[Updated December 2015]
So you want to start your own business and think property management is the place to be. What kind of person can be successful in this business, and what is required for starting a property management company?
What Is Property Management?
Property Management is the oversight of one or multiple residential, student housing, or commercial properties. The owner and manager can be the same individual, or the properties can be run by a property management company if the real estate investor doesn’t have the time or experience to manage the properties himself.
What Do Property Managers Do?
Property managers take care of and manage buildings and other real estate properties for individuals or groups of owners. They are classic middle managers that connect owners to renters and also take care of vacant properties. Responsibilities of property managers include marketing vacant units, showing the properties, collecting applications, getting leases signed, collecting rent, overseeing maintenance on the properties, conducting move-in/out inspections, and more.
One attraction of property management as a new business venture is that the barrier to entry is low. Startup costs are affordable ($2,000-$10,000), no advanced degrees are required, and you can get into the business with little experience. Having a background in real estate is helpful, but not essential.
Most important is the ability to be well organized, able to connect and empathize with people, and be responsive to many types of urgent situations. You’ll want to build a strong network of contractors to handle maintenance issues as well as special requests. And ideally you’ll be proactive in identifying ways for property owners to make valuable enhancements to their properties as well as to save money where appropriate.
Most of your daily tasks will involve working with landlords, tenants, and contractors, so your ability to communicate and deal honestly with them is most crucial. Property managers must also be detail oriented, dependable, independent, and consistent. Owners are outsourcing this task so they don’t have to be involved. The successful property manager is a creative and effective problem solver. Finally, you need to have a working knowledge of local, state, and federal housing laws and regulations.
How Many Property Management Companies Are There in the U.S.?
As of October 2015, there are over 200,000 businesses reported in the U.S. Property Management industry.
How Much Do Property Managers Make?
According to recent reports from payscale.com, the national average salary for property managers is around $38,000/year for entry level to $53,000/year for more experienced managers.
How to Become a Property Manager
Once you’ve decided you want to get into the PM game, it’s easy. Many states require you have a real estate license, so check to see if your state is one of them. Like with any new industry you’re interested in, get hired on as an entry level employee for a local property management company and work your way up. You’ll learn the ins and outs of management and make some valuable connections, and eventually you could branch out and focus on starting a property management company of your own.
Do I Need a Property Manager License?
Although many states require a real estate license or other certification, most don’t require an advanced degree. A real estate license or practical experience in the real estate industry is helpful, but not always required.
How To Get Property Management Certification
There are a number of programs in the U.S. that offer courses for licensed real estate agents and brokers to get certification in property management. The courses teach you how to establish and build a property management business, find clients, and remain compliant.
How to Start a Property Management Company
Starting a property management company is similar to setting up any other type of commercial enterprise. You need to establish a legal entity – normally a Limited Liability Corporation (LLC) or an incorporated business (Inc.). You can hire an attorney or you can do it yourself online.
Next, you need to set up your office. You can work out of your home, at least initially, by setting up a website, obtaining an email account, and printing business cards. You will need a computer, copier, scanner and fax machine. You can use your cell phone for communication with clients and contractors, as you’ll likely spend a good deal of your time out of the office.
How to Market a Property Management Company & Get Clients
Networking is an effective way to begin building your client base. Find local real estate clubs and connect with local business organizations like the Chamber of Commerce.
Reach out to real estate agents who are constantly in touch with landlords. Local lending institutions are also good sources of leads. They may have properties for which they are responsible and outsource the property management function. Local contractors also interface with property owners regularly, so seek them out for possible introductions.
Finally, advertise your services using both on and offline channels. The phrase “property management companies” is searched 90,500 times monthly in Google in the U.S. and the phrase “property management firms” is searched 30,100 times monthly, so be sure to run a paid search campaign to capture property owners searching on these terms in your area.
How to Run a Property Management Business
Once you’re all set up and have some properties to manage, running a property management business can be smooth and streamlined with property management software. Daily tasks can be optimized for efficiency and you can focus next on growing your business and making more money.
Being a property manager can be challenging, but for the right type of individual, it can be an extremely rewarding career.