Midway through last year, Gittleman Management changed its name to FirstService Residential to recognize its 2011 affiliation with an international homeowners association management company based in Toronto.
Recently, the company said that it’s opening a new Twin Cities-based corporate division that will manage individual rental units, mostly condominiums and townhouses owned by “accidental landlords” who don’t have the experience, nor often the interest, in dealing with the day-to-day management of their property.
The division is one of several new property management companies that have sprung up in the Twin Cities and beyond to satisfy this new niche, which is being fueled by an ever-expanding rental market and a growing number of renters-by-choice. Andy Gittleman, the FirstService executive vice president and the second-generation Gittleman to run the company, shared his thoughts about the new venture.
Q: Several companies, including Cities Management and Renter’s Warehouse, are already offering similar services. Why now?
A: Our company manages about 28,000 units in the five-county area, and about 7,000 of those units are non-owner-occupied. There is a huge demand for someone to manage individual condo unit for the guy who gets transferred to Texas, for example, but doesn’t want to sell the condo he owns. The demand is there. People are scrambling to find people to manage their units.
Q: Massive institutional investors now own hundreds of individual rental properties. Are “accidental landlords” likely to be your biggest group of customers?
Q: What’s the biggest problem/issue that these inexperienced accidental landlords face when trying to manage their property?
A: They typically have never been a landlord before. They don’t understand the laws and licensing requirements, HOA [homeowner’s association] requirements, how to go about leasing a unit or what’s involved in managing the unit. In many cases, the unit owners reside out of state. In some cases, they plan on returning someday and in some cases they are waiting for the market to come back so they can sell and get whole.
Q: Are the big institutional investors that are buying hundreds of rental properties in the Twin Cities and beyond a positive influence on the market?
A: They are buying single-family homes, not condos or townhouses, and we don’t mange or lease single-family homes unless they are part of a community association. My own perspective is that the fact that institutional investors are buying single-family homes and renting them out is not in itself a bad thing. The problem is that there’s no one in this market to lease and manage them that do a good job.
Q: Is this kind of rental management business expanding in other markets?
A: They do it big in New York, Miami and Toronto. Every market is a little different.
Q: Right now the supply of for-sale condos in the Twin Cities is at an all-time low and there’s only one condo building under construction in the Twin Cities. Aren’t you worried that this very small segment of the market is going to evaporate as these rental condos get sold?
A: Yes, it [supply of condo rentals] is going to go down over time, but there will always be a core number of condos available for rent.
Q: Where are the growth opportunities?
A: A lot of national companies are doing development in the outlying suburban markets. They’re building big communities, and whether townhouses or master-planned associations made up of single-family homes, these subdivisions have homeowners associations, so the growth is in the suburbs.