Learning how to start a property management company in Florida can be a complicated process, especially if you are new. Starting a property management business in Florida can be tricky because of the laws and rules that can get in the way. Finding the initial steps to establishing a property management firm can be complex if you consider the different stakeholders you need.
This process can be difficult and expensive without the correct advice, information, and resources. In this article, we'll walk you through the process of starting a Florida property management company so you can avoid the mistakes most new property managers make.
What Does a Property Management Company Do?
Property management involves taking care of one or more homes, student apartments, community associations, or businesses. The manager and owner can be the same person, or a property management company can run the properties if the investor in real estate doesn't have the time or expertise to do it himself.
Property managers take control of and run structures and other real estate assets for people or groups of owners. They are the traditional intermediaries who put owners in touch with renters and take care of empty rental properties.
Property managers oversee marketing empty units, showing them to potential tenants, gathering applications, signing leases, receiving rent, keeping an eye on property maintenance, checking in and out tenants, and more.
How to start a property management company in Florida
Establish Your Company and Secure a License
As a property manager, you need to have a license to operate. It's the most vital certification a property manager needs. To obtain a license, real estate agents and brokers must participate in programs that teach them how to start, grow, and locate clients for their businesses.
No academic credentials, including degrees or other certificates, are required. It is still crucial to review the license laws in your state, though. Once the certification is done, create a legal entity, like a Limited Liability Corporation (LLC) or a business that is incorporated. You can ask a lawyer to handle it for you. As an alternative, you can do it on your own by going online.
After sorting out the legal entity, you need to create a business plan. It is necessary to start your property management firm in Florida. This plan will be like a blueprint for your business. It will show you how to do everything, from getting funding to making a profit.
A basic business plan needs to include an executive summary, a company description, a market analysis, management and organization information, and a description of the company's services or products. It must also include your sales and marketing plans, requests for money, and cost estimates.
Organize your finances
Accounting is crucial to the operation of your property management firm, as it is in any business. To keep track of your financial flow, you need an organized system with plenty of details. This means using a reliable accounting tool instead of Microsoft Excel or, even worse, writing everything down by hand.
Additionally, you ought to open numerous bank accounts to maintain control over your cash. You set up a separate bank account for your property management work and a legal trust account for all security deposits. Your owners' properties should be served by a third account alone.
Naturally, your property management company will incur a large number of costs. This can take the form of overhead costs, dues from members, wages, fees from vendors, and other services.
It is advisable to plan for all these costs and keep meticulous records. You'll be able to create realistic income goals as a result. Most of your income will come from management fees, which is typical for many property management services in Florida.
Put together a good team
Because you're just starting, you can run the whole business yourself. However, if you need assistance, you should assemble a team of skilled people.
Your team should have leasing agents, property managers, maintenance workers, field managers, and different coordinators. You may also need people in the back office to handle payroll, accounting, marketing, and sales.
Furthermore, another part to take seriously is to work closely with tenants, contractors, and property owners. You will need contractors in addition to full-time and part-time employees. This encompasses a Certified Public Accountant, a real estate attorney, and different maintenance contractors like electricians, plumbers, etc.
Invest in a reliable property management software
This step is critical to the success of your property management company in Florida, so you can't skip it. We live in a technological world, so it is crucial to figure out how to use automation solutions and various tools in the real estate sector.
This will not only streamline your daily operations as much as possible to give you the best chance of growth, but it will also give you an edge over your competitors. Some management software can also be used to improve the user experience on your website and bring in new customers.
What sort of software do you require? First, you need one that makes it simple for you to organize your financial records, promote your properties, find renters for your rental homes, keep track of rent, handle maintenance requests, manage leases, etc. The correct tools can help you manage all these duties and operate your company independently if you don't want to hire staff.
Seeing as agents will spend a lot of time out of the office and in the field, it could also be incredibly beneficial to use field service apps. Look for one that gives real-time access to customer information and features seamless communication between the field and the office.
Choose a Pricing Structure
The next step is to choose a pricing structure that brings in enough money to keep the business going but is still appealing to customers. You don't want to undercut the competition or be the most expensive. If you've been managing commercial properties for a while, you'll know what the standard prices are in the area.
If you're starting, the easiest way to determine a suitable price is to conduct market research by contacting local property management companies to learn the going rates.
Draft a Contract
Your duties as a property manager should be precisely outlined in a formal contract, shielding you from any liabilities. You will serve as a liaison between the owner of the property and his renters in your capacity as a property manager.
You will take care of and run properties and other real estate investments for the owners. Include as much information as you can.
In addition to your responsibilities, your contract should list your fee schedule (including late payment fees), working hours, maintenance and repair budgets, emergency reserves, and an invoice schedule. When making contracts, it's best to talk to a lawyer to ensure everything is covered.
Manage Your Property Well
You will have a full plate as a property manager. Customers look to you for a wide range of services, such as advertising listings, screening tenants, collecting rent, doing repairs, and making lease agreements. Naturally, you'll need to learn about all property administration.
Use the appropriate channels and provide interesting information while advertising listings. Check people's criminal records and credit reports and talk to their previous property owners to find good tenants.
Regularly inspect your property to discover maintenance issues early. When obtaining rent, use a hard hand. Owners consider these services and more when choosing property management service providers.
Conclusion
The first step is figuring out how to start a property management company in Florida. To be a good property manager, you must be willing to do the daily tasks that come with the job and learn everything you can about the changing real estate market.
Everyone should not be a property manager because it can be difficult, especially if you work alone. But if you've managed real estate assets before and are confident that taking risks to start your own business is worthwhile, just do it!