Starting a property management company

Are you interested in starting a property management company? If yes, here is a comprehensive guide to starting a real estate management company from scratch .

Okay, so we’ve provided you with an in-depth sample property management business plan template. We also take it further by analyzing and writing a sample property management marketing plan supported by actionable guerilla marketing ideas for property management companies. In this article, we will consider all the requirements for starting a property management business. So put on your entrepreneur hat and let’s move on.

Table of Contents

  1. Property Management Industry Overview
  2. Market research and feasibility
  3. Property Management Business Plan
  4. Property Management Marketing Plan
  5. Property Management Company Name Ideas
  6. Property management licenses and permits
  7. Cost of starting a property management company
  8. Real Estate Management Firm Marketing Ideas

Property management, which is a subset of the real estate industry, is perhaps one of the easiest and most affordable real estate businesses to start with. This is because it is basically about; lease agreement or rental acceptance using legal documents approved for the area in which the property is located.

Simply put, property management companies are responsible for caring for and managing buildings and other real estate for individuals (owners) or for groups of owners.

In the United States, states such as Texas, New York and Colorado, it makes it mandatory for property management companies to be licensed real estate brokers, if they are to participate in rent collection, list properties for rent or help negotiate leases. and conduct inspections as required by your business. Although, a property manager can be a licensed real estate salesperson, but generally they must be working with a licensed real estate agent.

Some states, such as Idaho, Maine, and Vermont, do not require property managers to have Real Estate Licenses. Other states, such as Montana, Oregon, and South Carolina, allow property managers to work under a property management license instead of a brokers license. The state of Washington requires property managers to have a real estate license from the state if they do not own the property.

Owners who manage their own properties are not required by law to have a real estate license in many states; however, they must at least have a business license to rent their own home. Only owners who do not live near the rental properties may be required, by the local government, to hire the services of a property management company.

What does it take to start a property management company?

Interestingly, the minimum educational requirement for anyone wanting to start their own property management business is a high school diploma and practical work experience. It is one of the many businesses that an individual can start with from home and basically with just a business card.

Since the property management business is all about managing properties / properties on behalf of your clients, you may not need a large financial base to be able to start the business, except that you only want it to start off quite large.

As a property manager, your primary business responsibility is to liaise with landlords, tenants, and in some cases various contractors and in order for you to effectively conduct your business, you are expected to have an understanding of the law when it is about landlord-tenant relationships, et al. As a property manager, it is your responsibility to create efficient and effective protocols that will make you engage well with your clients (landlords, tenants, and contractors).

For example, you will be responsible for the full and proper evaluation or proof of an applicant’s credit, criminal record, rental history, and the ability to pay your rent when necessary. If you can do that aspect of your job / business well, you will surely enjoy your business.

Property management companies are also involved in mitigation and remediation regarding any maintenance issues, usually within budget, with prior consent or transmitted through a legally accepted Power of Attorney by the owner.

In fact, there are numerous aspects of the profession and some of them include helping your clients manage real estate finances and accounts, and participating in or initiating litigation with renters, contractors, and insurance agencies.

Surely, if an aspiring entrepreneur who intends to start his or her own property management business has the right connections, networks, managerial skills, and takes delight in managing real estate for clients, then he or she will find a property management business. very rewarding and lucrative properties.

Starting a Property Management Company A Complete Guide

  • Property Management Industry Overview

In 2009, s Statistics say that the total recorded income of the property management industry in the United States of America was approximately US $ 59 billion. Regardless of widespread expectations to slow rental growth in 2015, the industry still saw growth. At the 3 rd quarter of 2015, growth peaked historic departments in the United States. This is due to the escalation of prices from the west coast.

  • Interesting Statistics About The Property Management Industry

Although the sales generated by other property management services industries are lower than those of Residential Property Managers, but beyond any reasonable doubt, this line of business is still experiencing steady growth.

The property management industry is highly fragmented and statistics indicate that the top 50 property management companies generate less than 25 percent of the total revenue generated in the industry; small and medium-scale property management companies account for the remainder.

For example, in 2014, the federal government of the United States of America spent a total of $ 189,718,950 on residential property managers primarily to coordinate repairs to government facilities. The federal government awarded about 273 contracts to 47 companies, with an average value of $ 4,036,573 per company, most of the companies that won the contracts are within the top 50 property management companies in the United States of America.

Going forward, operating conditions for the property management industry are projected to remain positive for the next five years and thereafter are likely to slow down at some point in the future, which is why in the next few years , the value of residential construction will experience strong growth due to improved consumer confidence and low interest rates, which will cause an increase in the housing stock.

