Should I start my own property management company? What is happening YouTube? It's Matt Faircloth,
thank you for watching Mentorship Monday. Here's how this goes. My name is Matt. My
company is called the DeRosa Group, and this is our Mentorship Monday series,
if you guys are first-timers here. The way Mentorship Monday works is people
email questions to helpme@derosagroup.com. That is helpme@derosagroup.com. And these are real estate
investing related questions, just stuff that people want to talk their way through. We get
a lot of questions about, "Should I start up an LLC?" Yes. Okay. Yes, you should. Next question.
Just joking. But the question is just about working your way through logistics on a deal,
moving forward, whatever questions you have in real estate investing and in that world,
send them to me. And I'll answer those right here on the YouTube channel for
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can check that kind of stuff out too. Okay. So, today's question comes ... Let me pull it up,
from Michael, and Michael wants to know about starting up a property management company. And
this is an interesting conversation and Michael is even more specific on what he wants to do. So,
we'll get to his question in a minute, but let's talk about property management first. So,
property management is a necessary, don't want to use the word evil,
but it's a necessary side of the property of the ownership of real estate business.
If you buy a rental property, at some point the tenants are going to move out,
they're going to need a repair. They're going to be a little bit late on the rent,
or unfortunately God forbid, you may have to evict them or something like that. All those activities
are taken on by the property management side of the business. Now, if you're a smaller landlord
that could be you, so you really are a property manager, you're just doing the property management
types of responsibilities on your own. Some larger companies have third-party property
management companies to do all those things for them. Here's what I think ... And I used to have
a property management company, we managed about 115 units on our own. And I think that property
management is something that a lot of people should do. If you have it in your wheelhouse,
if you have it in your time constraints to be able to manage your own real estate,
there is no better lesson out there. There's no weekend. There's no guru class. There's
no run to the back of the room session that you can do that will teach you any more than
managing real estate on your own will. So, there's no better classroom. So,
if you can swing it, do it. So that's the education. That's why it's a yes. And you'll
also learn the business. You'll learn the ins and outs, and you'll be able to watch your real
estate like a hawk. You'll be able to see every nickel come in and out the door and you'll be
able to run it at a high level of integrity for yourself. Now, that's the good side. The bad side
is property management can be very time-intensive and especially if you've got a full-time job,
like today's question-asker Michael does, then it can be a time constraint. It can hold you
back in growth of your business. And that is why we ended up getting out of the management
business because it enabled us to grow. I'm grateful we did it. I learned what I needed
to learn, but now we are not property managing because really I'm focusing on growth. You will
get to that point as well, or you could just business-ize your property management company
and get enough under management that you can start making money from it as
part of your business. Now, let's get to today's question. Those are the pluses and minuses of it,
but let's talk about Michael here. So, "My name is Michael and I'm a commercial real estate agent. I
would like to start my own property management company as a side hustle with one other partner
and we'd love any tips you can provide." Now, first of all, running a property management
company as a side hustle is like ... Well, it can become big quick. Michael, you would need to build
a really good system around management. So, you would need to have an administrative assistant.
Some people involved that are doing some of the doing and really good systems and processes,
like if this then that, type of thing. Now, I love that Michael is a commercial real estate agent,
because that means that he can sell a building to an investor and also say, "Oh, by the way,
Mr. Investor, I can manage that for you." So, he can build his management company through
his core business of selling commercial real estate. So, I should also mention the rest
of Michael's question here, because it's just interesting and I don't have much that I can
say about it, but it's just interesting. "Myself already being in the business," good
enough, "and meeting everyday people is something that I would think would give me
an edge, but this would be the first business either of us has started on our own." Still,
I think that you'll be a lead source for business. This is where it gets interesting. "I specialize
in industrial buildings, but would like to eventually end up owning a few of those." And so,
that's such a niche inside of a niche, inside of a niche, Michael, and industrial buildings have a
few thoughts. I don't know if owners of industrial buildings even use property management companies,
or if they just manage with an in-house team. I don't know how many leads you're going to get for
people that want to have buildings like that managed. But the fact of the matter is it's a
niche inside of a niche, inside of a niche. So, if someone needs a service like that, you are going
to be the go-to and that's something to you guys that they say, "The riches are in the niches."
So, if you're wide and you provide everything to everybody, you're going to be a commodity. But
if you are a super specific ... Like if Michael decides to only manage commercial real estate,
that it's in industrial stuff, then there's not that many companies doing that. And so, he's going
to be able to really focus inside that niche. So, that's my thought on it, Michael, I don't know the
logistics of managing industrial because I don't own any industrial. So, it's hard for me to speak
on that, but I do think that that is such a niche that you might do well on it, just for that.
So, bottom line, guys, property management is something that you guys could look into,
there's pluses and minuses to it. But unless you're looking to build a long-term business
around it and have hundreds and hundreds, and maybe thousands of units under management as a
company that you own as your profit center. Unless you're planning on doing that, you need to have an
exit strategy lined up if you're going to manage yourself, to eventually hand it over to third
party-management, because [inaudible 00:06:32] management will eventually stunt your growth. So,
that's what I got, guys. Don't forget, as I said, please subscribe to the channel so
you can be in tune with everything we have going on. And email us at helpme@derosagroup.com with
your questions. Thank you for watching. Thank you, Michael, and have a great and profitable week.