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Updated almost 6 years ago on . Most recent reply

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Bryan Petrinec
  • Rental Property Investor
  • Cedar Park, TX
51
Votes |
59
Posts

Considering RE License to do Property Management - need broker

Bryan Petrinec
  • Rental Property Investor
  • Cedar Park, TX
Posted

I am managing 34 units now as part as my portfolio and considering going into the property management business and include properties outside of my own portfolio.  So in Texas, I would need to get a RE license or partner with someone with an RE license.  As I hate having my future dictated by others, I would prefer to have that credential so not to have issues in the future.  I also intend to act as an agent but only for a handful of deals a year to supplement the rental income to purchase more properties.

So before I invest the time and money, I wanted to see if there are brokers out there that would support this approach?  In discussing with my current RE agent, this could be hard to find a broker due to the potential liabilities and low number of deals.  If there are brokers out there that would be willing to work with this structure, please pm me as I would like to learn more before I move forward with the above.

Bryan

Most Popular Reply

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28,167
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Nathan Gesner
  • Real Estate Broker
  • Cody, WY
41,255
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28,167
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Nathan Gesner
  • Real Estate Broker
  • Cody, WY
ModeratorReplied

Your best bet would be to find a small mom-and-pop brokerage that's more flexible. Corporate companies will cry about liability even though I think sales has just as much liability and probably in greater dollar amounts.

One complaint I hear from Brokers: they don't like tenants and vendors constantly walking in/out of the office, particularly if you have C-class or lower. You may be able to find a Broker that will let you operate from home or a branch office to remove that from the equation.

The tougher part is figuring out how to provide value to the Broker. If you have 50 rentals with an average rent of $1,500 and charge a 10% fee, that's $7,500 a month. How much are you willing to share with the Broker to make it worth their while to take on your liability? You can figure this out by talking to local Brokers and find out how much they want each agent to bring into the office every year. For example, I know a Broker in Texas that turns a profit for every agent that pays $15,000 in commissions. If that's the case in your market, you could offer 15% of your monthly commission to the Broker ($1,250). You can probably pay less than a sales agent because your income is going to be very stable each month whereas sales agents may get three sales this month and no sales for four months and during a slow year they may only bring in $7,000 in office commissions.

Long story short, make some calls and you'll find someone.

  • Nathan Gesner
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