Property Management Business Plan Tips

property management business plan tips

Here are three property management business plan tips to think about before expanding your real estate business.

Focus On A Single Asset Class

One of the most important things to do when developing a property management business plan is to focus on a specific real estate asset class, and then ‘drill down’ to a specific sub-class.

An example of this on the residential side would be single- or multi-family homes.  Then then focus on a specific price range, area of town, or number of units in the property.

An example of this on the commercial side would be multi-tenant retail or office.  After selecting the type of commercial property you will property manage, determine the class of property (A, B or C) and the property size in terms of square footage.

Developing A Solid Property Management Business Plan

It might seem counter-intuitive by narrowing the type of property you will manage.  But narrowing your focus is great for your real estate business for three reasons.

First, tenant personalities and issues will be more similar.  Their wants and needs will be as well.

The things that a medical tenant requires are much different from what a mom-and-pop small retail business will need.

Second, owner personalities will be more alike as well.  Real estate investors who buy office property are much different from those who invest in small multi family buildings.

Third, you’ll develop a skill set much quicker when you manage only certain type of real estate asset classes.

This will let you grow your property management business faster.  You’ll be able to transfer the skills you’ve learned in working with similar tenants and owners to other like-kind real estate.  You’ll also be able to target your property management marketing to the audience most likely to respond.

The Most Important Part Of A Property Management Business Plan

property management business plan

The people over as Hostfully were nice enough to include my thoughts about the most important part of a property management business plan.

As you’ll see from their article, there’s a lot that goes into creating a good property management business plan.

But time after time I’ve seen new property managers overlook this key point when putting together their business plan.

Key Factor In A Property Management Business Plan

Here’s what I told Hostfully:

Jeff Rohde, author at says one of the most important things when developing your property management business plan is the focus on a “specific real estate asset class, and then ‘drill down’ to a specific sub-class.”

A residential example would be to decide if you’re doing for a single or multi-family homes. After that, narrow it down by price range, geographic area, and a number of units. A commercial example would be deciding on multi-tenant retail or office type of property. “After you chose that, focusing on the class of property (A, B or C), and the property size in terms of square footage.”

This is how you’d develop your niche, because, as Rohde puts it, “tenant personalities and issues, wants and needs, will be similar. Owner personalities and investment goals will be similar. And the skill set that the property manager develops will easily transfer to similar properties to manage.”

Getting Started In Real Estate Property Management

If you’re a new real estate agent or thinking about getting into real estate property management, consider going to work first for a firm that is already in the business.

It’s a good way to learn the ropes, so to speak, and to find out if property management is really what you want to do.

If it is, you’ll be able to hit the ground running.  Just remember, there are a lot of ways to make money in real estate property management!

Does Buying Foreclosure Real Estate Make Sense?

buying foreclosure real estate

If you believe what you see on television, there’s a lot of money to be made in buying foreclosure real estate and flipping real estate.

But as with most things in life, if it was that easy everybody would be doing it.

Here are some of the things to think about before buying foreclosure real estate.

Is Foreclosure Real Estate Really A Good Deal?

Another word for bank owned property is REO – or real estate owned property.  But no matter the name, inexperienced real estate investors think that if the bank is selling it, then the foreclosed real estate must be a good deal to buy.

Usually that’s not the case.

When a bank sells an REO property to someone buying foreclosure real estate, the bank does an appraisal first.

The bank definitely wants to recover the loan amount that was on the property.  But the bank also wants to sell the property at fair market value.

People buying foreclosure real estate mistakenly think they will have instant equity.  They assume that all the bank wants to do is recover the old loan amount and nothing more.

This might sound good on TV, but that’s now how things work in the real world of foreclosure real estate investing.

Foreclosed Real Estate Needs Repairs

Perhaps one of the biggest cons in buying foreclosure real estate is that the property will need a lot of repairs and updating.

Owners who get foreclosed on sometimes take as much as they can with them.  The vacated property will be without appliances, mechanicals such as heating and air conditioning, and fixtures.

Investors buying foreclosed real estate need to carefully calculate the costs needed to bring the property into a condition for renting or resale.


Rate Hikes, Credit Scores And Real Estate

credit scores and real estate

Recently a reporter reached out to me to talk about a client project I was working on about the relationship between rate hikes, credit scores and real estate.

Here’s the link to the published article:  House Loan Blog – Changes To Credit Score.

Credit Scores And Real Estate

Credit scores and real estate work together to affect the price of real estate along with the rent that a landlord charges for income property.

There’s definitely a relationship between interest rates, credit scores and real estate.  But often times it isn’t what the general public believes.

Professional real estate investors know this, and are able to leverage these three factors to make their real estate investments a success.

Credit Scores Increase Real Estate Prices

Real estate prices actually increase as credit scores increase.

While at first glance this might seem counter-intuitive, there’s a reason that this occurs.  As credit scores increase buyers can qualify for a higher-priced property.  This in turn allows sellers to raise the price of the real estate that they’re selling.

Rental Rate Hikes Can Be Tricky

Higher credit scores also allow landlords to raise rents.  But doing this is a little trickier than simply raising the price of real estate for sale.

That’s because landlords and property managers of income producing real estate need to be aware of the time and expense of turning a rental property.

Also known as a ‘unit turn’, turning a property refers to the delay between the time an old tenant leaves and a new tenant leases, along with any repair or updating expense the property needs.

For example, let’s say the current rent on a unit is $1,000 per month and the new rent will be $1,100.  That’s a 10% increase per month, which isn’t bad.

But if the property ends up sitting vacant for two months during the unit turn there is a short-term rental income loss of $2,000 plus the cost of any needed repairs or updating.



How To Break A Lease To Buy A House

break a lease to buy a house

Renters often times reach the point where they decide it’s time to break a lease to buy a house.

Here are a couple of ways that tenants can break a lease to buy a house that will also be a win-win situation for the tenant, landlord, and property management company.

Break A Lease To Buy A House – New Home Construction

New home builders can usually be a big help to tenants wanting to break a lease to buy a house.  As long as the house they are buying is the new home that the builder is selling.

That’s because new home construction usually has a lot of latitude in the pricing.

Granted, the tenant may need to pay termination fees to break its lease.  But the builder can sometimes reduce the price of the new home by the total amount of termination fees the tenant needs to pay to break its lease to buy a house.

Real Estate Agents Can Help Break A Lease

Another way that renters can break their lease to buy a home is with the assistance of their real estate agent.

Landlords that own income property, and property managers that handle the rented property are mainly concerned with keeping the property rented.

That’s where the help of a real estate agent can come in.

If the tenant is using a real estate agent to find a new house to buy, then the agent can also help the tenant break its lease.  The real estate agent can do this by finding a good, qualified new tenant to rent the property.

Many real estate agents will also offer to waive their leasing fee for doing this, since they’re getting paid a nice sales commission from the new home builder for selling a house for them.

How To Save On Housing Costs

save on housing costs

First-time home buyers frequently discover that their monthly housing costs are much, much higher than they anticipated.  So naturally they begin looking for ways to save on those housing costs.

Updating, furnishing, maintenance and utilities all add up quickly.  Add to these expenses the monthly mortgage, and even at today’s low interest rates these payments can put a strain on almost any budget.

Here are a few ways to save on housing costs.

Save On Housing Costs With Rent-To-Own

One of the more overlooked ways to save on monthly housing costs is to enter into a rent-to-own or lease purchase agreement with the seller.

This type of contract allows the buyer to become a tenant first.

First, agree to the purchase price of the house in advance. The next step is determining how much of the monthly payment is going to be applied to the purchase of the house.  The amount of the payment left over goes to the seller as monthly rental income.

There’s a right way and a wrong way to use a rent-to-own agreement to save on housing costs.

The agreement should be treated like a purchase contract, with an independent third-party such as an escrow company handling payment receipts and funding disbursements.

Sub-Renting Can Save On Housing Costs

Renting out extra space in the house is another way to keep housing costs down.

Some people rent to friends or family, others use an online service such as Airbnb and rent out to people looking for a vacation rental property.

There are both pros and cons to renting to people you know and finding good tenants that you don’t know.

But either way, home owners who rent out extra space frequently find that the extra income they receive is much more than they expected.

The additional money can add up fast, and be used for needed updating or remodeling.

Or even to pay off the mortgage balance much quicker than planned!

American Freelance Copywriters Are In Demand

american freelance copywriters

American freelance copywriters are in demand as never before.  This is according to the most recent Freelancing in America: 2017 survey.

As a top-rated and top-earning real estate freelance copywriter on Upwork I was fortunate enough to receive a copy of this report.  Here are some of the most interesting findings.

Why American Freelance Copywriters Are In Demand

The most recent survey identified a number of reasons why freelance American copywriters are in demand from clients around the world.

The top three factors for choosing a copywriter based in the U.S. include:

  • Freelancers in America are better prepared for the future – They take what they do seriously, and invest in themselves by taking skills-related education almost twice as much as their non-freelancing peers do.
  • American copywriters freelance by choice, not because they have to – Implicit in this decision is the determination to excel at what they do.  This means that clients of freelance copywriters can expect to receive the highest quality product.
  • Technology is enabling American freelance copywriters to do more for clients around the globe – Thanks in large part to the pervasiveness of the internet and the ability to work online from anywhere in the world.  American freelance copywriters are able to work with clients anywhere and anytime, no matter where the client is located.

American Freelance Copywriters Contribute To The Economy

The Freelancing in America: 2017 report notes that over the past year American freelance copywriters  – and freelancers overall – contributed about $1.4 trillion to the economy.

That’s more than the GDP of Panama and Costa Rica combined, according to the latest global GDP report from Statistics Times.

What Motives American Freelancers?

There are four motivating factors the American freelance copywriters have in common:

  1. Be their own boss
  2. Choose when they work
  3. Choose their own projects
  4. Choose where they work

While these four items relate to the freelancer, they also benefit the clients whose projects they take on.

