So you’re thinking about starting a property management company. You have the budget, tools, and resources you need. Maybe you’ve even decided to go into the business with a couple friends or business partners. Have you considered all the aspects of this here? Read on to find some things to consider before starting a property management company.
When you begin to plan for your new property venture, you’ll want to do some research to find out if the state you will be managing properties in require property managers to have a specific license. Most states do require these licenses whether they be a Real Estate Broker License, Property Management License, or both. Some states even require property managers to be members of Community Associations. You can find out here if there are any age, high school graduation, or residency requirements.
It’s Inexpensive to Start
Starting a property management company is relatively inexpensive. You can begin by working out of a home office with a few simple tools such as a phone, fax machine, scanner, and printer. You’ll want to incorporate your company appropriately (most commonly with an LLC) to avoid risk of personal asset harm or loss to yourself in case a legal issue or accusation arises. This typically carries an annual filing fee but can be well worth it for the benefits.
There’s No Degree Required
Didn’t get through those last couple years of college? Never went in the first place? Not a problem. You don’t need a degree to get into this business. Simply having connections and understanding what’s expected of you is enough to help you make smart budgeting choices, take on qualified clients, and keep your property owners content. It helps to have some experience, but it’s not necessary. (depending upon state requirements) Once you start a property management company, you may decide you want farther education in the field down the road.
You’ll Be Finding Clients and Marketing Your Business
You’ll have to find your own clients and market your own business. This includes property owners as well as tenants. You want to make sure you’re letting credible, financially stable people move into the property under your management. Starting a property management company often times begins with figuring out how to market your business. Where will you find property owners and tenants? Making connections with local real estate agencies and realtors may be helpful. Your property owner may have a preference for how he/she wants the property to be marketed, or may want it to be marketed to certain clientele.
You’ll Be Working with All Types of People
When you start a property management company, you’ll soon find that you’ll be working with all sorts of people. From property owners to real estate agents, irate neighbors or tenants, service providers such as lawn maintenance, plumbers, and more involved contractors, these are all people you’ll be working with on a regular basis. Having strong communication skills is a great asset when it comes to working with these different companies and individuals.
You May Lose the Privacy of Your Cell Phone
If you plan on starting a property management company by working from a home office, odds are it will be easier to use your cell phone as a point of contact. After all, it’s convenient: you always have it on you and anyone can reach you on it, which is essential because you’ll most likely be spending a lot of time out of your office. However, herein lies the con: losing the privacy that you have with your cell phone. You’ll no longer receive just personal or casual business calls on your device—you’ll also be getting emergency calls and complaints from tenants, landlords, and service providers. Think about how this will impact your personal life and consider getting a phone or number referral service just for business.
You’ll Need to Create Strong Lease Agreements
Before starting a property management company, you probably have some idea of what your lease agreements will look like. However, you may not know exactly what’s going in the lease. When starting a property management company, you need to be prepared to be as clear as possible in the lease agreement. Don’t underestimate the necessity of a strong clear lease: be specific. If you’re not sure what should go in there, find out before you start looking for tenants.
You Assume Responsibility and Risk
Starting a property management company means that you bear the responsibility and risk of whatever will happen to the property. You are responsible for marketing it, finding clients, keeping your property owner updated; you’re responsible for maintenance, inquiries, service providers, and keeping tenants comfortable. Understanding your responsibilities and the risk involved can help prepare you for potential troubles that may often lie ahead.
Starting a property management company requires time, effort, and knowledge. Considering all aspects of the business before you start can be helpful. With the right tools, resources, and networking, this can be a great business that will grow and be successful for years to come.