To ensure your property management estate business success in this highly competitive market, you need a properly structured property management business plan. With over 12 years of experience, we have helped over 5,000 entrepreneurs create business plans to start and grow their property management businesses.If this is your first time writing a business plan, we’ll walk you through these sections and give you some key things to consider.
Property management companies manage residential and nonresidential real estate for property owners. Among property management’s responsibilities are maintenance, rent collection, trash removal, security, and some renovation activities.
The value of residential construction is expected to grow at a slower pace from now to 2025. Unfortunately, the US home ownership rate is also expected to increase over the next 3 years, which reduces the need for residential property management services.
Nevertheless, office vacancy rates will decline slightly over the next 3 years. According to the latest trends, industry revenue is predicted to increase by 1.1% annually to $105.2 billion by 2025.
This industry provides the following major services:
Despite the challenges of the property management industry, We have identified five factors that can help you boost profitability, efficiency, and ultimately success.
Having contacts in key markets: Companies need to establish contacts within the real estate sector to secure clientele since most property management clients can be acquired through personal contacts and business relationships.
Having a clearly defined strategy/goal: Since the property management industry is highly fragmented, it is important to have a strategic plan that differentiates you from your competitors.
Access to key markets: Property managers should operate in markets where real estate services are in high demand. Areas with dense populations or places with high population growth are key markets for industry participants.
Business expertise: Businesses and individuals often consult industry professionals about real estate transactions because of their expertise in the local real estate market, including financing, zoning, and tax structures.
The ability to communicate effectively: Property managers serve as a liaison between owners and tenants, so they are expected to communicate effectively and quickly.
A business plan for a property management business is a written document that sets your company’s financial goals and discusses how you’ll reach them.
A solid, comprehensive plan will serve as a road map for the next three to five years of the property management business. Any bank or investor you approach will require a property management business plan, so putting one together will be critical to securing funding.
In short, writing a business plan can help you succeed if you’re thinking of starting a property management business or pitching to investors or venture capitalists.
You can stay current with market trends by developing a property management business plan. In addition, it lets you track results over time, test lead generation strategies, and develop new marketing approaches.
Property management owners who have a business plan grow 34% faster than those who don’t, and 73% of fast-growing businesses have one.
The following is what a good property management business plan will show you:
A property management business plan is a living document that should be updated annually as your company grows and changes.
The main sources of funding for a property management are personal savings, credit cards, and bank loans. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay the loan and interest.
To gain this confidence, the loan officer will not only look at your financials, they will also demand a professional plan. A well-developed business plan will ensure that they are confident that you can successfully run a business.
To write a property management business plan, you don’t need to be an expert. Our step-by-step guide will show you how to write a property management business plan, or you can just download our proven sample business plans to get a better idea.
The executive summary is the most important part of the document since it outlines the whole business plan. Despite the fact that it appears first in the plan, write the executive summary last so you may condense key concepts from the other nine parts.
It’s a part that catches the investor’s eye and provides key information about your company’s overview and upcoming short- and long-term goals.
Tell them what kind of property management business you have and what stage you’re in; for example, are you a startup, do you have a property management company that you want to expand, or do you have a lot of estate businesses?
Finally, an executive summary should provide investors with a preview of what they may expect from the rest of your document.
Check out these executive summary examples to help you write a perfect one for your property management business plan.
The company analysis follows the executive summary as the second section of a property management business plan. Your company overview will be short and clear, similar to the executive summary.
Even if they just have a few minutes, your reader has to understand what your company does and who your customers are.
The following sections will be included in your business plan’s Company Analysis:
Company summary: Your company analysis will describe the type of property management business you are running and its future goals. The type of property management business you might be focused on:
Company history: When and why did you start your property management business?
What milestones have you achieved so far? Your milestones could include served 100th customer, new contracts, etc.
Mission statement: An overview of your property management company’s guiding principles. Learn how to write a perfect mission statement.
You need to include an overview of the property management business in the industry analysis you performed before sitting down to write your property management business plan.
While this research may appear to be unnecessary, it helps you to build strategies that maximize business opportunities while lowering or avoiding the identified risk.
Furthermore, market research can improve your strategy, especially if it identifies market trends.
The third purpose for conducting market research is to demonstrate to readers that you are an industry expert.
Industry analysis can be presented as a 8-step process when written as part of a company’s business plan.
The customer analysis section is an important part of any property management business plan since it evaluates the consumer segments that your company serves. It identifies target customers, determines what those customers want, and then explains how the services will meet those requirements.
Customers can be categorized into the following segments: Landlords, Home sellers, Property owners, Home buyers, Renters, etc.
Customer analysis may be divided into two parts: Psycho-social profiles and Demographic profiles.
With regards to demographics, include information about: the ages, genders, locations, and income levels of your customers. When targeting businesses, describe what kind of business, size, and location your target customers are.
The psychological profiles of your target clients reveal their wants and needs. The better you understand and identify these demands, the better your chances of attracting and retaining customers will be.
Who are the main competitors in your target market, and what makes them your main competitors? How will you beat them? Use competitor analysis to:
The first step is to determine who your direct and indirect competitors are.
The direct competitors consists of other property management businesses that offer essentially the same property management services to the same people as you do.
In-house managers or homeowners and DIYers are fall in indirect competitors category. It is important to mention that not everyone uses the services of a property management agent when they sell or buy property.
