How To Start A Property Management Company: Best Practices & Guide

If you’ve owned and managed property before or are interested in starting a new business venture, starting a property management company could be an enjoyable and profitable path.

In this guide, we’ll review how to start a property management company, the steps you need to take, and what to consider before jumping in head first.

Key Insights

• Property management companies handle the day-to-day operations of rental properties by sourcing tenants, lease tracking and signing, and collecting rent among property upkeep and maintenance.
• Starting a property management company requires performing market research, creating a business plan, registering and licensing your business, establishing a base of operations, and ongoing marketing to keep the business flowing.
• Don’t do it alone; let property management software like TurboTenant ease the burden and streamline your property management.

Understanding Property Management

The term property management is relatively easy to understand on its own. But what does a property management company do?

Property management companies are responsible for the day-to-day management of rental properties, and they usually handle most, or all, of the operational responsibility of those properties. That could include collecting rent, scheduling and overseeing repairs and maintenance, interacting with tenants and addressing issues, and other tasks depending on the property and the property owner’s needs.

Property management companies often handle all aspects of sourcing and onboarding tenants, including conducting tenant background checks, building and signing leases, and overseeing the cleaning and upkeep of the rental properties under their control.

Steps to Start a Property Management Company

If you’re wondering how to start a property management company for your own properties or for units owned by others, there are some standard steps to follow to ensure your success.

Step 1: Conduct Market Research

The first step in creating almost any business is to understand and build around the market in which you’re focusing. Identifying your target market, understanding the needs of the property owners in the area, and knowing what types of properties make the most sense to focus on are key to building your business the right way.

Another strong approach is to research and study other property management companies in the area. How do they market their services? What kinds of properties are they primarily focused on and is there an opportunity to differentiate your company from the others? This is also a good time to review local guidelines and licensing requirements for the location since that could impact how you create your business plan and set up the company.

Step 2: Create a Business Plan

Once you understand the market your company will focus on, the next step is to create a business plan to define your goals, work through the company’s offerings and services, and project income and expenses.

If you’re looking to interest investors in becoming a part of your company, a business plan is absolutely necessary to convey the ideas in your head into a concrete action plan. But even if you’ll be your company’s only investor, a business plan is a fantastic way to visualize your dream.

Creating a business plan forces you to anticipate potential challenges and opportunities, influencing decisions, allowing you to organize your cash flow better, and estimating profit margins.

For a property management company, a business plan would outline the services offered, a description of the company, a mission statement, and why your company would stand out from the rest. This is a great place to leverage the market research you’ve gathered to strategize how best to succeed in a competitive market.

By diving deep into the analysis and committing your plan to paper, you’ll develop a clear roadmap for a successful property management company.

Step 3: Register Your Business

At this stage, the next step is to register the business with your state and local government and acquire the licenses you need, according to your state. Each state will have different licensing requirements for a property management company, so make sure you’ve carefully reviewed those and taken appropriate action before opening up shop.

At this point, you’ll need to decide how you want to structure your company. There are three main company types to consider:

• Sole proprietorship: You’re a one-person show with no other employees. This company type offers no liability protection but is the fastest and cheapest to set up.
• Limited Liability Company (LLC): This company type provides liability protection for your personal assets and is probably the most common company type for a property management company.
• Corporation (C or S Corp): Corporations enjoy the best tax advantages and still provide liability protection for personal assets, but they are the most complicated and expensive company type to establish.

Once you decide which company type you’ll move forward with, choose a business name and register with the state. The business name must be unique and not already used by another entity in the same state, which you can check against the state’s business registry. You can also run a check with the U.S. Patent and Trademark Office if you want to register for a national trademark.

Registering your new company with the state will allow you to apply for an EIN (Employer Identification Number) with the IRS. This is a free process, and the IRS requires it for tax and hiring purposes. Once you have an EIN, you can also open a bank account for the company to keep your personal and business finances separate.

By now, you have your business name, you’re registered with the state, and you’ve done your research, which means you’re ready to…

Step 4: Set Up Your Office

Now that your company is set up and your business is ready to go, you’ll have to decide where you want your home base to be. Do you think you can manage in a home office? Or do you want a centralized location where you and your employees can meet, do business, and organize? An office space might be necessary to hire multiple employees and meet clients in person.

