Looking to start a business with tons of potential to grow? What if you could start a business that also teaches you everything you know about investing in real estate and building true wealth?
Starting and running a property management company may be one of the best, most unique opportunities out there. You’ll get paid to manage other people’s rental properties for them. As a result, you’ll be working with experienced investors day in a day out.
So while you are serving your customers by managing tenants, repairs, and everything else associated with rentals, you get to learn the industry inside and out. This will set you up for your own investing career success.
Sound good? Wondering what it takes to start and run a property management firm? Keep reading to find out now.
What Does a Property Management Company Do?
There’s a lot that goes into property manager. As a new manager, you’ll have a lot to juggle. But once you build a team and a system. things can very much run on autopilot. Here are the most common tasks for managing a property.
Markets the Unit
First and foremost, you need to market the property to potential tenants. There are many ways to do this, and many different platforms to list on.
More often than not, listing the rental on the various online platforms can generate enough buzz to find a tenant. But property managers need to ensure quality photography was taken and write a compelling description of the rental.
Screens Tenants
Once tenants are interested, it’s your job to sift through applications, weeding out the obviously bad-quality tenants and trying to find the perfect person or family.
To do this, you’ll need to read between the lines when it comes to the application. Tenants might do their best to sound responsible, but there are many ways to decipher what they are actually saying.
On top of that, you need to know how to run background checks, collect application fees and/or security deposits, and offer tours of the property.
Manages Cleaning and Repairs
Once a tenant is in place, it’s your job as the property manager to field phone calls. If something breaks in the apartment or home, the tenant is going to call you.
This is one of the biggest reasons that real estate investors hire property managers. They don’t want to deal with toilet repairs at two in the morning.
You need excellent customer service and people skills since you will regularly communicate with tenants. And you either need to know how to fix common problems on your own, hire an employee to do so, or have contractors on-call that you can rely on.
Between tenants, the units will also need to be deep cleaned and prepared for the new tenant. While the old tenant should take care of this, it’s not always the case.
Collects Rent
And of course, you also need to collect rent. The property owners will remind you that is the most important job you have.
Most tenants will pay on time, every time. But every property manager eventually has some harder tenants that are frequently late on rent. It’s your job to confront and collect rent no matter what.
When people refuse to do so, or when they evade you for long enough, you need to be willing to evict the tenant in the most responsible way possible.
What Does Succesful Property Management Look Like?
Running a property management firm is not for the faint of heart. There are a lot of moving pieces. Especially as you grow, and the number of units you are managing begins to multiple.
A good problem to have, but a problem nonetheless. So what does success look like?
Working With Top Investors
First and foremost, it means working with investors who own multiple properties. It’s far easier to manage 10 properties owned by one person than it is to manage 10 properties owned by 10 different people.
Because of this, many property management companies don’t take on new clients unless they have a certain amount of units. In order to find these people, you need experience and you need connections.
Of course, you’ll need to start where you can. That means working with any investor that owns one or two properties. You just need experience and you need a reputation in your area.
Finding the Right Tenants
Secondly, success means finding the right tenants. One of the most critical aspects of successful property management is finding the type of person to rent from you.
Good tenants don’t damage your property. They always pay rent on time. When something breaks, they may even fix it themselves.
They stay put longer, often for three years or longer. And when they do finally leave, they inform you well in advance. Oh, and they clean the unit before they peace out.
No Vacancies
Lastly, a successful property management company is one that limits, or eliminates, vacancies. It takes a lot of work to fill units as soon as they become vacant.
But considering that the average vacancy rate is 7%, that means a unit sits empty, not earning money for 25 days a year. That’s almost an entire month’s payment that is missed.
If you want to retain clients and keep your business moving forward, cracking the code to lower your vacancy rate is one of the best investments you can make as a property manager.
How to Start a Property Management Company
Looking for tips to build a property management company? The first thing you need to do is get your own rental property.
It’s going to very difficult to convince experienced investors to hire you to manage their rental property when you’ve never done it yourself. Therefore, your first step should be acquiring your own property.
Don’t worry, it’s not as hard as you think. There are many programs available that allow you to put down smaller down payments, especially if you buy a multi-family property and occupy one of the units yourself.
Try finding a slightly distressed or outdated property. You can get a better deal on it, and you’ll have some budget left over to renovate the property. This is the additional experience that you need.
You need to know how to make upgrades that are budget-friendly, yet are attractive to prospective tenants.