It is also important to note that the rate of home ownership in the United States will also see an increase. In essence, fewer consumers will require property management services. Therefore, it is important that property management companies begin to position their companies to diversify now and stay in business in the future.

Accommodation is one of the main needs of humans, which is why people do everything they can to ensure a roof over their heads or a place from which to run their business. This is perhaps one of the factors that influence people to start their property management companies. They know that if they are well positioned and have a good relationship with the owners, they are likely to generate great business properties.

Other factors that influence people to venture into the property management industry is the fact that you can start the business with minimal startup capital and can make good profits from the business in a short period of time.

Starting a Property Management Company: Feasibility and Market Research

  • Demographics and psychographics

In most countries in the world, you can only be allowed to rent an apartment when you are 18 years old or older. It means that if you are managing a property management company, your target market demographic must be 18 years or older.

In addition to renting apartments to people 18 years of age or older, you should also make sure that you rent apartments or properties to those who are qualified. Most countries in the world do not allow property management companies to rent apartments to migrants who are not well documented.

In essence, the demographic compositions of those who need the services of property management companies are people who fall into poverty. following groups; working class / corporate executives, business people, corporate organizations, documented / legal migrants, campus students and households / families and others

  • List of niche ideas within the property management industry

There are several areas in the property management trade in which you can consider carving out a niche. Some of these areas include:

  • Real estate managers
  • Commercial leasing
  • Residential property management
  • Non-residential property management
  • Land management
  • Real estate brokerage
  • Construction

The level of competition in the property management industry

It depends on where you choose to launch your business store, but on average the property management industry is open to anyone and everyone and is in fact highly competitive.

If you choose to start your property management company in a small town, a few miles from busy cities, you are likely to face less competition against locating your property management company in cities like New York, Las Vegas, Los Angeles, Maine. and Boston et al.

The competition in these cities is quite tough. You must develop good sales and marketing strategies to penetrate the market if you are a newbie property management company.

Additionally, the demand for properties (leasing, rental, etc.) is driven by occupancy levels of commercial real estate. And to a greater extent, the profitability of property managers depends on their creativity and their network base is combined with the provision of world-class services.

One thing is certain in the property management industry; the larger your business, the greater your competitive advantage. The truth is that large property management companies have good leverage points when it comes to performing a wide range of management services in multiple markets. On the other hand, small property management companies can compete effectively by specializing in the neighborhood marker or the local market, as the case may be.

  • List of Recognized Brands Property Management Companies

There are property management brands that have performed well over the years.These people know what it takes to start humbly and build a successful business in record time. Here are some of the leading property management companies in the United States of America and in some parts of the world:

  • Greystar Real Estate Partners manage more than 202,000 properties
  • Riverstone Residential Group Manage more than 170,000 properties
  • Lincoln Property Company – Manage over 144,000 properties
  • Pinnacle – Manage over 138,000 properties
  • Equity Residential – Manage over 120,000 properties
  • Winn Companies – Manage over 91,000 properties
  • Aimco – Manage over 88,000 properties
  • Camden Property Trust – Manage over 67,000 properties
  • Bell Partners Inc – Manage over 65,000 properties
  • Archstone – Manage over 8,000 properties
  • Cortland Partners LLC
  • RAM Partners LLC
  • CBRE Group
  • Jones Lang LaSalle
  • Mitsubishi Estate (Japan)
  • Regus Group (UK)
  • YIT Corporation (Finland).

Economic analysis

If you are considering starting your own property management company in the United States of America, you can be sure that you will not have to spend a fortune to get the company up and running.In fact, you can start a property management business from the comfort of your home or from a very moderate office space; It could be shared office space or virtual office space. The bottom line is that the initial cost is low and the turnover can be quite high.

It is important to note that a nation’s economy has a great influence on that nation’s property management industry. If the economy is not healthy, the property management industry will experience difficulties and if the economy is booming, the property management company will also prosper.

Starting a property management company from scratch vs buying a franchise

One of the ideas that may come to your mind when trying to build your own property management business could be buying a franchise . But the question is; Is there really a commercial property management franchise available?

When it comes to starting a business, in most cases, your best bet is to start from scratch, especially if you have a long-term vision of the type of business you want to build; Except that you are an investor who is interested in expanding your investment portfolio and making more money.

Also, if you don’t have the experience of starting a business brand from scratch and are afraid of taking the risk of building a new business brand, then you can go for the franchise.Starting a property management company is not as tedious and demanding as others. aspects of the real estate industry; This is why most people will prefer to start their own property management businesses from scratch.

