What is Property management?
Properties owned by people require maintenance, and this is professionally done by a company that is expert in property management.
Your clients may vary in what type of property they own. It could be a single building, a residential/office complex and even leasehold buildings.
Thus, property management companies indulge in letting out properties after screening the tenants. The other part of the work is to draft tenancy contracts, monitoring how tenants maintain the premises. They act as the bridge between the landlord and the tenants by collecting the rent and engaging in repair services if the need arises. The landlords are comfortable with the arrangement as everything is legal.
A property management firm can also be quite successful, as most providers charge a one-time and a monthly fee.
Creating a property management firm is similar to starting any other type of business. It requires a lot of complexity and commitment and the necessary abilities. In the sections below, we’ll go through some of the most important things you’ll have to build a viable property management firm. Continue reading to learn more.
What you Need to do Before Starting a Property Management Company
The visibility of your business premises to the common public is vital. If you pick up an office premise inside a large office complex, your chances of walk-in business become slim. It’s best to have your office and signboard in a busy commercial Street.
Be with your flock
There are many associations for business people who manage properties. Join one of them and be a part of such organisations to know which direction your business is heading in.
A website of your own
A website describing your business has become a basic necessity now. It is accessible all round the clock and informs the visitor all he needs to know about your business.
Tools are available to build your property management site, and you need to make it as informative as possible. If the website is constructed in friendly SEO language, the chances of ‘ hits’ are more.
A signboard won’t do!
Unlike in old times, just a signboard won’t attract business. To be different from the competition, brand your business. Branding involves spreading the news about your business through various mediums. Before doing that, you need to develop an attractive logo and a catchy tagline. These would create a unique identity you can use on banners, posters, pamphlets, social media platforms, your stationery etc.
It is not only customers who give you business but your fraternity too. There are networks formed between business people involved in the property management business who can give you new leads to customers. The other advantage is getting to know the best practices in your field.
Never stop learning
Property management is one of those businesses that is dynamic. It’s best to keep ourselves updated on what is happening around us and knowledgeable. If guidance from a senior professional is available, consider him a mentor and make your decisions accordingly. On the other hand, it’s helpful to be recognized as a professional yourself. Attend courses and earn merit certificates.
Generally, it’s you who takes care of the business but with it increasing you need extra hands. Therefore appoint people who know the job and supervise everything. With a team in hand, more business is bound to flow in.
Property management is all about managing someone’s property, and you may have rented it out to a tenant of your choice, or they could be existing ones. It does not matter how they became tenants, but regular communication is vital. The tenant may have issues with the property, and you must attend to it immediately.
Technology aids you
Technology simplifies the property management business. You would have stored information vide documents in the box- files in the past. At present, you can keep more in computers and smartphones. The information you seek is available in a minute and helps you avoid hours of searching.
Be aware of budget constraints
Much investment is required when you set up your business initially, and you should be careful not to exceed it. Here are those costs that need to be controlled and fall within the budget.
It does not matter whether you rent, purchase or lease your office premises and control the cost well within your budget. The premises should be where everyone can see and access them. Never compromise on this.
Implementation of a marketing strategy that would work is essential. As mentioned earlier, spare no effort in advertising your business using the internet.
Never shrink your budget when it comes to administration costs. Unless the business is administered correctly, success would never happen.
It is the E-mail age, but certain things have to be done the old way. Posting specific information to tenants etc. is essential; these costs have to be factored in.
Ensure everything. The premium would increase your costs but would be a lifesaver if anything untoward happens.
Although the Executive Summary introduces the business plan, it is practically the last document prepared but presented first. The executive summary provides an insight into your key strategies.
Your Executive Summary should grab the viewer’s interest and hold it until the end of the document. Let them know what kind of property Management Company you run and where you are in the process of growing it.
Each element of your strategy will now be described in detail. Describe the property management industry, for instance, and discuss the nature of your property management company. Include a list of your most immediate competitors. Make it clear who you’re trying to reach. Provide a glimpse of your marketing strategy in a few sentences and identify your team’s most influential people. Describe your financial plan as well.
You can use this information to explain your firm’s mission statement, the products and services you offer, and the number of employees you have.
A Brief Overview of the Property Management Business
Provide thorough information about your business in your company description. Extensively describe the difficulties that your business resolves. Make a list of the people, organizations, or businesses that your business intends to service. Your business plan’s Company Analysis section should provide background information about the industry,
- When did you begin your business and why did you do so?
- Have you chosen the ideal site for your business?
- What accomplishments have you made thus far? Milestones could include sales targets achieved, the number of new contracts signed, and so forth.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal system here.
- Explain the competitive advantages that will make your business a success. Are there experts on your team?
In your company analysis, you will detail the type of property management business you are operating.
Commercial property management: Includes handling properties like industrial, retail, or office buildings.
HOA management: this type of property management business usually performs work under contract with individual Home Owners’ Associations.
Multi-family property management: this type of property management business manages multi-family residences, such as apartments.
Single-family residential property management: this type of property management business manages many different houses in different locations.
The main objective of the industrial analysis is to provide details and outline the property management business.
