Steps to Start Your Own Property Management Company
Deciding to start your own property management company is a big one and there are lots of things that you need to consider before doing it. Below, we’ll explain the requirements and the key steps to start your property management group.
What Do Property Management Companies Do?
The responsibilities vary based on the contract you sign with the client. One thing is for sure, every property manager needs to know and follow the landlord/tenant law in their state. Additionally, there are some general tasks that a property manager may be responsible for:
• Acquiring new tenants
• Managing tenants
• Eviction of tenants
• Managing accounts
• Manage vacant properties
• Supervise employees
Most states require property managers to have a real estate broker’s license. There are six states, including Maryland and Massachusetts that do not require a property manager to be licensed. To obtain a license, you must take a class, pass an exam, and spend a certain amount of time in the field.
What Can You Expect to Make?
On average, a property manager in the United States can make just over $55,580 annually. The low end is $29,700 and the high end is $126,000.
Get Started Planning Your Business
Here are the steps to starting your own property management company:
What roles will you perform?
First of all, it’s important to determine the activities you are willing to perform. Are you only interested in handling tenant management and building maintenance? Would you be okay with evictions, filling vacancies, and handling the financial aspects?
Determine Your Fee Structure
The next step is to figure out how you are going to be paid. You may want to charge a flat fee each month, which is typically a percentage of the income that is collected. On the other hand, you may wish to charge additional fees for certain tasks. For example, you may charge a fee of a few hundred dollars to get a new account set up. Sometimes property managers add a leasing fee to the rent to fill a vacancy. Some property managers even charge fees when they deal with evictions.
Determine Your Location
Think about where you plan for your office to be located. Do you want to be working from home or do you plan to rent an office space? You’ll find that it’s cheaper to work from home when you’re just getting started. However, you must ensure that you have all of the equipment that you need: printer, computer, landline phone, and fax.
Do You Plan to Hire Employees?
Do you plan to do it all on your own or do you plan on hiring employees to work with you? Keep in mind that your taxes and insurance requirements will change if you hire employees.
What is the Name of Your Business?
You’ll need to have a name for your company. When you register with your state, you will be given several resources, including the U.S. Patent and Trademark Commission, so that you can check to ensure that the name you have chosen doesn’t exist.
Establish Your Business Structure
To start a company, you’ll need to submit legal documentation. Many people choose to structure their company as an LLC, or limited liability company. However, there are other options as well, including corporations. You choose what works for you.
Check with your state, as each state has its requirements to set up a business. In general, you’ll need to ensure that all legal forms are filled out. You can either do this yourself or you can hire an attorney or legal website to do it for you. Then, you’ll need to submit them to your state and pay the filing and registration fees.
Draft Your Contract
Every successful business needs a strong contract in place. Once again, you can do this yourself or you can hire an attorney or website to take care of it. the contract should define:
• Term of contract
• Parties the contract is between
• What the property manager is/is not responsible for
• Hold Harmless Clause
• List of fees
• Property owner/tenant responsibilities
• Termination clause
Find Some Clients
Finally, you’ll need to find clients. There are a few different ways you can do this. First, you can create a website. You may also wish to set up on social media as well, to get your information out there even more. Second, you can reach out to real estate professionals in your area, including agents, lenders, etc.
If you’re ready to get started with your own property management company, contact Masters Commercial Capital Group. We’ll be more than happy to help you through the process.