Why I Chose to Start a Property Management Company
Property management is an incredibly tough business. Tenants can be challenging to keep happy, owners even more so, customers are hard to acquire, margins are low and the risks are high. Why anyone would willingly get into this business is beyond me. Property management is, however, a critically needed business in the real estate space. There are, unfortunately, a lot of bad managers that exist — In my opinion, either becoming a good PM or finding a good one is imperative to playing the long game in real estate.
So why did I choose to start a property management company and not outsource? The short version is that it just made sense in MY situation. BCG Real Estate Group was born almost out of necessity as our holdings in Chicago grew. My team was forced to build out an efficient management arm to make sure we were properly handling the day-to-day ops. We were already starting to get good at acquiring buildings, but had no practical systems in place to build a scalable property management business that made sense for our small size. The team then decided to start building these PM muscles so that we could continue to grow and do so easily with every new acquisition. Once we started to put these systems in place, we then took to the streets to find new clients and scale that business separately.
We get asked a lot why we didn't just outsource management. To start, we had some terrible experiences in the past and vowed to do this better if we ever got the chance. We had seen it all; 6-month vacancies, PMs that didn't have active phone lines, fires in buildings that went unreported, terrible communication, shifty accounting, and just outright zero standards. We also wanted to operate our buildings efficiently, and it is really hard to control costs, or even monitor costs in relative real time, when the management is outsourced.
So with all the bad, what is it that I love (or maybe just like) about property management? For one, we get to help a lot of people. Our team has direct control over a big portion of the quality of life for our tenants, and we take this responsibility very seriously. This means being responsive, actually fixing problems, and genuinely caring about our guests' needs. We also get to maintain and fix some of Chicago's most beautiful buildings. This is one of the more rewarding parts of the job and one that allows us to see the fruits of our labor. It is also hard to turn over property management companies, so while acquiring clients is hard, it is equally as hard to lose a client so long as you perform well. Finally, I like the cost control. As a building owner it is hard to manage costs when you are constantly getting nickel-and-dimed for every trip to a property by an outside/3rd party. By owning the management company, we can handle problems more quickly and easily, have more leverage negotiating with vendors, and get a better view of the building level P&L to know when it is the right or wrong time to execute certain non-emergency work.
In the end, everyone’s story is different and starting a management company may or may not make sense for you. For us, it was the right move and I am confident that our team will continue to grow by serving our clients as best as we possibly can. If you ever need help, reach out to our team at info@bcgrealestategroup.com.