Once you get the property ready for rent, do your best to get a tenant in there. Treat it like you are already a property manager. Spend a year focusing on this, and potentially acquiring a second property before you start marketing yourself as a property manager.
Getting Your First Clients
Once you have at least a year or two of experience manage a property, you can start building out your business. But rather than going all out right away, take it small.
Try to find someone you know personally, or have a connection with, and offer to manage their property for them for a discounted rate for six months, or even a year. Let them know you are trying to build a property management company, and are looking to build your portfolio.
While managing their property is similar to managing your own, it’s still a very different experience. Then, once you have one happy client, you’ll be ready to start marketing to others in your city.
Plus, they can leave you a testimonial that you can use on your website and in your marketing materials.
How to Build a Successful Property Management Firm
Now that you know how to start a property management firm, let’s talk about how to grow a successful company over the long haul. After all, starting a company, and finding success, are two different things.
Here’s what to do to grow your business, your bottom line, and your number of clients.
Get Really Good at Marketing
You have to learn how to market to two different customers. First, you need to market to the investors, the property owners. Then, you’ll learn how to market to tenants.
Marketing to Property Owners
These are the people putting money in your pocket. As mentioned before, finding your first clients comes through your network and word of mouth.
Once you are confident in your system, processes, and teams, you can start focusing on growth. One way to do this is to spend time where your customers spend time.
Since they are investors, that means they are high-net-worth individuals. So where do they hang out? A lot of the time, it’s at golf courses. It can also be at certain restaurants, bars, and events around the city.
Figure out what places these are, and make a commitment to spending time in these places networking and building relationships. You want as many people around town to know who you are, what you do, and how good you are at doing it.
You’ll also want to build out a professional, expansive digital presence. This includes a website, relevant social media accounts, advertising channels, and so forth. To sum it up, you need “Innovative Property Management Marketing Ideas to Grow Your Business” if you want to set your company apart from the rest.
Marketing to Prospective Tenants
The next type of marketing to focus on is tenant marketing. You want to be able to cast the widest net possible, to attract as many potential tenants as you can.
When you do this, there’s always going to be a few exceptional candidates in the sea of average and poor-quality candidates. And with the right interviewing and screening process, you’ll be able to figure out who the good ones are.
Start by figuring out what the most popular places to list a unit are. Oftentimes, this includes sites like;
- Facebook Marketplace
- Craigslist
- Realtor.com
- Zillow, which also syndicates to Trulia and HotPads
- Apartments.com
There are many other sites like this. Sites like Avail.co can even syndicate through a large number of other, non-related sites, saving you time and effort.
And don’t forget to join local Facebook groups for your area. When you share new listings in these groups, you’ll find that people will often share listings with friends or family members who said they were looking for a new apartment.
Prioritize your Tenants
As a property manager, you’re in a unique situation. On one hand, your main customer is the investor who is paying you to manage their property for them.
Your goal is to please them, so they continue to pay you every month.
But in order to please the investors, you must actually prioritize your other customer; the tenant. When you provide excellent service to the tenants in the properties you manage, they will be happier.
When they are happy, they’ll stick around longer, so you don’t have to constantly find new tenants. As a result, there will be fewer vacancies, which means the property owners don’t lose money.
And when rent comes in on a regular basis, the owners will be more than happy to continue paying for your services month after month and year after year.
In fact, if you get so good at prioritizing the tenants, providing the best experience that you can, you may never even need to talk with the property owners. After all, they really only call when there’s a problem.
Automate and Leverage
Automation and leverage are two terms you are going to grow to love. You need to be using technology to automate as much of your business as possible. There are so many tools available to help make your life as a property manager much easier.
They will save you time, frustration, and money. And they will prevent important information from slipping through the cracks.
You’ll want an online system that makes it easy for tenants to pay rent online and even set up automatic payments. You’ll want an online application system so you don’t have to deal with paper or email applications.
You’ll want software that tracks rent across all your different units, so you always know who has paid, and who hasn’t. Bonus points if this software also sends automatic reminders to your tenants.
You can also have a system for allowing your tenants to submit maintenance requests, which can get rid of late-night phone calls for you.
Building a Rewarding Career
Building a property management company is an incredibly rewarding career. Not only do you get to support your local community by providing safe, clean, comfortable housing, but you also get to work alongside experienced investors.
Not only will you be helping them, but they will naturally be helping you by allowing you to learn what investing and building wealth looks like.
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