how to create a business plan for property management

How To Write a Winning Property Management Business Plan + Template

Creating a business plan is essential for any business, but it can be especially helpful for property management businesses that want to improve their strategy and/or raise funding.

A well-crafted business plan not only outlines the vision for your company, but also documents a step-by-step roadmap of how you are going to accomplish it. In order to create an effective business plan, you must first understand the components that are essential to its success.

This article provides an overview of the key elements that every property management business owner should include in their business plan.

Download the Ultimate Property Management Business Plan Template

What is a Property Management Business Plan?

A property management business plan is a formal written document that describes your company’s business strategy and its feasibility. It documents the reasons you will be successful, your areas of competitive advantage, and it includes information about your team members. Your business plan is a key document that will convince investors and lenders (if needed) that you are positioned to become a successful venture.

Why Write a Property Management Business Plan?

A property management business plan is required for banks and investors. The document is a clear and concise guide of your business idea and the steps you will take to make it profitable.

Entrepreneurs can also use this as a roadmap when starting their new company or venture, especially if they are inexperienced in starting a business.

Writing an Effective Property Management Business Plan

The following are the key components of a successful property management business plan:

Executive Summary

The executive summary of a property management business plan is a one to two page overview of your entire business plan. It should summarize the main points, which will be presented in full in the rest of your business plan.

Start with a one-line description of your property management company
Provide a short summary of the key points in each section of your business plan, which includes information about your company’s management team, industry analysis, competitive analysis, and financial forecast among others.

Company Description

This section should include a brief history of your company. Include a short description of how your company started, and provide a timeline of milestones your company has achieved.

If you are just starting your property management business, you may not have a long company history. Instead, you can include information about your professional experience in this industry and how and why you conceived your new venture. If you have worked for a similar company before or have been involved in an entrepreneurial venture before starting your property management firm, mention this.

You will also include information about your chosen property management business model and how, if applicable, it is different from other companies in your industry.

Industry Analysis

The industry or market analysis is an important component of a property management business plan. Conduct thorough market research to determine industry trends and document the size of your market.

Questions to answer include:

What part of the property management industry are you targeting?
How big is the market?
What trends are happening in the industry right now (and if applicable, how do these trends support the success of your company)?

You should also include sources for the information you provide, such as published research reports and expert opinions.

Customer Analysis

This section should include a list of your target audience(s) with demographic and psychographic profiles (e.g., age, gender, income level, profession, job titles, interests). You will need to provide a profile of each customer segment separately, including their needs and wants.

For example, a property management business’ customers may include:

Commercial property owners/managers

You can include information about how your customers make the decision to buy from you as well as what keeps them buying from you.

Develop a strategy for targeting those customers who are most likely to buy from you, as well as those that might be influenced to buy your products or property management services with the right marketing.

Competitive Analysis

The competitive analysis helps you determine how your product or service will be different from competitors, and what your unique selling proposition (USP) might be that will set you apart in this industry.

For each competitor, list their strengths and weaknesses. Next, determine your areas of competitive differentiation and/or advantage; that is, in what ways are you different from and ideally better than your competitors.

Marketing Plan

This part of the business plan is where you determine and document your marketing plan. . Your plan should be clearly laid out, including the following 4 Ps.

Product/Service : Detail your product/service offerings here. Document their features and benefits.
Price : Document your pricing strategy here. In addition to stating the prices for your products/services, mention how your pricing compares to your competition.
Place : Where will your customers find you? What channels of distribution (e.g., partnerships) will you use to reach them if applicable?
Promotion : How will you reach your target customers? For example, you may use social media, write blog posts, create an email marketing campaign, use pay-per-click advertising, launch a direct mail campaign. Or you may promote your property management business via word-of-mouth marketing.

Operations Plan

This part of your property management business plan should include the following information:

How will you deliver your product/service to customers? For example, will you do it in person or over the phone only?
What infrastructure, equipment, and resources are needed to operate successfully? How can you meet those requirements within budget constraints?

The operations plan is where you also need to include your company’s business policies. You will want to establish policies related to everything from customer service to pricing, to the overall brand image you are trying to present.

Finally, and most importantly, in your Operations Plan, you will lay out the milestones your company hopes to achieve within the next five years. Create a chart that shows the key milestone(s) you hope to achieve each quarter for the next four quarters, and then each year for the following four years. Examples of milestones for a property management business include reaching $X in sales. Other examples include increasing the number of customers by X% each year, or expanding to a new market.