Regardless of location, you’ll want to make sure that you have a dedicated space for your office needs and equipment. Property management can be a filing-heavy industry, and while you can try to keep as much digital as possible and in the cloud, you’ll inevitably create some kind of physical paper trail.

Employ Technology

You’ll also want to identify the technology you need to run your business correctly. Besides the obvious, like computers, printers, and maybe a copy machine, you might consider utilizing a property management software tool to help organize the properties you manage and streamline your business efficiently and effectively. More on property management tools (like TurboTenant) later in this guide.

If you do find yourself in a physical location with employees, you’ll definitely want to establish clear day-to-day processes and operations to make sure expectations are clear and that your business runs as successfully and efficiently as possible.

An operations manual could be a great thing to think through, as well as establishing guidelines around customer service standards and goals. Your business is only as good as the service you provide, so keeping a happy customer base is crucial to long-term success.

Step 5: Market Your Business

Now that you’ve done your research, created your business, and found a place to call home, you’re ready to get some clients. Luckily, your business plan will have set you up for success, but there are some tried-and-true methods to drum up business that you should consider.

Build an Online Presence

The first place to start your marketing campaign might be to build a professional and user-friendly website. Since your clientele could include landlords and tenants, marketing to both groups would be a great place to start.

Showing landlords the types of real estate your company manages and showcasing listings to potential renters will demonstrate your expertise. Including clear calls to action will direct and funnel clients where you want them.

Make sure you include easy-to-find contact info for you and your company so clients who find you online can easily reach your inbox.

Utilize Social Media

Depending on who you’re marketing to, several social media channels could be helpful in your marketing campaigns. LinkedIn is a great place to find high-earning commercial clients, and Instagram and Facebook are fantastic outlets for residential renters and property owners.

Finding your audience where they gather is what you want to focus on as you seek efficient marketing plays that bring the highest returns possible.

Advertise and Offer Savings or Discounts

Everyone loves a discount. So, as you think through your various advertising campaigns, consider what you can offer as a discount to first-time customers.

As a new business, getting customers in the door is the biggest hurdle, and by enticing folks with promises of savings and value, you’ll have a full house in no time. Consider free property valuations or discounts on the first month of property management. Whatever you decide to offer is up to you, but think about how you can entice new business through creative offers.

Best Practices for Running a Property Management Company

Your business is up and running, and you’re attracting clients. But now, how do you ensure that your property management company will last as long as you want it to? Here are some best practices to consider:

1. Keep open lines of communication. Whether it’s with property owners or tenants, checking in regularly, quickly addressing challenges or problems, and being available when needed is a surefire way to keep everyone happy.
2. Stay on top of maintenance and repairs. The best way to ensure longevity for any property is to maintain it regularly and keep it in good repair. When tenants move out, get your crew in there immediately so you can turn the unit over to new tenants as fast as possible. Lingering maintenance issues can turn into significant problems overnight.
3. Stay on top of market trends. All that market research you did at the beginning of the process was a great start, but over time, things change. Staying up-to-date on what’s happening in your area can help you to get a jump on innovations or even new developments. The quickest way to get ahead of the competition is to never fall behind.
4. Prioritize tenant screening. While this may seem obvious, developing positive habits around the tenant screening process will help reduce problematic tenant situations and ease anxious property owners.
5. Leverage technology. Why do everything manually when so many tools are available to manage your company so much easier? Don’t reinvent the wheel; instead, let software and technology do as much of the work for you as possible. Utilizing property management platforms will save you time and money at every step of the property management journey.

How TurboTenant Can Help Your Property Management Company

As a property management company, there are loads of tasks you have to perform to stay current with your tenants and property owners, and nothing can fall through the cracks. Luckily, a platform like TurboTenant can take most of the weight off your shoulders.

TurboTenant has a full rent collection feature that automates the process, reminds tenants when rent is due, and automatically calculates and adds any penalties according to each tenant’s lease parameters.

Plus, TurboTenant includes a comprehensive tenant screening system that performs complete background checks, including credit scores and eviction history, where allowed by law. Once those tenants are approved, TurboTenant has lease templates from every state for you to use and sign directly within the software. No lawyers required.

If you’ve been wondering how to start a property management company and are feeling anxious and overwhelmed, TurboTenant can help ease the burden of day-to-day operations with just a few clicks. So, sign up for a free account today, and best of luck on your property management journey.