Which Is The Better Opportunity?

A few weeks ago, I wrote about a breakthrough in thinking regarding an opportunity in one of my Master Marketer Club weekly membership reports. I’m curious as to what you think might be a better opportunity, so I’ve decided to share what I wrote with everyone. I would love to hear your thoughts on this! Please feel free to add them in the comments section!

Here goes…

My breakthrough occurred when I compared starting property management services to buying an investment property. Most agents are hesitant to offer property management services, but would happily buy a rental property hoping for passive monthly income.

Why is this so?

You would have to do the same things on a month-to-month basis to own a rental property as you would to manage someone else’s property. However,  you have significantly less risk when you manage someone else’s property vs. owning your own rental property.

As an example…

If you own an investment property, you have to keep them rented to remain profitable. If you lose a tenant, you have to cover the mortgage payment out of your pocket. Moreover, you’ll probably have to invest additional funds to paint, carpet and spruce up the property to get it ready for a new tenant.

I’ve learned with my properties that ONE vacancy can suck up every penny of cash flow collected throughout the year. If the property is damaged, you have to cover the cost to make any repairs. And if you live an area requiring city rental inspections, you’ll have to cover the cost of fixing any violations required to obtain an occupancy permit.

Even worse, if the real estate market drops further, you could lose a lot of money when the value of your property gets pulled down.

Now let’s compare owning a rental property to simply managing someone else’s rental property. When you manage a property on behalf of another investor….

1.   You never have to cover a mortgage payment out of your pocket.

2.   You never have to invest money to renovate the property during vacancies.

3.   You can collect a management fee every single month of the year, regardless of whether the home is rented.

4.   You have no risk of loss if the property is damaged.

5.   You never have to pay to correct any violations required by the city for an occupancy permit.

6.   You have no risk of loss if the property values decrease.

7.   You don’t have to put 20% to 25% down to buy the property.

8.   You don’t have to borrow a penny.

9.   Your credit score is not on the line, because you’re not buying the property.

Let’s stop for a second. Which is the better opportunity? Are you starting to have the same shift in your thinking, about property management, as I did?

Now, here are a few additional considerations:

  • It’s pretty challenging to get financing for investment properties these days. How many rental properties are you able to acquire right now? If you’re lucky, you might be able to buy one or two investment properties with today’s lending requirements. More than likely, you’ll have to invest 20 to 25% out of pocket to buy these properties for the down payment. So you’ll have to invest a significant amount of money to generate passive income from one property and you’ll have to carry 100% of the risk of loss.
  • How many rental properties could you start managing right now, assuming you had a few key systems in place? Answer: as many as you wanted. There are no lending requirements, down payments or other restrictions that would limit the number of homes you manage. This simply means you could generate more monthly income by managing properties than you could by buying properties! All without any risk of loss.
  • Some might argue that you lose out on any future profit when the home appreciates. This is definitely true, assuming the home does appreciate. It’s probably going to be a long-time before home values go up by any meaningful amount. Believe it or not, you can receive a BIG check down the road from the properties you manage. Simply turn each property management agreement into a listing agreement and you’ll set your business up for many future commission checks.

Sure property management comes with a few headaches, but what good business opportunity doesn’t?

I had a huge shift in my thinking with this little comparison, because I was reluctant for many years to get involved with property management. However, during this same time period, I would happily run out and buy investment property after investment property.

This seems crazy in hindsight.

I was willing to invest large down payments to buy properties, handle the same management responsibilities, and carry the risk of loss to receive monthly cash-flow. With property management, you don’t have to invest a penny, have no risk of loss and can generate monthly revenue all for assuming the same management duties.

I might venture to make this statement…

It’s more profitable and less risky to manage a rental property than it is to own a rental property. You profit when the home is rented. You profit when the home is vacant. And you have the opportunity to earn a commission down the road, when the home is sold.

Once again, I didn’t think this way previously. I do now. What do you think? Please feel free to share your thoughts in the comments below.

If you’d like to download my new course “How to Start and Run a Profitable Property Management Business” for FREE, simply join my Master Marketer Club membership today at this special link:

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  • Marivel Kagy

    Reply Reply September 5, 2012

    I think I would go with your decision. Owning a property is indeed a huge responsibility, especially at times when troubles and damages occur.

