Over the past several years, the rental market has continued to boom as young workers struggle to compete with rising home prices and a fluctuating economic market. As a result, the need for property managers who can maintain rental apartments and houses on behalf of landlords has also risen.
If you’re thinking about shifting gears into self-employment or looking for a new business to run, a property management company could be a lucrative endeavor, particularly if you already have experience in real estate.
A property management company oversees rental properties that another company or landlord owns. The property manager is a third-party who isn’t affiliated with ownership in any way, but who takes care of tasks like ongoing property upkeep, security, tenant screening, rent collection, and lease agreements.
With so much to keep track of, using specialist property management software saves significant time and money. These tools automate many of the day-to-day responsibilities that come with property management, allowing you to scale your business and take on new work.
Property management companies oversee several different types of buildings. Some choose to specialize in one specific kind, while others may have different departments and employees to expand focus.
The most common types that property management companies work with are described here.
It’s a big decision to take the leap and start looking for partnerships and clients for your company. But being your own boss and starting a property management business come with several benefits that make the switch to a new career path a good one.
One of the biggest perks of this type of work is that there are very few expenses for your own operation, both when you start the business and as you move forward.
You need to oversee financial matters associated with each property, but the funding for these comes from the landlord, not your business. And as a people-oriented company, you don’t need to have a physical office space or any equipment beyond standard supplies to get your business off the ground.
As rental markets continue to grow across the country, there’s plenty of opportunity for budding property managers to get work. Many people are choosing to invest their money in property, both commercial and residential.
Reports find that more investors – over half – are looking to add to their property portfolio this year than in 2023. So with more money being added to the investment property market, the need for experienced property managers increases alongside it.
new residential buildings with 5 units or more were under construction in December 2023.
Source: FRED
Depending on your location and the type of property you manage, your work as a property manager can earn you a hefty salary.
Indeed reports that the average base income for a property manager is nearly $60,000 per year for those with less than two years of experience, while veteran managers earn as much as six figures. If you’re running the business yourself, your earning potential expands even more.
When you start a property management company, it’s up to you exactly which types of properties and businesses you want to work with. You could choose to specialize in the residential market or try your hand at commercial buildings if you live in a busy area with plenty of shops and restaurants.
The opportunities for what you can do with a property management company make this a varied and exciting career path. If you want a job that mixes office work with on-site experiences, this could be the one for you.
Whether this is the first business you’ve started or you’re already self-employed and moving into the property market, you need to take several steps to get your new property management company running.
Before you can start working with landlords and tenants, you need to ensure that your new business is legal and that you have measures in place to set yourself up for success.
Not every state requires specific licenses or certifications to become a property manager but investigate before you start working. For instance, Florida property managers are required to have both a real estate license and a Community Association Manager designation.
Even if you’re not required to have a license to begin operations, adding training or certifications to your résumé to support your credibility when pitching to potential clients. Becoming a Certified Apartment Manager, Certified Property Manager, or a Residential Management Professional can all help develop your experience.
Begin your work with putting together a comprehensive business plan. This is especially important if you’re looking for funding from investors or a bank because they want to see that you have a good understanding of your target market and plans for marketing your business before they part with their cash.
You should include information about the real estate industry in your area, the type of properties you want to manage, competitor analysis, and a deep dive into your marketing plan, finances, and operations.
Before you can start collecting your income from landlords, register your new business with the state. This can be as simple as setting up a Limited Liability Corporation (LLC), which provides you with certain legal protections and legitimizes your business as a commercial operation.
Once you’ve incorporated, make sure you have an Employer Identification Number (EIN) for tax purposes and a business bank account for your income. This helps keep your personal and business finances separate.
Using the best property management software for all the properties you supervise makes your day-to-day work much easier. These tools are comprehensive solutions that keep track of leasing documentation, maintenance requests, tenancy applications, and rental income.
The software you choose should make your life simpler. Look for tools that offer automated features for reporting and daily or monthly functions, like rent collection. They should also have the option of a tenant and manager portal so communication can be quick and straightforward.
Your business may be set up for success, but the right people need to know about your services. As part of your business plan, think about how you want to market your new property management company to prospective landlords and investors.
