How to start a property management business – 7 Actionable Tips
By the time you’ve read to the end of this blog post, you will know how to start a property management company and you will know the exact steps to take to make your dreams a reality. Property management is the daily management of industrial, residential, or commercial real estate by a third-party firm to ensure the smooth running of the real estate business. There is no way one can talk about property management without talking about real estate – they are interdependent. Lots of real estate owners enroll their properties with property management companies to help them directly cater to the needs of the direct users (occupants, tenants, etc.). It is one of the sought-after services in 2022, and if you can successfully set one up, it might just be the best financial decision of your life.
Think about it. You wake up in the morning and find out that the kitchen tap of your rented apartment is leaking. Not to worry, all you have to do is reach out to the property management company in charge of the property and inform them. It is their job to arrange for an artisan to get your tap fixed in the shortest possible time.
With the recent boom in the real estate industry, a major setback to success in the industry is the lack or inadequacy of competent property management companies. For instance, a real estate owner with 5 or more properties will most likely be unable to look after those properties by themselves, let alone attend to every tenant that has a complaint – the answer to this is the property management company. This is a big gap in the real estate industry that you can choose to fill.
Like most businesses, you will most likely be a solo team when you’re starting out your property management company. You will have to do a lot of things by yourself. You need a level of success before building a team around your property management business. To clarify the needs of this lucrative business, let us run through a few FAQs.
Who can run a property management company?
A person who is firm yet personable. You have to be a people person who is genuinely interested in making sure that people (tenants or direct users) get value for the rental fee they pay.
Property management will require that you have a good relationship with plumbers, carpenters, painters, lawyers, other skilled workers, etc. You just have to carry the consciousness that you are the first point of call if the tenants have an issue to resolve regarding the property.
You have to be comfortable with asking for rent. Not many people have the charisma to do this. If you are running a property management business, this becomes your new normal. You have to be ready to call out erring tenants, rent defaulters, rule breakers, and people who misuse the property.
What resources do I need to manage my property management company?
These days, your business is as good as the tools you use to run it. As a property manager, you need specific digital tools in your toolbox to accelerate your success. This includes a CRM designated for property management, accounting software, payment processing software, social media management software, and a website. I will elaborate on this one after the other
The first thing a property management company needs to do is to
1. Register a business name – Register your business according to the laws of the state you live in or choose to do business. I recommend that you start your business in your locality. Designate a phone line for your business and create an official email.
2. Advertise to friends and family – Explore your social currency with the people who know you and trust you the most. Any of your friends or family might know someone who needs property management for their property. Word of mouth is the best advertisement at this stage, and if you trust the process, it is very effective.
3. Landlord Relations – Start by meeting with landlords and asking if they are interested in having a property management company manage their rental properties. If the partnership is successful, you may find that your company will have a steady income stream from the landlord’s rental properties.
4. Marketing Data Collection – The most important part of your business will be collecting data about prospective tenants, and this data can be used to judge the property that a potential tenant wants to rent, their income level (and ability to pay), and their credit rating. The first step of this process is marketing.
5. Maintaining Property Standards – One of the most important tasks is keeping your properties in good condition. The state you live in may require that landlords/property management companies carry insurance to cover the cost of any damage to the property, and since you will be renting to families, it is your job to make sure that the properties are kept in a livable condition.
6. Tenant Selection – The key to your company’s success will be finding good tenants, and you can do that by using a combination of the tenant selection criteria of real estate experts and your own personal knowledge about potential tenants. Every potential tenant is different, so don’t assume that all of the people you meet will rent, but also don’t assume that all of the people you meet are bad tenants.
7. Financing and Legal Aspects of Rentals – The only way to keep your business running is with a steady flow of rental income. The rent will need to be paid in a consistent and timely fashion, and you will want to ensure that you are not risking the assets of your landlord by doing anything on the property that will jeopardize the landlord’s financial situation.
Do you think I missed any helpful tip in this article that can be helpful to people seeking to start a property management business in their respective locality? Drop your thoughts in the comment section. I will surely respond to them.
Good luck as you start your business!
Ogunjobi Oluwamuyiwa Felix preferred to be called Muyiwa Felix, is a personal finance coach and Insurance advisor. He creates content that addresses the core of personal finance in Canada, the United States, and the world at large. Daily, he meets up with clients who are interested in financial risk management, income protection, wealth-building, retirement planning, and tax-efficient investing strategies.
