Property Management Business Plan
Whether you’re looking to start a new property management business or expand your existing services, a well-structured business plan is essential.
A property management business plan serves as a strategic blueprint for accomplishing your business objectives. It outlines your goals and the strategies you will use to reach them, and it includes financial forecasts, enabling informed decision-making for both you as the owner and potential investors. By detailing the legal business structure, target market, and marketing strategies, you can ensure efficient resource allocation, attract potential clients, and optimize cash flow, positioning your property management company for success.
Sample Business Plan for a Property Management Company
The property management business plan sample below outlines the key elements to include for building a solid foundation for a successful property management business.
I. Executive Summary
Business Overview
[Property Management Business Name] is a [Location]-based property management company specializing in commercial and residential properties. Its goal is to solve the real estate management problems that property owners struggle with, including repairs and maintenance, enforcing rent due dates and strictly implementing late payment penalties, finding new tenants fit for their properties, and other property issues.
[Property Management Business Name]’s property managers are committed to dealing with all property-related problems, emergency repairs, and tenant issues 24/7. The company puts its clients’ interests first and aims to maximize the income generated by every property by preserving its value.
Clients are updated in real time on every property issue via our property management software, which is available to property owners through the online portal and mobile app. Property managers are trained to observe transparency and are keen to keep everything documented to maintain its credibility and clients’ trust.
By [year], the company envisions itself to be a leading property management company in [location] and the surrounding areas.
Services Offered
The following are the services that [Property Management Business Name] will be able to provide to its clients:
- Property Inspections
- Advertising and Marketing
- Leasing Services
- Tenant Screening
- Tenant Communication
- Legal Compliance
- Accounts payable and receivables
- Contract Management
Customer Focus
[Property Management Business Name] will primarily serve the residents who live within the city. The demographics of these customers are as follows:
- 311,445 residents
- 36,000 housing units
- 6,000 rental properties
- Average income of $52,050
- 41% married
- 36% in Management/Professional occupations
- Median age: 33 years
Management Team
[Property Management Business Name]’s most valuable asset is the expertise and experience of its founder, [Founder’s Name]. [First name] has been a licensed real estate broker in [state] since [year]. He specialized in rentals for 7 years and in real estate sales for the next 3 years. He was a consistent top broker before he decided to start a property management firm of his own.
Joining him are his colleagues from his previous real estate firms, who have a long tenure in the industry.
[Property Management Business Name] will also employ an experienced assistant to help with various administrative duties around the office. [Assistant’s name] has experience working with C-level executives and has spent significant time as an administrator.
Success Factors
[Property Management Business Name] is uniquely qualified to succeed for the following reasons:
- [Property Management Business Name] will fill a specific niche in the local property management market. In addition, it received extremely positive feedback from the community, saying that they explicitly want to utilize the expertise of [Company Name]’s licensed property managers.
- The location is in an economically vibrant area where new home sales are on the rise and turnover in homes and rentals often occurs due to the upward mobility of residents.
- The management team has a track record of success in the real estate brokerage industry
- The local area is currently under-served and has very few independent property managers offering an expert level of customer service.
Financial Highlights
[Property Management Business Name] is seeking a total funding of $210,000 of debt capital to open its firm. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses, and working capital.
Specifically, these funds will be used as follows:
- Headquarters design/build: $85,000
- Working capital: $125,000 to pay for marketing, salaries, and lease costs until [Property Management Business Name] reaches break-even
Top line projections over the next five years are as follows:
| Financial Summary | FY 1 | FY 2 | FY 3 | FY 4 | FY 5 |
|---|---|---|---|---|---|
| Revenue | $560,401 | $782,152 | $1,069,331 | $1,379,434 | $1,699,644 |
| Total Expenses | $328,233 | $391,429 | $552,149 | $696,577 | $776,687 |
| EBITDA | $232,168 | $390,722 | $517,182 | $682,858 | $922,956 |
| Depreciation | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 |
| EBIT | $225,168 | $383,722 | $510,182 | $675,858 | $915,956 |
| Interest | $6,016 | $5,264 | $4,512 | $3,760 | $3,008 |
| Pre Tax Income | $219,152 | $378,458 | $505,670 | $672,098 | $912,948 |
| Income Tax Expense | $76,703 | $132,460 | $176,985 | $235,234 | $319,532 |
| Net Income | $142,449 | $245,998 | $328,686 | $436,864 | $593,416 |
| Net Profit Margin | 25% | 31% | 31% | 32% | 35% |
II. Company Overview
Who is [Property Management Business Name]?