Some of the best strategies for marketing your new business are:
Using a combination of strategies is often the best approach. You may find yourself at a community event where you can network with landlords in need of a manager or you could spend time on social media discussing the benefits of working with someone like you. Anything you can do to spread the word about your new business is a step in the right direction.
The goal of property management software is to make it easier to oversee a large number of properties simultaneously, keep track of tenants and maintenance needs, and make sure rental payments are on time.
To be included in the property management category, platforms must:
Below are the top five leading property management software solutions from G2’s Winter 2024 Grid® Report. Some reviews may be edited for clarity.
Entrata allows users to manage multifamily communities using automation and artificial intelligence (AI) to support landlord and property manager needs.
“It has everything you need for a community in one place. I used the system to build my website, and all leasing and resident activity. Lead tracking integration, lead activity feeds, prospect-to-resident activity filters through on one page. There is no "going back to the guest card/application" to review details. Reporting has a lot of selection with filters to pull exactly what information is needed. Payables are simple and quick with a very good purchase order system.”
- Entrata Review, Tonya M.
“Sometimes the website is slow. At other times, it is unaccessible due to server errors, but that is to be expected with cloud-based software. Very permission-based.””
- Entrata Review, Genaro L.
Using a cloud-based management platform, AppFolio gives managers the ability to supervise various property types, including apartment complexes, family homes, community associations, and commercial buildings – all through one solution.
“The maintenance side of AppFolio is great. Residents can enter work orders on their portal, schedule on the portal, and check for updates.”
- AppFolio Review, Fran L.
“The activities system still leaves much to be desired. For example, creating recurring tasks would be helpful for daily operations. It would also be useful to add ‘subtasks’ to each task.”
- AppFolio Review, Luella L.
Yardi Breeze is an all-in-one property management software that handles accounting, leasing, and operations for residential and commercial properties from a centralized dashboard.
“This software is incredibly easy to use, even for someone like me who had no prior experience with it. The user interface is intuitive and friendly, making it a breeze to navigate. What's even better is the extensive help center that Yardi provides. The training manuals are incredibly helpful and have allowed me to quickly get up to speed. I appreciate how Yardi has invested in their customer support team as well. They are quick to respond and always offer helpful solutions to any issues I may have.”
- Yardi Breeze Review, MJW
“There are no integration tools to be able to extract data beyond a limited ad hoc report writer. Pricing is on a per unit basis and we use units to track common area square footage, so paying to have such a unit would not make sense. There is no comprehensive Lease Detail report that includes price per square foot, charge history, lease term, move-in date, and other information in one report as there had been in their prior desktop software.”
- Yardi Breeze Review, Brendan R.
Buildium offers accounting, communications, and leasing information in one tool. The mobile app makes it easy for both tenants and property managers to communicate directly.
“I love that Buildium allows our tenants to build up their credit scores through the reporting of their on-time rent payments. This is an often overlooked factor in their financial profile and allowing them to reap the rewards on on-time payment is an awesome feature. I also love now the design of the software and online portal lend an air of credibility to our operation and creates a professional user interface through which we can communicate.”
- Buildium Review, Brandon H.
“One of the main complaints we get from rental owners is their lack of visibility into certain tasks. For example, when a resident submits a Resident Request, the owners cannot see this, even if we share a message with them from that task.”
- Buildium Review, Charles M.
Innago is a free property management platform that makes it easy to screen tenants, collect rent, manage work orders, sign leases, and organize finances for each property you manage.
“I am able to list my properties on Zillow and Realtor.com, screen tenants, and increase app fees so that I can make a profit when screening tenants. I can make my own lease, add tenants, receive payments and work order requests all through this website. It will also charge late fees, send notifications to tenants about late fees and payments. Basically everything a property management company would do. Tenants can submit work orders and owners can keep up with expenses.”
- Innago Review, Erin S.
“The main thing we are missing is some kind of integration with an accounting tool. There is basic income and expense tracking, but having a bank feed option to easily track expenses versus entering them manually would be really helpful.”
- Innago Review, Jeff V.
Launching your own business is a big decision, and it’s certainly not for everyone. But with drive, dedication, and a passion for the real estate industry, you can start a property management company that makes the hard work of being your own boss worth it.
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