Welcome to the world of property management. Perhaps you’ve already been acting as a landlord to one property for a few months or years now, and you’re ready to expand. Maybe you haven’t actually bought any property yet, but you’ve been itching to be able to call yourself a landlord.
Regardless of how you ended up here, ready to flesh out your property management business plan, welcome to this exciting world!
While many people become landlords almost accidentally as they move houses and hold onto their former properties, there needs to be intention in your business as you grow and move forward if you want to succeed. Without a plan, you’ll be spreading your efforts ineffectively. That will hurt your bottom line.
To succeed in any entrepreneurial effort, you need to have a plan. Business plans can take many different shapes and forms, but the plan needs to be effective for you. Goals, progress points, and overall ambition can be harnessed and directed through a simple document.
Now, it’s time to learn how to create a business plan for property management your way. It’s time to pave your path to success!
A Table Of Contents For Creating Your Business Plan
- What Is A Property Management Business Plan?
- Why You Need A Business Plan
- What To Do Before Your Write Your Plan
- What To Cover In Your Plan
- Evaluating and Marketing Properties
What Is A Property Management Business Plan?
Let’s begin by reviewing what exactly this type of business plan is. As the name suggests, this is a document that lays out the direction that will be taken to accomplish growth and success in the property management industry.
There is no one-size-fits-all business plan model. In fact, property managers are all likely to have a wide variety of ideas about what their long-term goals are and how they will get there. Additionally, individuals have different short-term goals that act as waymarkers on their path to long-term success.
The business plan is a living document that outlines the idea of how to get from point A to point B. As things change, the document can change, too. If a great property suddenly becomes available when your short-term goals didn’t include a new property, it might be time to adjust the plan!
Part of the beauty and wonder of a business plan is that it should work and grow with you. Sticking to your plans is important, but it is also important to recognize that goals and best steps for success will change along the way. As long as you keep evolving, make sure that you keep your business plan up-to-date with you!
Note: Owner And/Or Manager
At this point, we want to mention that there are many different ways to become involved in property management. You might want to get involved as an investor/landlord, and this would mean that your plan includes information about finding properties.
On the flip side, you might want to start a property management business that takes on investor clients. These clients own properties, and you manage them. Just as most people tend to do a little bit of both, this guide will cover a little bit of both, too!
Why You Need A Business Plan
There are a few key reasons that you need a business plan. First, you should want to have one to help guide you. Working on your own or with a small team can be overwhelming at times, and you may lose track of where to focus your energy.
When you have a business plan, you can turn to it to find guidance and get back on course.
Another reason that many new property managers want to figure out how to write a property management business plan is because they want to get a loan. Most financial institutions will not give loans to investors unless they have proof of business plans, so having a solid plan in hand can help you get the funds you need to kickstart your business.
Of course, there are many reasons that having a business plan as a property manager might be a good idea. There are even a few reasons that you might not need one right now! Let’s briefly review some of the primary pros and cons of creating your own business plan.
The Pros
Organize Your Ideas
One of the biggest benefits of creating your own personal business plan is that you can organize your ideas and see how they all fit together. It can help you figure out how to get into this business at all!
Thinking through what you want to do with your business might lead you on twenty tangents; getting them all on paper can help you link up related and relevant ideas.
Regular Guidance
As mentioned, it’s easy to get lost in the world of property management. When you’re dealing with the day-to-day tasks of being a landlord and you also want to expand your investments, you might feel like you don’t have enough brainpower to do it all.
Having the guidance of a solid business plan to recenter and keep you on track is a golden ticket to success.
Pitch To Clients
Another huge benefit of having this document ready to go is that you will be able to bring in clients ASAP! Running a rental property management company will rely on you having a regular stream of investor clients that need their properties handled, so you want to be able to show them your plans and how you will help them succeed.
Adjust As You Go
Another cool thing about business plans is that they should always be written as a living document. A living document is a document that is meant to be changed and adjusted over time. As your business goals and needs change, your document can, too.
Secure Support
Do you want to get backing from a financial institution for your first big investment? Are you hoping to grow a small team to help your business grow? Using a business plan to secure these types of support is a great technique. When you show that you are planning for what’s next, you’ll be sure to find others to support your cause.
Plan Your Next Steps
Finally, writing a business plan can make you think ahead. Many people focus solely on what they want to do in the immediate future. It’s good to live in the moment, but you also need to think about your long-term investment payoff to ensure that the small steps you take today help you make a giant leap in the future.
