Property management is an excellent business niche for more than one reason. The requirements for starting and succeeding in this industry are not high, and one doesn\u2019t need a sizable up-front investment or years of experience in the field. However, as is the case with any business endeavor, there are several things one should consider and do to ensure success.<\/p>\n\n\n\n
So, if you are wondering how to start a property management company properly, let\u2019s get right on it. Below, we\u2019ll cover everything you need to know about starting such a business – from what property management is to how to draft a business plan – so that you can confidently make this your career path.<\/p>\n\n\n\n
Property management involves managing and overseeing one or more properties. It could be any kind of housing: residential, student, commercial, or community association. Most of the time, the duties coincide with those of the landlord or the property owner. However, not everyone has the time, experience, or will to handle the tasks themselves.<\/p>\n\n\n\n
Some of the responsibilities property management companies can take off landlords\u2019 plates are marketing rental units, hosting an open house, or simply showing the property to prospective tenants and collecting their applications. Screening new tenants and getting the paperwork set up for the selected ones is another service these companies can provide. Once a tenant moves in, the property manager is the one responsible for collecting rent, handling maintenance, and inspections.<\/p>\n\n\n\n
If you are up for it, let\u2019s talk about how to start a property management company in more detail. Here is a step-by-step guide you should follow to ensure your business gets off the ground.<\/p>\n\n\n\n
The first step is establishing the legal structure of your business. Typically, these firms are founded as limited liability companies (LLC)<\/a>. Occasionally, they can also be registered as incorporated businesses (Inc.).<\/p>\n\n\n\n You can accomplish this task online yourself or hire a respectable LLC service company<\/a> to handle it for you. If you can fit it into your budget, going with a service provider is the better choice because it will save you a lot of time. <\/p>\n\n\n\n This is probably the most daunting task you\u2019ll encounter on your way to a successful property management business. However, drafting a business plan early on will help reach your company\u2019s goals as it will keep you focused and make you take a systematic approach to what needs to be done to get everything up and running. <\/p>\n\n\n\n You\u2019ll want to ask yourself some critical questions as you embark on this journey. For instance, what kind of services will you provide to your clients? Should you focus on a specific type of property? How should you handle maintenance? Once you get these answered, you\u2019ll have a clearer picture of what you need to do to have a successful property management company. <\/p>\n\n\n\n If you are worried about what should be included in a formal business plan, Small Business Administration (SBA) lists the following sections as must-haves:<\/p>\n\n\n\n You should consider reading up on all the SBA\u2019s business plan guidelines<\/a> if you are writing such a document for the first time. Alternatively, you can hire someone to write it for you. <\/p>\n\n\n\n When starting a property management company, you\u2019ll likely be your only employee until you begin getting paid for your services. Once the business starts bringing in money, you\u2019ll be able to hire someone to help you out with the workload. As you might not be able to afford a big team, at least not at first, you should think about what fields of expertise your company would benefit the most from. Also, it could be cost-effective to have external service providers handle certain operations for you.<\/p>\n\n\n\n Hiring an accountant or subscribing to a good accounting and bookkeeping online service<\/a> is something every \u201cHow to start a property management company\u201d guide should advise you to do. A good accountant is a must for every business, regardless of how small it may be. You\u2019ll also need legal services as you\u2019ll want to make sure your company\u2019s operations comply with the law. That\u2019s why having a real estate lawyer in your ranks or signing up for online legal services<\/a> should be another priority.<\/p>\n\n\n\n Once you have the essential services pinned down, you should go back to your business plan and determine whether you need more employees and whether you need them to work full-time, part-time, or per contract. Don\u2019t worry; by the time you have a big enough budget to start hiring people for your property management firm, you\u2019ll know which aspects of the job require a full-time commitment and which need attention only once in a while.<\/p>\n\n\n\n Once your business starts expanding, you can hire additional property managers, payroll and accounts payable clerks<\/a>, showing, move-out, and service coordinators, and leasing agents. If you plan to advertise your services online, you should consider finding reliable marketing experts and IT professionals. <\/p>\n\n\n\n Speaking of IT, you should keep in mind that there are plenty of programs – some of them even free – that could handle certain tasks for you. Therefore, it would be wise to dedicate some time to exploring property management software solutions<\/a>, as these could take a lot off your plate and help you provide better property management services. The best ones will allow you to manage your business with just a couple of clicks.<\/p>\n\n\n\n Many other solutions will prove invaluable when you can\u2019t yet afford an entire team. If you don\u2019t have a lot of paperwork to handle, you can take advantage of free accounting software<\/a>, for example. Once you start hiring people, you should consider payroll software<\/a>, too. <\/p>\n\n\n\n Finally, it would be best if you also went for one of the marketing tools available online. Putting up your business\u2019 website yourself with the help of a good website builder can save you a lot of money, which can then be used for paying for the services you can\u2019t handle on your own.<\/p>\n\n\n\n Determining the prices of services your property management company will provide can take some time, as you need to work many details into the calculation. You need to earn enough money to keep your business not just afloat but growing further.