[Property Management Business Name] is a [Location]-based property management firm specializing in commercial and residential properties. Its goal is to provide a solution to the real estate management problems that property owners struggle with. It helps its clients with repairs and maintenance, enforcing rent due dates and strictly implementing late payment penalties, finding new tenants fit for their properties, and other property issues.
[Property Management Business Name]’s property managers are committed to dealing with all property problems, emergency repairs, and tenant issues 24/7. The company puts its clients’ interests first and aims to maximize the income generated by every property by preserving its value.
Through an online dashboard and a mobile app, clients are updated in real time on every property issue. Our property managers are trained to observe transparency and are keen to keep everything documented to maintain its credibility and clients’ trust.
By [year], we envision being a leading property management company in [location] and the surrounding areas.
[Property Management Business Name]’s History
In [year], [Founder’s Name], a licensed real estate broker, started receiving an abundance of inquiries about marketing properties, landlord-tenant law,s and concerns about property rentals and their daily operations. Realizing that he could not address every inquiry by himself and not wanting to ignore them, he decided to start his own property management firm.
[Founder’s Name] met with a few of his real estate broker friends and discussed the opportunity in building a property management firm. Five of these colleagues supported his vision and joined him to start [Property Management Business Name].
Since incorporation, we have achieved the following milestones:
- Found office space and signed a Letter of Intent to lease it
- Developed the company’s name, logo, and website located at [website]
- Identify key properties to target
- Began recruiting key employees
[Property Management Business Name]Services
The following are the services that [Property Management Business Name] will be able to provide to its clients:
- Property Inspections
- Advertising and Marketing
- Tenant Screening
- Tenant Communication
- Legal Compliance
- Accounts payable and receivables
- Contract Management
[Founder’s Name] understands that providing excellent service is key to building long-term relationships with clients and earning referrals. He is keen to maintain a high standard of service with every one of their clients by constant evaluation of team and individual performances. He will do this by reaching out to past clients for feedback and follow-up to develop a strong business relationship.
III. Industry Analysis
The Property Management industry is structurally resistant to economic downturns, primarily as a result of countercyclical demand trends. When the national economy struggles, the homeownership rate tends to decline as consumers and lenders remain cautious, creating demand for rental markets and, therefore, property management. During periods of economic prosperity, the residential market segment tends to weaken as homeownership becomes a more attainable goal and the need for management services slows. During an economic upswing, however, the expansion of commercial properties becomes more important to the industry.
Over the next five years, the US homeownership rate is projected to decline, increasing the need for residential property management services. Nonresidential property management is expected to drive most of the demand for industry operators. An increasing number of US businesses, coupled with expanding existing businesses, is expected to lead to continued commercial demand for industry services and contribute to greater industry revenue. Companies are also expected to expand the services offered to increase demand from consumers and businesses, which will likely help guarantee a continuous stream of new revenue.
IV. Customer Analysis
Demographic Profile of Target Market
[Property Management Business Name] will serve the residents within [location] and the immediately surrounding areas.
The precise demographics of the town in which our location resides are as follows:
| Wilmette | Winnetka | |
|---|---|---|
| Total Population | 26,097 | 10,725 |
| Square Miles | 6.89 | 3.96 |
| Population Density | 3,789.20 | 2,710.80 |
| Population Male | 48.04% | 48.84% |
| Population Female | 51.96% | 51.16% |
| Target Population by Age Group | ||
| Age 18-24 | 3.68% | 3.52% |
| Age 25-34 | 5.22% | 4.50% |
| Age 35-44 | 13.80% | 13.91% |
| Age 45-54 | 18.09% | 18.22% |
| Target Population by Income | ||
| Income $50,000 to $74,999 | 11.16% | 6.00% |
| Income $75,000 to $99,999 | 10.91% | 4.41% |
| Income $100,000 to $124,999 | 9.07% | 6.40% |
| Income $125,000 to $149,999 | 9.95% | 8.02% |
| Income $150,000 to $199,999 | 12.20% | 11.11% |
| Income $200,000 and Over | 32.48% | 54.99% |
Customer Segmentation
We will primarily target the following customer segments:
- Property owners: These are individuals or entities that are seeking to generate profits from their real estate properties by leasing them.
