Are you looking to diversify your business, and extend your reach to property management in Texas? Or perhaps you’re already a firm based in Texas, looking to branch into multifamily property management, or take over property management from your third-party manager.
Making the first steps into a new business venture can be intimidating, especially when the compliance rules and regulations are as strict as they are in many states. But with Designated Broker Solution’s expert services and guidance, you can get your business started faster and increase your reach exponentially.
But before we start thinking about the solution: What is it that you’re getting yourself in for?
Let’s start with multifamily properties. Multifamily units are buildings that house more than one family at a time and makeup over one-third of rental housing in the United States. This might mean condos, apartments, duplexes, and the list goes on.
There are some advantages and disadvantages that should be kept in mind when considering multifamily housing as an option. Multifamily housing can become a hotbed of disagreements and neighborly scraps: as everyone is living under one roof, there’s no way you can avoid your neighbors! On the flip side, this can sometimes mean that your tenants cause you fewer troubles. For example, if one tenant is hiding a pet in their apartment without your permission, you’re far more likely to find out! Or if one neighbor keeps throwing wild parties, your other tenants are likely to let you know about this, sooner rather than later. Furthermore, you have multiple units in one building, meaning multiple units to generate income to offset your expenses..
So now you know a little more, what are some of the most common mistakes made in multifamily property management?
Failing to become property licensed: Most states, and Texas is included, require property management companies to have a licensed real estate broker as their Designated Broker of the property management firm. If you do not have a designated broker, unless you fall under one of the exemptions, you are operating illegally.
Charging rent: if either your rent is too high above, or too low below, other properties in your area, considering the amenities and value you offer your tenants, it can reflect badly on your business. With some thorough market research you’ll be able to figure out if you’re charging the right price in Texas. Those looking to rent in a multifamily unit are likely to do a lot of research into the average prices around you - too low a price and they will wonder what is missing from the property, and too high a price will put them off altogether - unless you offer the finish and amenities to persuade them.
Screening tenants: it is of utmost importance that you screen your tenants properly. Bad tenants will reflect badly on your business, and may negatively affect it. They can lead to bad reviews, maybe forced evictions, that can take up your valuable time and money. It’s essential to check your tenant in the following ways: credit history, criminal background, and eviction history.
Inspections: make sure you’re carrying out periodic apartment inspections in all of your units - providing your tenants with ample warning, of course. Doing this is the best way to keep up to date with the condition of your property, which amenities need your attention, and to decipher which of your tenants are suitable for an extended lease.
Leniency: property management, especially multifamily property management, can be a difficult business. Not only do you have to manage many relationships with people in a professional manner, remaining relatable and approachable, you also need to identify and stick to your bottom line. Make sure you have decided on how lenient you will be, and stick to it. Decide, for example, if you are going to have a late fee for paying rent. Inform all of your tenants about policies such as these before they sign a contract. And then stick to your bottom line! You might hear a few sob stories along the way, and sometimes the human approach is best, but at the end of the day you are running a business so stick to your guns!
Compliance with the rules and regulations of a new State can feel like an uphill battle. To start, to gain a Texas real estate broker license you must have at least 4 years of experience in Texas, during the 5 year period immediately preceding filing the application, as a licensed real estate salesperson or broker. You also need to successfully complete 270 classroom hours of core real estate classes. If this sounds like a non-starter for your business, then we have the solution for you! Designated Broker Solutions has brokers licensed in 27 states, and we’re adding more! With one of our brokers, your property management firm can become licensed quickly and easily with our support.
So if you’re considering diversifying to multifamily property management in Texas, what about thinking about Houston? In 2018, demand for multifamily units was outpacing the supply 2-1.
Houston is a rapidly growing city, and many multifamily developments have been popping up to meet this need. With home prices, rental rates and property taxes much lower than other larger, growing cities, why not look into Houston when diversifying the reach of your property management firm?
And as your business grows, it’s vital you consider one thing: compliance. The way you operate your business in other states might cause you trouble in Texas: you may not be in compliance according to the Real Estate Commission. Here at Designated Brokers, we can do all the hard work and research for you! We will take care of all the paperwork, and will ensure that you’re operating entirely above board, in compliance with the real estate rules and regulations in Texas.
Contact us for a quote today!