If you have worked in the real estate business and want to become your own real estate entrepreneur, then you can consider starting a property management company. This firm manages personal and commercial real estate on behalf of the property’s owner. You can leverage our experience in the real estate sector to excel in property management and satisfy your clients. Fortunately, opening a property management company is not very complicated. The following 6 steps detail what is involved.
- Set up a business plan for your property management company
A business plan is the starting point for any business enterprise, especially if you want to secure funds. You should create a plan which explains:
- The goals of your business and outlines what you want to achieve
- The services you plan to offer customers and the pricing
- Competitor analysis
- Pricing strategies
- Financial projections such as investment needed, expected monthly expenses, revenue you expectations, and profitability targets.
Fortunately, a property management company does not need a lot of investment. All you need is an office with a basic setup that includes computers, furniture, and possibly a couple of staff. If you do not have enough savings for the capital, you can approach a bank or an investor for funds.
According to the US Small Business Administration, a micro-business would need an initial investment of around $3,000 however the funds required would vary from one country to another. You can do your own research and talk to real estate professionals to get an idea of how much funds you need to start your property management company.
- Decide on the type of company you want to form and register it
You then need to decide the form of business to start a property management company. You can choose from any of the following:
This is a simple form of business that is applicable if you are the sole owner of the company. This is an ideal business form to start off your operations.
If you start the company with one or more partners, you can consider the partnership business form. All you need to do is to create a partnership deed explaining the modalities of your partnership agreement. When you start a new business, this form is ideal.
Limited liability company:
If you are starting big, then you can consider an LLC. This business form will help you get tax advantages. It gives you most of the advantages of a corporation with simple paperwork.
This form of business is suitable if your business has many owners and you plan to expand in a big way. A corporation gives you protection for your personal assets and gives you tax benefits.
Once you have decided the business form, you can get the help of an accountant to complete the formalities of registering the business. Before registering, you also need to decide the name of your company which should be unique in order to help you promote your brand.
- Find what licenses are required and get adequate insurance cover
Some states require a license to be obtained before you start your business. You need to research this by studying the applicable laws in your country/state and then approach the licensing authority and complete the formalities to obtain the license.
Insurance cover may be needed to cover professional liability. You can consider a business owner’s policy that has property coverage and covers your liability. The costs incurred would depend on the size of your business, the location, and some other factors. Business liability insurance in the US would cost around $500 to $900 per year for a small company with a few employees. Do contact insurance agencies in your country/state to find out how much it would cost you.
- Get the space and equipment you need
When running a property management business you need an office to operate out of. So you will either need to rent space in a building or lease it after you research the neighborhood. Additionally, you will need equipment to run your office ranging from computers to fax machines and phones. You need to have a budget with a plan of how you will spend your funds on various expense heads. It is recommended by most business people to not spend any more than 30% of your revenue on expenses.
At this juncture, it is would be ideal that you evaluate software such as a CRM system, to manage client information as this will help you provide superior service to your customers. Some of the popular CRM software you can consider are Freshsales, Insightly, and Less Annoying.
- Set up a bank account and credit cards
Creating a bank account and getting credit cards for a company is important as it allows for money related to a business to be maintained separately from personal funds. The balance maintained in the bank account and credit history will also help in securing loans in future. You should research banks in your area to find out which banks offer the best services for small businesses..
- Implement your plan and get going
Having done all the hard work you can now implement your business plan and get started with your business. The first focus area should be marketing as you will need to start promoting your services. Often the first step in marketing involves creating a website. You can also list your company on property listings and other websites. Once this is ready you may want to start hiring people and putting systems in place and then you are ready to get going with your new venture.