PAR President Al Perry joined Marc Cunningham, president of Grace Management, a company that his father founded in 1978, for a webinar on the changing property management market.
“The umbrella of selling real estate is pretty small. You help someone buy or you help someone sell,” said Cunningham. “Under the umbrella of property management, there are a lot of different paths. It makes it fun and exciting.”
Cunningham said that the reason agents who go into property management fail is mostly due to not mastering the practical relationship. “Working with sellers and buyers, they tell you what they want to do,” said Cunningham. “If you are representing a property as property management, you can tell the owners they need to redo rooms or replace items. Your level of control has to go drastically higher. Now you have a tremendous amount of opportunity. When you take off the sales hat and put on the leasing or property management hat, you have to educate and guide the owners more on what they have to do.”
As the market settles into less of a frenzied state, Cunningham suggested tenant representation can help agents make more money. “Show tenants rentals. It requires a different hat. Payment will come to you much faster than as an agent.”
As a Realtor®, you know the importance of fair housing and Cunningham stressed the importance of following fair housing if agents decide to dip their toes into tenant representation or property management. “It is a risky game we play, we need to be aware of it, but it is nothing to freak out about.”
Perry reminded attendees that agents can’t do any real estate activity for another person and for a fee “outside of the brokerage.” They can manage their own property, but not another’s. Agents should contact their brokers to determine if they’re able to do property management. If you are violating the regulations, then it’s possible that you won’t be covered by your broker’s errors and omissions insurance. And there are some things that salespeople just cannot do for a landlord with only a salesperson license.
When working with tenants, Cunningham suggested that Realtors® reach out to landlords before taking tenants to see properties. “Every landlord will be a little different in what they are looking for. As an agent, reach out to those landlords and ask them what their requirements are. There is no standard. It is all over the board. It can be frustrating because a tenant can qualify for this one, but not that one. You need to do some homework on the front end and ask landlords what their screening requirements are.”
Cunningham noted a surge of what he called “accidental landlords” recently; homeowners who bought with low interest rates and now are hesitant to sell despite needing to move. Instead, they turn to renting out their property. “We are seeing a rebalancing of our rental stocks. Real estate investors are not buying like they used to. The return isn’t there like it was there a decade ago. But people who bought in the past few years with a low interest rate don’t necessarily want to sell, so they are opting to rent out. Accidental landlords have an emotional attachment to their houses. Investors do not. We have to have an emotional detachment conversation with accidental landlords.”
However, he reminded viewers that turnover is the biggest expense you have as a landlord. Keeping both tenants and landlords happy is financially beneficial to everyone.
Additionally, consider that many renters hope to become buyers one day. “There are so many opportunities under this umbrella. If I helped five tenants find properties last year, I should have a drip campaign. One of those five will probably look to buy a house within a year and they may not know I sell as well. We do a monthly email that is education-based. We don’t talk about how great we are. They want education, what are prices in the neighborhood, here is a new listing and here is a new law.”
Representing either tenants or landlords means paying attention to what is going on in the government. “Legislation nationwide is shifting. A decade ago, it was property rights/landlord leaning. It’s shifted to almost anti-landlord. National tenants bill of rights was just introduced. We have to pay close attention to legislation,” he said.