Why Every Real Estate Broker Should Start a Property Management Business Discover the 5 Incredible Benefits of Diversifying Your Business
Realtors across the United States sold just four million homes in January 2023; that’s a whopping 36.9% percent drop from January 2022.
Let that sink in for a minute. Home sales have dropped off by over one-third, leaving agents to compete in a cutthroat market.
Even more concerning is that this drop mirrors the trend over the past 12 months of plummeting sales, with sales currently at their lowest in over a decade. Fluctuating mortgage rates, few new listings, and a limited buyer pool means many real estate agents are grasping at straws to keep their brokerages afloat.
Enter the property management lifeboat.
Why Start a Property Management Business?
Frankly, real estate brokers getting into the property management game is a no brainer. If you own a real estate business, you already understand the trends impacting the market, plus you have access to invaluable networking tools with other movers and shakers in the industry. Even better, you likely have a team of specialists on your side, and you have a nearly inexhaustible pool of would-be clients and tenants at your disposal.
Whether you’re a broker hurting in the current market or you’re simply looking to grow your bottom line, starting a property management can help you to achieve
Hedge Against the Market
Housing demand can grow or diminish in any given market for a number of different reasons, but ultimately, people need a place to live. In an unfavorable sales environment, rental demand tends to increase exponentially, as would-be buyers seek temporary refuge from bad financing options and a poor selection of places to call home.
On the flip side, in a buyer’s market, many tenants leave their rental homes and invest in their own properties.
By dipping your toe in both waters, you can safeguard your business against changing market patterns.
Discover five simple benefits of adding property manager to your list of responsibilities.
Maximize Your Residual Income
“It’s all about the deal.” The second you stop hustling, motivating your team, doing the footwork…your earnings dry up.
Residual income is king because it provides financial security and flexibility, along with the potential for exponential growth. By focusing on creating and building passive income streams, you can achieve greater financial freedom and and ultimately, start working towards the financial goals that will allow you to live the life you desire.
Each property under management for you will net you a consistent monthly commission. Even better, your business is literally built to scale. Add new doors, add more income, expand your team. Rinse and repeat.
Open a Gateway to New Sales Deals
On top of residual income, being a property manager can open up a world of qualified leads.
For one, you’re the first to know when a tenant is leaving a property. Are they looking to buy? Point them to your real estate sales arm.
Maybe the investor is looking to get out of the rentals business. A tenant departure is the perfect time to touch base and help your client to identify their goals, whether that means continuing to rent our their investment or selling the property. It’s a win-win situation.
The osmosis and synergy between the sales and management sides of your business effectively supercharges both divisions. In turn, you’ll see greater returns and more consistency across the board.
Hold On to Great Clients
Client retention is an essential aspect of any real estate agent’s business. Why spend thousands on marketing to new clients and kiss your sales commissions goodbye, just because your client isn’t ready to buy or to sell?
Property management allows you to maintain relationships with your clients long past the initial sale. By managing a client’s rental property, real estate agents can stay in touch with clients and continue to offer services when the client is ready to buy or sell another property.
Stay ahead of the game by spending less money and minimizing the effort necessary to convert potential tenants.
Forget High Startup Costs
Real estate agents already possess many of the skills required to be successful in property management, such as market knowledge, tenant screening, and negotiation skills. By starting a property management business, you can leverage your existing expertise and offer a new service to clients.
There’s no need to embark on a hiring spree or invest thousands in new office space. Instead, leverage your existing resources to grow your business with minimal cost.