HOW TO START YOUR OWN SUCCESSFUL PROPERTY MANAGEMENT COMPANY: Part II
Property Management is a great career to get into because it’s rewarding, it meets the demands and preferences of the modern world due to its innate flexibility, it’s systems are highly scalable, and the industry is rooted in a strong market that isn’t going anywhere as long as people need places to live.
Over a decade ago, Nexus Property Management® founder and CEO, Nick D’Agnillo made that very decision and since then has built the Largest Property Management Firm in Southern New England (per Providence Business News, January 2021).
As part of Nexus’ model, the company wants to help others maximize the opportunities that abound in the real estate markets, including getting involved in property management as a career. The following is a brief introductory “how to” for those interested in building their own property management companies or just taking some initial steps in hopes of gathering more information.
THE HARD TRUTH
It’s important to first point out that of the thousands of optimistic entrepreneurs who start a business each year, more than half of them will close their doors in the next four years. Keep in mind, those statistics held true even before Covid and countless studies have come to the same conclusion: it’s been really difficult to start and maintain a new business in America, and very likely more difficult now. This reality is important to ground yourself in as a motivator to ensure you place high value on your decision making process. Your enthusiasm is less important than your ability to assess the market and create systems that promote efficiency and lend themselves toward scalability.
[ Learn More: 10 WAYS TO OVERCOME SMALL BUSINESS FAILURE ]
To open and operate a property management company, most states require that you have your broker license just to open your doors. In the state of Rhode Island, where Nexus headquarters is located, you need two years of working with clients, buying and selling real estate, to even apply for your broker license. Each state has its own licensing guidelines and can be found through a simple Google search. After you apply, you’ll need to take classes and meet education requirements, and ultimately pass required testing.
[ Learn More: BROKER LICENSE BASICS ]
As mentioned above and in countless real estate cliches, location is key. You naturally want to operate in an area you’re familiar with and that has a density and housing market that will create ample demand. As much as it might seem counterintuitive, finding an area where other property management companies already exist can be a positive because it indicates the presence of a strong market. This same logic explains why you’ll see a McDonald’s and Burger King right across the intersection from each other. It’s worth noting, the number one reason small businesses fail is lack of market. If you can tap into a market that exists and offer superior service and/or value, you increase your odds of success.
More specifically and almost as importantly, you also need to be optimal and thoughtful in the location of your office. So many property management companies are buried in ugly, cookie-cutter office parks and plazas that reek of conformity. This is not how you separate yourself from your competition. Your office needs to help you communicate an identity. If you’re on the second floor of an outdoor mini-mall you’ve lost your ability to be creative and visible. Check out the first 50 seconds of this clip if you need a visual → Better Call Saul Cell Phone Store.
All Nexus franchisees must have a street front office. Our franchise in Fall River, Massachusetts, is located on South Main Street, right off of Interstate 195, and there’s no doubt this prime location helped Lyndsey Pachon and her team hit the ground running. They had over 70 units under management after just 2 months of operation! That’s over a unit added per day! That team would’ve found success regardless, but being able to establish their reputation right out of the gate was a huge advantage, one they wouldn’t have had if they had instead opened up sandwiched between a local dentist and CC Mobile Cell Phones.
With that said, please be reminded that the office does not have to be big. We recommend starting with a couple hundred square feet. What’s most important is that you have a dedicated door that’s just for you, and individual signage that’s visible to passersby. This visibility and exposure is the most important variable in choosing your office location.
BRANDING AND BUILDING A WEBSITE
All that effort to make sure you’re visible and recognizable does you little good if you don’t put considerable work into your branding. You’ll need a unique logo and will need to build branding around something that will resonate with customers. Once you open your doors, much of your branding will be tied to your reputation (which is another reason exploring a successful franchise has advantages), but prior to building relationships and trust in your community, you need to come up with some sort of hook that is honest and engaging.
While we spent quite a bit of time talking about your brick and mortar locale, it’s your online presence that will be most impactful in bringing potential clients your way. These days, you simply can’t be successful without a professional website and search engine optimization strategy. Building a website is extremely intensive and very expensive. It’s rare that the skill set that draws you to property management will also help in website design so it’s likely you’ll need to do your homework in finding a professional. Remember, your website is the billboard/signage that will get the most traffic. It is not the place to try to save a couple bucks.
[ Learn More: SEARCH ENGINE OPTIMIZATION TIPS ]
BUILDING YOUR TEAM
You’ll also need to come up with a plan for hiring employees. Here’s where the scalability of property management can create a huge advantage. The reality is this: you only need as many employees as your client holdings demand. Do not hire a leasing agent and several maintenance technicians before you open your doors! Until there’s work for them, there is no money to pay them and no demand for their services. The name of the game is organic growth: you (personally) handle as much as you can until your days are too long…then you hire to fit the need. In this way, your employees always have work (and a feeling of importance) and you’re not only building a company from the ground up, you’re building a work ethic and culture. If you’ve already gone ahead and hired a secretary to man the phones, or have a vision of yourself sitting back and conducting the orchestra from your leather throne, we’re sorry to say, you’re not going to be able to keep up with the competition. You’ve gotta start and get your hands dirty to get the ball rolling and to ultimately appreciate the importance of all the cogs that make up your machine.
THE FINAL (AND NEVER ENDING) FIRST STEP: NETWORKING
In business, you need friends you can count on. Initially, Nexus was hesitant to work very closely with other real estate professionals because we were working hard on building our own reputation and didn’t want anyone else we endorsed or partnered with to pull our public perception down. Now that we’ve successfully built that reputation and offer franchise opportunities nationwide, we’ve come to fully value how important it is to rely on and work with industry related professionals. For Nexus franchisees that have opened their doors since, they now benefit from our name recognition and our professional networks so they can jump right into building their own critical relationships with limited risk or hardship.
With strong professional relationships you can benefit from both providing business for others and (much more important to you out of the gate) receiving it. You can’t just sit back and expect people to magically discover how wonderful your company is. Remember, statistically there’s about a 50% chance that you won’t make it…so you need to be active in building your circle. You need to make connections and establish your reputation with vendors and property owners alike. You need to put the work in…and having someone in your corner always helps.
Nexus Property Management® has been in operation and perfecting industry best practices for over a decade. Follow the advice above and your chances for success increase greatly. Property management, like real estate, is a long term haul; it’s not done overnight; it takes a lot of experience, learning, and accountability to do it right and to find success.
If you’ve got any questions or seek clarification or assistance please contact our team. If interested in learning more about franchise opportunities or advice you can visit our franchise pages and reach out directly to our franchise team via the Consult Form in the right hand margin.
Best of luck!
Mick Lefort is the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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