If you’re thinking about starting a property management company, the first step is to write a business plan. This will help you map out your business goals and objectives, as well as set up your financial projections. Once you’ve got a solid business plan in place, you can start working on setting up your company.

Related: How to write a business plan

You’ll need to choose a name for your property management company. This is something you should put some thought into, as it will be the name that customers and clients will associate with your business. Once you’ve chosen a name, you can register it with the state and get started on setting up your company.

A business entity (also referred to as a legal entity) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a property management business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
 
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

While property management companies can operate from home, having a physical location will lend to a more professional appearance and place to meet with clients.

If meeting with clients isn’t a necessity, operating from home is a great, low-cost option. Be sure to check zoning and covenants in case you have a neighbor that doesn’t approve of your venture.

If operating from a storefront, be on the lookout for a location that is convenient for your customers and clients. You’ll want to choose a location that is easily accessible and has good visibility.

Before you can start operating your property management company, you’ll need to obtain the necessary licenses and permits.

The licenses you need will vary depending on the state you’re operating in, but you’ll typically need to get a business license and a real estate broker’s license.

Related: Common business licenses, permits, and registrations by state

Starting a property management company can be expensive, so you’ll need to find financing to cover your startup costs. There are a few different ways you can finance your business, such as taking out a loan or investing your own money. Once you’ve secured the necessary financing, you can start working on setting up your business.

Banks are typically going to want the borrower to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

A well-executed marketing plan is essential for any business, and a property management company is no exception. There are a number of factors to consider when creating a marketing plan for a property management company, including the type of properties the company manages, its target market, and its budget. A few tips to consider when working on your marketing plan include:

First, consider your target audience. Who are you trying to reach with your marketing efforts? Once you know who your ideal tenant or buyer is, you can tailor your marketing message to appeal to them.

Next, think about the various channels through which you can reach your target market. Traditional advertising methods like print ads and radio commercials can be effective, but don’t forget about online marketing strategies like SEO and social media platforms. By using a mix of both offline and online marketing tactics, you’ll have the best chance of reaching your target market.

Finally, make sure you have a system in place to track your marketing efforts. This will help you see what’s working and what isn’t so you can adjust your plan accordingly. By following these tips, you’ll be well on your way to creating a successful marketing plan for your property management company.

Related: Low-cost ideas to market a new business

You’ll need to get insurance for your property management company. This will help protect you from liability if something goes wrong with a property you’re managing.

A few of these include:
– General liability insurance covers expenses if a client is ever injured or if an employee damages a client’s property.
– Worker’s compensation insurance is required if a business hires employees. It helps cover expenses like lost wages or medical bills if an employee is injured while working.
– Automobile insurance is needed to cover any vehicles and drivers.  If you plan to use a personal vehicle, be sure to review your current policy to ensure it allows for commercial activity.

The cost to insure a property management business will differ according to factors like a business’ location, the value of the equipment to be insured, and the number of employees on staff. To get a more accurate idea of potential insurance costs, request quotes from multiple insurance companies. Compare the policies and consider factors like deductibles and coverage limits to find the policy that’s best for a business.
 
Related: Types of insurance your business may need

As your property management company grows, you’ll need to hire employees to help you with the day-to-day tasks associated with running a business. You’ll want to carefully screen and train your employees to make sure they’re capable of providing quality service. Once you’ve hired employees, you can start working on managing your properties.

There are a number of steps that are required before hiring an employee.

Related: Hiring your first employee

Setting up an accounting system for your property management business is critical to your business’s long-term success by accurately keeping up with security deposits, income from rent, and fees, along with any business expenses.

Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business
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