How to Start a Property Management Company

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If you’ve thought about starting your own business, you’re not alone.

Being your own boss offers many advantages.

You get to choose your hours, live life on your own terms, and travel. It can offer the perfect combination of freedom and financial success.

And, this is a great time to start your own property management company. A 2021 study by Fortune Business Insights projects that the property management market will grow from $15.10 billion in 2021 to $28.21 billion in 2028.

Real estate property owners rely on property management companies to keep people housed in safe, hygienic homes and businesses operating in safe and professional environments. Despite intermittent fluctuations, property management services are consistently in demand.

If you find yourself reading this article, you’ve probably been in the property management game for a while, and you’re ready to build your own company from the ground up. Or, maybe you’re running or employed by a real estate business and want to transition to property management.

Life running your own property management company has a lot going for it. So, why are you still working for “the man”?

If you’re like many would-be entrepreneurs, you’re just not sure how to get started.

Navigating the transition between employee and property management entrepreneur can be tricky. If you’re ready to leap, we’re here to share everything you need to know about how to start a property management company.

Step 1

Choose your niche

One of the keys to running a successful property management company is identifying and embracing your niche. If you specialize in one type of property and do that better than anyone else, you'll find it easier to attract those specific clients reliably.

When starting your own property management company, it will be much easier to stand out from your competition (especially over the long term) if you specialize.

Think about it. Would you go to a general practitioner or an oncologist specializing in lung cancer if you had lung cancer? You’d see a lung cancer specialist because they offer the best chance to solve your unique problem.

The same is true for clients seeking property management services.

Clients want to feel confident that the people managing their property are doing it right. And, knowing that you’re an expert in managing their type of property will boost their confidence in your ability to get the job done right.

Here are common niches in the property management industry:

  • Residential property management
  • Commercial property management
  • Home Owners Associations 
  • Timeshare property management
  • Short-term vacation rental property management

Property management companies that are specialists will appear most qualified to help and will be most appealing to the clients with those needs.

You may find that your niche is obvious. For example, it may be the area in which you have the most expertise. Or, it may be a property niche that needs to be filled in your local economy. For example, many highly paid professionals become real estate investors and buy rental properties in major cities. They don’t want to manage those properties and often look for capable and respected property managers.

Whatever niche you choose, don’t make the mistake of trying to be the right fit for every client. Marketing directly to the businesses that need your area of expertise will deliver the best results.

Ensure that the niche you choose provides a meaningful opportunity. Once you assess your total addressable market, you’ll be able to evaluate whether the opportunity is sufficiently lucrative to be worth your time.

Finally, even experienced real estate brokers and property managers may need special training to deliver the best possible service in a specific property management field. So, take advantage of opportunities to improve your skillset – even if you’re already an expert.

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Step 2

Define your services

The types of services you plan to offer will impact the resources you'll need to operate, the number of employees you'll need, and many more aspects of your property management business.

So, what exactly does a property manager do?

Property managers take care of buildings, inside and out, on behalf of individuals or groups of property owners. Property management services may include:

  • overseeing daily maintenance of the interior and exterior of the building
  • overseeing daily maintenance of the surrounding landscaping and parking lots
  • on-call maintenance for mechanical and weather emergencies
  • shopping out bids from vendors (HVAC, plumbing, painting, elevators, electrical, drywall, etc.)
  • brokerage services (like advertising, showing, and negotiating terms for vacant units)
  • managing new leases and lease renewals
  • conducting move-in/move-out inspections
  • collecting rent
  • overseeing unit renovations
  • billing for appropriate maintenance services
  • mail/package delivery services
  • and appearing in court over rent or billing disputes.

It’s important to decide early which of these services you’ll offer. Potential clients will want clear guidelines of what they can expect of you.

And, you’ll need to decide how many employees are needed to manage these services and what tools and supplies you’ll need to own to maintain your properties properly.

Your niche will help you determine if you can reasonably leave any of these tasks off of your list. For instance, residential property managers are more likely to provide mail/package services than commercial property managers.

Step 3

Write a business plan

Once you've thought through your niche and services, you can start to flesh out your business plan. Creating this document will help you think through all of the details of your new business - helping you to avoid pitfalls along the way.

People often make mistakes when they start a new property management company.

This is because they rush into things before considering their business from all angles.

A property management business plan isn’t mandatory. But, it can help you think many things through – including your services –  and avoid many mistakes.

Studies show that entrepreneurs who take the time to write a business plan when starting a business are 2.5 times more likely to follow through and get their business off the ground.

The work that goes into creating a business plan helps new property managers build skills (like analyzing their competition and examining their finances) that will be important to their success.

But, don’t get obsessed about getting every detail right in your business plan. You don’t even need to write a traditional 100-page business plan. Instead, do your research and create a one-page business plan.

For insights and free downloadable business plan templates, read this definitive guide on how to write a business plan. And take a look at these business plan tips for more insights. 

Step 4

Decide your legal business structure

Your legal business structure affects everything, from how you file your taxes to your personal liability, and whether you need to comply with any special additional requirements at the local, state, or national levels. Think carefully about the type of business entity you will register.

There are many different types of legal business structures for various business entities. (Note: These legal business structures are different than your business niche.)

For new property management entrepreneurs, choosing the best business entity for your business can feel overwhelming. So don’t rush yourself into deciding to register your business immediately.

For example, while a sole proprietorship or partnership might be quick and inexpensive in the short term, it might expose you to more financial and legal risk, create an unfavorable tax treatment, and lead to problems for you in the long term. 

A limited liability company (LLC) is a strong choice for most property management companies. Still, a corporation could make sense for bigger property management companies, especially if you have investors.

So, spend some time reading about each possible entity your business might fit into.

Then, consider which business structure is most helpful for your business; and how each business structure can help you accomplish your business goals.

And, remember that most states require you to register your company with the secretary of state or county clerk in the county in which you operate if you run your business under a different trade name than your legal business name.

This is an easy problem to solve. Just register your actual trade name with your state (and/or local government) by filing a “doing business as” (DBA) certificate.

DBAs are also commonly called “assumed name,” “fictitious business name,” or “trade name.”

Here’s a terrific resource that explains what a DBA is, the DBA state requirements, and how to file a DBA for your property management company in all 50 states and U.S. territories.

Step 5

Fill in the business blanks

Property management companies require special licenses, permits, and insurance. Navigating these legal and logistical hoops properly will set your new business up for success.

While it’s easy to get caught up in the excitement of becoming your own boss, it’s essential to give equal attention to the less glamorous aspect of business ownership – following the rules.

If you don’t operate legally, your new property management business may get shut down before it has a chance to grow. So, let’s talk details.

After you determine your business’s legal structure, you’ll need to file the necessary paperwork.

The U.S. Small Business Administration tells us that some form of license or permit is necessary to operate virtually every business type legally. Their website has all of the info you need to find out what sort of license or permit you’ll need to start a property management company in your state.

In addition to any basic business licenses or permits you may need to operate legally in your state, you will also need some licenses specific to the property management industry.

Property management licenses

Many states require specific real estate and property management licenses or paperwork to legally operate a property management business.

So, check out your state’s real estate commission or licensing board website for the details relevant to your business.

But, some requirements are universal. You, and your employees, may be asked to acquire the following licenses:

  1. Real estate broker’s license: Most states require you to acquire a real estate broker’s license to operate a property management company. This is a comprehensive accreditation. It requires applicants to complete a certain number of hours working in the industry, pass an exam, and possibly pass a background check.
  2. Property management license: Some states require this specific property management license if you plan to lease and manage rental properties.
  3. Leasing agent license: Some states require a leasing agent license for individuals who manage residential leases.

For more details on these licenses, read this helpful article.

And, this list is not exhaustive. You may need to complete other paperwork as well. For instance, in addition to the licenses required for individual employees (listed above), you may also need to acquire separate licensing in your business’s name.

Finally, check out associations that can help you network and pursue continuing education and certification in property management. A few notable associations include:

  • National Association of Realtors (NAR)
  • National Association of Residential Property Managers (NARPM)
  • Institute of Real Estate Management (IREM)
  • National Apartment Association (NAA)

Insurance for property management companies

You may need (or want) to carry many different types of business insurance to protect your property management business.

All businesses should carry general liability insurance to protect them if someone gets hurt (or property gets damaged).

And, the law requires businesses with employees to carry worker’s compensation insurance to cover any work-related accidents that occur on the job. But that’s only the tip of the iceberg. 

You may also want to consider adding on the following:

  • Business personal property insurance: This covers any personal property in your office that can be moved. This includes phones, laptops, tablets, and any other items that travel with you while on the job.
  • Professional liability insurance (aka Errors & Omissions insurance): This coverage protects you from being personally sued for any mistakes or oversights.
  • Cyber liability insurance: Property management firms are ripe for cyber-attack by hackers. After all, they store confidential client and tenant data. This insurance helps your business financially recover from digital attacks.
  • Automobile insurance: Company vehicles will need to be covered by auto insurance.

