Steps Required to Start a Property Management Business
So, you want to start up a property management business. You may think that this is a tough and complicated process, but it doesn’t have to be! In fact, entering into the property management field is actually pretty easy and affordable to do. It doesn’t require that much education or capital to get into.
However, there are plenty of details that you need to be aware of as you enter into the property management business. From setting up your business to managing the properties themselves, the below article will take you through the four main steps in setting up your successful business. It doesn’t matter if you’re setting up a property management business in Phoenix, AZ or in any other part of the country, the following steps will stay the same no matter your location.
Step #1: Setting Up Your Business
Most property management companies are set up as limited liability companies (LLC’s), so you will have to start the process of registering your company first. This includes setting up your business as an official legal entity, getting a fax system, setting up business cards, and other management duties. And most of these tasks are not going to break the bank for you, unless you go for the most expensive options.
It’s very easy to file an LLC. Just head to your state’s website and search around for the exact process of setting up the entity in your home state. Depending on your state, the filing fee is going to be around $50-$150, so it definitely won’t hurt your bank account too bad.
Another step of setting up your business is getting an office going. Most first-time property managers will simply set up an extra room in their home as their office until they make enough revenue to get a physical office. This is completely dependent on your budget and the time you have available! Make sure you get a phone line set up too, whether that’s your mobile phone or a landline.
Step #2 Finding Your Clients.
Next up, you’ve got to find your clients. One of the best ways to get these clients is to start attending meetups at your local real estate investment club. Make sure you’re pretty aggressive in your networking – you never know who might be the one that gives you your big break and really helps your business take off!
No matter who you network with, everyone has something to offer. Whether it’s actual business or a simple reference to someone that they know, you should speak to as many people as possible at these meetings in order to get the connections flowing and hopefully, a profit churning.
Step #3: Filling Up the Rental Units
Right, so you have your business and you have your clients. Now, it’s time to find the tenants. And sure, finding just any old tenant is super easy, but it’s your job to find quality tenants that will be perfect for your rental properties.
One of the first steps to finding tenants is to get into their minds a bit. How are your potential tenants looking for rental properties? Are they looking on craigslist? Or are they looking in their local newspapers? Be sure to figure that out through proper market research first and then focus all of your effort on getting into those mediums.
Make sure you have set up a proper application and screening process as well. You’ll want a pretty high quality application, an interview that will actually tell you what you need to know about the tenant, and the proper time to allocate to speaking with these people.
Step #4: Managing the Property
And lastly, we have your big job – managing the properties. The main goal of all good property managers is to mitigate risk and maximize your client’s profits. One of the top ways that managers do this is to offer incentives for your tenants. For example, if the tenant stays on a long-term lease, then they will get a discount on their rent for the next couple of months. Anything like that will increase the profit coming in and minimize the risk of having vacant spaces in the rental property.
And there you have it. These are the basics to being a successful property manager and starting up your property management business properly. Be sure to do all of your research and get all of the resources ready for this journey!