Whether you’re a landlord with experience managing properties or you simply enjoy the real estate industry and are looking for a way to get involved, owning a property management company could prove to be a potentially lucrative opportunity. But like any financial venture, it requires a little bit of business acumen.
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4 Tips for Building a Property Management Company
Property management can be lucrative and rewarding, but it can also end up being stressful and deflating if you don’t know what you’re doing. While everyone has their own way of doing things, here are a few helpful tips for building a profitable and stable property management company that will produce results over a long period of time.
1. Make sure it’s right for you.
The first step is to make sure you’re actually cut out to run a property management venture. There’s a difference between being a real estate investor and being a property manager. Overlap exists, but they aren’t one and the same.
As a property manager, you’re not just focused on the property. You’re also dealing with people and handling issues like marketing, tenant acquisition, contracts and lease agreements, repairs and maintenance, rent collection, and possibly even evictions. If you aren’t comfortable with the hands-on nature of property management, there might be something else out there for you.
2. Find some capital.
Unless you happen to have a bunch of cash sitting around, you’re going to need some capital to get your property management business up and running. Expert Anne Miller suggests a small business loan as a good funding option.
These types of loans are preferred for their leniency and flexibility. “Smaller lenders also generally offer lower interest rates along with longer repayment periods to the borrower’s advantage,” Miller explains. “This is in addition to a non-interfering attitude in terms of wanting a stake in your business or any controlling right over it. All they want is their money back with interest and within the stipulated time.”
3. Build your reputation.
No real estate investor is going to trust you with their property if you don’t have a good reputation in the area. Unfortunately, this is one of the trickiest parts of building up a property management company. You need clients in order to build a reputation, but clients want you to have a reputation before they agree to do business with you.
One of the best ways to build up a personal reputation is to work with another property management company for a period. During this time, you can network with other people in the industry and start to build connections. Then, once you go off on your own, you have a personal reputation upon which you can stake your brand’s reputation.
4. Hire the right people.
You can’t run a very big business on your own. You’re eventually going to need some employees to help you scale up. The key here is to hire the right people. Warm bodies won’t suffice.
As you interview candidates, look for people who are motivated and ambitious. “Employers should be looking for employees who want the job, and candidates who follow up demonstrate their enthusiasm for the opportunity,” says Mike Steinitz, executive director for Accountemps.
5. Take a business-like approach.
Far too many real estate investors and wealthy individuals think property management is as easy as putting up some money and watching everything fall into place. In most cases, these are the folks who fail rather swiftly. If you want to find success in the property management field, you must take a business-like approach from start to finish. There’s no other way around the situation.
Any tips you’d add to this list?
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