There are a lot of people out there right now trying to learn how to start a property management business. For some, it’s to provide a little bit of extra spending money. Others are looking to transition into a new career, and some just want to diversify their skills if their job is unstable.
Whatever the reason, the strategy should be the same. This article will outline a basic (but effective) way to get your business up and running.
Step 1: Incorporate Your Property Management Business
Even though it’s tempting to just hit the streets as fast as possible, the first thing you should do is incorporate. This isn’t too difficult or expensive, but it’s important for several reasons.
The main reason is to protect your personal financial assets in case someone sues your company. If you are operating as a sole proprietorship, any lawsuit can come after your stuff- your retirement accounts, house, etc. But if you have a corporation or Limited Liability Corporation (LLC) for your business, the only assets at risk are those owned by the business.
Another reason is to help your business look more professional. The least professional type of business is one that operates under your name. One step up is where the business actually has a name, like Athens Property Management. But having a corporation, making it Athens Property Management, LLC is one step above that.
Step 2: Identify Your Target Clientele
Marketing 101 is to identify your target market. When you’re building a new business, you need to be laser-focused on who you reach out to for new clients.
Will you specialize in working with new investors that have one or two single-family homes for rent? Or are you looking at having several larger clients instead of dozens of small ones? You have to make this decision upfront because it determines who you market your business.
Step 3: Join Local Professional Networking Groups
Professional networking groups are hit or miss. Some are great and some aren’t as effective as they could be, but you never know until you get in. One of the best types of groups for you to join is a real estate investment group.
If you live in an area that can support property managers, chances are good that there are at least one or two groups in the area that center around real estate. Usually these are real estate investment groups where people meet to share opportunities and lessons learned. These are extremely useful for anyone in the industry, because even people with lots of experience may come across opportunities to buy or sell properties here that they otherwise never would have known about.
Most people in the group will be real estate investors, meaning even if they aren’t interested in switching to a new property manager just yet, they can help you get an idea on what they look for in a PM.
Step 4: Get Your First Client
Getting your first client for any property management business is the number one priority. Once you have one client, you have an idea of what works and you can scale up.
Note that I didn’t say you need a professional website, nice office, stack of fancy business cards, etc. Obviously the business cards are nice for networking purposes, but just getting a cheap set of 500 for like $20 is perfectly fine for now.
Since you already know who your target market is, go where they are. Maybe it’s the professional networking group. Perhaps the best place is a gym in a high-end part of town. Finding them on LinkedIn and reaching out to them to meet over coffee may be the best route.
A successful business of any size worries about cash flow, right? Your job is to get that into the black as quickly as possible. Finding your first client, learning from the experience and using that knowledge to grow.
Step 5: Grow
A business that isn’t growing is dying. You need to be constantly growing in several directions:
- Studying for property management certifications
- Finding new clients, preferably through referrals
- Cornering a new niche part of the market to dominate (once you already dominate your initial segment)
- Invest in property management software to make your job easier
It’s not easy and it will take time, but if you stick with the basics and focus on taking care of your clients and regularly market yourself to new ones, your property management business will take off.