Basically, property management is a business, that primarily involves managing various kinds of real estate and people. In this regard, you need to maintain a professional relationship and deal with diverse contractors, landlords, and tenants.
As a property manager, you’ll also need to be aware of the local laws and make effective and efficient protocols. Due to these specifications and additional responsibilities of property managers, not everyone considers owning a property management business like TMG Northwest, even if it has rewards and perks. But, if you’re comfortable and enjoy managing properties and people, it’s a good time to know how to start a property management business.
There are various ways that you can use while starting a property management company.
You can check for some tips on Facebook or read on below for the strategies to start a good property management business:
1. Write a Business Plan
If you like to establish your own successful property management business, you should have an elaborate business plan. Your business plan lets you pin down the concept of your business and the strategies to achieve your goals and manage your properties effectively. It can also help your business stand out in the competition.
It’s essential to consider critical factors such as figures, relevant statistics, and other useful data before you manage any property. Your business plan should include the following:
- Executive Summary and Company Description – It covers the vision and mission statement of your company. You must emphasize what sets your business apart from your competitors. It’ll help you attract not just potential customers but also investors to your business.
- Income Generation Projections – It’s great to be conservative with your estimates. Ensure that you set realistic expectations for the number of properties you’ll manage and the management fees you’d charge for every property.
- Miscellaneous – Other essentials that you need to mention in the plan include; your product offerings, property marketing, pricing, sales strategies, expansion strategies, financial projections, costing, and so on.
2. Obtain Official Licenses and Permits
If you fail to acquire necessary official licenses and permits, it may lead to expensive fines or might even cause your company to shut down. In many states, you should have a property management license or a real estate license. Aside from broker licensing requirements, additional state licenses and permits may be required to run a property management company. To know your state’s licensing requirements, get assistance from your county or city’s clerk office.
3. Set Up Your Website and Company’s Office
Just like any business, you should have a place for your property management business. Once you have sufficient funds, look for a good place to start your company where you’re accessible to maximum clients. To reduce the expenses, a lot of property management company owners start out working from home and later rent out an office space, once their business grows and they hire more staff. Additionally, you also need office tools and other relevant equipment to organize everything at your workplace. These may include a computer, fax machine, scanner, copier, and so on.
Once you’re done setting up your office, it’s time to focus on launching your website. At present, you need an online presence to reach your target audience. Aside from that, having an online presence can give a boost to your credibility, making more people transact with your company. Just ensure that your website is well-designed and easy to navigate. You can achieve this by working with professionals who specialize in building websites for property management companies.
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4. Find and Hire the Right Team
To run a successful property management business, you need strong candidates for your team. To do this, make sure to write a clear job description and take advantage of ads, that speak of the benefits and culture of your company. You can post your ads online or on a job listing website.
Once you have the right people in your team and make sure to keep them happy, motivated, and satisfied. Take note, happy employees are the best tools to attract new talents and represent your company to property owners and residents. Besides, they’re the first ones to spread the word about your company’s reputation in the market.
5. Devise Your Own Pricing Structure
In terms of setting fees, you should do thorough research. You should be familiar with the market rates of similar services or properties. Then, check your revenue goals to know if you could offer more competitive pricing.
Staying competitive in the market may depend on the structure of your pricing and what’s included in an ongoing management fee that comprises your baseline service.
You also need to need to consider some common fields in the fees structure, which may include the following:
- Setup Fee – It’s a one-time fee that your company charges landlords for the overall cost to set up an account with your business and usually, it costs USD$300 or less.
- Leasing Fee – This one-time fee to lease a property can be considered for your pricing structure. Generally, it’s equivalent to a month’s rent or rent’s percentage. It also covers the listing and staging of the rental property.
- Ongoing Management Fee – It’s your company’s bread and butter. It may be as low as three percent of the rental income every month depending on the local market. It may cover daily operations like collecting rents and conducting inspections.
- Eviction Fees – It’s optional but highly recommended for property management companies to charge the eviction fees. This is because you’ll be called to serve as the official representative or liaison for the property owner.
- Lease Renewal Fees – It’s an optional fee that you may charge when you’re renewing the lease for existing tenants.
6. Get Your Company’s Business Insurance
As with permits and licenses, your business requires insurance to operate lawfully and safely. Your company’s business insurance will protect your financial well-being, in case of a covered loss.
Certain insurance policies are specifically made for various companies, that may be prone to different risks. You may start with General Liability (GL) insurance if you’re not sure of the potential risks your business might face. It’s also the common insurance policy that a small business requires.
Another insurance policy you might need is Workers’ Compensation Insurance. If your business has employees, your state will require you to have this insurance for your business.
If you’re overwhelmed with the plethora of options, always ask for suggestions or recommendations from your insurance agent to help you decide the most appropriate insurance for your business.
7. Select the Right Property Management Technology
If there’s one step to starting a property management company that you may not afford to neglect, it’s choosing the best property management technology.
With today’s advancement of technology, you should look for ways to get the right automation tools and solutions. This won’t just make your daily operations more efficient, but also can provide your business a competitive edge. This can make a huge difference to your growth potential. Moreover, operations-specific management software work as a marketing tool, which may be helpful for attracting new clients and optimizing your website.
To choose the right kind of property management tool or technology, you should know your needs. A good tool lets you manage your financial records easily, find tenants for your rental properties, market your properties, handle maintenance requests, track rents, and so on.
If you’re not planning to hire employees, having the best tool to manage such responsibilities may come in handy in running your business.
8. Establish Your Client Base
When it comes to a business venture, you should bear in mind that customers won’t just appear magically. You have to work hard to search for and attract your potential clients. It may be a tough business, but there are several ways to establish and maintain your client base. No matter how big or small your property management business is, take note of the following:
- Do Networking – A good way to advertise your business is through word of mouth. Maintaining relationships, talking to people, and other such socializing strategies are a part of networking. You can expand your network by contacting real estate agents as they know about the properties for rent and the people who’re planning to purchase properties. You may also consider checking out different real estate investment clubs in your area.
- Use Offline Marketing – In today’s modern world, it’s not surprising why a lot of people focus on the online market. However, it doesn’t mean that you should get rid of offline marketing. It may be traditional or old school, but it’s still effective. Free papers, newspapers, cable channels are just some of the forms of offline marketing. To make the best choice for your business, try doing a local market analysis, to determine the preferences of people.
- Choose the Best Online Ad Campaign – These days, you can find various online platforms to advertise your business; from Search Engine Optimization (SEO), Search Engine Marketing (SEM) to Google ads, the options are limitless. All you have to do is to pick the one that’s most compatible with your business.
Bottom Line
It’s a challenge to start your own property management business, hence not everyone is able to run it. However, if you’re confident enough to establish your own business and it’s worth all the risks, just go for it. Besides, big risks may mean big rewards in the long run, if you’ve done it diligently. Just ensure to consider the above-mentioned factors in mind and work with professionals and highly experienced individuals, if necessary.
Author Bio
Eric Bailey writes business-related articles and publishes them on different online platforms. Eric is an aspiring entrepreneur who wants to help his readers understand how business works.
