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How to Start a Property Management Company

October 4, 2023 by Realty411 Team

By Joe Arias

If you are thinking about getting into the real estate investment business, you might consider starting a property management company. A good deal of experience and knowledge is required, but it can be quite lucrative if you succeed in setting up a profitable property management company. This article will go over the necessary steps to set up a successful property management company and start making money through real estate investing.

Decide What Type of Legal Entity You Are

If you’re interested in setting up a property management company, you’ll need to establish a legal entity. Many different legal entities can be used in the real estate investment business, but the most common is a limited liability company (LLC). An LLC can be a good choice because it allows you to operate an enterprise as an individual or with partners without worrying about filing forms and going through the costs of becoming an S Corporation. An LLC might not be the right choice for everyone, so it’s important to talk with your attorney to determine the best option for you.

Obtain a License

You need to complete one more important step before you can begin your property management company. You’ll have to get a real estate license. Each state has different requirements for getting a real estate broker’s license, so you’ll have to check your state’s licensing and regulation department to determine the specific requirements. A real estate license will allow you to perform transactions on behalf of a property owner as a property manager and will enable you to handle all related paperwork. Depending on your state, you may also have to get a property management license, limiting you exclusively to property management.

Brand Your Business

Now that you’ve established your legal entity and obtained a license, it’s time to brand your business. Decide on a company name and logo. You may even decide to hire a professional to help you determine your branding. You may not realize it, but font choices and color go a long way in establishing yourself as a reputable, trusted company.

Separate Your Finances

It’s essential to open a bank account for your business to keep it separate from your personal expenses. This will help you keep track of your business and avoid any trouble when doing taxes.

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Create a Website for Your Business

Once you’ve established your legal entity and obtained a real estate license, it’s time to create a website for your property management company. Many property management companies use websites to establish their brand, conduct business online, and keep records of interactions with clients. A good website will cost some money, but if you choose the right web developer, you can create a great-looking site that is optimized for Google. This will ensure that anyone looking for a property management company will come across you before your competitors.

In today’s world, it’s more important than ever to have an online presence. Your website needs to be filled with important keywords that your clients could be searching for. These will help you show up in their Google search results and will lead to more business. Knowing what you are doing online makes you appear more reputable and will help gain trust and credibility. If you don’t know where to start, consider hiring someone to take care of your digital marketing.

Hire a Real Estate Team

Any good real estate investor knows that you’re only as good as the team you work with. As a property management company, you will want to create a solid real estate team to help you succeed. Starting off, the three most important professionals you will need are an accountant, a real estate lawyer, and a trustworthy contractor. An accountant will be necessary to manage the day-to-day accounting related to your company’s operations. A real estate lawyer will play a key role in handling any legal issues that might come up. And a contractor will be necessary for everything from mowing lawns to painting houses. Each of these professionals can represent you at public meetings, so you don’t have to attend them all the time personally.

Set Up Property Management Technology

When you’re running a property management company, it’s crucial to have a good system for keeping track of everything that’s going on. A few years ago, this would have been much harder to do, but you can set up an entire system just using the internet with today’s technology. There are specially designed services for companies looking to increase efficiency and cut down on expenses through technology. From customer and vendor management tools to marketing solutions, you can find what you need through an online service. If you plan to manage short-term rentals, you will need management software that helps you keep track of all check-ins and check-outs, as they will be more frequent and hard to keep track of on your own.

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Establish a Pricing Structure

Once you have the basic nuts and bolts of your business taken care of, it’s time to establish pricing. Your pricing structure will differ based on the type of real estate that you’re managing. For instance, if you manage properties in a city where there is a lot of demand for affordable housing, you may be able to charge less than if you were managing high-end condos in a neighborhood with very little retail space. An excellent first step if you are just starting off is checking and seeing what competitors are charging in your area. Some fees to consider when creating your pricing structure are:

– Setup Fee: This is a one-time fee that is charged to new clients as soon as you take the job.

– Property Management Fee: This is the monthly amount that you charge for managing each property on your list.

– Real Estate Commissions: This is the percentage of your client’s total rent that goes directly to you. Technically, it’s called a ”total real estate charge,” but most property managers call it a “fee.

– Ongoing Management Fee: This is a percentage of the total rent that you charge each month to have you manage your client’s property.

– Maintenance Fee: This is an hourly fee that you charge your clients for any maintenance or repairs that need to be done at their property.

– Multiple Management Fee: If a client is also using another property management company, then you can charge the rental amount of one of the properties as a multiple management fee for your services.

– Leasing Fee: This is a fee that occurs when there is a vacancy that you need to fill. It covers the cost of staging, listing, showing, and eventually renting the unit. It typically comes out to about one month’s rent.