It’s wise to protect your business by investing in the strongest coverage you can reasonably afford.

Getting to know all of the necessary legal and logistical considerations of starting a property management business will create a strong foundation for your company’s successful future.


Step 6

Crunch the numbers

When starting a new property management business, it's essential to understand what it's really going to cost - and how you're going to pay for it.

Property management is a financially complex business.

As with any business, you’ll need to track your revenue. But there’s so much more to think about.

You’ve got to track the billing expenses and rent payments for each tenant in each property you manage, building expenses, and client revenue. But, before you can get there, you’ve got to start at the beginning –  with your start-up costs.

Start-up Costs

Your start-up costs are the one-time expenses you’ll need to pay to get your business operating.

Each business is unique. But many property management companies share similar start-up costs.

Start-up expenses and costs for a property business may include:

  • brand identity design (logo, business cards, and website)
  • license and/or permit fees
  • business and vehicle insurance
  • deposits and rent for your physical offices
  • basic infrastructural costs like phone and internet service, scheduling, invoicing, property management software, etc.
  • marketing and advertising costs (physical signage, digital marketing)
  • initial legal services
  • maintenance equipment (tools, vehicles, etc.)

Once you’ve outlined your start-up costs, it’s time to consider what your recurring expenses will be.

Recurring costs for a property management business may include:

  • office rent
  • utilities (phone, internet, electricity, etc.)
  • employee wages
  • software subscription costs (property management/bookkeeping, and maintenance ticketing)
  • license and permit renewals
  • accounting and legal services
  • vehicle maintenance and repair
  • annual taxes

Research ahead and run smart calculations to determine how much it will cost to start and run your business. This will allow you to plan for additional financing assistance (if needed) and think about pricing.

Once you know how much it will cost to get started, you’ll want to assess your existing finances and compare the two. 

Assess your existing finances

Assessing your existing finances is crucial.

When starting a property management company, you’ve got to know exactly how much money you have to invest into the project.

Setting up offices, acquiring maintenance tools, employee salaries, and insurance payments… it all costs money. You’ve got to know if you have enough.

And, you may discover that you need help with your business financing. If you do, there are many business financing options for small businesses.

If you don’t understand the numbers, you’ll have difficulty building a sustainable, profitable business. Most of your strategic decisions will be impacted by your cash flow.

And, to help you project your cash flow, you’ll need to outline your prices.

Set your prices

Your pricing strategy is a key factor in the success of every property management business. And, it isn’t a simple matter.

There are several factors to keep in mind when setting your prices.

The hard numbers

To create a competitive pricing structure, you have to start by knowing how much it costs you to run your property management business (your recurring operating costs). While there may always be unexpected expenses, the recurring costs you know should all be considered.

But, your operating costs are only a starting point.

Your time has value, and you need to make a living wage.

And, it’s essential to bake some profit into your prices as well. Otherwise, it will be challenging to sustain your trucking business over time.

So, make sure your prices are high enough to cover the cost of doing business and deliver some profit.

Your competition

Your potential clients are most likely doing research – and that research includes your competitors, too.

Consciously or not, people gather data about what they think services like yours should cost and what they’re willing to pay. That means you need to be aware of what your competitors are charging, too.

You might feel that your services are worth more or charge new clients less than your competitors. And that’s okay.

But, if you’re entirely unaware of what your competitors charge and their ongoing management fees or lease renewal fees, you may miss the mark completely – either costing you profit if you charge too little or costing you business if you charge too much.

Perceived value

Perceived value is the amount that a client thinks a property management service is worth. 

And, your competitor’s prices are a part of that perception – but not the whole picture.

The services you offer and the perceived quality of those services play a big role. Clients care about the tangible results that your property management company delivers for them and the tenants in their buildings. The more they stand to gain, the higher your perceived value.

And, your branding influences how your property management services are perceived, as well. A professional logo and high-end brand positioning will have a higher perceived value than a cheap logo and discount branding. Clients, especially new clients, may be willing to pay you more if they trust your brand.

So, remember to consider your brand, how you present your services, and your competitors’ pricing when creating your pricing strategy.

Step 7

Develop your brand identity

Brands are not just for big corporations. Brands are even more critical for small businesses like new property management companies. They help build credibility and make your business memorable to potential clients.

It’s hard to build a successful property management business unless you take branding seriously.

