In an era where cryptocurrencies, NFTs, and Airbnb arbitrage are the talk of the town, Codie Sanchez presents a contrarian view. She emphasizes the importance of “boring businesses” with recurring revenue, specifically focusing on property management. In a conversation with Peter Lohmann, co-founder & CEO of RL Property Management, the video explores the dynamics of property management and how it can be a high ROI and low-hassle way to make money, especially during a recession.
5 Key Takeaways
- Recurring Revenue and Predictability: Property management offers recurring revenue with long-term rental agreements, making it a predictable and stable business model.
- The Importance of Systems and Technology: Leveraging systems engineering and modern property management software can streamline operations and make the business more efficient.
- Ideal Property Selection: Focusing on Class B properties (middle-of-the-road) can lead to a calm work environment with reasonable expectations from tenants.
- The Role of Realtors: Realtors have an unfair advantage in starting a property management company due to existing licensing, industry contacts, and real estate knowledge.
- Generational Wealth Potential: Unlike get-rich-quick schemes, property management can lead to generational wealth with a consistent and strategic approach.
A. The Appeal of Property Management
Property management is not about chasing the latest trends but building a solid, recurring revenue model. Peter Lohmann’s journey from owning his first property at $68,000 a year to managing almost 700 properties is a testament to this. The real money, as Codie puts it, is in these “boring businesses.”
B. The Role of Technology and Systems
Peter’s background in systems engineering allowed him to create seamless processes for property owners. Using tools like Notion, Buildium, AppFolio, and Lead Simple, property management has evolved from a chaotic business to a streamlined operation.
C. Short-term vs. Long-term Rentals
While Airbnb and short-term rentals may seem lucrative, the video emphasizes the stability and predictability of long-term rental management. The contractual recurring revenue and sticky clients make this model more appealing, especially in a down market.
D. The Ideal Properties and Tenants
Not all properties are equal. The video highlights the importance of focusing on Class B properties, avoiding both very high-end and low-income areas. Partnering with local realtors can also elevate the quality of tenants.
E. The Realtor’s Advantage
Realtors have a unique advantage in entering property management. Their existing licensing, contacts, and understanding of real estate make the transition smoother. Moreover, property management can provide consistent cash flow, balancing the volatility of real estate sales.
F. Generational Wealth Building
Property management is not a get-rich-quick scheme. It requires work, strategy, and a long-term vision. However, it offers the potential for generational wealth, making it an attractive option for those looking to build a legacy.
Lessons Learned
- Embrace Technology: Modern property management software has revolutionized the industry, making it more accessible and efficient.
- Choose Properties Wisely: Focus on Class B properties for a balanced approach to expectations and returns.
- Build Systems: Document processes and create systems to ensure smooth operations.
- Network with Realtors: Collaborate with realtors to find quality tenants and grow the business.
- Think Long-term: Property management is not a quick win but a strategic path to financial stability and wealth building.
Final Thoughts
The video “The 2023 Recession-Proof Business” offers a refreshing perspective on property management as a viable and attractive business model. In a world chasing the next big thing, it reminds us of the value of stability, predictability, and long-term thinking. Property management, with its recurring revenue, technological advancements, and strategic approach, presents an opportunity for both seasoned realtors and newcomers to build a business that can weather any recession. It’s not about the glitz and glamour but the solid, consistent returns that make this business model stand out. Whether you’re looking to diversify your investment portfolio or start a new venture, property management offers a path to success that’s both grounded and promising.