When it comes to direct competitors, you should describe the other property agents you compete with. It is most likely that your direct competitors will be property management agents located nearby.
Once you’ve identified the competitors, concentrate on the direct, head-to-head competitors, since they are the most threatening to your property management business— but keep an eye on the indirect competitors as well, just in case.
Provide an overview of each direct competitor’s business and detail their strengths and weaknesses.
You will be able to position yourself competitively in the market if you perform proper competitors research. Perform a SWOT Analysis to learn your competitors’ strengths, weaknesses, and competitive advantages in the following areas:
The final section of your competitive analysis should include a list of your areas of competitive advantage. for example: Are you going to offer premium property management services? Will you offer unique real estate services that your competitors don’t offer? Will you offer better pricing or will you offer greater customer support?
Consider how you will outperform your competitors and include them in this portion of your estate business plan.
Creating a marketing plan for a estate business involves identifying the target demographic and finding property management services that suit their preferences.
As part of your marketing plan for a property management company, you should include:
Pricing and Product Strategy
Your property management business must offer services that are different from those of your competitors.
Research what your competitors offer and how they price their property management services. Unique services identifies your property management business as the place to go for unique services and differentiates it from others.
Placing and Promotions
Discuss how your location might be able to provide a steady stream of customers. As an example, Is your property management company in an area with a high number of vacation rentals?
Promoting your property management business is the final part of your marketing plan. In this step, you document how you will drive customers to purchase your property management business. A few marketing methods you could consider are:
You should also think about your property management’s Unique Selling Proposition (USP), which should explain why clients should choose you over other property management businesses. Ensure that your USP is reflected in your marketing.
While the previous sections of your property management business plan described your goals, your operations plan discusses how you will achieve them.
An operations plan is helpful for investors, but it’s also helpful for you and employees because it pushes you to think about tactics and deadlines.
Your operational plan should be able to answer the following questions:
Your operations plan should be divided into two individual parts, as seen below.
Everyday short-term processes include all aspects of property management, such as serving customers, procuring supplies, maintaining the property and green spaces, performing bookkeeping and staying organized and so on.
Long-term goals are milestones you hope to reach. It may be the date when you expect to serve your 1000th customer or when you hope to reach $X in sales. Another example would be when you expect to hire your Xth employee or start a new location or service.
When writing a property management business plan, the management section’ outlines your management team, staff, resources, and how your property management business ownership is structured.
This part may be easily organized by dividing it into the following points:
This section outlines your property management business’s legal structure. If your company is a sole proprietorship, it may simply be one phrase. It might be longer if your company is a partnership or a corporation. You should make it a point to clarify who owns what part of the business.
Internal Management Team
This section should not only outline who is on your management team but also how each person’s skill set and experiences will contribute to the growth of your property management business. Ideally, you and/or your team members have direct expertise in the property management business. If this is the case, highlight your experience and skills.
External Management Resources
Think of these external management resources as your internal management team’s backup. Consider forming an advisory board if your team is lacking expertise and experience with property management business.
An advisory board would consist of 3 to 7 people who would serve as mentors to your property management company. They would assist in answering queries and providing strategic direction.
If necessary, search for advisory board members with expertise running property management business.
Describe all of your company’s external professional advisers, such as accountants, bankers, attorneys, IT experts, business consultants, and/or business coaches.
The final topic to consider in the management area of your property management business plan is your human resource needs.
As part of your financial plan, you should present a 5-year financial statement broken down monthly or quarterly for the first year, and then annually. Financial statements include your income statement, balance sheet, and cash flow statement.
A profit and loss statement is more commonly called an income statement. It shows your revenue and subtracts your expenses to determine whether you were profitable or not.
As you develop your income statement, you need to develop assumptions. For instance, Will sales grow by 2% or 10% per year? Your choice of assumptions will greatly impact your business’s financial forecasts. Conduct as much research as possible in order to ground your assumptions in reality.
While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities.
The balance sheet shows your property management business’s net value at a specific point in time. It categorizes all of your company’s financial data into three categories:
The equation that expresses the relationship between these financial data elements is Assets = Liabilities + Equity.
Create a pro forma balance sheet for your property management business plan that highlights the information in the income statement and cash flow projections. A balance sheet is normally prepared once a year by a company.
Balance sheets indicate your assets and liabilities, and while they contain a lot of information, they are simplified to highlight the most important things you need to know.
For example, spending $150,000 to build out your property management business will not result in instant revenues. Rather, it is an asset that should help you earn money for many years to come.
Similarly, if a bank write you a check for $100,000, you do not have to pay it back right now. Rather, that is a liability that you will repay over time.
Cash Flow Statement:
Your cash flow statement will help you determine how much money you need to start or grow your property management business. In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a property management business:
List any additional material you cannot include elsewhere, such as resumes from key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts, and personal and business credit histories.
Attach your full financial projections along with any supporting documents that make your plan more compelling in the appendix.
A property management business plan is a worthwhile investment. As long as you follow the template above, you will become an expert in no time. By following the template, you will understand the property management business, your competitors, and your customers. The plan will help you understand the steps necessary to launch and grow your property management business.
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Since 2010, Wise business plans’ property management business plan writers has developed business plans for thousands of companies that have experienced tremendous success.