Branding provides a reassuring level of professionalism that new property management companies sometimes struggle to establish. So, don’t think you can afford to leave your brand identity to chance.

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Clients trust property management companies with hundreds of thousands (and sometimes millions) of dollars in real estate. Weak brand identity will undermine clients’ trust and make them reluctant to hire you.

So, before you reach out to your first prospective client, ask yourself these critical questions as you develop your brand strategy:

  • What identity/personality do I want my property management brand to project?
  • Who will want or need my services?
  • What can my clients get from my company that they can’t get from other property management companies?
  • What is the most important part of my clients’ experience?
  • What is the most important part of my tenants’ experience?
  • What values guide the way that I do business?

Your answers to these questions (and others like them) will build the core of your brand.

All of your future branding decisions should expand on these ideas. For example, your company name, company logo, and website design should grow from the concepts you laid out here.

So, take the time to think – really think – about your brand from the start.

Real estate is a competitive industry. And, it’s the property management companies with clear, authentic brands that survive and thrive.

Important branding elements for a property management company include:

  • A unique and distinctive company logo that can be recognized easily from a distance (so potential clients can recognize your brand from your local signage)
  • Custom signage that includes your brand name, logo, and contact info to place on the properties you manage so interested parties can easily reach you
  • A custom email address and web domain that matches your business name (because people think less of businesses that use Gmail or Yahoo email addresses)
  • A professional-looking website that provides possible clients with all of the information they need to decide if your property management company is the right fit for their needs
  • Business cards that can be passed to potential clients and tenants for ease of communication

And if you’ve already started your property management company, but are struggling to grow it, maybe it’s time to consider a rebrand. It’s possible that your existing branding is holding you back more than you realize.

The cost of brand design

Before you decide that you should put off building a strong brand identity because your budget is tight, rethink that plan.

You don’t have to spend thousands of dollars on building a strong brand identity.

Here are a few pricing guides that can help you identify the sweet spot for pricing:

The above guides describe free, cheap, affordable, and expensive options. So, you’ll find a price point that will fit your budget, regardless of the size of your budget.

Step 8

Get property management software to manage your business

Modern property management businesses rely on sophisticated software to track their properties' and tenants' details. The software you choose will either keep your business running smoothly or cause you daily headaches.

Property management (commercial or residential) requires you to keep track of a million important details.

Which tenants have leases ending soon? When does the elevator inspection certificate expire for Tenant XYZ’s suite? Which tenants pay for their own HVAC repairs?

From regular building maintenance to upgrades and renovations to tenant billing and lease details, you need a single source of truth to keep it all straight.

A good property management software will store all of the unique data from each tenant’s lease contract, automate processes like tenant billing and rent collection reminders, run financial reports, and more.

But, property management software is not one-size-fits-all.

You’ll want to choose software that is designed specifically for your niche. Two options to consider are software from SparkRental and Yardi, an industry leader in commercial real estate software.

Take the time to research several options to find the right property management software for your business. You’ll be living with it and relying on it every single day.

Step 9

Find the right help

At times, every entrepreneur has felt like they're in it alone. But, for your property management business to scale and grow, you're going to need help. After all, there are only 24 hours in a day, and you can't work all of them.

Finding the right help will be key to building a strong property management business.

As you gain clients, you’ll need to hire employees to take tasks off of your plate so that you can focus on managing and growing your business.

But employees must be paid. So, at first, you should only hire for positions that will provide the most immediate benefit to your business.

In a property management company, consider the following types of part-time or full-time employees:

  • Additional property managers
  • Admins or receptionists (or answering service)
  • Dedicated maintenance staff or curated contractors and service providers
  • Sales representatives and marketing specialists
  • Maintenance managers
  • Payroll and accounts payable help
  • Leasing agents
  • Showing coordinators
  • Move-in and move-out coordinators
  • Field managers
  • Service coordinators

After that, consider what aspects of the business are posing the most significant challenges.  

Does it make sense to hire maintenance professionals rather than relying on outside contractors? What about hiring brokers to show and lease vacant units?

You’ll know what your business needs as it evolves.

Building a robust and well-rounded team will create a stable foundation for your business. And, you’ll sleep better knowing you’ve got a team in the trenches with you that you can rely on.

The legal stuff

Of course, hiring employees for your commercial or residential property management company means that you’ll have to deal with all sorts of legalities and paperwork. This isn’t an area where you should “wing it.”

