How to Start a Property Management Business?
Given the growing housing needs and property owners requiring frequent help navigating housing laws, it’s no surprise the property management industry is booming. While you may need to put in countless hours, starting a property management business might be incredibly rewarding in the long run.
However, before you get started, there’s a lot to consider. That’s why we’ve put together a list of steps you’ll need to follow to start a property management business. Let’s begin!
6 Steps to Starting a Property Management Business
According to Verified Market Research, the property management industry is expected to reach $35.46 by 2030. This means that if you’ve thought of starting a property management business already, now is a great time to begin. Such businesses help homeowners avoid back-and-forth hassle of managing things and eliminate rental vacancies. Here’s a rundown of the steps you’ll need to follow to begin:
- Fulfill Legal and Licensing Requirements
First things first, check your local legal requirements to avoid any conflicts with your business. Most states require property managers to have some form of licensing. For instance, Washington requires obtaining a real estate broker license before getting into the business. So, before you begin, make sure you have up-to-date licensing for your state.
- Create a Business Plan
If you don’t plan out your business properly, chances are you’ll run into avoidable problems. When starting your property management business, craft a business plan that maps out your goals, has market insights, and outlines your marketing strategy. To make it simpler, create a plan around these key elements:
- Overview
- Market Analysis
- Competitor Analysis
- Marketing Strategy
- Financial Plan
- Operational Plan
- Decide Your Property Management Niche
Once you’ve crafted a solid business plan, it’s time to pick a niche. The sooner you select the niche you want to tap into, the better it is for developing the relevant skill set. As a property manager, you may opt for residential, single or multi-family, commercial, luxury, or vocational rentals. Your niche will help potential clients track you down easily.
- Insurance
Insurance gives your property management business the protection it needs to operate with confidence. It covers you if something goes wrong, whether it is a legal claim, property damage, or a simple mistake. At the very least, you need general liability and errors and omissions coverage. If you are hiring help, workers’ compensation is a must. The right insurance also shows clients they are in capable and professional hands.
- Plan Your Fee/Pricing Structure
When setting fees, research what other property managers are charging in your particular niche. If you can, make your prices more competitive. Consider the different pricing structures, i.e., percentage-based, flat, or project fees, and decide which one works best for you. Knowing your market and costs helps you set fair and profitable prices.
- Advertise Your Property Management Business
To grow your venture, it’s important to effectively spread the word about your property management business. Start by building a website, optimize it for search engines, and launch your social media accounts. Traditional approaches like word of mouth, networking with local real estate agents, and personal connections also help advertise your business.
- Invest in Property Management Software
Lastly, managing properties involves a bundle of complex tasks that can be hard to manage manually. This makes investing in property management a great option, automating multiple tasks and streamlining your business operations. Here’s a list of tasks it takes care of:
- Document Signing
- Automatic Rent Collection
- Customer Relationship Management
- Property Accounting Management
- Tenant Screening
Bonus: Insurance
Insurance gives your property management business the protection it needs to operate with confidence. It covers you if something goes wrong, whether it is a legal claim, property damage, or a simple mistake. At the very least, you need general liability and errors and omissions coverage. If you are hiring help, workers’ compensation is a must. The right insurance also shows clients they are in capable and professional hands.
Final Thoughts
Like any other business, starting a property management business can be downright daunting, with doubts looming about where to begin. However, staying committed is the key to showing landlords you’re the right pick. Keep at it — you’ll attract clients and establish a name in the industry!
