Do you run a short-term rental property with glowing reviews? Not every owner wants to self-manage their properties. Why not leverage your experience to help others manage their vacation rentals? Your rental management background will help you know how to start a property management company addressing the short-term rental market’s needs. Follow these steps to start a thriving business.
1- Learn the requirements for property management
Every jurisdiction has different licensing requirements for a vacation rental property management business. When researching how to start a property management company in your area, start with property management licensing. Many states require at least one person in the company to hold a real estate broker’s license to conduct any real estate business, including property management.
Additionally, a property management company must adhere to the local business licensing guidelines and certifications. States or cities with a large tourism industry may have specific regulations about operating rental properties.
Check on the required taxes and fees, both for guests and your type of business. Learn about insurance for property management companies, such as what is standard in the policies and the average rate.
2- Create a business plan
As you research the local requirements, assemble a business plan. Compile a list of regular expenses property management companies face, like restocking cleaning supplies, repairing guest damage, and property marketing. Project these expenses and the income you’ll need to be in the black in your first year. Plan for the long-term by estimating growth for the first three and five years.
Analyze other property management services advertising vacation rental support. The market research helps understand standard management fees and potential add-on services to drive more revenue. Use the information combined with your estimated expenses to determine a pricing structure.
Finally, consider your value proposition. What will you offer to vacation rental owners that make your services stand above the competition or owners doing it themselves? Think about what special offers or terms will make your property management business attractive.
3- Set up office and website
When you look at how to start a property management company, one crucial component is promoting the company. Not all vacation rental property owners live in the area. An online presence is important to connect with short-term rental owners and to pitch the relevance of your services. Set up a website that advertises what you do and is optimized to drive them to contact you.
Along with the website, an office space legitimizes the management company and serves as a business hub. Use the space to store essential supplies, handle the daily tasks like marketing and guest communication, and host meetings with prospective clients. An office space in a high-traffic tourist area can be used to promote the available vacation properties.
4- Build a local network of professionals
Contractors are essential to keep your rental properties in tip-top shape and business in order. You’ll need trustworthy vendors to do quality work at an affordable rate. Think HVAC repair, cleaners, roofers, landscapers, and general handyman services.
Consider other business professionals, too. For example, a lawyer will know how to start a property management company and comply with city and state laws. Lawyers will assist writing and reviewing client contracts and handle any unresolved guest issues that need to be handled through the courts.
Another professional to consider is a bookkeeper. A dedicated bookkeeper can help keep internal records straight, auditing, and filing taxes as the company grows and you hire employees.
5- Craft your promotional and marketing strategy
As a new vacation rental property management company, you’ve got to reach short-term rental owners in your area. Create a marketing strategy to target these owners. The messages should talk about how your services help owners get better guest reviews or how you optimize Airbnb marketing for more bookings. Remember to optimize your website for local searches and use social media to bring some brand awareness to your business.
6- Build a client base
A happy client is a loyal client, and to succeed long-term, you’ll need consistent repeat business. A real estate investor often has multiple properties in their portfolio, and are steadily adding more properties. If you can win their business, your company could grow with them.
Another aspect to address when starting a property management business is luring returning customers to the vacation rental property. Repeat business is more cost-effective than marketing and finding new guests. How will you lure guests back to the rentals you manage?
7- Use software to automate and scale
The best way property management companies can reduce their expenses and staff load is by using property management software, like iGMS. The right solution will take over repetitive and routine tasks, allowing you to spend more time focused on the most important aspects of running the business. These software solutions reduce human errors (a double booking can be disastrous!) while streamlining communication, automating repetitive tasks, and sending the owners accurate reports on a regular basis.
Start your vacation rental management business
As a vacation rental owner, you have the know-how to start a property management company. The most important aspect is ensuring a positive guest experience. If you can do that, the guests and your clients will be happy. Following these steps will help with growing your business and setting it up for years of success.