What It Takes to Run a Property Management Company
This summer, Norman Bibeau will work to make sure thousands of people have a great vacation on the beaches of the Outer Banks in North Carolina.
Bibeau, president and CEO of Elan Vacations, will pass on getting the sand between his toes, however.
“I don’t even like the beach,” said Bibeau, a Nags Head resident since 2003 by way of New Jersey and Massachusetts. “I haven’t been to the beach in eight years. I have no use for it.”
That might be a good thing in Bibeau’s case, given that he doesn’t have a lot of free time to be ocean side anyway.
Bibeau is in the property management business. He serves as the middleman between property owners who want to rent out their homes and those who want to rent them. This means he’s in charge of marketing homes, writing up rental agreements, collecting payments, handling maintenance requests and more.
Bibeau and others in the business—including those who handle long-term residential and business rentals—say running such a business takes a lot of time and requires dedication.
They also point out that it requires having the flexibility to survive economic fluctuations, staying up-to-date with the latest technology and trends and being able to say no to some potential clients.
Weathering the Economy
While the economy seems to be slowly improving, property managers—like most smart business owners—must be prepared for lean times.
Brian Mann, a managing partner with Realty Consultants Property Management in Greensboro, NC, said the best way to do that is to have plenty of properties in your rental stable. That way, even if there are some issues with a few properties—such as renters who are not paying and refuse to move, landlords who won’t make needed repairs and properties that just aren’t renting—you still have a steady income from others.
Mann, whose company manages about 300 properties which are mostly single-family homes in the Greensboro area, said having at least 100 properties is the key to making money and weathering economic downturns.
“It’s so painful until you get to 100 properties,” said Mann, 37. “It takes all your time and every ounce of your energy. And sometimes you aren’t making money.”
Bibeau, who only manages vacation rentals, said his company has survived tough times because his staff is relatively small and cross-trained to handle anything that is needed.
“When the economy was bad people were cancelling their vacations. They were watching their pennies,” he said. “But we survived, and actually expanded, because we are lean and mean and can make adjustments quickly. We don’t run with a lot of fluff. Our employees wear multiple hats and are endorsed to be decision makers.”
Keeping up with Trends and Technology
Currently, the largest generation of people in the United States, according to government figures, are millennials. Millennials aged 18-34 are also the biggest percentage of renters, said Bart Sturzl, president-elect of the National Association of Residential Property Managers.
As the majority, they dictate trends in the field, said Sturzl, who is also co-owner of and a broker at Bella Real Estate in Austin, TX. And what do they want?
In general, those in the field say millennials like the latest in design and decor, short-term commitment, and getting things done via their smartphone or tablet. They want rental properties with recent upgrades and amenities, Sturzl said.
While some predict millennials will start buying more in the coming years thanks to a better economy and continued low interest rates, Mann expects many to be happy to remain renters, even if it means paying more for rent than they would a mortgage payment.
Mann said in many ways, millennials aren’t buying into the American Dream of homeownership. He points out that many watched as their parents were saddled with homes that ended up not being worth the money they owed, and they don’t want to end up in that same stressful position.
Low interest rates don’t impress them either, because unlike those who shopped for homes in the 1970s and 80s, millennials only know a time of low-interest loans. Plus, they prefer not to be locked down financially or geographically because they perceive the world to be filled with uncertainty.
“They are living in a world where everything changes in a minute,” Mann said. “They don’t want to get stuck like their parents did.”
They also want to be able to shop for rentals online, and once they rent a place, pay rent and request needed maintenance virtually. For their part, landlords also want to be able to log on to see the status of their properties, from who is behind on rent to what maintenance expenses have been incurred.
“You need a great website and an online presence these days,” Sturzl said. “Facebook pages, Google, Yelp: that’s where renters are looking.”
Saying No to Some Clients
When the housing market dried up after the subprime mortgage crisis forced lenders to tighten regulations and deny many loan requests, homes that owners once hoped to sell were instead offered for rent.
While this continues to bring new clients, property managers say sometimes you have to make the tough choice to turn them down. Cash-strapped and desperate, some owners either need too high of a rent to be charged or have no slush fund for home repairs that could – and likely will – be needed.
“As much as you want to help people who are in a tough financial situation, you have to think ahead,” Mann said. “What happens if your renter calls and says the air conditioning has stopped working? Will the owner have the money to pay to fix or replace it?”
Bibeau agreed, adding that positioning yourself so that you can keep renters and landlords happy is the most important part of the job.
“This business is nothing more than a gloried customer service business,” he said. “You just have to add the extra touches and go the extra mile to be successful.”