I had to chuckle this morning, when I read an article talking about how easy it is to expand your real estate business by adding property management services. Easy, huh? I beg to differ.
Although it’s certainly true, the steady income of property management activity is enticing, setting up and running a property management operation is entirely different than running a real estate sales business. Yes, your real estate pre-licensing education may have provided the minimum training you are required to have in order to be a property manager (some states require specialized licensing for property management), but did you learn anything about the business of managing investment real estate? If more than an hour of your pre-licensing education was dedicated to property management activity, I’d be surprised.
The article claims, “…agents are already familiar with 99 percent of the real estate law they need to know. The other one percent can be found easily.” Seriously? Let’s look at that a bit more closely.
Fair Housing Law
Although the Federal Fair Housing Act applies equally to sales and property management activity, there are big differences in the types of issues that come up between buyers and sellers, compared with landlords and tenants. For example, how many real estate licensees know what to do when a prospective renter with an emotional support animal asks to occupy a unit in a “no pets” property? Or, does the typical real estate licensee know who will pay for physical modifications such as widening doorways or removing entry steps in a multifamily unit built in 2003? (Most likely, it’s going to be the landlord.) These are issues that are rarely, if ever, faced by real estate sales agents.
Does the typical real estate licensee know what constitutes “habitability” of a residential dwelling? How about the landlord’s responsibility for essential services? When is the rent actually “late?” What are “reasonable” late charges, and how should they be collected? How many people are “too many” in a 3-bedroom home? All of these are situations faced regularly by property managers, and rarely, if ever, by real estate sales agents.
Servicemembers Civil Relief Act
More and more often, property managers are being asked to accommodate the needs of renters who are called to serve in the armed forces. Does a real estate sales agent typically know the provisions of this federal law?
Fair Credit Reporting, Fair Debt Collection
How much does the average sales agent know about these two federal laws? Not much? Well, as a property manager, you’ll need to have a thorough understanding of both.
Tip of the Iceberg
I could go on, but I think you get the idea. Although most of these laws were probably mentioned in your real estate sales pre-licensing program, it’s not likely they were covered in sufficient detail to prepare any licensee to manage property.
And then, there’s the issue of time…
The article further claims, “…some agents fear they will not have the time. But property management software today is almost completely web-based…” Sure. Sure. That’s true. Our advanced technologies help us in many ways. But, time savings is not one of them, in my opinion. In fact, I dare say that property management, if done correctly, is more time consuming now, than ever before. Why? In part, I blame technology.
Consider this, back in the day of the property management dinosaur (1980s, for example), we didn’t have ready access to instant communication. If our owners or renters wanted to contact us, they’d either have to pick up the phone, or send a letter. Now, with texting, email, and social media, our owners and tenants can contact us with every passing thought they have. And, they do!
Don’t get me wrong, I think it’s great that the communication between the parties is so instantaneous and thorough – it does a great deal to prevent misunderstandings. Yet, every text message, every email, and every contact MUST be answered. And, not only must we answer, we must be timely with our response, and thorough with the information we provide. This takes time. Lots of time.
Opportunity DOES Knock
Property management is an excellent opportunity for some real estate licensees to grow their businesses. But, I caution against jumping in without a complete understanding of the level of commitment required. Not only is education and training an absolute MUST for the new property manager, but a well-thought-out business plan, a bit of mentoring, and excellent time management skills will go a long way toward manifesting your success in the challenging world of property management.
What do you think? If you are both selling and managing real estate, what are your experiences? Has it been difficult to balance the two? Any particular rewards or challenges you’d like to share? Please do so, by leaving a comment.