November 27, 2018
Tips for Starting a Property Management Company
The property management business is a rewarding career choice, and doesn’t require intensive training or up-front capital (unless you are managing your own investments). But it does involve interacting with many different types of people (landlords, tenants, contractors), understanding local landlord-tenant laws as well as state and federal laws that impact tenants, and creating procedures that are both efficient and effective. It’s definitely not for everyone.
Maybe you’ve been working in the property management business and want to branch out on your own. Maybe you own a few properties and are thinking of taking on managing other properties as well. Whatever the reason, if you are thinking of starting your own property management company here are a few tips and strategies.
Look into Licensing & Training
(If you are already a licensed professional, you can skip this section!) If you have no training or experience in the field, definitely get your feet wet. Most property managers hold a property management license or a real estate broker’s license to be able to perform real estate transactions. These include leasing available units and collecting rent. The vast majority of states require that anyone who collects rent for a fee, commission or some other compensation to hold a license. Only a few states do not have this necessity. Look into the requirements needed to obtain a license and get certification.
Build Your Skill Sets
A property manager juggles a lot of responsibilities, from showing and leasing available units to overseeing repairs and collecting rent. They interact with property owners, tenants and contractors, follow up on leads and ensure building maintenance. They need three critical skills.
- Good Communication Skills: If we’ve said it once, we’ve said it a million times: The property business is a people business. You must be able to easily talk with a variety of people in a way that is clearly understood and professional. Being able to connect with people and build relationships (with tenants, landlords, contractors and many others) will be critical to your success in the business.
- Time-Management Skills: Next to excellent communication skills, the ability to prioritize tasks and manage your time correctly is the other must-have aptitude. Depending on where your properties are located, it’s not uncommon to have to be in two places at once! Being able to properly schedule your time and get your work done all comes down to time management.
- Detail-Oriented: It’s a lot of responsibility to oversee other people’s properties and lease them to tenants. Strict attention needs to be paid in an industry where laws and building codes can change easily enough. Repairs need to be handled quickly and efficiently, or it puts the company at risk. Procedures, like calling references, must be followed to the letter, and consistently each time.
Establish Your Company
You need to establish a legal entity – typically, this boils down to opting for a Limited Liability Corporation (LLC) or an incorporated business (Inc.). An LLC is a company structure that offers personal liability protection to its owners. When you incorporate a business, you turn your company into a legal enterprise separate from the people who founded it.
Both types of corporate entities have the legal advantage of helping to protect assets from creditors. And, they both provide an extra layer of legal liability. In general, the creation and management of an LLC is easier and more flexible than that of an incorporated business, and most property management companies go this route. However, you may want to speak to an attorney to discuss your options. And, don’t forget to get insurance that covers your business and professional liability – speak to an agent to make sure you have proper coverage for your unique situation.
Set Up Your Office
Initially you can work from your home office. Set aside a dedicated room or space that is distraction-free where you can set up your computer. You will need to get a website domain, and then set up your website and business email address. (Use your domain name for your email, as it is more professional than a free Hotmail or Gmail account.) Property managers spend a lot of time on the road, so you will need a cellphone with a dedicated business number. You will also need business cards, as you will be networking, looking for clients and prospective tenants for your clients’ properties.
Network, Network, Network
Build your client base by networking. Like any start-up, building a client base takes hustle. Connect with realtors and attend meet-ups at local real estate investment clubs. Real estate agents have the inside scoop on which buyers are buying for the purposes of investing/renting out. You might want to consider offering a referral payment.
Join your local chamber of commerce, and build connections with other entrepreneurs and business owners who may be able to refer business your way. Local contractors often speak with property owners regularly and will know who is has a property rental.
Scan ILS for ads by individual landlords who may be interested in your services. You may also want to consider paid search listings to help attract potential clients to your website.
Choose Your Technology
So, you’ve attracted some clients, and are building your business. You now need the tools of the trade: property management software. Even if you are only managing a handful of properties, property management software will save you time and money. You’ll be able to automate many manual tasks, including marketing your properties, accounting/reconciliation, much of the leasing cycle, maintenance and reporting.
It also boosts your credibility with landlords and tenants. Landlords will be able to access reports and see how their properties are doing at any time, and tenants will be able to pay their rent online, and use a portal to communicate with you. SaaS solutions are not expensive and you will see your return on investment.
The Last Word
If you are considering launching your own property management business, get the training and industry experience. You’ll then have a solid grounding in the tasks that need to be done and how to do them. Start building your connections now, so your business can be up and running quickly. If you are looking for property management software, we’d love to show you a demo of how Property Vista works. View our pricing here.