<\/p>\n\n\n\n First, you should consider your competition\u2019s pricing plans and use them as a point of reference. When you\u2019re just starting, your prices need to be competitive. On the other hand, you need to earn enough to cover the expenses of running your business. <\/p>\n\n\n\n So, to determine the pricing structure when setting up a property management company, your first step should be to go undercover and give the competition in the neighborhood a call to get informed about their price ranges. Once you estimate the standard prices in your area, you will get a better idea of how much you should charge for your services.<\/p>\n\n\n\n Keep in mind that whatever you calculate in, you must not forget that you should never compromise the quality of your services. Your good reputation is your main selling point, as this business is all about trust and relationships. So, even if you have to charge a bit more to provide a better service, don\u2019t hesitate to do it, as this is the key to professional property management.<\/p>\n\n\n\n To help you format the pricing structure, we\u2019ve laid out some of the most common fees property management businesses charge their clients.<\/p>\n\n\n\n This is a typical fee most service providers include, and this niche is no different. You would apply the setup fee when you sign up a new client, and the amount usually goes up to $300. <\/p>\n\n\n\n Another one-time payment, a leasing fee is something you should charge for getting a vacant property leased. Most companies charge the equivalent of one month\u2019s rent or at least half of it, and the amount should be clearly stated in the property management agreement. This fee covers numerous services provided, starting from listing a vacant property to you using one of the tenant screening services<\/a> to find the right person to move in.<\/p>\n\n\n\n You should consider adding this optional fee to your pricing structure, as it covers renewing the lease with an existing tenant. It is typically up to $200.<\/p>\n\n\n\n Another optional but strongly recommended fee you should consider adding to the list is the eviction fee since you can be called on as an official representative if an eviction process<\/a> involving the property owner is set in motion.<\/p>\n\n\n\n This fee is the one that will keep your business in property management growing. It\u2019s essential to include it in your pricing plan as it will cover all the daily operations, from collecting rent and conducting inspections to handling repair or maintenance requests. A set percentage of the monthly rental income is used to calculate this fee, going anywhere between 3% and 10% – the actual rate typically depends on the local market. <\/p>\n\n\n\n Once you get the basics down, you need clients. Figuring out your marketing strategy is not going to be easy, but it is one of your business\u2019 aspects not to be disregarded. <\/p>\n\n\n\n For example, as we\u2019ve mentioned before, you\u2019ll need to set up an online presence and start advertising. After all, if someone is looking for property management firms, they will most likely do it online.<\/p>\n\n\n\n Also, your website will be where your commercials and marketing efforts will lead to, and having a good one will add immensely to your credibility. If you\u2019re on a tight budget, you should think about making it yourself. There are many great website builders<\/a> available online. You might need to roll up your sleeves a bit, but considering how expensive some companies providing these services are, it is certainly worth the effort.<\/p>\n\n\n\n Still, if you want to ensure your website is done professionally and you have enough funds, hiring someone to create one that will be not only pretty but also useful is a good path, which many entrepreneurs in the property management industry take. Of course, your site\u2019s primary purpose will be attracting new customers and allowing them to get in touch with you quickly.<\/p>\n\n\n\n You\u2019ll also want to have someone create and implement an online marketing strategy, manage social media campaigns, and use all other available promotional tools to increase your online visibility and reach as many landlords and owners as possible. <\/p>\n\n\n\n While online marketing is a must, don\u2019t forget that networking is the easiest way to gain new clients and sign them up for your services. If you are running a commercial property management business, you should pay a visit to your local business organizations. Establishing good relationships in such places will undoubtedly lead to your services getting heard of and recommended to a number of prospective clients. Also, It would help if you got in touch with local real estate clubs and contractors.<\/p>\n\n\n\n With every new customer, your business will prosper. That is why it is fundamental never to stop networking, thus finding new clients and properties, but also ways to provide better service and keep your old clients satisfied.<\/p>\n\n\n\n Further Reading<\/strong><\/p>\n\n\n\n Starting a business in this field is not an expensive endeavor, as it usually takes between $2,000 and $10,000.<\/p>\n\n\n\n While it might sound like a nuisance, it is crucial to keep track of every expense you make from day one. By doing so, you will be able to set financial goals and stay out of trouble. <\/p>\n\n\n\n The most common expenses you will incur as you build your company are administrative ones, including salaries and benefits (along with payroll taxes), office supplies, and various services such as advertising or legal counsel. The price of any software you might use to help you get started is not to be forgotten either.<\/p>\n\n\n\n In the US, whether you need such a license usually varies from state to state<\/a>. Most of them won\u2019t require you to get a license or any other advanced degree. However, getting a real estate or property management certification will undoubtedly prove useful on your way to success. <\/p>\n\n\n\n Many US programs offer courses for licensed agents to get property management certification<\/a>. Although these are by no means mandatory, completing some of them is also bound to help you learn the ropes of the business.<\/p>\n","protected":false},"excerpt":{"rendered":" Property management is an excellent business niche for more than …<\/p>\nStep 2: Business Plan<\/h3>\n\n\n\n
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Step 3: Employees<\/h3>\n\n\n\n
Step 4: Technology<\/h3>\n\n\n\n
Step 5: Pricing Structure<\/h3>\n\n\n\n
Setup Fee <\/h4>\n\n\n\n
Leasing Fee<\/h4>\n\n\n\n
Lease Renewal Fee <\/h4>\n\n\n\n
Eviction Fee <\/h4>\n\n\n\n
Ongoing Management Fee <\/h4>\n\n\n\n
Step 6: Marketing Strategy<\/h3>\n\n\n\n
Step 7: Networking<\/h3>\n\n\n\n
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The Costs of Starting a Property Management Company<\/h3>\n\n\n\n
Getting a Property Management License<\/h3>\n\n\n\n