Should I Start My Own Property Management Company? Mentorship Monday - YouTube

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 [email protected]. That is  [email protected]. 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 [email protected] with  

your questions. Thank you for watching. Thank you,  Michael, and have a great and profitable week.