– Insurance Fee: If you take on a bigger job that requires higher insurance coverage, then you can charge an additional fee per month to cover the extra cost of the insurance.

– Renewal Fee: If there are any fees associated with renewing a rental agreement, then you can charge your client an additional renewal fee as part of your monthly management fee.

– Eviction Fee: If you need to evict a tenant for violation of the lease, then the landlord can charge the tenant an additional fee as part of your management fee.

– Deposits: If your clients are required to pay a deposit when they sign their property management contract, then you can collect a monthly percentage of that deposit.

– Pet Fee: If the property is set up for pets and has pet deposits, then you can collect an additional fee from those who choose to rent with pets.

Pursue a Marketing Strategy

Regardless of what marketing strategies you choose, you need to make sure they are appropriate for your business. For instance, if you’re just starting out, you might want to focus on word-of-mouth referrals from existing clients. If you already have several clients or a steady number of people coming into your business, then it might be best to focus on local advertising through classifieds.

If you’re just starting out, you’ll need to work a lot harder than the more established property management companies. The best time to start marketing your business is when you are still very new and unsure of the business. Don’t ever take on too much at the same time. Let your current clients know what your services are and how this will benefit their rental property. Then start new accounts by providing referrals from other potential clients in your area.

For a more modern marketing approach, take advantage of social media and digital ads. Create a Facebook page and an Instagram and update it often. Since the same parent company owns the two social networks, you can run ads across both platforms for a reasonable amount of money. Facebook ads can be adjusted to target specific demographics, locations, and niche interests. You will also want to either learn how to run Google ads or hire a company specializing in them. Investing a few dollars per day into some high-ranking keywords in your field may help you pull in leads and get your first few clients.

Network

Many people find the most effective way to market their business is to get to know their potential customers simply. This means going out and meeting them, but it also means making a personal connection through social media. Once you’ve established a rapport with someone, you might be able to refer them to your business later.

Summary

Once you learn how to start a real estate property management company, the next step is to make it successful. Even the best business plan doesn’t mean much if you can’t market it correctly. It’s essential to understand your target audience and have some marketing strategies in place before you set out on meeting people and renting out properties. Moving forward, be sure to track your progress. Keep a log of all important numbers, such as contact information for people who expressed interest in your business, how many units you rented out, etc. Keeping tabs on your company’s progress might help you if you decide to apply for bank loans or seek investors in the future. If you have trouble getting started, find a mentor who already runs a property management company and learn through them before you are ready to get started on your own.

To learn more about a career in real estate investment, make sure to sign up for our investment seminars.

RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.

Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping, R stands for Rentals and Retirement, and Wholesaling Real Estate.

“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone, I am CERO generation, usually people say, I am first or second generation but I was the one that crossed the border, no language, no friends, no family, no money, nothing, nada… If I can do it, anyone can.”

RealSuccess Website

Personal Instagram:

Real Estate Investment- Instagram:

Instagram: https://www.instagram.com/realsuccesseducation/

Video For Finding Money from All Day Training (10 Hour Seminar)

1 Hour Webinar

Amazon Book#1:

Amazon Book#2

Join Us for Education, Motivation and Collaborate – RSVP Now!

September 4, 2023 by Realty411 Team

4th Annual Los Angeles Real Estate Grand Expo

We are very excited to announce our 4th Annual Los Angeles Real Estate Grand Expo. The Grand Expo returns on Saturday, October 21, 2023, 9:00 am to 6:00 pm. We’re taking over the entire Iman Cultural Center for the day – it’s all ours!

The North Hall (vendor exhibition area), the South Hall (workshops), and the middle parking lot (loaded with workshop tents and food trucks). The theme of this year’s Grand Expo will be “Hedge Inflation – Buy Real Estate”.

Last year, the Grand Expo was the largest real estate event in Southern California. We had over 800 investors, 64 vendors, and 12 national speakers…this year will be even BIGGER! An entire day celebrating real estate investing and you can be involved. Best of all, the Grand Expo will be FREE to attend.

This Expo is going to be big, really BIG! We are hosting investors from around the nation once again.

