In my 28 year real estate career as a broker and coach, I have worked with many agents who have asked about adding property management to their existing business or becoming a full time property manager.
Thank you for reading this post, don't forget to subscribe!Property management looks easy from the outside. Work with real estate investors to help them sell and lease their properties, collect rent, and occasionally make repairs… how hard can it be?
The truth is, however, that asset management is very technical, and can be a very difficult and expensive business to get into if you don’t set up your system correctly from the start. In this article I will share the seven steps that will get you into property management successfully and permanently.
1. Meet Your State’s Property Management Requirements
It may shock you to learn that not all states require a license to become a property manager. Idaho, for example, is one of five states that requires only a person over the age of 18 and a high school diploma to manage properties for others. Many states do not require you to be licensed if you are managing your own property or Airbnbing your own home.
The remainder require either a real estate license or a property management license to manage properties for anyone other than you and direct family members. This includes managing short-term rentals such as VRBO and AirBnB.
It is also important to note that in most states in order to get your license, you will need to pass a criminal background check. Many others, like my home state of Colorado, also have special requirements for managing brokers. These may include additional insurance and special bank accounts.
Whatever the case, the first step is to visit your appropriate state’s website. Don’t rely on this article or any other blog, as state requirements change often and you want to make sure you are in legal compliance before you start managing properties for other people.
2. Get Additional Property Management Education
To avoid common mistakes and become the best property manager you can be, consider taking additional courses or certification specific to property management.
Most real estate licensing education providers cover the basic principles and requirements of being a property manager. However, they do not include the best practices that are necessary to be a Success property manager.
Property managers are responsible for collecting rent, paying expenses and managing the budget, so understanding financial management is important. Therefore, your first goal should be to become proficient in budgeting, financial management and reconciliation.
Second, you’ll need to learn how to manage physical properties, including routine maintenance and repairs, managing vendors, and ensuring compliance with safety regulations.
Lastly, you need to learn how to run your property management business. Look for courses like PM Success from property management coach Tony Kline that will teach you how to work with property owners. If you want to be successful and profitable, you will need many customers.
Tony also teaches you how to handle maintenance requests, handle tenant disputes, and set clear boundaries with your property owners and tenants alike. Otherwise, you’ll be getting phone calls in the middle of the night when the tenant’s bathroom light bulb is on!
3. Get Property Management Experience
Of course, the classroom examples aren’t the same as what you’ll actually be going through day-to-day as a property manager. So, once you have your necessary license and have taken some property management classes, you should get some real-world experience before taking on your first client.
Successful property managers are skilled at finding clients, marketing properties, showing them to potential tenants, and closing lease deals. Developing your marketing chops and leasing chops under someone else will help you learn faster, develop better skills, and focus on the right habits.
So how do you get real exercise without the risk? Also consider shadowing or working for another successful property manager before going out on your own.
Do this by building a strong network of contacts within the industry, including other property managers, real estate agents, contractors and property owners. Attend industry events and seminars to meet new contacts and build relationships with existing ones.
Ask if you can shadow a senior asset manager or help them with their current clients. Even if the tasks they ask you to perform seem entry level, you are going to gain the experience you need for a successful property management future. In addition, some may even pay you to show the property or do pre-leasing and walk-through exits.
4. Organize your legal and trust accounts
Now that you have your state requirements, education and some experience in hand, you are ready to go out and set up your property management company. This is the biggest step!
First you’ll need to register your business with the state, obtain the necessary insurance, fill out appropriate contracts and forms, and set up trust accounts.
Some states require an additional license for asset managers to operate as a separate business, so be sure to check with your state for the required qualifications.
Next, consult with your attorney and CPA to determine the best type of business classification for your needs. In many cases, a limited liability company (LLC) will suffice. You will also need a real estate attorney to instruct you on the legal jargon to include in your contracts, disclosures and forms to ensure the protection of you and your clients.
Finally, go to your bank to conduct your business and create a trust account. Trust accounts are different from operating accounts. Most states require property managers to keep tenant deposits and rent payments separate from the operating account of the property management business. This is because the money in the trust account belongs to the client (asset owner) and can never be accessed by the brokerage or management company.
Even if your state doesn’t require trust accounts, I consider it a requirement for anyone who is serious about becoming an asset manager. The most common lawsuits throughout the real estate industry are money laundering and misappropriation of your client’s money. Don’t fall prey to this common mistake. you can end hot water,
5. Find the Right Property Management Software
Great software is essential to any property management business—it will save you time and money. Many property management software today provide end-to-end capabilities from lead management through closing.
here are some must have Software Features for Property Management:
- Leasing: Accept tenant applications, run background checks, and submit and sign leases, all within the program.
- Collect fare: Manage online and automatic payments, late payment reminders, utilities and pet fees.
- Accounting: Manage bank reconciliation, vendor payments and financial statements.
- Reporting and Analysis: Prepare owner and tenant analysis as well as tax documentation for clients and business.
- Marketing: Create fliers and even post listings directly to popular rental listing websites like Zillow, Trulia, and HotPads.
- Owner & Tenant Portal: These provide property owners and tenants with secure access to reports, maintenance requests and even fund transfer services.
- maintenance: Manage tenant requests, vendor communications and billing.
- bussiness Administration: Keep track of business expenses, income and employee time sheets.
There are several piecemeal and all-in-one software options in this space. In particular, I’d recommend trying out TenantCloud’s system, as the company offers a free version of their software that includes listing management, applicant screening, access to seller networks, rental payment options, and more.
6. Get Customers
There is a commonly said saying in sales, “As long as you don’t have too many leads, you don’t have a problem.” While you may have already put in a lot of time making sure you’re state compliant, you’ve got the right experience, and you’ve got your bank accounts and systems set up, now is the time to go out and serve your customers. get to
Five Guaranteed Ways to Get Property Management Clients
The effort of tackling all of these strategies at the same time is overwhelming. So, start with strategies 1 and 2, and as your revenue grows, add others to your work.
- Referral and Oral: Ask all of your friends, family and co-workers to refer rental owners to your property management services. Once you get a few customers, offer incentives or discounts to help them bring in new business.
- Networking: Join professional organizations, attend local real estate events and investment groups to build relationships with real estate agents, landlords and property investors.
- digital marketing: Build a strong online presence with a professional website, social media profiles and listings on property management directories. Use search engine optimization (SEO) and pay-per-click (PPC) advertising to drive traffic and generate leads.
- direct mail: Send targeted direct mail campaigns to property owners and real estate investors in your area. Include information about your services, testimonials and a strong call to action.
- Local Advertisement: Advertise in local newspapers, magazines and websites that cater to the needs of property owners and investors. Consider sponsoring local events or sports teams to increase brand recognition and attract potential customers.
7. Stay up to date
Continue to educate yourself on industry trends, regulations, and best practices through seminars, workshops, and continuing education courses. Stay up to date with the latest technology and tools that can help make your job easier and more efficient.
Consider joining a professional organization for property managers, such as the National Association of Residential Property Managers or the Institute of Real Estate Management, to gain access to training, resources and networking opportunities.
Continuing education and certification will not only allow you to outperform your competitors, but it will also help you stand out from them. This will ensure that you will be successful in property management for years to come!
ground level
Property management can be an excellent and profitable career… that is, if you take the time to set up your business correctly! Don’t make the mistake of trying to wing it. If you do, chances are you’ll be wasting time and money, or worse: breaking the law.
There are many experienced property managers who have walked this path before you and have already cleared the landmines, pitfalls and hurdles. Learn from them first, then build the property management business of your dreams. My best wishes are with you!
