How to Get Started in Property Management

How to Get Started in Property Management Presented by Melissa Prandi, RMP® MPM® & Mike Bjorkman Focus and Experience Melissa Prandi • 29 years in t...
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How to Get Started in Property Management Presented by Melissa Prandi, RMP® MPM® & Mike Bjorkman

Focus and Experience Melissa Prandi • 29 years in the industry • Former NARPM National President • Growth from 100 to 3,000 units

Mike Bjorkman • 20 years in the industry • Manages over 300 residential properties • Completed over 2,500 real estate transactions in his career

Do You Have What It Takes?

What is “Property Management”


Only 2% of Property Management is Collecting the Rents…..

The Reality of the Other 98% Focusing on Your BUSINESS

• • • •

Ever changing policy & procedure manual Must have excellent tenants screening processes Keeping up with ever changing local, state and federal laws Utilize the latest Technology – which today can be your “friend” • Employee versus independent contractors • Need a good Lawyer on your team you can call anytime • Ongoing training is needed to keep up in the world of “Property Management”

The Reality of the Other 98% Servicing Your CLIENTS

• Hands on approach – no two problems are alike • Owner’s want to receive as much monthly as possible • Owner’s don’t want to spend the money or can’t to keep the rental property properly maintained – Investors too have financial challenges personally & professionally

Why a Property Management Business? • Full Service • Competitive • Strengthens Relationships with Current Clients (Sales or Rentals) • Generate Reoccurring Income • Supplement Other Business

How to Get Into the Business?


Property Manage Professional Associations

Franchising Opportunities Or Purchasing an Existing Business

Partnering Up with Pros

Consultant and Education Options

Setting up a New Company

The Cycle of Property Management • • • • • • •

Marketing for New Owners Signing New Owners Marketing the Property Signing Up the Resident Ongoing Management Move-Outs Terminations

Licenses & Certifications Broker’s License—a must! Sales License = Property Manager Continuing Education + Designations

Laws that Govern Property Management

• • • • • •

Fair Housing Act as amended Fair Credit Reporting Act Residential Lead-Based Paint Hazard American with Disabilities Act Megan’s Law Service Members Civil Relief Act

Understanding the Pros and Cons There are pros and cons to managing rental property PROS


It’s a predictable stable recurring revenue model

The margins are small

You’ll never be bored

The hours are not 9 - 5 p.m.

Maintain the relationship with your clients for a future sale opportunities

The potential to be sued

Renting properties is usually profitable

There are many local, state and Federal laws to follow – forever changing

It can be fun and challenging

You must rely on and trust your contractors and vendors

It’s a people business—you’ll always meet new people

Constantly dealing with complaints from tenants and owners

Basic Pillars of Property Management

Online Marketing

Risk Avoidance Accounting

Customer Service

Basic Pillars of Property Management Online Marketing

Do You Have Tools to Capture Leads? • How do you track leads? – Online leads – Calls

– Walk In – Referrals

• Media produces the most/best leads? • Do you follow up promptly?

• What’s you cost/lead and cost/customer?

Marketing Your Rentals

©2011 RealPage, Inc. — All rights reserved.

Public Relations • Broadcast not only your business, but yourself too! (usually for FREE) • Press Releases – – – –

Announce managing new properties Company changes Partnerships New products/offerings

• Distribute to local media • Call for follow-up

Basic Pillars of Property Management

Risk Avoidance

What’s The Cost of a Bad Tenant? • Premises Liability: Owner’s owe a ‘duty of care’ to protect their residents from foreseeable harm

• Failure to properly screen tenants could constitute a breach • Average non-jury award is $500,000

• Average jury award is $1,000,000


The Goal of Tenant Screening  Increase Occupancy  Reduce Bad Debt  Reduce Regulatory Liability (FCRA, FHAA, Premises, etc.)

Follow Fair Housing Guidelines • Educate yourself on federal and state anti-discrimination laws • Document your policies • Be consistent • Offer ongoing training • Yes, follow the law—but follow the “guidelines” too

Basic Pillars of Property Management Accounting

Accounting Cycle Accounts Receivable


Accounting Configurations

Accounts Payable

Trust Accounting

Printing Statements

Management Fees

Paying Owners

Trust Accounting Basics • Fiduciary account established to hold funds that belong to another party

Owner #1

Owner #2

Owner #3

Owner #4

Owner #5

Owner #6

• Typically governed by state specific laws • No commingling of funds between owners

Owner’s Trust Account

Trust Accounting Management Fees Money In

Operating Bank Account


Accounts Payable

The Rent Collections Lifecycle Managing Charges Due on Tenant Ledger

Processing Payments & Generate Receipts

Drive to Bank (Again)

Process Late Payments

Drive to Bank

Identify Past Due Residents

Notify Past Due Residents

Calculate Late Charges

It’s an Electronic Commerce World Telephone Bill

Utility Bill

Satellite / Cable Bill

Customers Demand ePayments • • • •

More Payment Options Online Access Easy Communication with Management Prospect never has to write a check or visit leasing office

Basic Pillars of Property Management Customer Service

A property manager deals with all types of people, which creates its own challenge

Today’s Customer • More demanding • More knowledgeable (thanks Internet) • Want real-time access to data • Looking for value they can’t get on their own • Have many options • Come from everyone (not just your town)

The Mindset of the Owner Wants to Rent Their Home • How much can I get in rent? • Are there a lot of vacancies? • Should I manage this myself? • How do I find a credible property management company?

The Mindset of the Tenant/Resident Wants to Find a Home (Rent or Buy) Understanding how they search for homes: Search Criteria: • Location (cities and neighborhoods) • Nearby amenities (food, transportation, hospitals, schools, etc.) • Safety • Amenities of the building/unit • Monthly Rent, Move In Cost and Lease Term • Impression of the Landlord

Search Methods • Drive By • Online • Word-of-Mouth

Best Practices in Maintenance Management


of Great Service

Differentiate Your Business with World Class Service • Document Your Process • Invest in Training Staff (Process/Etiquette)

• Leverage Self Service Technology • Simplify Communication with Tenants and Owners • Automate As Much As Possible

• Measure Everything • Review Key Stats Monthly • Reward Desired Behavior

Documenting and Communicating Your Process • Create an Internal Policy Guide • Customize Your Tenant Handbook / Portal User Guide

• Communicate it with Tenants and Owners • Publish on Your Website • Blog About It • Send Mass Email from Propertyware

Developing Your Game Plan • Consider your options – Cost of starting and supporting your business – Research laws and systems applicable to the industry – Consider acquiring a book of business – How will you differentiate yourself in a crowded space?

Final Thoughts Surround yourself with an expert in the field— Thank you for your time!

Melissa Prandi, MPM® RMP® (415) 482-9988 [email protected]

Mike Bjorkman 661-294-MIKE [email protected]