EDUCATORS. There will be national guest speakers (in three breakout rooms). Here is a partial list of our top educators:

1. Jonah Dew – “The Money Multiplier”
2. Eddie Speed – “Buying Discounted notes”
3. Rusty Tweed – “1031 Tax-Deferred Exchanges”
4. Joe Arias – “How to Get Started Investing”
5. Christopher Meza – “Developing Raw Land”
6. Tony Watson – “Tax Advantages for R.E. Investors”
7. Dani & Flip Robison – “Fixing & Flipping Houses”
8. Abbas Mohammed – “Investing in Multi-Residential Properties”
9. Marco Kozlowski – “How to Buy Lots and Lots of Houses”
10. Amanda Brown – “Invest in Commercial Real Estate”
11. Shawn Tiberio – “Marketing for Real Estate Investors”
12. Joeseph Scorese – “How to Finance Your Next Deal”
13. Jeremy Rubin – “From Employee to $100M in Flips”
14. Steve Price (Keynote) – Vice President at Auction.com

INVESTMENT EDUCATION. An all-day in-depth educational extravaganza celebrating real estate investing. Most importantly, this will NOT be a sales pitch. So regardless of whether you are a new investor, already own properties, or are very experienced, our Grand Expo is for you!

Buying Rental Property – Avoid Seller’s Tricks

August 15, 2023 by Realty411 Team

By Joe Arias

Buying rental property is a great way to invest for the future. Just watch out for these common tricks that sellers use to inflate the appraised value.

Be careful when buying rental property. We stayed at a motel for a week one winter. The bill showed twice what it should have, but since I already paid the correct amount in cash, I thought nothing of it. When we noticed that the lobby and swimming pool were unheated, we thought it was frugality. Only a year later, when I read a news story about a new owner struggling to make the motel work, did I realize what was going on.

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The owner had been planning to sell. To prepare, she was using the two most basic ways to inflate the appraised value: decrease expenses and increase reported income. By stopping repairs and quietly adding $100 in income every day, she may have shown $45,000 more net income for the year. At a .08 capitalization rate, that means the appraisal would come in $562,000 higher than it should have. Oops! The poor guy who overpaid!

Do you want to avoid a mistake like that when buying a rental property? You need to watch for tricks like these. You also have to understand the basics of appraising income property.

It starts with the capitalization rate, or “cap rate.” If investors in an area expect a return of 8% on assets, the cap rate is .08. Net income before debt service is divided by this to arrive at the value of a property. I explain this further in another article, but the primary point here is to remember that every dollar of extra income shown will increase the appraised value by $12.50 with a cap rate of .08, or by $10, if the cap rate is .10.

Sellers Dirty Tricks

If sellers of rental properties increase the net by honest means, then the property should sell for more. Unfortunately, there are many dishonest ways, both legal and fraudulent, that are sometimes used. Unlike sellers of houses, who may cover foundation cracks with plaster, the tricks used by sellers of income properties aren’t about appearance. They are about income and expenses.

Income can be inflated by showing you the “pro forma,” or projected income, instead of the actual rents collected. Ask for the actual figures, and check to see that none of the apartments listed as occupied are actually vacant. Also, be sure that none of the income is from one time events, like the sale of something.

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Income from vending machines is a gray area. Smart investors subtract this from the net income before applying the cap rate, then add back the value of the machines themselves. If laundry machines make $6,000, for example, that would add $75,000 to the appraised value (.08 cap rate), if included. Since they are easily replaceable, adding the $10,000 replacement cost instead makes more sense.

Hiding expenses is the most common of seller’s tricks. Paying for repairs off the books, or just avoiding necessary repairs for a year, can dramatically increase the net income. Demand an accounting of all expenditures. If a number in an expense category is suspicious, replace it with your own best guess.

Analyze each of the following, verifying the figures as much as possible, and substituting your own guesses if they are too suspect: vacancy rates, advertising, cleaning, maintenance, repairs, management fees, supplies, taxes, insurance, utilities, commissions, legal fees, and any other expenses. This is how you make buying rental property safe.

RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.

Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping, R stands for Rentals and Retirement, and Wholesaling Real Estate.

“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone, I am CERO generation, usually people say, I am first or second generation but I was the one that crossed the border, no language, no friends, no family, no money, nothing, nada… If I can do it, anyone can.”

RealSuccess Website

Personal Instagram:

Real Estate Investment- Instagram:

Instagram: https://www.instagram.com/realsuccesseducation/

Video For Finding Money from All Day Training (10 Hour Seminar)

1 Hour Webinar

Amazon Book#1:

Amazon Book#2

Ways to Find a Real Estate Mentor

June 20, 2023 by Realty411 Team

By Joe Arias

If you want to quickly grow within real estate, finding a good mentor is the best thing you can do for yourself. Whether they be in real estate, politics, or business, almost any successful person had a mentor who helped them get to where they are now. Books, podcasts, and videos will only get you so far when it comes to learning about real estate investing. After that, it’s all about real-world experience and gaining valuable connections.

To learn as much as possible in a relatively short amount of time, you should look into ways to find a real estate mentor. Someone who is trustworthy and knowledgeable will help you quickly grow within the industry and get you closer to your goals. By sharing their mistakes, they can help you avoid making your own. By aligning yourself with someone who has already reached your set goals, you are more likely to achieve your own. There is more to finding a real estate mentor than just picking someone you admire. This article will go over everything you need to know about how to find a real estate mentor.