Management Team

List your team members here including their names and titles, as well as their expertise and experience relevant to your specific property management industry. Include brief biography sketches for each team member.

Particularly if you are seeking funding, the goal of this section is to convince investors and lenders that your team has the expertise and experience to execute on your plan. If you are missing key team members, document the roles and responsibilities you plan to hire for in the future.

Financial Plan

Here you will include a summary of your complete and detailed financial plan (your full financial projections go in the Appendix).

This includes the following three financial statements:

Income Statement

Your income statement should include:

Revenue : how much revenue you generate.
Cost of Goods Sold : These are your direct costs associated with generating revenue. This includes labor costs, as well as the cost of any equipment and supplies used to deliver the product/service offering.
Net Income (or loss) : Once expenses and revenue are totaled and deducted from each other, this is the net income or loss.

Sample Income Statement for a Startup Property Management Company



Revenues	$ 336,090	$ 450,940	$ 605,000	$ 811,730	$ 1,089,100
	$ 336,090	$ 450,940	$ 605,000	$ 811,730	$ 1,089,100

Direct Cost
Direct Costs	$ 67,210	$ 90,190	$ 121,000	$ 162,340	$ 217,820
	$ 67,210	$ 90,190	$ 121,000	$ 162,340	$ 217,820

	$ 268,880	$ 360,750	$ 484,000	$ 649,390	$ 871,280


Salaries	$ 96,000	$ 99,840	$ 105,371	$ 110,639	$ 116,171
Marketing Expenses	$ 61,200	$ 64,400	$ 67,600	$ 71,000	$ 74,600
Rent/Utility Expenses	$ 36,400	$ 37,500	$ 38,700	$ 39,800	$ 41,000
Other Expenses	$ 9,200	$ 9,200	$ 9,200	$ 9,400	$ 9,500
	$ 202,800	$ 210,940	$ 220,871	$ 230,839	$ 241,271

EBITDA	$ 66,080	$ 149,810	$ 263,129	$ 418,551	$ 630,009
Depreciation	$ 5,200	$ 5,200	$ 5,200	$ 5,200	$ 4,200
EBIT	$ 60,880	$ 144,610	$ 257,929	$ 413,351	$ 625,809
Interest Expense	$ 7,600	$ 7,600	$ 7,600	$ 7,600	$ 7,600
	$ 53,280	$ 137,010	$ 250,329	$ 405,751	$ 618,209

Taxable Income	$ 53,280	$ 137,010	$ 250,329	$ 405,751	$ 618,209
Income Tax Expense	$ 18,700	$ 47,900	$ 87,600	$ 142,000	$ 216,400
	$ 34,580	$ 89,110	$ 162,729	$ 263,751	$ 401,809
	10%	20%	27%	32%	37%

Balance Sheet

Include a balance sheet that shows your assets, liabilities, and equity. Your balance sheet should include:

Assets : All of the things you own (including cash).
Liabilities : This is what you owe against your company’s assets, such as accounts payable or loans.
Equity : The worth of your business after all liabilities and assets are totaled and deducted from each other.

Sample Balance Sheet for a Startup Property Management Company



Cash	$ 105,342	$ 188,252	$ 340,881	$ 597,431	$ 869,278
Other Current Assets	$ 41,600	$ 55,800	$ 74,800	$ 90,200	$ 121,000
Total Current Assets	$ 146,942	$ 244,052	$ 415,681	$ 687,631	$ 990,278

Fixed Assets	$ 25,000	$ 25,000	$ 25,000	$ 25,000	$ 25,000
Accum Depreciation	$ 5,200	$ 10,400	$ 15,600	$ 20,800	$ 25,000
Net fixed assets	$ 19,800	$ 14,600	$ 9,400	$ 4,200	$ 0

	$ 166,742	$ 258,652	$ 425,081	$ 691,831	$ 990,278


Current Liabilities	$ 23,300	$ 26,100	$ 29,800	$ 32,800	$ 38,300
Debt outstanding	$ 108,862	$ 108,862	$ 108,862	$ 108,862	$ 0
	$ 132,162	$ 134,962	$ 138,662	$ 141,662	$ 38,300

Share Capital	$ 0	$ 0	$ 0	$ 0	$ 0
Retained earnings	$ 34,580	$ 123,690	$ 286,419	$ 550,170	$ 951,978
	$ 34,580	$ 123,690	$ 286,419	$ 550,170	$ 951,978
	$ 166,742	$ 258,652	$ 425,081	$ 691,831	$ 990,278

Cash Flow Statement

Include a cash flow statement showing how much cash comes in, how much cash goes out and a net cash flow for each year. The cash flow statement should include:

Cash Flow From Operations
Cash Flow From Investments
Cash Flow From Financing

Below is a sample of a projected cash flow statement for a startup property management business.