- Home Sellers: These are mostly seniors who are moving out of the region for retirement and have no one to tend to their properties. These individuals find it convenient to entrust the maintenance and concerns to their residential property managers since they are not able to be there in person. A small part of this group are individuals or couples that are selling their homes to purchase a different property out of the area.
- Landlords: These are owners of apartment buildings, multi-unit homes, condominium complexes, and small homes who seek to rent out a portion or all of the space of their property. This group includes both professional landlords who earn their primary income from real estate rentals and landlords who are capitalizing on excess space to earn extra money.
V. Competitive Analysis
Direct & Indirect Competitors
Other property management companies in the area present a notable competitive landscape for [Property Management Business Name]. These firms, each with their unique strengths and service offerings, include:
The Property Guys
Established in 1986, The Property Guys specializes in providing condominium management services, including financial, administrative,e and maintenance services throughout the state. The Property Guys is now responsible for the management of over 40 communities, ranging from 10 homes to 300 homes per community.
The Property Group
Founded in 1987, The Property Group is a property management company with deep expertise in all aspects of residential asset management, from first-class property maintenance to risk avoidance to long-term asset management. At present, they manage approximately 11,000 residential units in approximately 90 resident or owner-controlled, non-profit, community associations. The Company’s portfolio includes single-family, garden style, townhouse, low-rise, mid-rise, and high-rise buildings throughout the state.
Rock Solid Properties
Rock Solid Properties is an experienced association management company focused on the needs of owner-occupied residential associations in the community. It has been managing associations since 1982 with a mission to adhere to management practices that give boards and owners the confidence that their home is being maintained at its highest level. Rock’s goal is to provide advice based on the staff’s education, experience, and expertise so that boards can meet their fiduciary responsibility to association owners.
Competitive Advantage
[Property Management Business Name] enjoys several advantages over its competitors. These advantages include:
- Location: The company is ideally positioned in a thriving part of town, close to many residents and businesses. This makes it easy for [Property Management Business Name] to find property owners who want to monetize their real estate.
- Client-oriented service: [Property Management Business Name] will have a full-time assistant with real estate experience to keep in contact with clients and answer their everyday questions. [Founder’s Name] realizes the importance of accessibility and will keep in touch with his clients through monthly newsletters.
- Experienced managers: [Property Management Business Name]’s property managers have reputable real estate experience, making them credible and able to provide their clients with detailed insight about real estate properties, risks, and opportunities. Further, [Founder’s Name] has been extremely successful working as a real estate broker before starting [Company Name] and will be able to use his previous experience to serve customers in a much more sophisticated manner than many of [Property Management Business Name]’s competitors.
- Relationships: Our team of real estate brokers is well acquainted with many of the local leaders and property owners within [location]. With their experience and good relationships, they will be able to reach good prospects for the business.
VI. Marketing Plan
The [Property Management Business Name] Brand
The [Property Management Business Name] brand will focus on the following unique value proposition:
- Client-focused property management services, where the company’s interests are aligned with the client
- Service built on long-term relationships and personal attention
- Big-firm expertise in a small-firm environment
Promotions Strategy
[Property Management Business Name] expects its target market to be individuals working and/or living within [state]. [The Company’s] promotions strategy to reach these individuals includes:
Targeted Cold Calls
[Property Management Business Name] will initially invest significant time and energy into contacting potential clients via telephone. In order to improve the effectiveness of this phase of the marketing strategy, a highly-focused call list will be used, targeting landlords and sellers who have listed by themselves and are having difficulty finding a buyer. As this is a very time-consuming process, it will primarily be used during the startup phase to build an initial client base.
Referrals
[Property Management Business Name] understands that the best promotion comes from satisfied customers. The Company will encourage its clients to refer other businesses by providing economic or financial incentives for every new client produced. This strategy will increase in effectiveness after the business has already been established.
Additionally, [Property Management Business Name] will aggressively network with useful sources such as home contractors, real estate development companies, and businesses. This network will generate qualified referral leads.
Online Marketing
[Property Management Business Name] will invest resources in two forms of geographically focused internet promotion: organic search engine optimization and pay-per-click advertising. The Company will develop its website in such a manner as to direct as much traffic from search engines as possible. Additionally, it will use highly focused, specific keywords to draw traffic to its website, where potential clients will find a content-rich site that presents [Company name] as the trustworthy, well-qualified property management firm that it is.
