Once you have the necessary experience in the short-term rental industry, the next logical step for many property managers is to start their own property management company. However, starting a property management company means that you will take on a lot more responsibility.
Plus, you will need a deep knowledge of local regulations and the interpersonal skills to work with contractors, landlords, and tenants. This 9-step action plan and insider tips from the co-founder of CHECKiN will help you to set up your company for success from the get-go.
There are typically two legal entities that can be used: an incorporated business or limited liability corporation (LLC). You will have to study the specific tax implications of the different types of legal entities. Each kind has its own advantages and disadvantages which could make one more suitable depending on the situation.
An attorney will be able to help you establish your legal entity. Alternatively, you can visit the official website of your state. Here you will be able to find more information and the necessary documentation.
Not only will a business plan help to guide you, but it can also help you to secure funding from a real estate investor or lenders. Your business plan should explain what property management services you will provide (including your unique selling propositions), your marketing strategy, management structure, a financial plan, and projections.
The majority of US states require that you have a property manager license. In fact, there are only 6 states where you can manage real estate properties without any type of license.
As not all the US states have the same requirements regarding licensing, it is best to reach out to the local authorities first. You will most likely have to get a Real Estate Brokers License (this is required in most states). With this type of license, you will be able to complete real estate as well as property management activities in the United States.
One of the first things clients ask is if you have the correct licensing. Thus, if you need to obtain a license, make it a priority.
In today’s day and age, it is key that you have an online presence. Thus, a user-friendly website is a must! After you have designed your website, also remember to create a custom email address that your tenants and clients can use to contact you. In addition to a custom email address, you will also find that you will use your cellphone often.
Yet, a website is no replacement for an office. If you are only starting out, a home office equipped with a scanner, copier, and computer will be sufficient. However, keep in mind that from time to time you will have to meet with your clients and, ideally, this will be at your office.
Your pricing structure should be reasonable. If it is too expensive, you will scare away clients. If it is too low, you will not be able to generate a sustainable source of income.
Ultimately, your market will determine how much you can charge. To determine the average price for your market, find out what a few property management companies are charging in your area.
Here are some of the common fees to research:
You will reach a stage when your company will need to contract work out to third-party suppliers. After all, it is impossible to complete all the tasks that have to be completed without any reliable help.
How do you convert potential clients into actual ones? Handing out business cards will not be enough – you will need to craft a good marketing strategy too. As mentioned earlier, your online presence will be of paramount importance. You can, for example, use Google ads, and search engine marketing (SEM) to get more traffic to your website.
Getting new clients is one of the areas that every property management business finds very challenging. Therefore, it is key that you put in a place a system that will help you with this.
While your marketing strategy will help, of course, you do not necessarily need a big marketing budget. Positive word of mouth remains one of the most effective ways to build your client base.
So, you can start by networking with real estate brokers, HOAs and other stakeholders in the industry. Equally important, make it a priority to maintain the new relationships that you have created. You can also join a property management organization. Not only will it help you to build your client base, but it will help you to stay up to date about the latest news, technology, and other tools in the industry.
While word of mouth is a good place to start, it will not be enough. As mentioned earlier, online advertising is very effective. To help you build your client base, you can also create a landing page that will help you to collect new leads. Be sure to include content that your clients will find valuable on your landing page. This way they will be more inclined to entrust you with their rental properties as your content has already helped them.
In addition to building a local network of professionals, it is also a good idea to invest in the right software solution. There are numerous time-sensitive tasks that demand your attention. The reality is that without help, you will not be able to deliver a first-class service.
For example, responding quickly is one of the biggest challenges that a property management company faces. This is where a property management software solution that can automate your messaging can come in very handy. By responding promptly to your guest messages, you will keep your customer experience at a high level.
There are many success stories of hosts who managed to start their own property management company. One such success story to check out is CHECKiN. CHECKiN offers rental management services for cottages as well as urban properties.
Their turnkey solutions include restocking, maintenance, calendar optimization, professional cleaning and much more. To help you with starting a property management company, we asked them to share some of their top tips.
We started as a cleaning company in 2016. Mathieu was an Airbnb host. He was already working full time and realized that even with only one apartment, it was tough. All the cleaning between guests needed to be done between 11 a.m. and 4 p.m. which made it very challenging. He discussed the situation with Steve and they decided to start a cleaning company that would help only Airbnb hosts.
After the first summer of running the cleaning business, some of our clients started to ask us to respond to their messages. We saw that there was also a need there. So, we started to manage our clients’ Airbnb accounts.
It was complicated to respond to all the messages quickly. We always had to connect to our clients’ Airbnb accounts, and then switch to another account to respond to another message.
Did you face any other issues that new companies usually have to deal with at the beginning (legislation, city regulations, finance, etc.)?
In the beginning, the only problem we had was to find enough housekeepers and to train them properly. Later it also became quite difficult to keep track of the new bookings and to make sure that we didn’t forget any cleaning after a checkout. The multi-calendar has become incredibly useful for this. In fact, we use it on a daily basis.
We found our first client by offering housekeeping services. Since we were doing an impeccable job, the client entrusted us with managing his listing.
iGMS really differentiates us from our competitors since it lets us use our clients’ Airbnb accounts. This way, our clients still have access to their accounts and can see everything that we do for them. It is crucial for us to be transparent with our clients. We have nothing to hide and that’s how we’ve developed strong relationships.
Also, the fact that we have our own cleaning staff really helps us to stand out. In most cases our competitors use subcontractors. Having our own cleaning staff offers multiple advantages. Firstly, we can train them like we want, helping us to offer the best cleanings in town. Secondly, they know our units very well since they’re always the ones cleaning them. Plus, it’s cheaper than having subcontractors.
We also took a lot of time to study the pricing fluctuation in the area. We consider the days of the week, the months, the events in the area – anything that can help to increase the rental revenue while lowering the vacancy.
Because we were offering good services, our clients recommended us to their friends. So, word of mouth has helped us a lot!
Also, by encouraging our clients to give us more apartments, we have implemented a system where our management fees are decreasing according to the number of apartments delegated.
We reached a point that we needed more than two partners to manage the housekeepers and develop all the spheres in the business at the same time. We decided to hire an Operation Assistant to help us with our daily tasks. A couple of months later, we also hired a Communication Agent to help us to respond to all the messages received via Airbnb.
After two years, we started to use Facebook to do a bit of marketing. It was mostly to recruit housekeepers. We also did a bit of Google AdWords to find new clients. Now we use Facebook to advertise our units rented monthly and our cottages.
Transparency is the key, which is why iGMS is so important to us. It allows us to manage our clients’ accounts in a way that they can access all the data by themselves and see what we are doing for them.
Always be humble and honest. Treat your employees and clients like you would want to be treated if the roles were reversed. The values and principles that you apply in your life should be reflected in your business. You have to make sure that your employees understand and agree with your business values. This way they will be able to represent you correctly and help you to grow the business. We believe that’s how you can build a successful business.
It’s really a no-brainer. When we started the company, we were working so inefficiently as we were not using vacation rental software. iGMS helps us to save a lot of time, and the automation tools are very helpful to avoid making mistakes.
Managing properties requires a lot of time. Therefore, we strongly suggest that you use a vacation rental software solution. It will help you save time so that you can concentrate on offering the best service to your clients and guests. Ultimately this is the best way to grow your business.
Often we avoid starting a new venture as we believe it’s going to be too much work. Perhaps, you delay it because you simply don’t know where to start? With these 9 steps, starting a property management company can be easy to realize.
Plus, there are many tools that will help you too. iGMS, for example, offers a free 14-day trial. There will come a day when your company will need to rely on third-party tools. Why not be ready from day one?