You’re thinking about starting your own property management company. Whether to become full-time business or a part-time gig. Or perhaps you’re a landlord already managing your own rentals. But you want to earn more income by managing for others. Regardless of your reasons, we inform you how to start a property management company.
How to Start a Property Management Company – The Traditional Way
Whether as a freelancer or a business to scale, these efforts will be similar.
Every state have laws regarding real estate. Laws defining management limitations and the license requirements. In most states, you do not need a license to manage your own rental properties. In states like Arizona, you can manage one property unlicensed. Typically, that is for large multifamily properties. Research your state laws and understand the requirements. Come up with a company name This is the fun part! Come up with a name you will like for years. Here’s a tip for starting a business, use the name for branding. If you want to specialize in luxury homes, consider a name with luxury in it. Same applies for other niches: multifamily, city/town, asset type, etc.
Open up a business account
Managing rental properties means you are handling money. And not just your own. It is important to keep your business funds completely separate from landlord funds. One of the easiest ways to get fined is commingling funds. Avoid the headache and always keep rent money in a different account. This business account is for your operations. All income from fees should be deposited here. All business expenses are drawn from this account. Such as your lease, license, office equipment and more. Your state law will define the required bank account standards for holding onto security deposits and rent. Most states require a trust account.
Get a PO box
If you’re starting small and at home, get a PO box. Similar to the business bank account, when starting a real estate business do your best to keep everything separate. This allows you to share the PO box for mailed checks and documents.
Although mailed checks is not a good idea.
Research your state law for licensing requirements. If you’re looking to start today not licensed, take the time to research what tasks require licensing. Large property management companies have staff members who are not licensed. They are limited to which tasks they can perform. Point being, you do not need a license for every single task. But make sure you understand which you do need a license for. Advertise Once you are ready to start taking on clients, start advertising. Consider advertising online and offline. When starting a property management company, understand it will take time to build up a portfolio. The more effort put into lead generation, the faster your portfolio grows. For online advertising, set up a website and social media accounts. You can use paid ads to drive traffic. Or, grow traffic organically with SEO. Adzing Digital Marketing works with property management companies for both. Before spending money on paid ads or SEO, make sure your website is capable of capturing leads. A marketing agency can check this for you. Or else you are investing in a leaky bucket.
How to Start a Property Management Company – The Modern Way
Starting your property management business is a lot of work. What if there was a way to streamline most of the startup efforts? Luckily, there is. Burbz has created the first gig economy for property managers. Meaning you can start your own property management effort a lot faster! Here is how Burbz helps you launch your solo management business.
Leads and Clientele
Burbz attracts landlords who are seeking property management. They can create a Request For Proposal. This is your chance to submit your proposal and rates! There is a formal interview process between you and landlords. By operating on Burbz, you gain access to a pool of landlord clients. We become your marketing department. Reducing your expenses even more. Or, find your clients offline and still set them up on Burbz.
Landlords join Burbz so they can receive their rent directly from the renter. This eliminates the risk of commingling on your end. Most importantly, this eliminates a major task for you! Landlords are happier than waiting until the 20th to receive rent. You save all the time distributing funds. Plus, you eliminate the angry phone calls asking when they receive their rent. When rent is paid through Burbz, managers automatically receive their calculated earnings. Your fees are deposited directly into your business account. Again, eliminating any risk for comingling.
Free Property Management Software
Simplify your operations with technology. Burbz is more than a gig economy for property managers. We built management software for you to use in service. More reducing of overhead and expenses. Helping you keep more profit.
How much do property managers charge?
Industry average for property management is 8-10% of monthly rent collected. Plus a full month of rent for leasing. However, there are more details to determine in your pricing. The major difference between the successful and unsuccessful management companies are the other fees. You will need a Management Agreement form that defines all the responsibilities and fees. We covered this in our blog all about property management agreements. The successful management companies can easily explain how much and when they earn fees. This includes vacancies, late fees, maintenance, leasing and more. Large property management companies have more overhead. Therefore, they need higher rates and more volume. More volume can also cause poor customer service with landlords since they do not respond quickly. Take pride in your customer service and do not worry about volume. Find ways to reduce your bottom line so you can reduce your rates. Landlords are already shellshocked by the amount of money paid to property managers. Be unique and work with incentives that align the landlord. For example, consider on-time rent bonuses instead of keeping late fees. Most landlords prefer a manager who is motivated to earn them more money, not spend it.
