Whether you are a property owner yourself or working for a landlord, property management can be a quite profitable and alluring option for many business owners worldwide. It is quite a reliable source of income that has shown a continuous demand across economic cycles. While property management does seem an easy business option, in reality, it requires careful strategic planning, the right tools, and efficient pricing models to make it lucrative.

It might include tenant screening, managing lease agreements, overseeing rent payments, responding to maintenance requests, doing inspections, posting job openings, and many such activities that require thoughtful execution. Fortunately, automating and streamlining these procedures with property management software eliminates a major chunk of the burden while also offering essential services to property owners. 

Short Summary

From covering the legal setup, operational planning, to choosing the right tools and pricing models, this blog takes you through the step-by-step procedure of how to start a property management company from the ground up.

What is Property Management?

Property management refers to the daily supervision, management, control, and upkeep of residential, commercial, community association, student housing, or industrial real estate by a third-party property manager. As a property manager, you should ensure that your company offers:

• Marketing and advertising: Using advertising software to fill positions in order to preserve cash flow swiftly.
• Tenant screening: Using tenant management software to do credit, criminal, and eviction checks.
• Rent collection: Enforcing payment plans and late fines.
• Accounting: 1099s forms, financial reporting, and trust account management.
• Maintenance: Using work order software to manage maintenance requests and coordinate with vendors.
• Legal compliance: Handling eviction procedures and fair housing legislation.

Step-by-Step Guide to Starting a Property Management Company

Starting a property management company necessitates a well-thought-out plan and execution. The fundamental actions to start a scalable, compliant company are as follows:

Step 1: Select a niche

Finding and embracing your specialization is essential to operating a profitable property management business. It will be simpler for you to consistently draw in those particular clients if you are an expert in a specific kind of property. The following are common niches in the real estate management sector:

• Management of residential properties
• Management of commercial properties
• Associations of home owners
• Management of timeshare properties
• Property management for short-term vacation rentals

Step 2: Market your offerings

The resources you'll need to run your property management firm, the amount of staff you'll require, and many other things will depend on the kind of marketing and lead generation services you intend to provide. Your services for property management could consist of:

• Supervising the building's daily exterior and interior maintenance.
• Monitoring the regular upkeep of the parking lots and adjacent landscaping, and providing on-call maintenance for weather and mechanical problems
• Obtaining quotes from suppliers (drywall, HVAC, plumbing, painting, elevators, electrical, etc.)
• Brokerage services (such as promoting, displaying, and negotiating conditions for available units)
• Overseeing lease renewals and new leases
• Collecting rent and performing move-in and move-out inspections

Step 3: Build a business plan

You can begin developing your business plan strategy once you've considered your services and speciality. Creating this document will allow you to evaluate every aspect of your new venture and avoid potential problems. It should include:

• Your business overview defines your target market, audience, and geographic focus.
• It should outline your revenue model or finance plan.
• It should describe your operational workflow with tenants, investors, and owners.
• Your marketing strategy will attract partnerships, tenants, and build your digital presence.
• The tools you will use for communicating, documenting, and client engagement.  

This process of writing a property management business plan helps in developing abilities that will be critical to the success of new property managers, such as financial analysis and competition analysis.

Read More: The Essential Parts of a Business Plan

Step 4: Legal Requirements

Ignoring legal requirements can land you in penalties. Therefore, when considering how to start a property management company, ensuring legal and licensing compliance becomes essential. Make sure:

• To register your business as a legally recognized structure in your country, region, state, or area. For example, you can register as a sole proprietorship, in partnership, or a limited company. 
• To get a business license or a regulatory approval (if it is mandatory to hold a property management licence in your region).
• Create trust accounts for rent collections (Many regional or state laws require property management companies to hold security deposits in separate trust accounts).
• To ensure compliance with tenancy and housing regulations.
• To get insurance and risk protection using policies like professional liability insurance, general business insurance, etc.

Step 5: Calculate the figures.

Knowing how much a new property management company costs and how you plan to pay for it is crucial. You must keep track of building costs, client revenue, and the billing and rent payments for every renter in every property you oversee. This can include: 

• Startup costs (brand identity design (logo, business cards, and website), license and/or permit fees, business and vehicle insurance, deposits, and rent for your physical offices)
• Recurring costs (office rent, utilities (phone, internet, electricity, etc.), employee wages, software subscription costs, and more)

Step 6: Invest in building a brand image.

The property management business runs on customer trust, and ensuring credibility for this business is important from day one. To build a strong and credible image of your property management business:

• Create a strong professional business name.
• Generate a custom domain for your business email.
• Define clear service agreements and policies that align with your brand and adhere to the regional or country-specific regulations.

Note: A custom domain for email, instead of a generic email, immediately gives an impression of a professional business, plus gives you a guarantee that your emails will land in the recipient’s inbox and not in a spam folder.

Step 8: Create a web presence

For a property management business, its website acts as the first and most important sales tool. So, when starting a property management company, creating a branded website with a custom domain that is also intuitive, user-friendly, and works across desktop and mobile applications is crucial. 

Step 9: Adopting the right pricing model

Choosing the right pricing model according to your business goals is essential:

• Percentage-based model: Allows property managers to charge a fixed percentage of the monthly rent collected.
• Flat fee: A fixed property management fee is shared regardless of the rental amount.
• Tiered pricing model: Different services are delivered according to the package, such as basic, standard, or premium.
• Hybrid model: Bundles a lower monthly management fee with extra charges for specific services.