    I really think that owning a large property doesn’t necessarily mean larger benefits. So once you decide to own one, you will have to prepare yourself.

    Thanks for such an informative post. I learned many new things from it.

  • K.Terry

    Reply Reply November 22, 2010

    Hi! Rob I agree that property management is easy to get into as oppose to buying a investment property. Now on the other hand a property management instructor i had in college told me to stay with sales because you could make six figures with out the stress of manageing something the owner doesn’t want to.

  • Mike Levitin

    Reply Reply November 15, 2010

    Rob, I have been following your efforts for several years. You are one of the few Realtors that actually get it. I offer turnkey single family investments for investors interested in Houston and Austin, Texas. We sell properties, supervise the repairs, lease them and manage them. Your Income For Life program was pure genius. Keep up the great work. On a more important note, Colt McCoy is a winner. There is a large group od Austinites that have become a Cleveland Browns fan. Go Browns, unless they play the Houston Texans!!

    • Rob Minton

      Reply Reply November 19, 2010


      Thank you so much for your kinds words. I really do appreciate what you wrote. And I love Colt McCoy. He’s the best thing to happen to Cleveland since Lebron James. It’s amazing what one player can do for a town.


  • james waldrep

    Reply Reply November 11, 2010

    Property Mgt. can be coupled with real estate investments. Small multi-family projects are the best type of investment for this type of combining property owner and mgt. The potential for cash flow and appreciation based on good property mgt. should be part of the long term investment plans. The current market has low prices that can be good investments with full due diligence and new property mgt. of the projects. The property management should help to develop the investor’s skill in analyzing properties.

  • Juan A. Perez

    Reply Reply November 11, 2010

    It’s like having 2 cows, one that constantly gives you milk and the other one that sometimes gives you milk, sometimes not and sometimes it drinks the milk it gave you before and maybe even ask for more.
    Asset vs. Liability

  • Joel

    Reply Reply November 11, 2010

    Property management is one of the most sue happy types of real estate there is.As a broker myself your Errors and Omissions coverage will charge sometimes double or triple your yearly rate to insure you doing property management.

    Just like other insurance companies they track the numbers and know what types of real estate generate the most claims.

    Generally regular real estate deals are the most safe,followed by foreclosures,then short sales,then construct projects and joint venture deals,then property management.

    Whether the seller or tenant,buyer is at fault they will both turn on the manager to blame because it is easiest to do.You have to answer calls all hours of the day,write down every event and log the day and time,etc. How bad the property management will be will also depend on how good or bad the lease is that the seller got the tenant to sign. Based on what IS or IS NOT in there will determine how much of a headache you will have.

    I personally can’t stand property management.I am a deal junkie so love closing sales and buying my own property.

    I agree on the residential side they have gotten way to strict for lending.On the commercial side there are still 100 percent loans at great rates to be had.The commercial industry doesn’t YET have the government meddling it’s hands in it.

    Loving to invest and doing property management are 2 separate things.Many people will have money to invest but not the time to property manage.

    Property management requirements will vary depending on each states landlord tenant laws.So all I am saying is don’t make that decision lightly.

  • I could not agree more. I had a chance with an investor a year or so ago but passed on it. I believe in my state a REALTOR needs some special classes and such. Will have to start thinking more about this!

  • Jeanne Harbison

    Reply Reply November 11, 2010

    That’s very interesting. It actually makes alot of sense.

  • Mike Moffitt

    Reply Reply November 11, 2010

    Hey Rob,

    You’re right on in terms of which is the safest way to go (especially in today’s RE reality).

    The reason more people don’t think that way (including myself) is that buying a rental property, at least upfront, is perceived as a single event. You do your research, you make an offer, you either get it or you don’t. Of course, if you really think about it, your work is just beginning.

    That’s the problem right there, we think that Quick = Easy.

    On the other hand, starting a rental management business would require planning, creating a business, finding customers, and much more.

    In short, it requires a lot more thinking and action than just buying a darn property!

    In my experience, most people will pick Easy over Safe almost every time.

    Thanks for the insight, as usual, you’re right on!

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