Can I be a property manager without a license?
Every state has its own laws that define the licensing requirements. These laws will define what tasks require licensing. To be a full-service property manager, you will need a license. All but 3 states require some form of a license. Or you can consider co-management. If you are not licensed, you can work alongside a landlord to help them manage their rentals. For example, if your state law allows, you could be the local move-in and move-out inspector and maintenance coordinator while the landlord handles the leasing and rent collection. Learn more here.
Set yourself up with property management software
Every successful business has a system in place. This helps them run efficiently. Take on more clients. Or, reduce expenses which increases profits. Property management is no different. When it comes to property management software, there are two categories. Professional property management and landlord software. The difference is cost and power. Professional software, like Buildium, is built for larger management firms. They charge per unit and per team member. Since large organizations will have multiple property managers, the power of Buildium is sharing all the data amongst staff members. Landlord software is built for single-user operations. Although commonly called landlord software, property managers can use it as well. For freelancer property managers, this is the desired solution. These software companies are more affordable, some are even free. When starting a property management company, go with the affordable software. This keeps your expenses at a minimum. Free software like Burbz puts more money in your pockets. You can use that to grow your business or keep it as income.
Business skills of a property manager
As a solo property manager, you will ultimately be performing or managing every aspect of the business. Time to sharpen those business skills!
Sales & Marketing
Every business needs sales. Become comfortable asking for business and referrals. Modern times have created new sales channels. There is still the old school face-to-face sales approach. Consider joining your local chambers of commerce. Or, attend local Real Estate Investment Clubs (REIC or REIA). The other approach is more digital. Setting up a website and Google My Business account to capture leads. Or, use a marketplace site like Burbz or ThumbTack that connect landlords and property managers.
As a property manager, you are the middle person for landlords and renters. Meaning twice the communication. Set up proper communication channels with renters. This will help you optimize your time. When tenants follow a procedure, this saves you time. Another reason why it is important to have a good software for renters to send not only rent but even maintenance requests. Landlords will expect great communication from you. Be prepared to provide quick responses when they call or email. Do not put off difficult conversations as that leads to more frustrations.
Operations & Procedures
It may take a while for you to experiment and find what works best. Eventually you need to systematize your operations. Bulking tasks is a popular method for people. This helps you stay focused and reduces time for setup. For example, property management companies wait until the 15th or 20th each month to pay landlords their rent. By doing this all at the same time, it allows you to be more efficient. Find ways to completely automate the task. Keep a log of your time, effort and stress for different tasks you work on. Over time you will identify the biggest time consumers. By creating or paying for a system that automates the process, your saved time can be spent on addressing other business tasks. Like more sales!
How many properties should a property manager have?
This is a personal decision. As a solo property manager, you have limitations. There is only 24 hours within a day. As your operations becomes more automated, you can take on more properties. You can start a rental property business managing a single unit. The beautiful value prop about Burbz is allowing you to grow your business. To go full time, calculate your desired annual income and divide it by profit per unit.
Start as a part-time property manager
Let’s face it. Most people with a desire to start a business or create a product don’t because it’s scary. It’s scary quitting a job. It’s scary investing in a business. Reduce your risk by starting out part time. Most of property management occurs after-hours anyways. Open houses and showings are weekends or week nights. Things break when tenants are home, which is weekends and evenings. Start your solo property management business as a part-timer. This allows you the luxury of building your systems while your client base grows. On Burbz, managers can be solo. They can be part-time or full-time. We help you start your property management business from a low financial risk. Continue to provide great customer service and receive referrals.
When you considering to start your own property management company, you have options. The traditional approach is setting up your business and accounts. Then search for clients. This might require you to go full-time at first. Or, consider the solo property manager approach. It can be part-time or full-time. It could be a side hustle until you have a large enough client base to go full time. Burbz is the first gig economy to help property managers. Help you find leads, reduce expenses and most importantly, optimize your time. Consider joining Burbz as a property manager or co-manage