Publications
[Property Management Business Name] will list its properties for rent and sale in key local publications, including newspapers, area magazines, and its own newsletter. Additionally, we will print brochures and place them in specific locations frequented by target individuals, such as small business development centers and accountants.
Community Events/Organizations
[Property Management Business Name] will promote itself by distributing marketing materials and participating in local community events, such as local festivals, business networking, or sporting events.
Pricing Strategy
- Flat Fee: Charge a consistent monthly fee for basic property management services like rent collection and tenant communication.
- Percentage-Based: Set a management fee as a percentage of the monthly rental income, aligning incentives with property owners.
- Tiered Packages: Offer different service levels (basic, standard, premium) with varying fees to cater to diverse client needs.
Additional Fees
- Lease Renewal Fees: Implement a flat rate or percentage fee for lease renewals.
- Leasing Fees: Charge a one-time fee for tenant placement, often equivalent to one month’s rent.
- Vendor Coordination Fees: Apply a flat fee or percentage for managing property maintenance and repair requests.
This approach ensures [Property Management Business Name] remains competitive while effectively meeting client needs.
VII. Operations Plan
Functional Roles
[Property Management Business Name] will carry out its day-to-day operations on an appointment basis. Potential and existing clients can make appointments through phone calls, an office visit, or through the company website. In the initial meeting, the clients will be able to show their properties and discuss their goals – target monthly or annual income, ideal renter or buyer, timeline, and other specific concerns. These meetings will primarily be conducted at [Property Management Business Name]’s office, and the succeeding meetings will be on-site at the properties for the property manager’s viewing and inspecting of the property.
[Founder’s Name] will work on an as-needed basis, including weekends, which are a prime showing time, and will generally take days off on weekdays. We will also employ an administrative assistant who will also support marketing and client relationship development efforts and will be present on weekdays on a regular 9 AM – 5 PM schedule.
To execute the property management business plan our team will divide the following roles:
Service Functions
- Administrative Assistant
- Property Managers
Administrative Functions
- General & administrative functions, including marketing, bookkeeping, etc.
Milestones
[Property Management Business Name]’s long-term goal is to become the most sought-after property management firm in [location] and the standard by which other providers are judged.
The following are a series of steps that lead to our vision of long-term success. [Property Management Business Name] expects to achieve the following milestones in the following [xyz] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Property Management Business Name]’s most valuable asset is the expertise and experience of its founder, [Founder’s Name]. [First name] has been a licensed real estate broker in [state] for the past 10 years. He specialized in rentals for 7 years and in real estate sales for the next 3 years. He was a consistent top broker before he decided to start a property management firm of his own.
Joining him are his colleagues from his previous firm, who have had a long tenure in the real estate market.
[Property Management Business Name] will also employ an experienced assistant to help with various administrative duties around the office. [Assistant’s name] has experience working with C-level executives and has spent significant time as an administrator.
Hiring Plan
[Founder] will serve as the Manager of [Property Management Business Name]. To launch, it needs to hire the following personnel:
- Property Managers: 5 to start, including the owner himself
- Administrative Assistant: 1 full-time employee to handle client calls, set appointments and assign incoming clients to property managers
IX. Financial Plan
Revenue and Cost Drivers
[Property Management Business Name]’s revenues will come primarily from commissions earned from client rental fees and real estate sales and purchases.
As with most services, labor expenses will be key cost drivers. [Founder’s Name] and property managers will earn a competitive base salary. Ongoing marketing expenditures are also notable cost drivers for [Property Management Business Name].
Capital Requirements and Use of Funds
[Property Management Business Name] is seeking a total funding of $210,000 of debt capital to open its firm. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses, and working capital.
Specifically, these funds will be used as follows:
- Headquarters design/build: $85,000
- Working capital: $125,000 to pay for marketing, salaries, and lease costs until [Property Management Business Name] reaches break-even
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
| Clients per Quarter | Average |
|---|---|
| FY 1 | 15 |
| FY 2 | 21 |
| FY 3 | 30 |
| FY 4 | 36 |
| FY 5 | 45 |
| Annual Lease/rent (per location) | $50,000 |
Financial Projections
5 Year Annual Profit and Loss Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRE-TAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