The property management software consists of several other pricing structures, also:

• Freemium: Premium features can be purchased for a fee, while core features are free.
• For each user: The quantity of software users determines pricing.
• Pricing per unit: It is determined by the quantity of managed properties or rental units.
• One-time fee: A lifetime license requires a single upfront payment.
• Pay-per-use: Instead of a fixed cost (monthly or annual), charges are based on actual consumption

Step 10: Building your marketing strategies

You are ready with your business plan, have followed all the legal and compliance requirements, and have also established a branded online presence (with a professional email and a website). But these tools do not deliver efficient results unless you have the right marketing strategy. Design effective marketing channels on your website and through your marketing plans:

• Use SEO tools to boost your website ranking.
• Use smart AI writing tools to create and add engaging content on your platform, such as blogs and other informative content, or generate marketing content for email campaigns.

How to Purchase Tools for Property Management?

A property management software helps in centralizing rental operations, including activities like tenant screening, lease management, maintenance tracking, etc all from a single platform. However, the process of selecting and acquiring the best property management software is strategic and goes beyond an easy feature comparison to a thorough operational and financial assessment. 

1. Assessment of needs and evaluation

Establish essential features like accounting or maintenance tools. Evaluate the size and type of properties in your portfolio. Some platforms have minimum units. Before deciding, compare suppliers, get pricing, and match features to your needs.

2. Choosing a plan

Starter programs cover basic costs like rent and maintenance. Pro subscriptions add portals, financial tools, and reports. Property management business plans include customization and APIs. To avoid having to switch platforms later, choose a plan that allows for your future growth and meets your current needs.

3. Agreements and unstated expenses

While annual plans tend to be cheaper, be mindful of extra costs related to setup, onboarding, transactions, and add-ons. Review the terms carefully and negotiate them up front. Don’t assume base pricing includes all the features and services.

4. Demo and trial

Free trials and demos can be used to test workflows. For large portfolios, you may want to request a proof of concept. This is useful to ensure the software meets your needs before committing to a long-term contract.

5. Cost vs. value

Look at the value instead of the price. A higher cost plan that includes automation can provide long-term savings. To determine ROI and support your investment, weigh expenses against time saved.

6. Predictive analytics and artificial intelligence

Advanced tools can forecast maintenance problems, rental trends, and tenant turnover. Even if they are expensive, AI features can increase income and lower risks, resulting in significant long-term profits.

Employing The Best Software for Property Management Tools and Website Builders

Today, technology automates everything from marketing to maintenance, radically changing how companies handle their portfolios. Thus, the best property management solutions automate and consolidate the essential tasks of property management for both residential and commercial portfolios. Some of the most popular property management tools include:

1. AppFolio

Mid-sized to large property management companies can benefit from AppFolio. It provides robust commercial tools, CAM reconciliation, and AI leasing. You can benefit from per-unit pricing with a minimum spend makes it perfect for larger portfolios. You also get enterprise-level connectors with open API support, training, and assisted setup are all part of onboarding.

2. DoorLoop

For aspiring property managers, DoorLoop is an easy-to-use tool. It provides maintenance tools, tenant screening, and quick onboarding. It offers a property management business plan with tiers encouraging corporate expansion. Training and white-glove migration make setup easier. seamlessly integrates with several payment methods, including QuickBooks.

3. Buildium

Buildium is a comprehensive platform for managing residential properties. Accounting, inspections, and resident portals are all part of it. Onboarding is self-directed with alternatives for assistance. It is a dependable option due to its strong interfaces with financial and tenant screening systems.

4. Breeze Yardi

For small to mid-sized portfolios, Yardi Breeze offers an easy and reasonably priced solution. With minimal per-unit fees, it provides basic bookkeeping and leasing tools. The onboarding process is simple. effectively integrates with necessary third-party services and Yardi products.

5. Propertyware

Propertyware is designed for managers of single-family portfolios. It supports advanced owner portals, remote workflows, and customization. The platform also offers features for marketing and accounting. There are minimum costs and unit-based pricing. Strong integration possibilities are available, although expert setup may be necessary for onboarding.

Summing Up

A strategic approach that integrates technology, customer happiness, and operational efficiency is necessary to run a profitable property management company. Success depends on organization, automation, and offering top-notch service, whether you're managing rents for a property management firm or growing a bigger business.

Neo allows your register your domain name for your property management business for free when you purchase its business email plans. It offers creating business emails with custom domains along with a free (.co.site) extension. 

Moreover, it provides business growth capabilities that help users to generate engaging content for emails using an AI smart writing assistant, track analytics, capture leads, or alter layouts, colors, fonts, and templates of the websites according to their preferences. 

You can use the domain name deploy a website as well using the Neo Site, which is an AI website builder. Start with Neo to build a strong digital presence for your property management business.

FAQs

1. What should be included in a property management contract?

Your costs, the extent of your power (such as how much you can spend on repairs without owner consent), termination terms, and liability safeguards should all be spelled out in a property management agreement (PMA). 

2. Can I create a mobile app for my property management company? 

You can use a mobile app on your smartphone or tablet to access essential functions like financial tracking, maintenance requests, and tenant communication. This adaptability guarantees that you can quickly do important duties even when you're not at your desk, increasing productivity and tenant satisfaction. 

3. Does starting a property management company require a real estate license?

Mostly yes. A real estate broker's license is usually required if you are managing property for third parties (other people), collecting rent, or negotiating leases. While some jurisdictions may not require a license for specified operations, others have specific "Property Management Licenses." Always review the regulations set forth by the Real Estate Commission in your state.

4. How can I get my first property management clients?

Local real estate brokers frequently sell investment homes but don't want to manage them, so networking with them is really beneficial. One of the best ways to obtain leads is to establish a referral partnership with them. Furthermore, quick traffic can be generated by pay-per-click advertising (Google Ads) that targets local "property manager" keywords.