Want to open your own PM business?
Poorly-paid property managers who see all their hard work taken for granted may well be tempted to set up a business of their own, but the challenge should not be underestimated.
In order to strike out on your own as a property manager, you will need a full real estate agent’s licence, not just an agent’s representative certificate.
You will also need legal advice to ensure you comply with relevant sections of the law – for example, around trust accounting – and to establish the most appropriate company structure.
RentCover Executive General Manager, Sharon Fox-Slater, said that opinions varied on whether a commercial office was strictly necessary in this day and age – at least when starting out.
“If you do decide to work from home, it’s worth checking in with an EBM broker to see if adjustments to your existing policy are required to keep you covered,” she said. “Professional indemnity insurance is also a must.”
Even if you’re not paying commercial rent, setting up a new property management business is not cheap.
If you’re planning to buy a rent roll to get you started that can be a major expense – however it will give you cash flow and leads for further growth through referrals. According to The Rent Roll Broker, you would need about 150 properties on your books to make a profit – but bigger rent rolls often deliver higher profitability through better efficiency. Unfortunately, the quality varies, with some rent rolls having incomplete files, work outstanding and sub-standard properties – all things you have more control over if you start with a blank slate.
Monthly subscriptions fees for being on the major real estate website portals are steep – and can run into thousands of dollars.
Computer systems, forms, letterheads, brochures, listing kits, database systems and administrative procedures all have to be in place to establish an efficient business from the outset – and to reinforce the special points of difference your business will offer.
Once all that is sorted, it is time to start marketing. Here are some channels:
- Make contact with buyers agents, financial planners, property developers, accountants, strata (body corporate) managers and any others in your local area who might be able to refer clients to you – make sure you offer to return the favour.
- If you’ve bought a rent roll, reach out to existing landlords to find out if they have any other properties you can manage and/or if they can provide referrals for workmates, friends or family who have investment properties.
- Consider advertising or look to have articles published in local newspapers.
- Social media – raise your profile by posting interesting information about your local area, its activities, rental market etc.
- Join internet forums where property investors congregate, such as Somersoft, and contribute useful responses to queries. Avoid giving people a direct sales pitch.
- Be active in your local community – you will meet a lot of people by contributing to the school committee, Rotary, local business associations, sporting clubs etc.
- If you’re also establishing a sales division, it can be helpful to create rental appraisal documents on properties for sale and to attend ‘for sale’ home opens.
Property investors are also sometimes tempted to start a property management business but, according to Sharon, they would be well advised to gain experience working at an agency before putting out their shingle.
“Property management is a specialised and highly challenging area of work,” she said.