However for all those months with no issues and I just get mailbox money I don't pay anything for management so that is nice.

Sorry this got long winded but the point is if you want to be the point person you can charge a lot do to anything but not have to be responsible the rest of the time which can possibly work out well for everyone (and not really violate licensing law since you aren't REALLY a property manager).

Joel Owens · Answer

Shane that would be a big fat NO to managing.

If the person is moving out of state maybe they are selling cheap and you can buy it or get it under contract and assign it to another buyer.

Find another way to make money on it but not to manage it! lol

Kyle J. · Answer

You'd need to be a licensed realtor working under a broker to manage someone else's property in your state. Hardly seems worth it for one property (unless maybe you're already a realtor).

Tom Spaeth · Answer

You are very likely required to be a realtor. However you could lease the property from the owner with the right to sublease subject to the existing lease. I typically charge a percentage of the rent I collect. But there are other ways. From that figure how much is worth for you to deal with the hassle. I do similar kinds of management. And i figure I am worth more than the typical manager that does not own property nor care for a property like their own.

I have taken one persons property that was in a condition I would never allow my house to get into. Convinced the owner to put in some money over time, gotten good tenants that have performed some work such as painting and in the process increased rents and improved the property condition. And I have a happy owner.

Jesse T. · Answer

If the properties are good ones, I would focus on an agreement to acquire them.

Could he cover his mortgages for 60 to 70% of rent?  Maybe do seller financing with payments of that amount, with a balloon at the point the where you would be in a position to buy them.  Basically doing a subject to financing agreement.  Just make sure he is staying current on the mortgages.  In that arrangement, I would want any money down to be applied to his mortgage.

Another option might be for you to wholesale them for him.  If he is willing to sell for pretty much the pay-off there may be a fair amount of spread to work with.

Chris Martin · Answer

I'm not sure where your "for a fee" quote comes from. For sure, self leasing and "self management" are okay. By NC statute, "Any individual owner who personally leases or sells the owner's own property" is exempt from needing a real estate license. So the owner is exempt if that owner "personally leases" the property.

Now Shane, on the other hand... it depends on if he is actually leasing and/or renting the property (meaning on NC Standard Form 410-T (or equivalent) is he identified as the Real Estate Management Firm or "Agent") or is he providing other services? The fact is the word "manage" or "management" is not in the NC definition (NCGS 93A) of "A real estate broker":

"A real estate broker within the meaning of this Chapter is any person, partnership, corporation, limited liability company, association, or other business entity who for a compensation or valuable consideration or promise thereof lists or offers to list, sells or offers to sell, buys or offers to buy, auctions or offers to auction (specifically not including a mere crier of sales), or negotiates the purchase or sale or exchange of real estate, or who leases or offers to lease, or who sells or offers to sell leases of whatever character, or rents or offers to rent any real estate or the improvement thereon, for others."

Expanding on the @Shaun Reilly  post, in NC you can provide some peripheral real estate services (but not the actual leasing) and not need a broker's license. The "line" is drawn by Chapter 93A, not the NC REC. NC REC implements the NCGS.

The reality is that as long as no one complains, there isn't going to be an issue.

Greg Baker · Answer

Have you considered purchasing it through seller financing?

Fred Heller · Answer

The answer to "who draws the line between being a property manager and helping someone out" is the Real Estate Commission of North Carolina

I've seen enough posts to know that North Carolina requires a real estate license if you are managing/leasing property for a third party "for a fee." If you do not hold a real estate license then you cannot manage someone else's property for a fee.

If you are a real estate licensee, the standard rate for property management is in the 10% range of the gross monthly rent. There is also a leasing fee in the range of 75% to 100% of one month's rent when a new tenant is signed to a lease.

Dawn Brenengen · Answer

@Shane Waller If you are getting paid, you not not "just someone helping."

I have been asked to manage a property for someone?

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