Virtual Property Management?

Rehabbing, Fix and Flip, Rental Properties
1

Hello,

I have done several things related to real estate investing over the years, including management, investment pro-formas, construction, remodeling, etc. I am interested in starting a virtual property management company and wanted to see what your thoughts are. Is this a service that would benefit your business? Below are some things I am looking at offering.

-Review Maintenance Requests
-Answer repair calls 24/7
-Schedule Vendors
-Coordinate Between Vendors & Tenants
-Maintenance Follow Ups After Work Completed
-Monthly account statements
-Process Prospective Tenants Applications
-Other Administrative Duties Upon Request
-Resident coordination
-Property marketing and advertising

I am open to comments, ideas and even criticism!

Thanks

2

Hi,

In order to provide property management services in any state you are required to be a real estate broker! An agent can provide management services if his or her broker is willing to allow the agent to do management services.

You can not have a virtual website providing management services to any US (United States) state without licensing.

You may however be able to provide property management services without a license to North Korea, Venezuela or Cuba?

Be very careful as you are stepping into state and federal law providing property management to a property owner!

                  GR
3

In order to legally manage property in other states, without a broker’s license, and/or bonding, etc. you will need standing. One way is to execute a master lease on each property you want to manage, with each owner, giving you full control of the subject property, including rights to sub-lease the property.

The terms of the master lease should give you complete management control of the property, but with limits on liabilities for repairs, much like limits found in a routine property management agreement.

The objective is to assume total management control of the property, without being bonded or licensed, and yet limit your liability in the event of a catastrophe. You need an attorney to draw up the management master lease, because this isn’t something you can find on, much less download from, the internet.

I’ve done this many times over the years, for family, friends, and my church, etc., and I am not a broker, nor am I bonded. Of course, too I have close relationships with the principals in these transactions, and don’t publicly advertise for business this way. But…

Once I have control, the primary issue is that any tenant is entering into a lease agreement with ME, and not a management company, or the title holder, and the occupancy agreement cannot be transferred to anyone else, including another manager, or even the title holder, without my cooperation.

For example, I managed my church’s property for years, until I discovered it was now owned by one of its pastors. I had been donating my time and money to the cause, which was now a private cause.

After I became aware of this, I lost interest in the deal, and consequently cancelled the master lease agreement with the church. Interestingly, I was originally asked to manage a house willed to the church by one of the members, whom was in convalescent care, and later died. After the death, I discovered the title on the house had been transferred to the pastor, and not the church.

So, as a result, I formally notified the (new) “owner” that I was terminating my master lease agreement. This also required sending certified notices to my tenant, informing them of an ownership change, a management change, a termination of lease, and a notice to vacate, if a new lease was not offered and signed by “x” date.

Of course, this gave the new title holder time to write up, and offer a new lease agreement, and have the current occupant sign it.

That’s a lot to say, but the bottom line is you must have standing with the property by assuming an equity position, before you want to manage other people’s property, without licensing, or bonding.

As an aside, if you were to end up in court, you would need to prove your position and standing with the judge, just in case, one of your tenants gets cute, and does a title search, and/or a bonding and licensing search on you, and discovers …that you are neither licensed, nor bonded, and that the property being managed isn’t YOURS, and brings it all to the judge’s attention…

That’s when you flip out your trusty master management lease agreement, and wave it under the judge’s nose (not really), and prove your standing, and proceed in securing a judgment against the defendant.

FYI

4

As GR outlined, in order to do this conventionally, you would need to be licensed and bonded in every location that you want to do business. Otherwise, you could do what I’ve done, which doesn’t require either of those conditions.

That said, what value are you bringing to the table, by being “virtual?”

I mean property management is a hands-on, boots on the ground proposition. If you were in Texas, and offering to ‘virtually’ manage my rental house, I would virtually be telling you “no thank you.” Why?

Because I know that you have no ability to personally, much less practically, inspect my house on a regular basis, or show and lease my house at all, and much less in an efficient and cost-effective manner.

Maybe I’m misunderstanding the term “virtual” here, but I do know that anything having to do with the house requires hands-on treatment, and will cost the owner money, no matter what price is being charged. All the expenses come off the top of the rent.

So, my question would be, how do you compete with my local management company that will personally show my units, drive by my houses, take pictures of my lawns and paint jobs, and give me routine feedback on the conditions of my rentals …without being physically present?

I’m not saying this can’t be done.

Out-of-state wholesalers flip deals they’ve never seen, using the help of locals for a cut of the action, or a fee.

I just don’t see there being enough spread to make this profitable.

Property management operations are typically run on thin margins to start with, and if you’re having to pay people to keep and eye on your out-of-area/state accounts, it just seems impractical, if not wholly unprofitable, and unsustainable to do that from a distance.

That said, what about offering virtual management assistance? This is where you act as a consultant, to walk ‘anyone’ who needs help managing, marketing, and maintaining a rental, through their routines. After a while they might not need you, but conventional, for-profit, property managers don’t usually offer very much free help to do-it-yourselfers. Just saying.

That’s all I got.