What is a Real Estate Mentor?

A real estate mentor is someone who will help you quickly grow within your real estate career by offering advice and coaching based on their own experience. Typically, you will choose someone who already has many years of experience and is now knowledgeable enough to share their own experiences with you. They should be willing to help guide you through your career journey based on things they learned in theirs. This mentorship should be a beneficial relationship for both parties. You should also bring something valuable for your mentor, like new skills, networking connections, or potential deals.

Best Ways to Find a Real Estate Mentor

The perfect real estate mentor should be someone who is successful in the same things that you aspire to do in your own career. Before looking for a mentor, you should complete the following steps:

Identify what you want to accomplish in your real estate career
Establish whether or not your potential mentor has the credentials and experience to help you reach your own goals
Look for someone in the same type of real estate investment you see yourself in (flipping homes, wholesale, property management, etc.)
Make sure the goals of your mentor align with yours
Ensure there is a mutual level of respect

Once you better understand what you want in a real estate mentor, you can begin looking for someone who could be the right fit. This list includes some of the best ways to find a real estate mentor.

Join local real estate groups
Attend networking events
Try out all aspects of real estate to meet the most people
Share your work online and on social media
Create a robust LinkedIn profile and connect with other real estate professionals
Engage with their content and attend their sessions

Types of Real Estate Mentorships

Before you jump right into finding your real estate mentor, you should decide which type of mentorship works best for you. Consider things like your learning style, availability, and what you feel you need to learn from your mentor to succeed. Once you understand yourself and your needs better, you’ll be able to choose the best mentor for you. Below are a few different types of real estate mentorships you may want to consider when looking for your own.

Personalized Coaching

With a personalized coaching style of mentorship, you will get one-on-one coaching from your mentor. This is an excellent option for anyone just starting off in real estate who could benefit from a lot of personalized advice that pertains to their specific needs and goals. This mentor will be someone experienced in the type of real estate investing you plan to get into who can help walk you through any potential projects or deals.

Mastermind Groups

Unlike the personal coaching style of mentorship, being in a mastermind group is like having many mentors around you who you can reach out to. Check your area to see if there are any real estate investing groups that you can join. This is an easy way to connect with peers in real estate and start making connections with people who can help you. If there are no groups in your area, look into some virtual groups instead. You may even end up meeting someone who you want as your mentor in one of these groups.

Apprenticeships

Some of the best knowledge you can gain is through experience. The quickest and easiest way to get lots of experience is through an apprenticeship. With this type of mentorship, you will assist your mentor as they show you the ropes through their own business. This is a valuable way to get hands-on experience, plus you can see how someone who is successful in the same goals you set for yourself conducts their own business. Pay close attention to what your mentor does throughout your apprenticeship so you can follow their example.

How to Pick the Right Mentor for You

It’s important to note that just because someone has good knowledge of the industry doesn’t mean they’re a good fit for you. Don’t feel obligated to accept someone’s offer to be a mentor just because they are open to it. This is a symbiotic relationship, and both people need to get something out of it. Do your research and make sure whoever you pick as your mentor has similar goals as your own. The best real estate mentor will be able to help you fast-track your goals and grow quickly within your area of real estate. Start by looking for someone who is already accomplishing what you aspire to in your future.

Once you find people who are successful in ways that you hope to be, make sure they would make a good mentor. Just because someone is successful doesn’t mean they are good at being a real estate mentor. If someone doesn’t feel like the right fit, don’t be afraid to talk to others. Find someone who has a good communication style that matches your own. Committing to a mentorship is a big decision, and there is no need to rush it.

Does Real Estate Mentorship Cost Money?

Everyone is different when it comes to requiring payment for mentorship. This is something you should discuss with your potential mentor before committing to anything. That said, having a good mentor can put you ahead of your competition and speed up your success within real estate. Despite costing money, getting a real estate mentor is something you should highly consider for yourself if you want to achieve your goals.

To learn more about how to get started in your real estate investment career, reach out to us to join our three day real estate investment course!

RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.

Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping, R stands for Rentals and Retirement, and Wholesaling Real Estate.

“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone, I am CERO generation, usually people say, I am first or second generation but I was the one that crossed the border, no language, no friends, no family, no money, nothing, nada… If I can do it, anyone can.”

RealSuccess Website

Personal Instagram:

Real Estate Investment- Instagram:

Instagram: https://www.instagram.com/realsuccesseducation/

Video For Finding Money from All Day Training (10 Hour Seminar)

1 Hour Webinar