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There are many niches in real estate, all of which tend to have sub-markets unto themselves. This is one of the beauties of the business and why you tend to find a plethora of diversity in the industry. You have your residential broker, your commercial broker, and then there is your property manager. Although property managers can technically be designated in the real estate industry, they tend to be put in their own category altogether. Almost like a duck-billed platypus, you scratch your head and wonder where they really fit. Ergo, how property managers can tend to be perceived in real estate as well.
This perception is not without its merits. When compared to their counterparts, the residential and commercial brokers, property managers typically endure a much longer relationship with their clients and tenants. The kicker is it’s also for significantly less money. One of the biggest contrasts is the service aspect of the property management business and how much more diverse and flexible you have to be. It is not uncommon to have an affluent owner investing millions of dollars into a market for a tenant base and demographic that is blue collar or even on a government supplemental program. The shift from one side of the spectrum to the other takes a certain skill, along with a few others to operate and succeed in this niche.
If you’re considering getting into the property management business, here are some talents you must possess and issues to study before making the move.
Are you diverse enough in business to speak to every demographic?
As mentioned, in property management, you don’t always have the luxury of just dealing with an investor for one brief transaction (obviously, this doesn’t apply to repeat clients). It’s one thing to go through a sales transaction and wish your clients well after you have closed. It’s a whole other skill set to deal with that same investor for an average of one year (the typical length of management agreements). Closing a sales transaction that can last 90-120 days on the high end, versus 365 days, is a huge factor and tests your stamina and customer service.
While the upside to property management is the residual component, you must make sure you and your team have the endurance to provide the kind of service that will make you succeed. Anyone can be a property manager; however, it takes endurance to be a great one.
Are you prepared to work — a lot?
In property management, there are no days off. It’s a Monday through Sunday gig and your business is open 24 hours a day. If there is an emergency at midnight, it’s your responsibility to address it. If the stove breaks at one of your tenants’ units on the night before Thanksgiving, guess who is getting the call. It begs the question, is it worth it?
The answer lies in your objectives and how you plan on growing. As you begin to scale, you have the opportunity to hire more staff and hopefully delegate more. Until then, you can’t be naïve about how much effort it will require. The day-to-day realities of property management can wipe you out if you’re not prepared to work plenty.
Are you OK with a thankless industry?
“One man’s trash is another man’s treasure” is probably the best way to describe property management. It is rare that a tenant or owner ever calls you to say how great of a job you are doing. On the contrary, the calls you can expect to get will be emergencies, complaints, questions, concerns and threats of lawsuits. It’s not if something wrong is going to happen, because it will; it’s how many fires can you put out that day. Sound fun? Still want to take on the property management industry by storm?
Having the fortitude and grit to persevere is by far one of the prime requirements. Knowing that you are doing the right things and doing all you can to make your owners and tenants happy has to be what drives you. Also knowing you are making a difference in your community helps keep the fire burning. On the rare occasion you do get a compliment or thank you, the appreciation for it is all the more satisfying.
Why should I be a property manager?
If the list above hasn’t scared you off yet and you are still considering being a property manager, then congratulations — you just may have some of the required DNA it takes. Beyond the challenges of property management lies a vast opportunity. Besides residual income, if incorporated correctly into your business model, you can also use to your advantage the relationships you have built with your owners. This can turn into listings, being the buyer’s broker for new investments, partnerships and even first looks at deals before they hit the market. What starts out as a firestorm, if run right, can eventually be turned into a form of controlled chaos at its best. Come to think of it, maybe the property manager and the duck-billed platypus know exactly where they fit.