How to start a property management company?
The rental markets have been incredibly strong in Canada. Many investors are considering the residential real estate market in Canada to be recession proof and property management companies servicing this market will remain strong through the recession. There are a lot of things to consider when starting a property management company —from taxes and insurance to marketing and legal matters. In this article, we'll discuss how to start a property management company and what steps need to be taken along the way.
Create a business plan
A business plan is a document that outlines the goals and strategies of your company. It's important to have one, as it will not only help you get funding from investors or banks, but it gets you thinking about all aspects of the business.
Your business plan should include detailed information about the following:
i) how much money it would take to start up
ii) how much money you need to pay yourself each month (which includes salary)
iii) and how long it will take before your business becomes profitable enough for employees to be paid well above minimum wage.
You must also include marketing strategies in your plan. Marketing includes everything related to getting landlords interested in getting your services. You can run advertising campaigns through social media posts on Facebook or Twitter accounts dedicated solely toward building brand recognition among consumers.
Incorporating, Licensing and Insurance
Incorporating a business can be expensive as you will need to pay to register the business as well as maintain proper records and annual filings. However, incorporating is important to protect you from a liability perspective. Property management can get litigious if you are dealing with hundreds of tenants. Tenants can sue both the property manager and landlord for accidents that occur on the property. Call a commercial insurance broker that has experience with property management companies to see what coverages are required and how much they cost.
Some provinces also legally require you to get a license to be a property manager. Do the research and see what is required to apply.
Getting your company known
Build relationships with landlords
Consider joining investor groups to help landlords that are stressed dealing with tenants. A property management company should be responsive to the landlord's needs and it helps to understand what your customers want. Separate yourself from other property management businesses by developing a good relationship with the landlords whose property you are managing.
Build relationships with real estate agents
25% of property sales in Canada are to investors. Get the contact list of real estate agents that are primarily dealing with investors. Reach out to them or join their circles. When growing your network, it’s important to give more value than you receive. Try helping anyone with tenant problems for free. You will soon find that these agents will begin sending investors your way as they start to see you as the property management expert.
Create a website
Your website is the first thing that potential clients will see. Make sure it looks good, is easy to navigate and has all the information you want on it. Make sure you showcase testimonials from both landlords and tenants. A good property manager services both these customers well.
Consider both online and offline marketing
Marketing is important to a successful business, and it helps you get new customers. You can market your company through both online and offline marketing. Online marketing includes social media, website and paid advertising such as Google and Facebook. Offline marketing includes flyers or pamphlets that you hand out at community events, local newspaper ads and radio spots.
Understanding what is required to run a smooth operation
When starting out, you need to be able to handle the administrative tasks yourself. You can hire others when your financials allow you to do so. Create a network of service providers that can deal with maintenance and repair issues at an affordable price.
There are many things involved in running a property management company:
Collecting rent from tenants
Remitting rent to landlords
Advertising the properties
Paying bills
Managing the contractors for maintenance and repairs
Dealing with tenant issues in a timely manner
Managing the financial records of each property and your business’s
Maintaining your knowledge about local tenant and landlord laws
Creating monthly reports for your landlords
Be familiar with the tasks and define out each process so that you can consistently deliver good service to both landlords and tenants.
Creating a property management company is not easy, but it can be a good source of income. It provides a predictable source of monthly income. The best way to start a property management company is not just planning but getting out there and taking action!
