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In April 2012 I started a property management company with two of my best friends. None of us had any actual experience in real estate apart from being interested in getting into it. We got the basic paperwork done to incorporate our business in California, and then the real work began. Here are some of the questions we had to answer pretty quickly when we got started:
What Property Management Fees Should You Charge?
The going rates in our area are from six to ten percent. We feel we can provide quality services at a competitive rate of 8.5% with a cap of $150 per unit. If the property rents out for a high amount, then we feel that we do not need to charge more than $150 to be able to manage the property. We want the property owner to keep the extra money.
How do we keep our expenses low?
- We kept our marketing expenses low
- We found a great location at a very reasonable price
- We kept our servicing area within a reasonable amount to keep gas costs low
- We use Buildium for many of our online services that we require
- We meet real estate brokers and salespeople in person
- We use banks that provide free accounts to us
How Do You Track Income and Expenses?
We break down the income and expense section within our policies to help give property managers an idea of how we view the two topics in a specific light. We define specific in-house financial words that directly affect profit:
Moneymaker vs. Asset: Anything that pays for itself is a moneymaking asset.
Product: A property that is positioned to be rented by a tenant is our product.
Money Drain vs. Liability: A property that is not bringing enough income to pay expenses is considered both a money drain and a liability.
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