The Cons
Time Consuming
The biggest con about a business plan is that it can be very time-consuming to put together, but the time that you save by having this document available makes that investment well worth it for most. If you follow the rest of the guide that we’re sharing today, this process can even go a little bit faster than usual!
Stressful
Some landlords find the prospect of writing out the one-month, three-month, or three-year future of the business to be very daunting. You should put a lot of passion into the plan’s creation, but you should also remember that the document will never be complete or uneditable. Let go of some of the stress by reminding yourself that adjustments can be made as needed.
Potentially Unnecessary
If you are just dabbling with the idea of becoming a landlord, it might not be necessary for you to dive deep in property management business plans just yet. Not every landlord needs to have a full-fledged rental property or property management business.
Managing just one property can be enough for many people, and those people won’t be needing a business plan to organize themselves.
If, however, it’s time to consider yourself a full business, it’s time to create your plan.
What To Do Before Your Write Your Plan
Before you write your plan, there are a few things that you should think about. We recommend getting a blank notebook and using this notebook to jot down any and all ideas that you have about the rental business. Do this for at least one week, and then re-read through the ideas for another week. Add more as you go.
If you aren’t feeling inspired enough to start from scratch, these questions might help you think more about what type of business you want to create and why:
- What are your long-term goals?
- What are your short-term goals?
- How many properties do you want to own?
- How many properties do you own now?
- Do you want to own properties, or do you want to work for clients strictly as a property manager?
- Do you want to hire additional team members?
- Do you have any loans or plans to add any loans?
- Why do you want to be in this business?
- Do you have experience with tenants?
- Are there any skills that you need to learn before becoming a property manager and business owner?
These questions are in no way comprehensive of all the things that you could think about. The idea is that you want to create a brain dump of everything that has been circulating when you think about the business. With all of these scribbles, you can start creating your property management company business plan.
What To Cover In Your Plan
You now have a large list of ideas, thoughts, and dreams about your business. It’s time to formalize those ideas and get them into an organized and achievable plan.
In this part of the guide, we’re going to concentrate on the different sections that you should put into your property management business plan. It’s impossible for us to cover every single thing that you might want to include, but remember that you can be flexible about your plan. Adjust as you need to, but remember that all of these sections are included for a reason.
Our Services & Business Model
This section covers who your business is, what they do, and how they are generally structured. Is it strictly a management company, or is it also an investment company? This small profile should bring clarity to that question.
Our Mission & Goals
Next, outline your short and long-term goals for the business. If possible, it’s also great to create a general mission statement that you can use to pitch your business to clients.
Team Structure
What kind of positions will you have in the business, and what are the position’s responsibilities? Outline the structure of the team, and be sure to update this part of the document as your team expands.
Services Offered
What does the business offer clients? What comes in standard packages, and what must be paid for additionally to complete?
Fee Structure
Cover the general fee structure, and update the fees as soon as they change so that all information included in the document about your fees is accurate.
Finding Clients/Properties
This section should detail how you plan to pitch to clients, what your ideal market is, and what types of properties you expect to run or invest in.
Evaluating and Marketing Properties
How will your business determine the rental value of a client’s property and market it so that it stands out in a rental-heavy industry?
Screening Tenants
Detail your screening best practices, and be sure to include information about your compliance for federal, state, and local laws when screening. Including expected turnover rate can make for an interesting metric here.
Rent Collection
This section should explain the various types of rent collection that will be available, and it should also include information about how rent will be collected or transferred to the primary owners.
Inspections and Maintenance
A complete guide of inspections needed, maintenance schedules, and what needs to be done in the case of an emergency should also be included in the business plan.
Continuing Education
If there are skills that you need to learn or licenses that you need to get to operate the business legally, you will want to outline how you are going to accomplish these goals in the business plan.
Financials
Finally, it is important to give your expected cash flow and budget for each year as well as for sample properties and clients. By creating some basic projections based on old data where available, it will be a little bit easier to plan for the future.
You Can Find Success In A Plan!
Setting up a property management business plan just makes sense if you’re ready to expand your business by buying more property or bringing on more clients that need help with their properties. The only way to smoothly transition into a new phase of your career is to set up a clear plan!
Using a business plan might seem like an old school idea, but it is actually an incredibly invaluable idea that still has a lot of worth and merit in the industry today. What are you waiting for? It’s time for your future to be planned!