Tips on Setting up New Property Management Company

[Coleman Nelson]

My business partners and I just created a new property management company here in Cincinnati, Ohio to manage the properties in our portfolio.  I am hoping that current PMs and owners who use PMs can offer some tips on the best way to manage the cash handling between the management company and the owner. We are currently only planning to manage our own properties, but we want to set up the company as though we are managing 3rd party properties so we will be able to transition to that quickly if we determine it's the right opportunity.

Our plan is to have the management company collect all rents, pay all expenses, and send a check to the owner for the net cash flow at the end of the month, less management fees.

Is it common practice for PMs to pay the mortgage, insurance, property taxes, etc., or should the owner be paying those expenses?

Is it difficult getting vendors, such as lenders and utility companies to work with the management company since they are not the property owners?

For large expenses, such as property taxes, do you have the owner transfer money over to the PM in advance so they have enough cash to make the payment?

Do you have a separate bank account for each owner that you manage for where a reserve is kept?  Does the PM and owner both have access to this account to add and withdraw funds?

I have more questions, but this is probably enough for now!  Thanks in advance for all of your help.

[Jered Sturm]

Great questions Coleman. Keep at them and The right solution will come to you. A previous poster said "You could ask a hundred questions, get all kinds of answers, and still not know enough to run a PM company." I agree with this but smartest people can get 100 answers and then make one educated decision based off of those answers. Then adjust as they feel needed through real world experience. Some feel they need to pay for education, get certificates to feel qualified. Some are able to do it with out that. By way of example it would be like someone becoming a millionaire flipping houses with out ever going to any trade school or getting a contractors license ;) . Keep at it! 

@Nathan Gesner It is sad to see someone as successful in the industry as yourself answer this question the way you did. With a few assumptions and choice words you managed to come off disparaging, and frankly a jerk. BP is the platform set up to do exactly what your criticizing Coleman for doing.