6 Steps To Establish a Successful Property Management Business

Starting a property management company can be lucrative, considering you can charge clients upfront and monthly fees. The general property management fee ranges between 8% and 10% of the monthly rent for a single-family home. If you’ve been thinking of setting up a property management business, this might be the right time. With demand for properties on the rise, property owners need the help of property managers to vet potential tenants, draft legal contracts, manage finances, and deal with maintenance issues. 

However, before getting started in property management, you’ll need to make sure that you have the right skills and resources. Becoming a property manager sounds simple, but it can be complex for anyone who lacks knowledge. Keep reading to learn a few steps to establishing a successful property management business. 

6 Steps To Establish a Successful Property Management Business

1. Hone Your Management Skills

Property management is a continuous service, so clients expect high-quality services throughout your contract. With this in mind, it’s crucial to have good interpersonal and communication skills. As a property manager, you’ll meet different people, including landlords, tenants, maintenance contractors, and vetting companies. All of them will have different needs and expectations. 

Having excellent communication skills and confidence helps you interact with potential clients and also communicate with team members effectively. Other skills property managers must possess include financial expertise, marketing, and technical know-how, knowledge of tenant-landlord laws, organization skills, and problem-solving abilities. With these managerial skills, you can easily deal with issues linked to property management. 

2. Develop a Property Management Business Plan

It’s easy to dive headfirst into property management when you have the right skills. But before you do anything, prepare a business plan for your property management startup. Writing a property management business plan serves as a roadmap for your venture, meaning you can grab opportunities in front of you to succeed.

Typically, a property management business plan highlights the clients you’re targeting. Your potential clients could be owners of multi-family homes, single-family units, or even commercial properties. So, specify the clients you want to work with and determine the services you’ll offer. For example, if you specialize in managing commercial properties, your services will include vetting tenants, collecting rent, negotiating lease agreements, and marketing the commercial property. 

3. Research the Market 

As a general rule of thumb, carry out market research in advance to find out if there’s a demand for a property management firm in your area. If there’s a gap in the market, focus on creating a full letting service company. To stay ahead of other property management companies, research the services and processes they offer. Doing so helps you develop a unique selling proposition and set competitive prices. When writing a unique selling proposition, think of the pain points of prospective customers. That way, you can offer great value to your clients and stand out in the market. 

4. Identify Ways to Create Memorable Experiences

Once your business is established, you and your team will interact with tenants daily. So, creating memorable experiences for them is vital to keep them happy and build an excellent reputation through word of mouth. The good news is there are many ways to make your tenants’ experience memorable. For instance, you can create an emergency plan to deal with structural damages like burst pipes and natural disasters, such as earthquakes and floods. Providing tenants access to different amenities and seamless communication via emails, text notification, and letters is also an excellent way to make residents happy. 

As a property manager, you can keep tenants satisfied by handling issues, disputes, and complaints on time. For example, when tenants complain of pipe leaks or pests in their home, take quick action to solve the problem. Typically, dealing with pest infestation in residential homes is expensive and time consuming. But there are several ways landlords can manage pests in rentals without breaking the bank or requiring tenants to pay for pest control services. This includes organizing professional pest control visits, offering pest prevention education, and spraying non-toxic pesticides to prevent or eliminate pests.   

5. Familiarize Yourself with Certification and Licensing

To run a property management firm, you’ll need a real estate broker’s license and property manager’s license. To get an up-to-date license, you need to undergo thorough training and sit for an exam. Note that some regions don’t require property managers to have licenses. But holding the right property management certification helps you set up your business for success. For example, a certified property manager holds a real estate broker’s license. This means they are well-versed in topics like insurance, property listing and tax, leasing, and drafting contracts. 

Licensed property managers also know topics on property maintenance and upgrades, providing information about low and high-demand areas and property locations and recommending real estate attorneys when needed. Once you’ve received the required licenses, research all business legal structures. Then decide if your company will be a limited liability company, corporation, or partnership.  

6. Be Smart with Financing

Like with any other business, planning your finances is essential if you want to become a successful property manager. Therefore, determine how much revenue you want to earn in the first year and include it in your business plan. Think about the income you expect, your business expenses, and how much you should set aside for emergencies. Also, calculate the cost of starting a property management company from scratch. 

It’s worth noting you can start your property managing venture from home at a lower cost. However, if you decide to operate as a letting agent, you’ll need a high-street office to boost visibility and attract potential clients. This means your start-up costs will be higher. Next, consider setting up a property management accounting system. While you can keep track of your clients’ properties by updating your spreadsheet regularly, it’s wise to invest in comprehensive property management solutions. Accounting software helps track rent and other property fees, monitor expenses, and pay bills on time. 

The demand for housing is increasing daily, meaning the need for property managers will continue to rise. So, if you’re considering starting a property management business, the chances of earning a high income are high. However, property management isn’t simple. To succeed, you need the right skills, including excellent communication, problem-solving abilities, and organization skills. It’s also crucial to develop a business plan, understand the real estate market, organize your finances, get the right licenses, and create ways to enhance the tenant’s experience.

Dragan Sutevski

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan