Tips for Property Management Startups
You might be thinking it’s crazy to launch a business in today’s economy. Yet, even during this worst phase of the pandemic, there are hopeful signs for startups as we enter 2021.
If you’re reading this, you likely are looking for a new start, and one with some potential. You may have checked out the rental property sector after hearing about the big returns in rental houses in some cities. The success of Airbnb too, is testament to rental sector opportunities.
As lucrative as the AirBnb vacation sector seems however, the longer lease term rental sector is where bigger demand and profit exists. In this post, we look at the opportunity of a property management business startup.
The Economy Will Return
Some newly conceived businesses will do quite well given how the economy will turn around in 2021. Some entrepreneurs believe the housing market will make a big comeback by mid 2021. Since the Covid 19 vaccines are being approved, it’s not a reach to say optimism about the end of the pandemic will unleash a lot of pent-up demand.
As the economy improves and shutdowns dwindle to zero, demand for rental housing is going to grow. Due to housing shortages (i.e., houses), home prices are rising and could rise much further in 2021. Yet, without affordable homes (affordable home supply is severely reduced) to buy, home buyers will turn to the rental housing market .
This in turn will create demand for new property management companies. Small passive income landlords will look for help too. More regulation and property investors scaling up means these landlords will seek help from professionals. And developers with rental developments are increasing in number too, requiring the formation of new HOA management companies in 2021.
In many areas of the rental property sector, you’ll find opportunity.
Recent stats show property managers are optimistic although the economy is making them keep the status quo.
Property management startups will need to be planned strategically to keep up with these current providers who have learned what really works and have earned a loyal customer base.
What’s Driving the Demand for Management Companies?
Landlords face many challenges from regulation and taxation to technology and increasing size rental property portfolios. They’ll call on property management companies for more efficient workflow management, all in one online operations management, growth management, dedicated accounting services, leasing and marketing services, along with the usual maintenance and collections capabilities.
They’ll rely on an ever expanding list of property management software solutions. While most of the investment money has gone into software development, a big market for property management companies is awaiting new entrants with modern capabilities.
The switchover to digital solutions comes with opportunities to grow new, profit growing services. Reduced costs through software and greater revenue potential in a growing market are a nice combination for entrepreneurs.
What’s Happening Currently:
- small urban landlords going out of business due to shutdowns and reduced cash flow
- apartment and multifamily landlords have been hit hard by skyrocketing vacancy rates
- many renters fleeing to the suburbs and rural areas to rent roomier houses
- companies buying smaller property management companies and their portfolios
- reduced revenue is making them lose sight of needed improvements for 2021 and beyond
- some landlords are selling their portfolios, thus property managers lose the account
Are there Positives to Focus on?
Yes, while markets were oversaturated with property management companies, most conduct their business old school fashion (in person, face to face, closed business networks). Old work processes, old software, and changing demands from owners, is encouraging a switch to modern providers.
Landlords are looking for new modern providers who can scale up to manage a high volume of properties efficiently.
Even if landlords are earning more, they want efficiency and enhanced services. Many of them will look online to find companies with specific skills and technological competence. They want to outsource many services, so they can move onto managing their investments and raise profit.
7 Important Services Landlords are Outsourcing
Which services should be building your business on?
- rent collection
- maintenance services
- legal advice and evictions
- leasing and marketing
- accounting & bookkeeping
- property sales
Keep in mind that there are new rental business startups in storage, marinas, mixed residential/commercial, and homeowners associations.
The average property manager might not be considering services such as leasing and marketing, accounting, or property sales. Some Realtors might. And more Realtors are looking at property management companies as a way to grow lucrative property sales deals. A partnership with a Realtor might not be a bad idea because they’re into rentals in a big way. You might need one to be licensed in your state.
If they’re seeing opportunity, you might want to discover how they’re developing their own business.
As a new property management startup, you can position your company to fulfill the top 4 performance goals: profit, optimal tenant relations, operations efficiency, and portfolio growth. With those in focus, everything else will likely fall in line.
How Should You Design Your New Startup?
Refer to the post on how to start a property management company, but here’s a few additional tips (and see the additional resources below).
- create a business plan and a revenue growth strategy
- focus on lead generation and new landlord acquisition
- build your business on a simplified, efficient yet capable property management platform
- identify those property management services that are in demand
- design a company brand that focuses on what landlords really need in your area
- obtain licenses and certifications needed
- acquire Property Management Insurance: E&O and Liability
- go virtual to save a lot of money and get an edge to outcompete established companies
- ensure customer service and communications are your number one priority
- create a plan and tools to build engagement and satisfaction with renters
- offer online tools for tenants to empower a positive renting experience (ManageCasa)
- integrate Proptech solutions (touchless features, at home technology)
- add outdoor features renters will pay much more for (hot tub, pond, waterfall feature, home office space)
- price your rentals smartly
- reach the tenant market online and acquire tenants professionally
Read up more on how to start a property management business and view all of the ManageCasa’s software services that will help you make your venture successful. The words simplicity, affordability, dedicated, and workflow really tell you why ManageCasa is the choice of property managers who want to grow their business and be profitable.
We hope you’re venturing into property management for profit. Because that pursuit keeps everything running at optimal levels.
Good luck if you should decide to launch a new property management or HOA management firm. Let us know what your management challenges are. We’d like to make our property management solution even more effective for you.
Additional Business Startup Resources:
How to Start a Property Management Business: Prelaunch Tips irem.org/online-course/id-ODCMMCS-0719HQ01/_How_to_Start_a_Property_Management_Company_Part_1_%E2%80%93_Pre-Launch
Arizona Startup requirements: azdor.gov/transaction-privilege-tax/residential-rental-guidelines/property-management-companies-pmc
Nevada startup requirements: red.nv.gov/Content/Real_Estate/Property_Manager/Initial_Requirements/
NY property management licensing: dos.ny.gov/licensing/re_salesperson/re_sales_broker_faq.html
Licensing in Florida: what-are-the-property-management-requirements-in-florida/
Licensing in Massachusetts: mass.gov/service-details/re42r05-property-management
Property Management in Texas: trec.texas.gov/taxonomy/faq-category/property-management
Maryland real estate licensing: dllr.state.md.us/license/reahi/reahireq.shtml
More on licenses for property managers.
Discover what current property managers are offering in their service mixes: Los Angeles San Francisco Property Managers, Boston Property Managers, Denver Property Managers, Phoenix Property Managers, Miami Fort Lauderdale Property Management, Honolulu Property Managers, and Chicago Property Managers.
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