5 Rules of Property Management in GA
As you can image, I receive a lot of questions about property management and lately have been receiving more and more calls from real estate agents and individuals thinking about getting into the business. I wanted to take this time to share with you the top 5 rules of property management.
Rule #1 – You have to have a real estate license to manage another person’s property. The only exceptions are if you are an employee of a firm that owns their own properties (like the employee of an apartment complex) or you are managing your own property. You cannot manage your investment homes and another person’s without being a licensed real estate agent.
Rule #2 – Once you are a real estate agent, you must operate under a Broker that allows you to manage property. The broker must agree to take the responsibility of the licensee’s actions, review all contracts, property management agreements, advertising, etc. This can be a great risk to a broker which is why most brokers do not want to engage in property management.
Rule #3 – Understand trust accounts. There are a lot of issues that go into management of other people’s assets. That is why rents and security deposits are held into trust accounts. Payment of vendors has to be handled with care and under the terms of the GREC rules and regulations.
Rule #4 – Have written policies, procedures, and guidelines. Communicate those to your owners, tenants, applicants and vendors. These guidelines should address what you will and won’t accept for a prospective tenant, how maintenance issues will be handled, how owners will be paid, who to contact with questions, what you require from your vendors, what is required of an owner and a tenant, etc.
Rule #5 – Make sure that you have the proper insurance to protect yourself, your owners, and your tenants. Litigations in property management are higher than in a traditional real estate firm. The main reason is that the longer the relationship, the higher chance of miscommunication. You want to make sure that you are adequately protected so that you don’t lose your livelihood.
Obviously there are many other factors involved when talking about property management, but these give at least some idea of things to consider before you decide to start up a property management business or if considering hiring a property management firm. At Solid Source Property Management, we started out as investors managing our own property before we decided to become licensed.
Because we had several years in the business, we had developed all the processes, procedures, and guidelines. It was because of our diligence and business plan and model that we able to show that to our broker that we had what it took to take the risk and allow us to manage other people’s property. Subsequently, when we became brokers ourselves, we fully understood the trust we were given and are thankful that we had that opportunity.
The market today is much different than when we started 4 years ago managing other people’s properties. We never would have imagined that owners with tenants would not make their payments; that tenants would leave properties in some of the conditions we have seen; that foreclosure rates would have increased like they have; that rents have become as depressed as they are. It is a totally different marketplace.
While we still believe that rental real estate is the key to long term wealth – we share with people the good and the bad to make sure that it is the right opportunity for you. If you are interested in learning more about getting started in investing – register for our free class on Investing Strategies – Getting Started in Rental Real Estate.
If you are already an agent – come to Agent Appreciation Day at the Fox Theater on May 19th to learn how you can “Escalate Your Wealth!” We hope to see you soon!
April 5th, 2009 at 1:18 pm
Nice Site layout for your blog. I am looking forward to reading more from you.
Tom Humes
April 10th, 2009 at 1:43 am
“most brokers do not want to engage in property management.”
The same can be said here in Las Vegas. Not many brokers have the time to fully manage a property management division and because of the liability involved, most choose not to.
“Have written policies, procedures, and guidelines.”
This is so important! If you don’t have policies, procedures and guidelines, how can you even operate?