How to Start a Property Management Company: Step-By-Step Guide
Last Updated: February 2, 2023
Are you looking for a business opportunity with a high potential for growth? If so, starting a company that deals with property management may be the perfect venture for you. Property management is a rapidly growing industry, and there is always a demand for qualified professionals.
In this step-by-step guide, we will walk you through everything you need to know about how to start a property management company. Let’s get started!
What Is Property Management?
Property management companies deal with the management, care, and control of real estate properties on behalf of the property owner. Property managers are responsible for finding tenants, negotiating lease contracts and fees, collecting rent, conducting maintenance on a property, and resolving any issues that may arise.
The main goal of a property manager is to maximize the profit while minimizing the cost. They make sure that tenants are satisfied with their living experience and that landlords receive payment on time each month without having to deal with any issues themselves.
Property Management: The Most Important Consideration
There are many things to consider when you decide on starting a property management company. Some of the most important ones are your ideas, goals, and the skills you need for dealing with such a business.
The first thing to consider when starting this business is the idea of what kind of properties you’d like to manage:
- will they be residential units (houses, condos, apartments) or commercial buildings?
- how many units will you manage per building?
- what type of clients would benefit most from the services you’ll provide.
Make sure that your idea fits well into the geographical area you live and work in.
In order to start a property management company, you have to have both your short- and long-term goals figured out. Think about:
- where you see your business in 1, 2, or 5 years
- what kind of services you’ll provide
- how will you structure your team
Additionally, having a plan B is always a good idea, just in case your original project doesn’t work out as planned.
When starting any kind of business, you have to make sure you have the skills required in order to succeed. Apart from knowing the landlord-tenant laws and how the leasing process works, you also have to possess good customer service skills, organization, time-management skills, and the ability to multitask for starting a property management business.
|DID YOU KNOW: Marketing skills are also important for a property manager. You’ll need them in order to keep the current tenants and attract new ones. Knowing how and where to advertise vacancies can make a huge difference in the number of tenants you manage to attract.|
How to Start a Property Management Company?
The two most important things you should do before starting a property management company are:
- gather as much information as possible about the industry you’ll be working in
- do in-depth research about the competition you’ll be dealing with
This includes researching the level of demand for such a company in your area and discovering how many other companies are offering the same services. Your property management startup checklist should include price comparison, so you can see if you can undercut your competition by charging less, or if you can offer some different services than they do.
Be Ready for Start-up Costs and Other Requirements
Starting your own property management company is not cheap. There will be start-up costs, ongoing expenses, such as marketing to get clients, and employees who need salaries paid regularly. You’ll also have to face legal fees for things such as license applications or incorporation paperwork.
When estimating your start-up costs, it’s important to remember that these can vary greatly depending on the size and location of your new company. When thinking about how to start your property management business, consider gathering estimates from multiple sources before starting down any path. You can also consult some books for starting a business, as they can offer plenty of useful advice.
|Property management companies deal with the management, care, and control of real estate properties on behalf of the property owner.|
|Before you start your property management business, think about what kind of properties you’d like to manage and what your goals are.|
|Do in-depth research on your competition, so you’ll know what to do to stand out.|
|Try to do an estimate of your business’s costs to know the approximate sum of money you’ll need to start.|
Create a Business Plan
Before starting any business, it’s important to have a solid business plan in place. This document will outline your goals for the company, strategies on how you’ll achieve them, and what resources (financial and otherwise) you’ll need to make it happen. Make sure your business plan includes the following things:
- The name of your property management company
- The number of employees you’ll need to run your services smoothly
- For a start, what kind of services will your property management company provide (include what services it offers that other companies don’t)
- Who your target market is
- How will you reach out to potential clients
- Estimate the start-up costs and how you’ll finance them (business loans, investment programs, etc.)
- Include a timeline for when you expect to achieve each goal
The work that you put into creating your business plan will help you obtain the skills you need, such as analyzing your competition and examining your finances, which will prove to be very important for your company’s success.
|DID YOU KNOW: Even though writing a business plan isn’t a mandatory step for how to start your own property management company, studies have shown that entrepreneurs who take time to create one are 2.5 times more likely to succeed.|
Promotion of Your Business Is Important
When you consider starting your property management company, you should also come up with an idea of how you will promote it locally or globally. Think about whether creating an online presence, either on your own or via a press release distribution service, will help in spreading the word about your business. Another point to consider is what type of advertisement will provoke more engagement from both landlords and tenants.
When setting up a property management company, come up with some catchy slogans or taglines which people can remember easily. You should also make sure that your company name and logo stand out from the others and are easily recognizable.
Build Your Client Base and Start Networking
Once you’ve established your business, it’s time to start building up your client base. This means contacting other landlords or property owners who may be interested in working with someone like yourself (i.e., starting a relationship based on mutual trust). A good starting point might include attending local trade shows related specifically to those industries that could benefit from hiring professionals to manage their real estate investments.
After opening a property management company, don’t forget to network with other businesses too. This includes real estate firms, banks, or any companies that might deal with tenants or landlords. The more people you know who are familiar with your business, the better.
Launching a property management business can prove to be a very profitable venture, but it’s important to remember that there are many things that need to be taken into account in order for it to stand out and succeed. By following the steps listed in this article, you should have everything you need to get started! Good luck!
If you want to set up a property management company, know that the barrier to entry is relatively low. The start-up costs are affordable, ranging from $2,000 to $10,000. No advanced degrees are required, and you can enter this business with little experience.
In order for your property management business to be successful, you must start by doing in-depth research about the industry and your competition. It’s also important to figure out your goals.
A NARPM survey showed that around 20% of the property management company’s revenue is profit. This makes thinking about how to start a property management company worthwhile, as it proves that property management is a great way to build residual income from real estate.
One of the biggest reasons property management companies fail is because of loose accounting. This results in inaccurate expenses, missing income, overdue payments, inaccurate rent rolls, and much more. Another reason is that many of them don’t research the market and its potential.