Sample Cash Flow Statement for a Startup Property Management Company



Net Income (Loss)	$ 34,580	$ 89,110	$ 162,729	$ 263,751	$ 401,809
Change in Working Capital	$ (18,300)	$ (11,400)	$ (15,300)	$ (12,400)	$ (25,300)
Plus Depreciation	$ 5,200	$ 5,200	$ 5,200	$ 5,200	$ 4,200
Net Cash Flow from Operations	$ 21,480	$ 82,910	$ 152,629	$ 256,551	$ 380,709


Fixed Assets	$ (25,000)	$ 0	$ 0	$ 0	$ 0
Net Cash Flow from Investments	$ (25,000)	$ 0	$ 0	$ 0	$ 0


Cash from Equity	$ 0	$ 0	$ 0	$ 0	$ 0
Cash from Debt financing	$ 108,862	$ 0	$ 0	$ 0	$ (108,862)
Net Cash Flow from Financing	$ 108,862	$ 0	$ 0	$ 0	$ (108,862)

Net Cash Flow	$ 105,342	$ 82,910	$ 152,629	$ 256,551	$ 271,847
Cash at Beginning of Period	$ 0	$ 105,342	$ 188,252	$ 340,881	$ 597,431
Cash at End of Period	$ 105,342	$ 188,252	$ 340,881	$ 597,431	$ 869,278

You will also want to include an appendix section which will include:

Your complete financial projections
A complete list of your company’s business policies and procedures related to the rest of the business plan (marketing, operations, etc.)
Any other documentation which supports what you included in the body of your business plan.

Writing a good business plan gives you the advantage of being fully prepared to launch and/or grow your property management company. It not only outlines your business vision but also provides a step-by-step process of how you are going to accomplish it.

Our guide will help you organize your thoughts and make sure you haven’t missed anything important. Once you have a good outline, flesh out each section with more detail.

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A Step-by-Step Guide on How to Start a Property Management Company

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Are you passionate about real estate and have a knack for organization and customer service?

If so, starting a property management company might be the perfect business venture for you. Property management companies are responsible for overseeing the daily operations of rental properties on behalf of property owners, ensuring that everything runs smoothly and tenants are happy.

If you're ready to dive into this unique industry, this in-depth guide on how to start a property management company will walk you through the process.

how to create a business plan for property management

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How to start a property management company in 6 steps

Starting a property management company shares many similarities with starting any other business. You’ll need to choose a legal structure and create a business plan — essential steps for any budding entrepreneur.

However, there are unique aspects of starting a property management business, too. You’ll need to draft tenant agreements, maintain strong relationships with owners and collect rent payments.

There’s a lot to cover, so let’s get started.

Step 1: Research and plan your property management business

This isn’t the sort of business you can delve into without much real estate management experience or prior knowledge.

To successfully start a property management company, you’ll need a solid understanding of the real estate industry.

Study the local real estate market to identify areas with high rental demand and a potential shortage of property management services.

Explore rental prices, vacancy rates, and tenant preferences to gauge the profit potential of your venture.

Finally, decide what types of properties you want to manage, such as residential, commercial, or vacation rentals.

Define your business model

Determine the type of property management services you want to offer. Will you specialize in a particular niche, such as small office buildings, coworking spaces, or manufactured homes?

Consider whether you'll manage properties on behalf of individual owners, real estate investors or homeowner associations. Some companies even own the properties they manage, and slowly add to their real estate holdings over time.

Create a property management business plan

A comprehensive business plan will guide your company's growth and operations.

Include sections on your target market, marketing strategies, organizational structure, financial projections and growth plans.

SCORE, a nonprofit organization focused on small business growth, offers free business plan templates you can use. We can walk you through writing your business plan .

Step 2: Setting up your property management business

Once you’ve established a clear plan for your property management company and conducted your research, it’s time to lay the groundwork for your new business.

Pick a legal structure

You’ll need to determine the legal entity for your property management company , such as a limited liability company (LLC) or a corporation.