The purpose of industrial analysis:
- To educate yourself, conduct research in this business.
- Research promotes your understanding of the market.
- Identification of market trends to strengthen your strategies
- A market research aids in developing you into an expert in the business of property management.
The following questions need to be answered under Industry Analysis:
- What is the size of the property management business in terms of money?
- Have you identified your competitors?
- Have you identified the best suppliers in the market?
- Are you aware of the current market trends?
- Have you projected what could be the Industry’s growth over the next decade?
- Do you know the appropriate size the market has to be?
- You need to decide that your company growth has to be in line with the Industry. For this purpose, you apply the market’s total size to the local population, and you can conclude what’s business you should do.
If you’re going to be in a property management company, you need to have a part of your business plan devoted to client analysis.
Customer segments include residential, business, and holiday properties, among many others.
In other words, the sort of property management you provide will be heavily influenced by your choice of customer segment(s). Shoppers and holiday homeowners have different needs and preferences regarding service possibilities, and they’ll respond to various marketing campaigns.
Consider the demographic and psychographic profiles of your ideal customers. Include a section on your target audience’s age, gender, location, and economic level when talking about demographics. Such demographic information is readily available from government websites because most property management companies serve consumers in the same city or municipality.
Customers’ psychographic profiles reveal what they desire and need. Understanding and defining your consumers’ wants will help you recruit and retain them.
The indirect and direct competitors your company faces should be identified, and then the latter should be the focus of your competitive study.
Other property management firms compete directly with us.
Alternatives to your products that aren’t direct competitors are referred to as “indirect competitors.” Below are in-house managers and owners who operate their vacation rental properties. It would be best if you mentioned such competition to demonstrate your understanding that not all owners of commercial or residential income properties will choose a property management business.
You’ll want to include the other property management companies with whom you’re in direct rivalry. Property management companies in your immediate neighbourhood are likely to be your main competition.
It is essential to give an overview of each competitor’s business and describe their strengths and weaknesses. You can’t know everything about your competition unless you’ve worked for them before. However, you should learn the following essential details about them.
Property Management Marketing Plan
The four Ps of marketing strategy are
Your marketing strategy for a property management company should include the elements above.
- Should not be beyond comparison with that of the competitor
- Document it
- Indicates where your business premises are located.
- Detail report on whether the location would find you business
- Promotions are nothing but marketing. Consider the following methods to promote your business.
- Flyers, social media, radio and TV etc.
Property Management Operations Plan
With the goals and objectives to be achieved in place, all you require is an action plan to achieve them. Technically it is called an operations plan, and there are two divisions in it.
The first is the short term plan which includes
- Mundane activities run by you daily, which includes customer services
- Purchases and office maintenance etc.
You can reach long term goals with the short term goals accomplished. It could be achieving a market position in five years and a leader in the property management business within ten years.
Having a well-trained management team is crucial to proving that the property management company can succeed. Emphasize those abilities and experiences that demonstrate the power of your key individuals to grow a company.
Financials should include the following:
A statement shows whether you made a profit or loss during the given period.
A statement that shows your company’s assets and liabilities with value.
Cash flow statement:
The statement would reflect the cash you have after expenditure to run a project or business.
Success in a property management business is never easy as it involves collecting money, maintaining the property, satisfying both tenants and landlord, etc. Using the ideas mentioned above, passion, nothing can stop you from becoming a successful property management businessman.
The steps for starting a property management company typically include registering your business with the state, obtaining business insurance, obtaining a license, developing a business plan, setting up financial systems and procedures, creating a marketing plan and building a portfolio of clients.
Generally, a property management company owner should have a degree in real estate or a related field such as business administration or accounting and experience in the real estate industry. In addition, some states may require you to obtain a license or a specific type of certification.
Typically, a property management business will require general liability insurance, professional liability insurance, and errors and omissions insurance. You may also need to obtain workers’ compensation, property and theft insurance, independent contractor coverage and product liability insurance.
Start-up costs may include licensing and permit fees, rent for an office space, software and technology expenses, insurance, legal and accounting services, staff salaries and taxes, marketing, and set-up costs for the office.
Depending on the state, you may need a license or certification to manage properties. Some states may require a real estate license, while other may have certifications specific to property management.
Yes, a business plan is an essential component of any successful business. Your plan should include an analysis of the local market, a description of your services offered, a marketing plan, an assessment of your start-up costs and a list of your target clients.
Acquiring and maintaining clients can be done through networking, referrals, advertising, and promoting your services. You should also focus on building relationships and providing quality service to all of your clients.
Responsibilities of a property manager typically include screening tenants, collecting rent payments, handling other forms of tenant payments, handling tenant inquiries and complaints, managing repairs and maintenance issues, maintaining records, and preparing leases.
Setting up and implementing a financial system and procedures should include setting up a bookkeeping system to track income and expenses, generating invoices and statements, collecting tenant payments, organizing rental documents and contracts, setting up a budget and tracking cash flow, and filing tax returns.
When pricing your services you should consider the size and type of property, the number of services you are providing, the local market rate, and the level of service you are offering. You should also consider your overhead costs and the cost of your staff.