You should:

  • Get an Employer Identification Number (EIN) by applying on the IRS website (you’ll get your number immediately after applying!). You’ll need an EIN for many things, including to open a business bank account for your trucking company.
  • Register with your state’s labor department.
  • Fill out paperwork to withhold federal taxes from your employee’s wages.
  • Set up workers’ compensation insurance if it is required in your state.

You’ll also need to decide whether you’re hiring full or part-time employees. Part-time employees cost less and require less paperwork to get set up. So you may want to start with part-timers. Then, as the business grows and you can afford it, you can expand their hours. 

Step 10

Build an online presence

Your website is one of your property management business's most important sales tools. Creating a professional, brand-appropriate website is essential.

A website is active online, promoting your business 24/7 – even when you’re onsite doing building inspections or showing vacant units.

So, put this vital business tool to work for your property management business.

Start by ensuring that your website design truly embodies your brand. Visitors should understand who you are and what your company is about as soon as they arrive.

Do you specialize in full-service commercial property management?

Maybe your property management company provides white-glove service for the tenants in your residential properties.

Communicate important brand differentiators (things that set your property management company apart from your competition) like these on your website.

And, your website’s visual design and marketing copy should project your business’s personality and identity, too.

Here are some suggestions:

  • Use your brand’s colors.
  • Prominently feature your company logo.
  • Write marketing copy with your target audience (best clients and tenants) in mind.

Besides helping people to get to know your property management brand – increasing the likelihood that they’ll hire you (now or in the future) – your business website is also an excellent venue for showing off your success stories.

Consider sharing testimonials from past satisfied clients and tenants.

Finally, a strong website design will lend credibility and legitimacy to your business.

And don’t worry that you have a brand new website and business. You can overcome that obstacle too. Mandi Ellefson, CEO of The Hands-Off CEO, told us that:

I could take a brand-new company and spin up a website and a logo and make it look like they’ve been around for 10 years.

Perception is everything.

To learn more about excellent website design, check out Grow Your Small Business With These 7 Website Design Best Practices and 11 Biggest Web Design Trends for 2022.

Step 11

Spread the word

Marketing your property management company is the only way to ensure that you have a steady flow of work. It's time to focus on getting the word out about your brand-new business.

Marketing is essential, especially for new businesses. You need to find a way to get in front of potential clients. 

Whether you’re managing vacation rentals, commercial buildings, or residential buildings, it’s your job to figure out how to let your potential clients know that you exist.

So, build a game plan for selling yourself and your property management services.

Your marketing efforts will mean the difference between success and failure. So, opt for tactics that you can really implement daily without taking too much time from your core business – property management.

Here are three tips to get you started:

Take time to develop and rehearse an “elevator pitch” (explaining exactly what your company does, what it does best, and why it’s the best choice) until you can deliver it comfortably and confidently to anyone, anywhere. This 20-30 second explanation of what you do should be interesting and descriptive. After all, you’re the expert in property management – not your potential client. Check out MindTools’ guide to Crafting an Elevator Pitch.

Practice overcoming objections. No matter how excellent your services are, clients and potential clients will always have reservations – after all, their money is on the line. For example, how do you answer questions about your maintenance track record or vendor contract negotiation skills? So, brainstorm as many possible objections as you can think of.  Then practice putting those concerns to rest.

Develop and execute a list of day-to-day tactics that will keep your sales/marketing efforts moving forward. If you’re not selling your services, then it’s likely that no one is. So, make sure to make marketing a part of your day every day.

Here are a few ideas…

  • Use your buildings as passive marketing ambassadors. For example, place signage with your business name, logo, web address, and contact info at every property. 
  • Build a mailing list and stay in touch with your clients and prospective clients. This will keep your business top of mind, so you’re more likely to get a call when your services are needed.
  • Build strong relationships with clients (and tenants!). Then ask them to refer you to their friends and colleagues. Word-of-mouth is the most powerful form of marketing there is.
  • Keep business cards with you at all times and hand them out whenever you see an appropriate opportunity. (Be sure to share business cards with any potential clients and tenants. You never know who may connect you to your next client or tenant.)

However, you approach it, create a plan to seek new business proactively – and then stick with it.

Before you go...

The prospect of running your own business can be scary after spending many years as an employee. But, there are limits to how far you can go when you're working for someone else. And, you wouldn't have read this far if you didn't know that you're looking for something more.

For the brave men and women who dare, starting a property management company may be the most rewarding, life-changing decision they ever make.

Will you join them and start a property management company of your own?

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