You can start the business on a small scale, from your home and manage one or two properties and then grow the business as big as you want it to be. Simply put, starting from scratch is the best option when it comes to starting a property management business.

Possible Threats and Challenges You Will Face When Starting a Property Management Business

No matter where in the world a business is located and whatever the nature of the business, there will always be challenges and threats.

When it comes to property management, some of the threats and challenges that you are likely to face in the United States of America and of course in other parts of the world are unfavorable government policies, the global economic downturn, the arrival of companies from larger, well-structured property management and unreasonable tenants, etc. Definitely; Unreasonable tenants can be a nuisance to property managers.

Write a business plan for your property management company

If you can successfully define your business concept and the strategies you intend to work with in order to achieve your business aims, goals and objectives, then you would successfully create your original blueprint.This is not only necessary when you want to establish a conglomerate or corporations billionaires; but also ideally it is important to do this, if you call what you want to do serious business.

This means that to the extent that you have decided to start a business, you must have a detailed business model to fly with. Here’s a sample property management business plan template to help you get started.

A business plan is the blueprint of your business; It is a business document that can help you to successfully establish a business and also manage / manage it. It is not enough to simply write a business plan for the sake of writing one, your business should be able to pass the reality check; You should consider relevant facts, figures, and statistics when writing your business plan.

The truth is, the main idea of ​​writing a business plan is not just because you have a business document; but to have a detailed guide on how to set up, manage and run your business effectively. Your business plan should outline and cover strategies for how you intend to operate your property management company.

When writing your business plan, be sure to be moderate when it comes to establishing projections about income generation, et al. It is better to be on the safer side, so when calculating your future income, you should underestimate and make your plans based In them they overestimate and get into tight corners when things don’t go according to plan. Make sure these key areas are covered when writing your business plan;

Executive summary and company descriptions: You are expected to write about your business concept, company descriptions, your company’s vision and mission statement, where your company will be located, the problem you intend to solve, and perhaps why people should sponsor your services.

Other key components that should not be missing in your property management business plan are your product offering, SWOT analysis, sales and marketing analysis / strategies, pricing, cost and financial projection, management techniques, expansion strategies, advertising and publicity strategy, budget and generation of initial capital.

Choosing a location for managing your property Company

As for choosing a location for the property management business, you can have your office in one part of the city and manage properties throughout the cities and even across the country; the number of properties you manage and the locations where they are located largely depend on your relationship with the owners and also your business network.

So when it comes to choosing a location for your property management business, be sure to choose an office facility that is visible, a location where people driving the pass or pass can easily see your office. You should also choose a location that is not saturated with property management companies, unless you have a unique selling strategy and competitive advantage.

Do not make the mistake of locating your business in a place where the majority of the residence are retirees and live in their own retirement apartments; of course, you will find it difficult to advance in such areas. You should locate your property management business in a busy city, a place where people move to find work or to live better; a place known to be suitable, peaceful, and safe for people to live and conduct business.

Starting a Property Management Company – Technical Personnel Details

The computer (software) and the Internet are the main technical tools that you would need to run your property management company. When it comes to securing an office facility, your financial strength is part of what to consider before choosing between renting or leasing an office facility. If you intend to start small, you should consider starting from home, sharing the office with someone, or renting a virtual office space.

To successfully run a standard property management company, you need to prepare to hire a minimum of 8 employees. These are the key roles that you should look for qualified professionals to fill in your property management company;

  • Director of operations
  • Project Manager
  • Company Attorney / Secretary
  • Administrator and Human Resources Manager
  • Head of Asset Management, Acquisition and Disposal
  • Business developer
  • Sales and Marketing Company
  • Accountant
  • Reception officer

How to Start a Property Management Company The Marketing Plan

  • Marketing Ideas and Strategies for the Property Management Business

Your ability to market and convince people to patronize your services will go a long way toward growing your business. This is why a property management marketing plan is one of the most important documents you need to be successful.

When it comes to property management businesses, networking is an effective tool. You can build your customer base with your business network; so be sure to network with real estate clubs and also chambers of commerce in your locations. You can also network with real estate brokers who are constantly in contact with landlords and landlords.

When it comes to a trade association, such as a property management company, local credit institutions; the truth is that most of the time, they have properties for which they are responsible and also outsource said properties to property management companies, in some cases lenders sometimes find themselves stuck with rental properties and not in business of property management, so they tend to outsource it to property management companies. You should also look to partner with local contractors, as they also interact with homeowners on a regular basis.

