Why some brokerages are embracing property management
The rental market is massive. Between investor purchases and property management, it can be a lucrative business for brokerages — and a source of buyer leads.
Key points:
- With renter households on the rise, property management is a high-growth area that can complement a brokerage's services.
- For Mindy Rovillo, who owns Imapp Realty Group in Florida, the 50 income properties she manages are a “listings incubator.”
- Today's renters may be tomorrow's buyers, providing a steady funnel of leads.
Rentals are big business, and some agents and brokers are tapping into that market by working with investors, renters, or both.
There are currently around 44 million rental units in the U.S., according to Census data, and that number has risen steadily over the past two decades. So it comes as no surprise that property management is a high-growth area — one that can pair well with running a real estate brokerage, especially as the advent of new technology and online rental payment services have eased the process for managers, owners and renters.
Managing investment properties — and helping investors buy more
Rebecca Redman-Hamaoui owns Bella Trae Realty with Real Broker LLC, based in the greater Orlando area. She is a licensed real estate agent who also works as a property manager overseeing a portfolio of homes for lease.
Redman-Hamaoui has grown her property management business from 160 income properties to 270 in under five years as new residents pour into Central Florida. "Our biggest growth was during the pandemic. It is a trend that continues today as more new residents move to the state. We have seen a huge increase in demand for rentals," she said. "People from out of state want to rent first before making a purchase."
As tenants approach the end of their lease, her company asks if they want to renew or are seeking to buy a home. In this way, she can funnel prospective buyers — often seeking to purchase their first home — to her real estate business.
On the brokerage side, helping small investors buy and sell properties is another big part of her business, said Redman-Hamaoui.
"Sometimes existing investors want to branch out into a different area. They may own condos and want to buy single-family homes," she said. "Clients come to me and say they have a certain amount of funds, and ask what is the best combination of investments for them."
'A listings incubator'
For Mindy Rovillo, who owns Imapp Realty Group near St. Petersburg, Florida, the 50 income properties she manages are a "listings incubator."
A property manager for 25 years, Rovillo markets her services as a real estate brokerage to rental property owners thinking about selling. Investors know they can turn to Rovillo, who already knows their home and the neighborhood.
"I've been doing this business forever, so I know the ins and outs, the laws, permits needed and regulations," she said about managing rental properties.
Rovillo also understands the needs and goals of small investors shopping for income properties. "Investors are much more critical and discerning when looking for properties. There is not the same emotional connection that people buying their own home bring to the process."
She will work with tenants too when they seek out her help. "With tenants, a lot of them end up buying after a year or two, and I offer to help, though I do not directly market to them as it conflicts with my role managing properties," she said. "There is a balancing act that needs to be followed."
Tapping into a dual market of renters and future buyers
Individual brokerages aren't the only ones looking to tap into the vast rental market. On a national level, property management represents a growing business, with startups like Poplar Homes opening offices across the country.
In 2022, Poplar raised more than $53 million from investors for its tech-powered, lifecycle approach to property management. "What makes us unique is our full-service platform to assist consumers in their real estate journey," said Chuck Hattemer, founder of Poplar Homes. In addition to its property management services, Poplar has buyer's agents who will represent former tenants looking to buy a home after their lease ends.
Even businesses that have traditionally focused on buyers are now courting renters. Realtor.com acquired rental software management company Avail in 2020, and late last year, announced an expansion of its rentals division into the multifamily arena.
Like Poplar, Realtor.com is betting that today's renters are tomorrow's buyers. "We want to build this best-in-class consumer experience that's great for renters today who eventually will become first-time home buyers," said Ryan Coon, who co-founded Avail and now handles the rentals segment for Realtor.com.
"We want to help guide them through that entire journey of finding that right rental for them today and making that process as seamless as possible. Then, if and when it's right for them, we'll help guide them into a home that they may be looking to purchase."