10 Property Management Business Plan Steps to Avoid Failure
Property managers should make it a point to create a complete business plan upfront. This will set you up for success and reduce your risk of failure. With a complete property management business plan, you will not have to waste time making important decisions later on since you will have already planned for them.
Creating a long-term plan for your property management company has some similar elements to creating any other business plan, but there are also some unique aspects to the real estate management industry. To make sure you get started on the right foot, we compiled tips and elements that you will want to include in your plan.
1. Before You Start Your Property Management Business Plan
We are going to outline a general property management business plan that will set you on the path to success, but you will need to make some adjustments to customize it to your unique business. To make sure you successfully adapt our business plan, you will want to start by thinking about:
- Your long- and short-term goals.
- How many properties you want to manage.
- Whether you want to own properties or just manage them.
- Your current financial situation, including available capital and loans for your business.
- Why you want to be a property manager.
- The skills you need to hone before success.
2. Start Your Business Plan with an Overview
The business plan should start with an overview of your company, including its ownership. This is where you summarize the business’s current state if it already exists. It is also where you explain the short- and long-term goals of your property management company.
3. The Business Model for Your Property Management Company
One of the first and most important aspects of your business plan is the business model that you will follow. This is where you outline how you will approach the market and what will set your company apart from other property managers.
The business model commonly includes strategic partnerships or operations processes that you will use to handle clients or their properties.
4. The Services in Your Property Management Business Plan
You may include the services as a subjection of the business model or its own section. This is where you will outline all the services that you will offer clients as a property manager. As you create this section of the business plan, reflect on whether you just want to manage property or also want to own it.
This section is also where you will list all the tasks you will undertake as a property manager, such as:
- Maintaining the property.
- Attracting tenants.
- Screening tenants.
- Collecting rent.
- Handling evictions.
- Arranging repairs.
- Acting as a liaison between property owners and tenants.
Do not just list the services in the business plan. Write a sentence or two (at least) about each to define them.
When discussing the services, you will also want to outline which services are always included for clients and which will have extra charges associated with them.
Given the increase in short-term rentals for vacation properties, including on Airbnb, it is wise to make a designated section of your business plan’s services that explicitly says whether you manage just long-term rentals or also manage short-term rentals.
5. The Team Structure of Your Property Management Company
The team structure is another section that you may include as a subsection of the business model or its own part of the business plan. This is where you outline how many employees you will have in your property management business as well as their responsibilities.
For example, your team structure may include:
- Property Manager: Identifies overhead costs, sets rental rates, oversees client properties, manages market depreciation costs.
- Property Maintenance Manager: Supervises repairs, oversees repair and maintenance staff.
- Property Manager Service Representative: Interacts with the tenants and owners, advertises vacancies, represents the company across platforms.
Depending on the size of your property management business, some other roles may include a sales and marketing officer, an accountant and financial advisor, a software engineer, an HR manager, general repair workers, and a legal advisor. In the case of a small company, there may be a single job title that takes on responsibilities from several of these descriptions.
The team structure is one of the aspects of your business plan that you may find yourself updating regularly as responsibilities shift. This part of the plan will help you with finding and retaining employees, thanks to your clear expectations.
6. The Goals and Mission in Your Property Management Business Plan
For this part of your property management business plan, you need to look back at your answers to those initial questions. This is where you outline your short- and long-term goals. Not only do you formalize these goals in this part of the business plan, but you also come up with a short description of how you will achieve those goals.
It is also wise to create a mission statement in this part of the business plan. The mission statement should outline the benefits that you will provide to property owners and tenants. It will likely be at least several sentences and can include something like “to handle day-to-day operations of the property as well as to liaise between the property owner and tenants.”
7. The Marketing Plan for Your Property Management Business
Your property management business plan will also include a marketing plan section. This will be among the most critical sections in determining how successful you will be. After all, you need to attract clients if you are going to have properties to manage and generate income.
The marketing plan needs to consider all the various marketing techniques that you will use, such as:
- Strategic Partnerships
- Digital Marketing
- Social Media Marketing
- Traditional Marketing
The marketing plan should also include the budget for your marketing and how you will advertise your property management services as better than the competitors. Most property managers include how they will attract tenants to properties in this section, although the focus is on attracting the primary clients, the property owners.
8. The Financial Projections for Your Property Management Company
The area of your business plan dedicated to financial projections will have a great deal of detail. It should include the payment structure for employees, the prices you will charge clients, and the costs associated with managing the properties.
Some of the elements to include in the financials section of the marketing plan include:
- Planned expenditures on equipment.
- Profit and loss of the recent fiscal year, including profit, revenue, material costs, and personnel costs.
- Projected profit and loss of the next fiscal year, divided into months.
- The balance sheet.
- How you will monitor the P&L and compare that to your budget.
9. Incorporate Technology and Tools into Your Property Management Business Plan
Creating and following a property management business plan can be overwhelming at first, especially if you are just getting started. Make it easier to stick to your plan by taking advantage of the tools available to you.
For example, Podium Starter helps you organize your communications, helps you get more reviews to promote your business, and incorporates payments. Technology like this can automate or simplify many of your daily tasks, freeing up your time to focus on your other property management responsibilities.
10. Regularly Update Your Property Management Business Plan
As your property management company evolves, be sure to update your business plan to reflect those changes. This will help you stay on track, and it will also help you attract clients, as they are unlikely to trust a property manager with conflicting information in different spots.
Summary: Why a Property Management Business Plan Is So Important
Creating a property management business plan will set you up for success. The business plan will help you organize your thoughts and look ahead to the future. As you create the business plan, you will outline your services, goals, and the methods you plan on using for your services, saving you time in the future that would have been spent determining all of these things.
The business plan will also be there to help you stay on track as a property manager if you are unsure of what to do or how to complete a specific task. It can even help you attract clients via the sections dedicated to services and fees, as they give the clients clear expectations. Even the fact that you have a detailed business plan will show property owners that you are well-organized and prepared, implying you are likely to do a good job caring for their property.
Don’t forget that your property management business plan is not set in stone. You can and should adjust it as the need arises.