Lastly, don’t forget to harness the power of the media by advertising your services using both online and offline platforms. For example, the phrase “property management companies” is searched about 90,500 times a month on Google in the US alone, and the phrase “property management companies” is searched approximately 30,100 times a month, so you should be sure to run a paid search campaign to capture potential landlords and even tenants who are searching for this topic within the area that you operate. You can also use the following avenues to market your property management business;

  • Present your business by sending cover letters along with your brochure to those interested in the real estate industry and also to homeowners.
  • Speed ​​in bidding for contracts
  • Advertise your business in real estate / property magazines and websites
  • List your business in the yellow pages
  • Attend trade shows, seminars, and exhibitions, among others
  • Create different packages for different categories of clients to work with their budgets and still offer them quality homes / properties
  • Take advantage of the Internet to promote your business
  • Place a Sign to sign on the properties under your care with details of the additional services offered by do et al.

Factors that will help you get the right product price for the real estate management business

It is a bit difficult to determine the price of a property or the commission you want to get from a property management business, except when it comes to other services like maintenance, rebuilds, waste management, etc.

The truth is that try real estate is commission-based and properties are valued by professionals based on the area where the facility is located, the type of facility, and other factors. No property management company can directly control the pricing system in the real estate industry, although they can influence it to some extent, but they would have to stick with what is obtainable when it comes to the pricing structure in the industry.

Part of what you need to do when it comes to cutting costs is to minimize all maintenance cost by renting / leasing any property in your care to responsible tenants that will not cause damage to your premises and also be sure to request multiple quotes before adjudicating. any maintenance contract to a contractor; with that you can analyze and get a pocket friendly price.

Possible competitive strategies to beat your competitors in the property management industry

Some factors that will give you a competitive advantage in the property management industry; trust, honesty, good network and excellent relationship management. Most homeowners generally look for these traits and qualities before handing over their properties to a property management company.

It is also very important to be flexible in your trading strategies; You should have plans to serve smaller clients and larger clients. Another strategy to employ is to ensure that your employees are well cared for and that your wellness package is among the best in the industry. With that, they will be more than willing to build the business with you and help meet your organization’s stated goals and objectives.

Possible Ways to Increase Client Retention for a Property Management Business

If your customer service delivery is top-notch, you’re good with relationship management, and the properties under your management are well-maintained and competitively priced, you’re sure to retain your tenants and attract new tenants as well.

Strategies to Drive Property Management Brand Awareness and Create a Corporate Identity

Any company that wants to grow beyond the corner of the street from which it operates must be ready and willing to use all available means (conventional and unconventional means) to advertise and promote the business. Increasing your brand awareness will go a long way toward attracting you to both homeowners and renters.

Below are some of the platforms that you can take advantage of to increase your brand awareness and also to create an identity company for your property management business;

  • Place ads on print and electronic media platforms
  • Place your flexible banners with your company logo and contacts on each property you put up for sale or lease
  • Sponsor relevant TV shows
  • Maximize your company website to promote your business
  • Take advantage of internet and social media platforms like; Instagram, Facebook, Twitter, LinkedIn, Badoo, Google+ and other platforms (real estate online forums) to promote your business
  • Install your billboards in strategic locations
  • Distribute your flyers and brochures in specific areas from time to time
  • Attend homeowner and residence association meetings to network and introduce your business to them.

Vendor creation / Distribution network for a property management company

When building a strong supplier and distribution network, you need to be very dynamic when it comes to networking. Do your part to meet new people, as well as maintain and nurture existing relationships. Why is this important, you may ask? This is important because you must be connected with the right people to build your business to an enviable and successful state.

One of the strategies you need to employ to stay in business is to continue expanding your network base. When it comes to property management businesses, the size of your network has a great influence on the income you generate from the business, so be sure to maintain a healthy network with real estate clubs, chambers of commerce in your location, real estate brokers and of course the homeowner / homeowner association and others.

Tips for Successfully Running a Property Management Business

If you run a standard property management company, you are expected to meet with your employees every morning, or once or twice a week to review performance and set new goals for the week or months; regular meetings and, of course, trainings as an integral part of a successful business. Basically, some of the day-to-day activities of standard property management companies revolve around:

  • Rent collection
  • Facilities maintenance services administration
  • Security management
  • Garbage collection and recycling management
  • Property accounting
  • Legal representation of the owners
  • Search and selection of lease applicants
  • Coordination of repair contractors et al

In general, it is true that if you want to make big returns on your investment, you have to be ready to work hard and smart. One of the areas through which you must learn to work hard and smart in building a successful property management business is to get involved only in those activities that can generate good results.

As such, you and your team members must be determined to cut back on activities that are using resources like money, and still get minimal results.

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