Follow me step-by-step as I start a property management company from the ground up.
For many years I worked as a property manager for another firm. I enjoyed my time working with that company. I learned a lot of valuable lessons and developed great relationships. My career as a property manager had grown tremendously along the way. But eventually, the time came to step out and start a property management company under my own broker license.
It was a difficult decision. I was nervous and excited all at once. One of the biggest challenges was that I was going to have to leave most of my accounts behind. When you work as an agent for another broker, the accounts belong to that broker. So, stepping away meant that I would be starting from ground zero. This was scary but also I was thrilled about the idea that I could take my own ideas a grow a company in the direction that I wanted to.
How to start a property management company?
One of the questions I see the most is people asking, How do I start a property management company? There are a lot of great resources that will give you good ideas on where to start. But I thought that since I was starting a new property management company from the ground up, I could take you along with me on my journey as we start at step 1.
I had this idea that since everyone wants to know how to start or grow a property management company, why not do it together? I would document my efforts every step of the way and show you what I was doing and how I was doing it. Everything from getting started with licensing and what is required to register a property management company and be able to legally operate. (I am in the state of Florida) So, depending on where you are there may be some nuance differences regarding licensing, setting up your business entity etc.
Get Professional advice when starting a business
Always follow the laws of your state and be sure to hire an attorney and financial advisor who can best guide you based on your personal situation. Since each state is different and each person’s personal situation is different I won’t spend a lot of time discussing what business entity is best for your property management company or things like that. I will touch on what I did for myself but you might need to do it differently based on your situation. So just be aware of that. Please don’t copy what I am doing without consulting with your own personal advisors and legal counsel.
Ok, enough of the disclosures. What I really want to accomplish with this post is to show you how I launch and grow my property management company. I’m actually writing this in almost real-time. As of this post it is early 2020 and I am only a few weeks into the process of starting my business. You will be able to join me on the journey and hopefully, we can grow together! The intention is to make this a series of posts that you can follow along with. Let’s consider this post, Step 1. I will bring you up to date on where I am in the process.
Step 1 – Make sure you are following the rules and laws for starting a property management business.
For me, I am a licensed real estate broker in the state of Florida. In order to own a property management company that provides management services to 3rd party owners and investors, you will most likely need to be a licensed real estate broker. This is the case in Florida and also many other states as well. There are some loop-holes such as being the owner of the real estate or being an employee of the property owner, but for the purposes of this article, we will assume that you are a licensed real estate broker (or an agent working for a broker who has authorized you to manage properties under their license) and that your goal is to lease and manage real estate for clients. So be sure you have the proper licenses, first and foremost.
If you are a real estate agent and want to become a broker, check out the laws in your state for how to qualify to become a licensed real estate broker. Most states will require that you have a certain number of years of experience as a real estate agent before you can apply to be a broker. You will also likely have to meet a certain level of educational requirement such as a state-approved real estate broker course. In Florida, passing a 72-Hour educational course will be required along with passing an exam. Know the rules of your state before you set out to start a property management company.
Step 2 – Setting up your company structure
Legal Entity
This is an area in which you want to consult with your professional legal advisor and accountant too probably. For me, I decided to set up an LLC. Setting up an LLC is pretty easy to do just make sure you follow the laws of your state as well as any federal laws that may apply.
Insurance
You also want to get some insurance. When you are dealing with the public, things can and do go wrong. Be protected by having the right insurance. Your insurance agent or someone on your legal team can help point you in the right direction when it comes to getting insurance that is best for your situation.
Forms and agreements for doing business.
Get solid contracts to protect you and your clients from liability. This is an important step in starting a property management company. Have an attorney you trust who is experienced in real estate and property management to put these forms and contracts together for you.
Do not develop your own forms unless you are a licensed lawyer. Avoid “Cookie-cutter” forms. These are often very inadequate and leave you open for potential issues. Always consult an attorney when it comes to real estate and property management contracts.
Step 3 – Developing a brand
Your company’s image
Your administrative tasks are completed. Now it will be time to get to work on the branding and image of the company. This is the time to be creative. The brand should reflect who you are and what you do. Choose something that not only you like the look of, but also something your customers can recognize and make a connection with.
Often times when it comes to the look and brand of our own business we pick what appeals to us. But it’s important to choose an image that connects with the audience as well.
At the very least, send some ideas for your logo and brand image to friends and family and have them give honest feedback. Getting an outside perspective on your company logo provides you valuable feedback.
Designing your Image
Unless you are a graphic designer you will want to hire a professional. As new business owners, we are very cost conscience, and that’s a good thing! But there are also times to let the professionals handle it. When I designed the logo and image for my new management company, I used a service that does graphic design by contest.
The way it works is you start a contest and dozens of graphic designers will submit their ideas to you. You will have the opportunity along the way to give them feedback and get lots of revisions. You can also ask friends, family, and colleagues to get their input as well. It’s a great way to “crowdsource” your company’s branding and logos. It’s very reasonably priced as well.
Launching a Website
When it comes to launching a website there are so many providers you can choose from. Pick one you like and that works with your level of technical knowledge. I use WordPress, and there is some technical knowledge required. Do you want to take the time to learn and are you interested? Decide for yourself.
In general, the website should be easy to update and should be easy to navigate. Keeping things simple is important. People focus on the design too much. Too much flash and too many links on the home page will not help you. Keep the navigation clean and make it clear what the site is about. People have no attention span and you only have a few seconds before they’re gone. Do you know what pages are visited the most? Make sure those are front and center. You will create marketing campaigns for your property management company, and keeping people engaged is the key to success.
Other Branding and Operational Needs
A property management company needs lots of things. You may need some property management software. There are lots of solutions. Pick the one that works best for you. Yard signs and for rent signs are good to have too.
You can go overboard when starting a new business. I believe that bootstrapping a business until it has some momentum is the way to go. Don’t spend too much money upfront until you have some clients and some revenue coming in. That way you’ll know if you have a viable business to begin with before you spend too much money!
Stage 1 complete
This is where I am now and I hope you’ll continue to follow me on this journey as I start my own property management business after years of working with another firm. Let’s share ideas too! Please reach out and connect with me. I’d love to hear your ideas about how you’re starting your property management company. What are you doing to find new clients, and market your property management business?