LLC: An LLC provides you with the flexibility of a partnership or sole proprietorship while offering limited liability protection like a corporation. This protects your personal assets from business debts and liabilities. An LLC also offers simplified management with fewer formalities and less paperwork than a corporation.
S Corporation: An S corp combines the benefits of limited liability protection with pass-through taxation. This means that business profits and losses pass through to individual shareholders, avoiding double taxation at the corporate level.
C Corporation: A C corp might be a good fit if you have plans for substantial growth, attracting investors or going public. C corps are separate legal entities and provide limited liability protection. They offer the ability to issue different classes of stock, making it easier to raise capital. However, C corps are subject to corporate income tax. If dividends are distributed to shareholders, they may face individual income tax as well.

To make the best decision for your own property management company, consult with a real estate attorney or business accountant. They can provide guidance based on your specific circumstances and long-term goals.

Figure out your taxes

As a business owner, you’ll need to pay a host of new taxes, including federal taxes, sales taxes and payroll taxes .

Consulting with an accountant is a smart move. A tax professional can advise you on how to structure your property management company to minimize your tax bill and help you file your tax returns.

You’ll also need an employer identification number (EIN) , a unique identifier assigned by the Internal Revenue Service. You can apply for an EIN on the IRS website for free.

Get licensed

Before diving in, make sure you have the necessary up-to-date licensing to operate legally in your state.

One of the main licenses to consider is a real estate broker's license. It demonstrates your expertise in areas like insurance, taxes, and contracts. To get a real estate broker’s license, you’ll need to complete specific courses and pass a comprehensive exam.

Some states may also require a property manager’s license. This too requires coursework and an exam.

Step 3: Accounting and financial management

Next, it’s time to set up a bookkeeping and accounting system to monitor cash flow and maintain accurate financial records.

There are many accounting software programs to choose from, including Freshbooks , Zoho and Xero . They all have tools to help you keep track of income and monitor expenses.

It’s also vital to set up a streamlined rent collection process — including online payment options.

On a tight budget? Check out our top picks for the best free accounting software for small businesses .

Research property management software

Investing in property management software and automation tools can help streamline your operations.

Buildium and Yardi are two popular options. Both offer a suite of integrated services including accounting, marketing, and lease execution.

Using these programs can also make renting easier for tenants because it allows them to make payments, sign leases, request support, and manage their accounts online.

Property management software usually offers different pricing tiers, and services can be customized to fit your needs. Buildium, for example, offers three package options, ranging from $52 to $479 a month.

Open a business bank account

You may be required by law to open a separate business bank account for tax purposes, depending on which state you live in. Either way, it’s a good idea to have dedicated accounts in your business’ name. Many banks and credit unions offer business checking and savings accounts .

You may want to consider opening a small business credit card , too. It can help you rack up points and cash back on business expenses, while keeping your personal and business finances separate.

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Create a pricing structure

Figuring out how much to charge owners is vital to operating a successful property management company.

First, consider the type of fee structure you want to implement. There are several options to choose from.

Flat fee model: This simple and transparent pricing structure charges a fixed fee per property or unit, regardless of its rental value or size. Flat fees are often appealing to clients because they’re predictable. Ensure that the flat fee adequately covers your costs and allows for a decent profit margin.
Percentage of rent: Another popular pricing model is charging a percentage of the monthly rent collected from each property. Most property management companies charge anywhere from 8% to 12% of the monthly rent.
Hybrid model: If you want to offer flexibility and cater to different client needs, consider a hybrid pricing structure. This approach combines elements of both the flat fee and percentage of rent models. For example, you could charge a lower flat fee along with a small percentage of the collected rent.
Value-based pricing: As your property management company grows and establishes a strong reputation, you may consider adopting a value-based pricing strategy. With this approach, you charge a premium fee based on the unique value you bring to your clients. This model is best suited for companies that offer specialized services or cater to high-end properties.

To figure out how much to charge property owners, pay attention to what other property management companies in your area charge. This helps you benchmark your prices.

You should also consider the type and size of properties you'll manage. A single-family home requires different services and effort than a multifamily apartment building, so adjust your prices accordingly.

Step 4: Create property management contracts and hire staff

There are numerous laws and regulations surrounding real estate and rental properties. Requirements vary by state, but here’s an overview of the essentials.

Lease agreements and contracts

Developing comprehensive lease agreements and management contracts will help protect both your clients' interests and your own.

