How to Use Your PM Company to Build a Rental Portfolio: A Case Study on Ralph Reahard
Property management company founder and investor Ralph Reahard talks about how he built a successful real estate portfolio in less than 10 years.
Property managers (PMs) have a head start in investing in real estate. Sometimes, building an investment portfolio is just a matter of looking at the opportunities in front of you.
Strategic PM sat down with Ralph Reahard, Principal Broker at Real Property Management Richmond Metro, to find out how he built his portfolio and the advice he’d give to investors just starting out.
Which Came First for Ralph: Real Estate Investing or the PM Company?
Ralph started as an investor with one single-family home. Then, a college buddy came to him and said, “Why don’t we buy a duplex?” They ended up buying an eight-unit building in Richmond, Virginia. At the closing, the broker asked who they were going to use for property management. Ralph didn’t really know anything about the PM industry. He lived around the corner, so he thought he’d just manage the property himself.
That was in 2012. Two years later, he purchased a Real Property Management franchise in 2014, and he’s been growing his business and portfolio ever since.
Real Property Management Richmond Metro manages about 1,400 units between two offices. On the investing side, Ralph has an ownership stake in about 580 different units.
When Ralph first started buying properties, he was doing it as a way to grow the management business. If he bought a new building, it was another door to manage. He was buying deals that were kind of tight with his cash flow. Once he became more sophisticated and realized he didn’t need to control every aspect of his portfolio, he started buying into other markets and working with other PMs.
Now, out of that 580 number, he only owns about 20 without partners. He prefers group projects because he’s found it’s better to share the risks and the rewards, which brings us to the challenges many PMs make for themselves with investing.
How He Built a Portfolio Through Partnerships
Many PMs don’t get started with investing because they think they have to do everything themselves. They think they need $60,000 down to jump in. But Ralph got to 580 properties by embracing partnerships.
At first, he thought of them purely as joint ventures. Each investor brought in, say, $40,000, and they owned 50/50. But Ralph found he was doing all the work while the other guy was just cashing the checks.