How to Start a Property Management Business
Property management is a huge part of the real estate industry. Investing in a property management business might be a very wise decision if you know what you are doing. The market is steadily growing and it has become appealing to investors.
Property managers might be thinking of starting a property management company from scratch and, naturally, questions will arise. There are many problems that beginners come across while creating a business no matter how professional they might be in the field.
First of all, you need a full-proof plan with important pointers. You must keep every detail in mind and create a property management startup checklist.
As a business owner, there are several steps you want to take. We suggest you read this guide to remind you of all the crucial aspects of the business you should consider.
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4 Steps to Starting a Property Management Company
Here we have discussed 4 steps to starting a property management company from the scratch.
1. Setting Up A Property Management Business
Sort out your budget, think about the plans in the long run, and come up with a catchy slogan & a catchy name for your Property Management business. Sort out the key factors that make a business successful. Firstly you are going to need a property management company license to create a wanted business.
You need to ask important questions. How much does it cost to start a property management company? What licenses will you need? What type of team are you going to need? Who are the clients going to be?
Firstly, you must write a property management business plan. Here are the key points to emphasize:
You must reach your target audience to create effective marketing and service plans. Anyone can be a property owner. You may be targeting families, retired couples, or professional investors. Sort out your priorities and the company values.
How Much Does It Cost To Start A Property Management Company?
Using a business cost calculator, you will be able to determine the budget for your new business. You need to take many factors into account, you will need a license, you will have to pay a business incorporation fee, and you will need to pay for a commercial space for the company.
The fees usually depend on your state of residence. Incorporation of business costs roughly 100$-200$. You also have to think about the equipment, you will need computers, furniture, and printers at the very least – let’s say around 5 000$. You will need about 2 500$ to get a permit and a license for your property management company.
We can’t forget about taxes, advertising, and an official website. Altogether you might be able to launch a company for less than 15 000$. If you are smart with your budget and your plan ends up being a success, you will make a huge profit.
Creating a property management accounting system is going to be highly beneficial for your business. You are going to have to create a team full of professionals who are going to ask for suitable salaries. There will be certain expenses to take care of and finances to manage throughout the development process.
You might even end up hiring an accountant, however, before you do so, you will need to sort out an accounting strategy on your own.
What Licenses Will You Need?
A property manager can operate their management business using one of the types of licenses. You can have a real estate broker’s license, which is a highly demanded license in the real estate industry. Depending on your state, the license might be a necessity to become a property manager.
A property management license is required to become a property manager or create a property management company in some states alongside a real estate broker’s license. You will need to get through an examination and have a high school diploma to receive the license.
Creating the Perfect Property Management Structure
Choosing the best type of property management structure is as important as it has always been. Is your property management company working on residential properties? The answer is yes if you plan to give your services to single-family homes, vacation rentals, multi-family homes, apartments, condos, REO properties, or manufactured homes.
On the other hand, you could be creating a commercial property management company. Working for hotels, malls, offices, and working spaces means that you provide commercial property management services.
Industrial property management companies offer their services to different types of manufacturing facilities and industries such as warehouses and distribution centers.
As for the special-purpose property management companies, they handle the big purposeful properties, such as theaters, operas, sports arenas, educational institutions, and cultural properties.
Related Post: How to Determine the Legal Structure of Your Business
2. Realizing The Property Management Plans
You might have calculated the costs, strategize the steps, and laid down the groundwork. As bright and well-structured as your ideas might have been, the difficult task is perfecting the plans.
Property Management Team Requirements
As mentioned above, you might need to work with accountants to keep track of the finances and the budget. However, there are going to be many other tasks that you will need to hand out because they might be too difficult to handle alone.
As a business owner, you must focus on the satisfaction of your customers, therefore, you can’t risk disappointing them by working on your own and burning out.
There are several positions you will need other professionals to fill in. For example, you will need to hire other property managers to handle multiple properties at once.
Although you might work with multiple maintenance companies to help the investors with issues, it’s best to have your own maintenance staff to oversee the renovations and provide service of the highest quality.
An inspection crew is going to be necessary to make sure the properties are safe to occupy. You will also need to hire leasing agents, field managers, coordinators, and marketing specialists to perfect the advertisements and gain a good reputation.
Finding the Professionals in the Field
These positions can’t just be occupied by anyone. You will need to hire professionals who can handle the difficult tasks you give out. Of course, interns can be a lot of help, since you don’t need to give out big sums of salary for internships, but there needs to be a professional overseeing their work.
After creating a list of occupations that need to be filled in your company, you can start interviewing strong candidates. The best way to approach the process is to take step by step:
By taking these steps, you can determine the best options to hire for your company. In the end, you will have a wonderful team of people whom you can trust.
3. Marketing the Property Management Company
Branding is crucial for a business to take off. You need to make sure that your name is exceptional and attractive to consumers. Property owners should find your company easily on social media and property management websites.
The best way to market a property management company is to make it easily accessible via a google search. The clients should be able to find you on their own. But you can go to them by creating eye-catching and attractive advertisements on multiple platforms. Don’t forget to use special keywords and phrases.
Crucial Aspects of Marketing a Property Management Company
Create a licensed website for your company. Digital marketing helps legit businesses become known to the public eye. It’s much easier and more effective to attract clients via social media posts and advertisements.
You can use blogs as a way of luring potential customers to your website. Attending local events and promoting your brand on a stage. Hiring a professional marketing manager can boost your popularity.
In the end, you will be able to develop a popular and prestigious property management company in the industry.
4. Working With The Customers
If your marketing strategy goes smoothly, and it should, you will find yourself working on your first property. Although you have prepared for the first job by hiring professionals and creating a property management plan, you might still come across some unexpected issues.
You can deal with property owners by setting accurate fees and a pricing structure that works for your company and the clients. You can choose a preferred system for your business.
For example, you can determine the cost of your services by using a percentage-based fee structure. This way, your company will get a certain percentage of the rent payment.
Another structure that property management companies use is per-project fees, meaning that you will only have them pay the fees according to the projects your team members work on.
There is also a flat fee system that’s less affordable for most clients. No matter how many projects you work on, they will be paying a certain amount of money monthly to cover the service fees.
In the end
No matter which system you choose, you are going to have a successful property management company if you handle every step with motivation and using hard work. You can create the best property management company by hiring the right people, marketing your company, and pleasing your customers.
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