The property management industry has been steadily growing for quite some time and shows no sign of slowing down anytime soon. The industry is attracting many experienced industry professionals looking to start their own company as well as new entrants eager to get their share of the billions of dollars it generates. Being a property manager can be a very rewarding career if you enjoy helping and working closely with people. If you’re thinking of getting started in the industry, it’s important to understand property management qualifications because there are some prerequisites before you begin your career.
If you’re already involved in the property management industry, you may be thinking of starting your own company. Although it is no easy feat, it could be a very lucrative path for an industry professional. Starting your own property management company the correct way takes time and consideration.
In this article we’ll discuss some of the requirements needed and steps you should take to get your business off the ground.
- Business Structure
- Building Your Team
- Building Relationships with Property Owners
Most states require some certifications for you to start your own property management company. These certifications and requirements vary by state, so be sure to check what your state requires.
Real Estate Broker License: This is the most common licensing requirement for property management companies. Every state treats this license differently and has different requirements to obtain it, but usually requires a minimum amount of experience in the real estate industry and coursework along with a test. If you’re just getting started in property management, there’s a good chance it will take some time for you to obtain a broker’s license.
Real Estate Salesperson License: While this license is not required to start your own property management company, many states require it to get a broker’s license. This license allows you to legally work with buyers and sellers in real estate transactions. Coursework and a passing grade on the exam are required to obtain this license.
There are also property management certifications and associations you can explore to further prepare yourself to run a successful company and network, however they’re not required.
Let’s briefly talk about the options you have when comes to business structure of your property management company. There are a few factors you’ll want to consider when picking the right structure for your business so it’s important to speak a licensed tax professional to weight all your options.
Limited Liability Corporation (LLC): This corporation is the most common for property management companies. Owners choose this structure because the profits flow directly through the company and are taxed as personal income versus business income, avoiding double taxation.
S-Corp and C-Corp: Depending on how these corporations are set up and your business’ income, it could be beneficial for you to pay corporate tax rates versus personal tax rates. C-Corps also have the added benefit of writing off certain expenses tax-free, which could save you a significant amount of your end of the year tax bill. If you’re thinking about incorporating under one of these structures, take a deeper dive into the differences between the two.
Building Your Team.
When starting your company, there’s a good chance you’ll have to wear many hats while building out your portfolio of properties. Once you start generating some revenue, you should know the type of employees and help you’ll need to continue to grow the business.
- Showing coordinators
- Selling and leasing agents
- Additional property managers (when portfolio is large enough)
- Maintenance managers
- Office staff (payroll, accounting, marketing, etc.)
- Real estate lawyers
These positions can be a mixture or full and part time employees as well as contract work. Some of these roles can be managed yourself, but it’s important for you to see what it takes to make a property management company run successfully.
There are many ways to market your company, and most channels should be considered especially when you’re just starting out. Marketing is probably the most important factor when trying to land your first few clients. The main goals of marketing are to bring awareness to your brand, establish your company as an expert in the industry, and network with potential clients. Here are some ways you can accomplish these goals through marketing:
- Content marketing (blog, SEO, etc.)
- Social media
- Review sites
- Paid advertising
Once you bring on your first few clients and create a solid reputation, you can start to rely more on word-of-mouth marketing and referral sources.
Building Relationships with Property Owners.
The key to a long lasting and successful property management company is building good relationships with your property owners. At the end of the day, it much easier to keep these clients long term instead of constantly having to find new properties to manage. Here are some simple ways you can keep your clients happy with your services:
- Set realistic expectations of how you’ll help them
- Keep lines of communication open at all times
- Do the work you promise to do
- Consistently exceed their service expectations
- Make your communication enjoyable for them
- Send monthly reports and invite them to share feedback
In short, doing whatever you can to keep your clients happy will ensure they want to stay with you long term.
Pro-tip: When your clients are happy with the service you provide them, you can use them in testimonials to win new business and as a referral source.
As you can see, there is a lot that goes into starting a successful property management company. Making the leap from a property manager or real estate professional to a business owner can be overwhelming. But, if you stick to getting the areas listed above right in your business, you’ll be well on your way to running a successful company.
Running a property management company isn’t for everyone. Some professionals prefer working for an existing company where they can focus on being the best property manager they be. If that’s you, it’s important to partner with a company that knows the ins and outs of property management and can help guide you along in your career.