I get asked periodically by owners if my organization would manage their properties for them.
Generally speaking, the answer is no. The reason is that our time is much better spent on our own projects, where we can reap the rewards of our very specialized skill-set. Hiring us to collect the rents on a stable building would be a bit like hiring a special forces team to guard a bank… you could do it, and they’d do a great job, but it’s over-kill.
That said, I’ve often toyed with the idea of getting involved in 3rd party management in cases where there is real value to be added to a property.
Here’s an example: I once paid a tenant an enormous amount of money to move out of an apartment at 1516 Micheltorena, one of our buildings. He promptly rented a one bedroom at a building down the street, in a great part of Silver Lake, for $900.
This made me viscerally angry at the landlord, because I know that my organization could get $1,300-1,500 / month for the same unit with a small investment in renovation and some elbow grease.
Regular readers will know that increasing the monthly rent on a unit by even $400 / month means adding $4,800 in rent / year, which would add approximately $48,000 in value to his building (based on a 10x GRM). Imagine doing that across his entire building… I bet we could have added at least a few hundred thousand dollars in value for him, which he could extract in the form of increased cash flow, a re-financing, or a sale of the property. (If you’re interested in how the math works, read this.)
Now, in a situation like that, I would be tempted to get involved in managing the property for the owner, assuming we could work out some kind of arrangement that compensated us for the effort involved.