That’s because a successful, full-time American freelance copywriter can be selective, which means that when a client’s project is accepted the work produced will be second to none.


How To Flip Homes With No Money

flip homes with no money

Recently a reporter for a major publication asked for some comments on how to flip homes with no money down.  While at first glance this might seem like an impossible task, it can and is being done – more often than one might think!

Ways To Flip Homes With No Money Down

In today’s super-hot seller’s market where prices increase almost monthly, it isn’t that difficult to flip homes with no money down.

This technique is also known as a back-to-back or double escrow, where the buyer of a home turns around and sells it immediately after he (or she) closes escrow on their purchase.

Steps To Flip Homes With Money Down

Here’s a first-hand report on the three steps to take when you flip homes with no money.

#1.  Make an offer, get it accepted, and open escrow on the home.  Put down as little earnest money as possible and have the close of escrow as long as possible.

#2.  Market the home for sale while you have it tied up in escrow.  In a hot housing market prices will increase over a very short period of time.

#3.  Accept a purchase contract from a buyer of the home that you are waiting to close on, insisting that the close of escrow for your buyer be immediately following the close of escrow for the home you are buying.

Benefits Of Flipping A Home With No Money

Other than tying up your small earnest money deposit for 60 or 90 days, even longer if possible, you’ve invested nothing else in the deal.

You haven’t spent the time or money applying for a mortgage because you don’t need one.  There’s also been nothing spent on inspections or other due diligence items.

Plus if you’re a licensed real estate agent, you’re probably receiving a commission for buying the home that you’re flipping, increasing your potential profit even more!

STEM Tenants

STEM tenants

STEM tenants currently drive the demand for office and industrial space in many markets throughout the U.S. and Canada.  They’re taking available space in previously vacant buildings, bringing relief to some depressed real estate markets.

What Are STEM Tenants?

STEM is an abbreviation for science, technology, engineering, and mathematics.  In other words, cutting-edge industries such as high technology, biotechnology, and biosciences.

There are two reasons why STEM tenants have been bringing relief, and much needed rental revenues, to building owners and investors in REITs.

Why Are They Good?

A recent article in the World Property Journal noted that when STEM tenants lease space, they lease lots of it.  Often times in the 50,000 foot plus range.

Secondly, they’re great not just for owners of buildings with a high vacancy rate, but for secondary and tertiary markets as well.

That’s because companies that employ workers skilled in science, technology, engineering and mathematics find that they have to go where the talent is, rather than successfully recruiting employees to relocate and come to them.

Going Where The Work Force Is Skilled

That’s one of the reasons by high-tech companies such as Google, Amazon, and venture-capital funded startup companies are appearing in cities where you might not expect them to be.

They’ve got to go where the labor pool is.  This works out well for the tech companies too, because often times the non-traditional technology areas also have much more affordable space to lease than would Silicon Valley or Silicon Beach in California.

Office, Industrial, and More

While STEM employers are users of Class A office space, they will also re-purpose older Class B or C space, or renovate dated industrial property into a work environment that will attract the labor force that they need.

In certain markets there’s also an increase in shared work and office space, because when high-tech employers come to town, small support services and entrepreneurial businesses are also created.

Why Invest In A REIT?

invest in a REIT

Tell a friend you’re going to invest in a REIT and they’ll probably ask you why?

After all, most people get their start in real estate investing by buying a single family home to flip, them progress into smaller multifamily or apartment buildings.

On the commercial side of real estate investing, people often get their start by buying a small office condominium or a building for their own business.  Then, they branch out from there.

What all of these have in common is that they involve direct ownership of the real estate, something that a REIT does not.

What Is A REIT?

A REIT is a real estate investment trust, which is a form of group ownership of some or more pieces of property.  REITs can be asset class specific, for example investing only in apartment buildings.  Or they can be more generalized, holding a mix of real estate assets and targeting a specific return or investment strategy.

REITs can also be public or private.

An example of a large, publicly held REIT traded on the New York Stock Exchange is Equity Apartments (symbol EQR).

Privately held REITs have become more commonplace since the passage of the JOBS Act in 2012.  This allows smaller, non-accredited investors to put some of their capital into privately held REITs.

Three Reasons To Invest In A REIT

Unless a real estate investor is dead-set on owning properly directly, there are several advantages to investing in a REIT.

#1 Indirect Ownership of Property

This is an advantage because the real estate investor doesn’t have to get involved with the day-to-day issues of leasing or property management.

#2 Access To Class A Property

While the definition of Class A property varies from market to market, in general this term refers to only the newest or most updated property, with the best amenities, and credit-worthy national or regional tenants.

#3 Invest In Multiple Asset Classes

When a real estate investors buys directly they usually have limited resources, meaning they can only purchase one or two properties.  Investing in a REIT allows people to potentially own a mix of property across different real estate asset classes.

Is Investing In A REIT Right For You?

Since different investors have different investment strategies and objectives, only the investor can answer this question for sure.

But given the way the real estate market is growing, and the advantages that REITs offer, many people are finding that putting some investment capital into a REIT is a good way of diversifying their real estate investment portfolio.