There’s still money to be made in property. With high house prices meaning that buying a home is out of the reach of many, lettings and property management companies are doing very well indeed.
Why start a property management business?
A property management company looks after property portfolios on behalf of their client base. Clients can range from one-property landlords through to people who own and rent out hundreds of properties or those own leasehold buildings. Either way, services offered by property management companies include finding and vetting tenants (that is if the property management company is also acting as a letting agent, which many are), drawing up legal tenancy contracts, checking on how tenants are looking after the property, dealing with maintenance and repair issues, managing financing and liasing between the tenants and the landlord. Property management services are very much in demand, with many landlords choosing to make their own lives easier, with the added benefit of knowing everything is compliant and legal. A property management business can be very profitable too, with most services charging an upfront as well as a monthly fee.
What skills will I need?
Good communication and interpersonal skills are essential as you will be required to deal with a whole manner of different people with different needs and expectations – landlords, tenants, vetting companies, maintenance contractors, etc. You will also need to be highly motivated and focused. Property management is often fraught with problems and things regularly go wrong, so you will need to be prepared for that and keep a level head at all times whilst liasing and tracking details to ensure that everything runs smoothly and meets all expectations.
What are the keys to success with this business?
As property management is an ongoing service your clients will be look for a high quality service throughout your relationship. This means good communication, keeping everyone up to speed and ensuring that everything runs smoothly. If you’re also acting as a letting agent then your clients will rely on you to find suitable tenants quickly, so a high level of marketing and visibility within the local areas is absolutely essential in order to satisfy your clients' demands. If you can quickly find tenants and then ensure tenancies run smoothly on a long-term basis then clients will continue to use your services.
Start-up costs can either be at the lower or higher end of the scale depending on what business you are exactly setting up and the services you intend to offer. For a detailed list of business start up costs, read our Guide to Business Startup Costs here. A property management company could be started up from home – all you really need is an office and the ability to travel around to visit properties and clients. If you intend to also act as a letting agent (which many property management companies do) then your costs can be considerably higher. Most letting agents have prominent high-street offices in order to attract the attention of prospective tenants and provide strong visibility and accessibility within the local area. As such, rent on such premises can be expensive. You will also need to budget for marketing, admin and insurance. Printing and mailing costs, admin and telephone costs can be especially expensive in a property management business due to the volume of paperwork and communication involved in the work.
Your next step
Conduct market research and find out what the potential demand levels are for a new property management company within the area you intend to set up your business. Would it be best to concentrate on property management or is the demand sufficient to set up a full service letting agency? Carefully research the services of other management agents and find out the fees they charge.