4 Tips to Help You Build Your Own Property Management Company

by | BiggerPockets.com

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.

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.

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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.

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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?

Leave them below!

About Author

Larry Alton

Larry Alton is a professional blogger, writer and researcher who contributes to online media outlets and news sources. A graduate of Des Moines University, he still lives in Iowa as a full-time freelance writer and avid news hound. In addition to journalism, technical writing and in-depth research, he’s also active in his community and spends weekends volunteering with a local non-profit literacy organization and rock climbing.

8 Comments

  1. margie kohlhaas

    Great article! I moved closer to my rentals so that we can maintenance them and thought about taking over the property management aspect. However, I prefer the investing side of things (working with the numbers, finding new properties, buying materials needed, and project management). I really don’t want tenants calling me about their toilets, heaters, issues with other tenants, or not being able to pay the rent. My property manager is worth her weight in gold. She keeps me freed up to do what I do best.

  2. Jim Costa

    Those who can, do and those that can’t teach. @larry Could you be any more vague. It reads like a high school paper when you didn’t read the assignment.
    1. Make sure it is right for you. So much more could be elaborated on here. What are your local requirements. Have to be licensed in my state similar to agent. Many start with managing their own property. What are some additional things to consider?
    2. Find some capital. For what? What are some of the expenses. Run the numbers. What are property manager getting. I would assume most areas between 5-10%. How many properties are you going to have to manage to break even. Can you run from home or do you need a retail/commercial space. Joining a rental association will answer a lot of questions and give you access to almost all the paperwork for less than $100 a year.
    3. Build your reputation. Besides work for someone else and steal their customers (great advise 🙁 ) . What about send letters to out of state property owners (get list from title company). Visit or join investment groups with people that don’t want to manage property. Become an expert in a certain area. Learn the stats, schools, crime, business, strengths, commute, weakness of area.
    4. Hire the right people. Who are the right people? Anybody that follows up, I think not. Who is your core team? Perhaps a handy man, painter, plumber, electrician, roofer, landscaper, accountant, lawyer. Again, join investment groups for qualified people or talk to agents, who they use to get a house/property ready to sell.
    5. Take a business like approach. Put up money. What money? Money doesn’t make you a property manager. Read 3 and 4. Learn the laws so you don’t get sued. What are the regulations for your state, county, city. How much can you collect with move-in. When do you have to give notices. Spend a day at court to see the process of eviction and for a free education day (spend a couple hours). Join landlord association and attend meetings.

    I don’t want to rewrite your article but if you are going to write an article at least be educated about it. Bigger Pockets use to be next step education. Your article did not give me any information on how to start or “build your own property management company.”. With higher prices, Bigger Pockets needs to focus on quality rather than quantity.

  3. Kim Meredith Hampton

    There are a lot of missing pieces to the article, but one big massive overlooked item is that almost all states require you to be a licensed Broker. Most states require that you be a Realtor for a couple of years under a broker, then you can work to get your Brokers license

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