Property Management
Gf and I (getting married have been dating since 9th grade lol) have both agreed we want to work for a while and invest some of our capital into multifamily.
I will be working in REGAL IB in NYC, she previously worked at a tech company but hates her job and rn is not a good market for NYC tech jobs lol.
she also feels that learning property management will be useful for our future plans. Graduated w/ Real Estate degree from a high tier state school, good GPA.
Assuming most of you guys are on the REPE/REIB side of things, but curious if you had any tips of best places to start for someone with no experience!
I have a friend who’s in IB and has been investing most of his personal capital into rental properties for years. He’s done well. A few observations:
1.) He focused on one particular location and niche. All of his rental units (a few single-family, but mostly multi family) are in one particular smallish sized city in the Midwest. And all are on the affordable end of the spectrum. (But he doesn’t mess with the Section 8 voucher stuff, he looked into it and decided to stay away)
2.) He’s not from that city but had done a non-IB corporate internship there in college and developed a view that it was positioned for success, so when he broke into IB he started buying.
3.) He’s focused heavily on scaling more units as fast as possible and aggressively investing his personal wealth there. He went all-in.
4.) Because he focused on that one city and since it’s not very big, he is at this point a noteworthy rental owner there (owns a double digit unit count, and he’s still in his 20’s) which means he has the knowledge about who’s the best property manager to hire, best maintenance guy, best local banks to deal with, etc. And he’s gotten to know other rental owners in that area so if they wanted to sell something fast in an appealing off-market deal, he’d likely be on the short list of people who knew about it and have a chance to buy.
5.) He tends to buy things that are at or close to being ready to cashflow with minimal upfront capex. Often he will do some minor window dressing stuff when units turn over to spruce them up a bit, but he does not try to buy some uninhabitable unit requiring massive upfront capex. He focused on units that are “livable immediately, could benefit from a bit of window dressing, but are affordable for working class people, nothing fancy.”
6.) He’s self-taught, has no formal background in real estate. His IB experience (≈5 years) is in sectors totally unrelated to real estate. But he does have great common sense investing wisdom. I know that to gain knowledge he listened to A LOT of interviews and read books from famous and successful real estate operators, both residential and commercial. He tried to study all the greats and find the themes. He never purchased any courses because he has a reflexive disgust for courses and subscriptions and considers them scammy, but he did learn from the free content from Grant Cardone and a few others.
So if you and your girl work in NYC but you’re from some other place, maybe use your niche knowledge of your hometown or college town or whatever and start there.
But my single biggest takeaway from watching his moves over the past several years is that he has benefitted immensely from having the balls to pick one particular city and one general market (affordable but not Section 8 units for working to middle class) and just concentrate on it
A word of caution, it’s been a lot of work. I’m sure it varies from person to person, but he has had to deal with a lot of BS over the years. And one thing I’m sure he would stress to you is that the quality of the local property management company you hire will make all the difference in the world, in terms of both investment returns and preserving your sanity. And that is especially true when you don’t live in the city where your rentals are located.
Hope this was helpful. Best of luck.
Thanks, this is super helpful... unfortunately the two cities we are from have unfavorable taxation schemes and laws that overwhelmingly favor tenants - will have to look elsewhere haha.
He WHAT?!
I think this is overall very good advice, but I have major concerns when someone buys rental property they are not local to. This "hands-off" approach can lead to mismanagement. Additionally, the C class / affordable space is sort of imploding right now, so a lot of people who have been successful are about to lose their shirt. Rents are down, vacancy is rising, expenses have grown, and borrowing costs remain elevated.
I know a number of people who have been buying multifamily and often through these coaching programs, just not Grant Cardone lol yuck. As you mentioned, building a critical mass in a single city is a smart move. Your points on using best in class 3rd party for PM and everything else is accurate from what I've seen. Your suggestion to buy stabilized deals with minimal capex is a solid recommendation as well. I'm sure having your friend's IB experience definitely gives him a leg up in terms of deal comprehension. Awesome that he was able to build this portfolio at his age!!!
Nothing wrong with being hands-on for your first deal or two—you may need to out of necessity. But given your backgrounds, I wouldn’t spend too much time there. Your highest ROI is becoming a true market expert in whatever geography and asset class you choose. That means knowing rents, comps, submarkets, operators, and deal flow cold—not learning how to manage tenants day-to-day. Learn property management enough to underwrite and oversee it—but don’t confuse that with where the real edge is.
For the love of god do not work in property management.
Have we ever met a happy or sane PM?
Your post is a little all over the place. Unfortunately, the trade off of getting experience in multi-family property management is going to be significantly less money salary wise if she works on site (just assuming since she has a tech job). Maybe suggest she tries to do software implementation/support roles on the corporate side and try to assimilate information that way.
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