Consult with a real estate attorney to ensure these documents comply with local laws and regulations governing rental agreements.

Fair housing laws

It’s important to familiarize yourself with the Fair Housing Act to ensure you treat all prospective tenants equally and avoid any form of discrimination.

Be aware of federal, state, and local fair housing laws and stay up to date with any changes.

Tenant screening and eviction procedures

Establish a screening process that adheres to fair housing regulations and effectively assesses prospective tenants. You might decide to conduct credit checks or criminal background checks as part of the process.

Software programs like Rent Spree can help you with the tenant screening and rental application process.

Work with an attorney to develop clear eviction procedures in compliance with local laws so that you follow proper legal protocols when removing tenants who violate their lease agreements.

Hiring staff for maintenance and repairs

Establishing a system for handling maintenance requests promptly is key.

You might be able to handle some basic repairs yourself, assuming you’re as handy with a toolbox as you are with a spreadsheet.

Still, as your property management company grows, you’ll need to develop relationships with trusted contractors and vendors. Build a reliable maintenance crew of plumbers, electricians, septic companies, waste companies, and landscapers.

Negotiate favorable rates so you can resolve maintenance issues in a timely manner.

And make sure to calculate how much revenue you need to hire an employee .

Step 5: Market your property management business and find clients

You’ve got the skills and laid the foundation for a successful property management company.

Now that your business is up and running, it’s time to start finding clients.

But adding new properties to your portfolio is only part of the process. You’ll need to keep and retain them, too.

Create a professional brand

Develop a visually appealing logo, website, and marketing materials to establish credibility and attract potential clients.

You’ll also need to pick a business name for your property management company if you haven’t done so already.

Your secretary of state’s website should have an online database where you can find out if your proposed business name is already taken.

PRO TIP: Need help picking out a name? Here are some tips on how to come up with a business name .

Establish an online presence

A lot of business happens online, so make sure to create a user-friendly website and active social media profiles. (Hint: Wix is a great option for websites.)

Attract more potential clients by following search engine optimization (SEO) best practices and utilize keywords relevant to your services.

You should also advertise your available properties on reputable listing sites like Zillow and Apartments.com. Ensure your listings are detailed and include high-quality photos.

Social media is another great way to connect with potential clients. Check out these ways to engage customers with social media marketing .

Explore local advertising and partnerships

Consider advertising in local newspapers, magazines, and websites frequented by your target audience.

Partner with local real estate agencies, property investment groups, or homeowners' associations to tap into their networks and gain referrals.

Great customer service goes a long way

Word-of-mouth referrals are essential for property management companies, so offer referral incentives to current clients who refer new business to you.

Keep clients informed about their properties by providing regular updates, financial statements, and property performance reports. Proactive communication fosters transparency and shows your dedication.

To keep business flowing in, focus on delivering outstanding customer service. Happy tenants and satisfied property owners are much more likely to recommend your services.

Tenant communication and retention

As a property manager, maintaining communication with tenants is essential. Respond promptly to questions and concerns to foster positive tenant relationships.

Consider implementing tenant retention strategies, such as renewal incentives or discounts on lease renewal fees.

Step 6: Expand your property management company

As your business grows, you may need to hire additional staff, including administrative personnel, maintenance workers, and other property managers.

Implement an efficient hiring process so you can recruit qualified employees without wasting time digging through dead-end resumes.

You should also consider outsourcing certain tasks, such as bookkeeping or marketing, to third-party providers.

Market research and adaptation

To stay at the top, you’ll need to continuously monitor the local real estate market and rental trends.

Regularly evaluate your service offerings and make necessary changes to stay ahead of other property managers.

Stay current in the property management industry

To grow your business, never stop learning.

Attend industry conferences, seminars, and workshops to stay updated on real estate industry trends, best practices and regulatory changes.

Networking with other property managers can also provide valuable insights and keep you ahead of the game.

Consider obtaining professional certifications, such as certified property manager (CPM) or residential management professional (RMP) to enhance your credentials.

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Final thoughts

Knowing how to start a property management company can be challenging, but with the right approach, it can be a profitable and fulfilling business.

By implementing the strategies and tips outlined in this guide, you'll be well on your way to building a successful property management empire.

Rachel Christian is a Certified Educator in Personal Finance and a senior writer at The Penny Hoarder. She focuses on small businesses, retirement, taxes and investing.