Do you want to start a rental property company? If YES, here is a 20-step guide on how to start a rental property business with no money or experience. What really is a property rental business all about, you may ask? Simply put, a property rental business is a business that has to do with renting or rather leasing properties to people who may be in need of it. This could be different types of properties- it could be flats, duplexes, offices and what have you.
Please note that if you intend to start this type of business, it is advisable to first look at the existing laws and zonal regulations in the United States of America or the city you reside in to know what is expected of you. You also need to pay a visit to the regulatory bodies in your city to get all the information you need before you can legally launch your rental property business in the United States of America.
You can start your rental property business from a small town in the United States of America and if you are good at what you do, it won’t be too long before your brand becomes a nationally recognized brand especially if you go into franchising.
20 Steps to Starting a Rental Property Company Business
Table of Content
- Conduct Market Research and Feasibility Studies
- Decide Which Niche to Concentrate On
- Know Your Major Competitors in the Apartment Rental industry
- Decide Whether to Buy a Franchise or Start from Scratch
- Discuss with an Agent to Know the Best Insurance Policies for You
- Protect your Intellectual Property with Trademark, Copyrights, Patents
- Get the Necessary Professional Certification
- Get the Necessary Legal Documents You Need to Operate
- Raise the Needed Startup Capital
- Choose a Suitable Location for your Business
- Hire Employees for your Technical and Manpower Needs
- Write a Marketing Plan Packed with Ideas & Strategies
- Work Out a Reasonable Pricing for your Services & Products
- Develop Iron-clad Competitive Strategies to Help You Win
- Brainstorm Possible Ways to Retain Clients & Customers
- Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Understand the Industry
Rental property business is grouped under the Apartment Rental industry and this industry is made up of companies that are into rental of one-unit structures, rental of two- to four-unit structures, rental of five- to nine-unit structures, rental of 10- to 19-unit structures, rental of 20- to 49-unit structures and rental of 50- or more unit structures.
In the United States, states such as Texas, New York, and Colorado, make it mandatory for real estate brokers cum rental property companies to be licensed if they are going to be involved in collecting rent, listing properties for rent or helping negotiate leases and doing inspections as required by their business.
Although a property manager may be a licensed real estate salesperson but generally, they must be working under a licensed real estate broker. A few states, such as Idaho, Maine, and Vermont do not require property managers to have real estate licenses.
Other states, such as Montana, Oregon, and South Carolina, allow property managers to work under a property management license rather than a broker’s license. Washington State requires property rental companies to have a State Real Estate License if they do not own the property.
Landlords who manage their property are not required by the law to have a real estate license; however, they must at least have a business license to rent out their own home. It’s only landlords who do not live close to the rental property that may be required, by local government, to hire the services of a property management company.
The Apartment Rental industry will continue to experience growth in all parts of the world. Statistics has it that in the United States of America alone, there are about 518,271 licensed and registered apartment rental/rental property companies scattered all across the length and breadth of the country and they are responsible for employing about 769,588 employees.
The industry rakes in a whooping sum of $154 billion annually with an annual growth rate projected at 2.4 percent. Please note that the Apartment Rental industry has no companies with major market shares in the United States of America.
A recent research conducted by IBISWorld shows that operators in the Apartment Rental industry have performed strongly over the five years to 2021; however, industry performance softened in 2016 and 2021 as vacancy increased in those years.
Since the subprime mortgage crisis, the industry has undergone structural change. Leading up to the crisis, most investment in real estate were carried out by institutional investors (those who own 10 properties or more), whereas today, most properties for rent are single-investor owned and nonowner occupied.
Historic lows in homeownership, decreasing rental vacancy rates and surging demand for rental units have enabled landlords to increase rents, aiding revenue growth. Therefore, IBISWorld expects industry revenue to climb an annualized 2.4 percent to $153.9 billion. In the same timeframe, the number of businesses has grown by 0.5 percent and the number of employees has grown by 0.4 percent.
No doubt, if an aspiring entrepreneur who intends starting his or her own property rental business has the right connections, networks, managerial skills, and takes delight in managing real estate for clients, then he or she is going to find property rental business very rewarding and lucrative.
Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who do business with rental property companies cut across families, individuals and business owners et al. The truth is that, when it comes to the rental of one-unit structures, rental of two- to four-unit structures, rental of five- to nine-unit structures, rental of 10- to 19-unit structures, rental of 20- to 49-unit structures and rental of 50- or more unit structures, there is indeed a wide range of available customers. In essence, your target market can’t be restricted to just families and individuals, within your location, but a wide range of clients in and around the city.
Decide Which Niche to Concentrate On
It is safe to say that there is no niche area in the rental property line of business, they are usually involved in developing, acquiring, managing, selling and renting/leasing student accommodation, residential apartments, office apartments and hall facilities et al.
However, there are several areas a rental property company may be known for by reason of what they choose to concentrate on and they are;
- Rental of one-unit accommodation structures
- Rental of two- to four-unit accommodation structures
- Rental of five- to nine-unit accommodation structures
- Rental of 10- to 19-unit accommodation structures
- Rental of 20- to 49-unit accommodation structures
- Rental of 50- or more unit accommodation structures
- Rental of manufactured homes, mobile homes or trailers
The Level of Competition in the Industry
The competitions that exist in this line of business goes beyond competitions amongst rental property businesses in your location; you are expected to compete with other businesses in the real estate industry who are also into renting of properties and apartments. So, it will be right to say the competition in the rental property line of business is tough.
The truth is that, no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your services or business properly, you will always make headway in the industry.
Just ensure that you invest in attractive properties with good return on investment (ROI), you can deliver excellent customer care services and you know how to attract and reach out to your target market.
Know Your Major Competitors in the Apartment Rental industry
Here are some of the most popular rental property companies in the United States of America and across the globe;
- Boston Properties
- Digital Realty Trust
- Realty Income
- SBA Communications
- AvalonBay Communities
- Equity Residential
- Public Storage
- Simon Property Group
- Crown Castle
- American Tower
- Mid-America Apartments
- Healthpeak Properties
- Essex Property Trust
If you are planning towards successfully launching a business and maximizing profits, then you need to ensure that you get your economic and cost analysis right and try as much as possible to adopt international best practices in the industry you choose to build a business in.
Rental property business is not a green business, as a matter of fact; you will come across several rental property companies and other players in the real estate industry when you search through directories and browse through the internet.
So, if you are mapping out your economic and cost analysis, you should carry out thorough market survey and costing of the required amount for renting a space where you are expected to open your rental property business, the capital required to start building and developing apartments and also the cost to successfully run the business.
If you are considering starting a rental property company, then your concern should not be limited to the cost of renting an office space, securing your license, and working capital et al, but also on branding and on how to build a robust clientele base.
The truth is that if you are able to build a robust clientele base, you are sure going to maximize profits in the business.
Decide Whether to Buy a Franchise or Start from Scratch
There is no hard and fast rule when it comes to choosing how you intend starting a business. Basically, you should be guided by your overall business vision and mission statement.
If you are looking towards starting a rental property company in the United States of America, you would have to start from the very scratch simple because you can hardly get a franchise of a rental property company to buy.
Besides starting a rental property company from the scratch is less stressful when compared to other related businesses. With rental property company, you should just try as much as possible to get the required pool cash, the right employees, build business relationship with key stakeholders and investors and then leverage on every marketing tool within your disposal especially the internet when it comes to marketing your services and properties.
Know the Possible Threats and Challenges You Will Face
If you decide to start your own rental property business today in the United States of America, one of the major challenges you are likely going to face is the presence of other rental property companies, property development companies and of course other players in the real estate industry in your target market location.
The only way to avoid this challenge is to create your own market; concentrate on families who are interested in renting / leasing a property within your location and startup businesses who need the services of a rental property business from time to time.
Other threats and challenges that you are likely going to face when you start your rental property business are mature markets, bad economy (economy downturn), stiff competition, volatile costs, and fluctuations in the vacancy market.
Interestingly, vacancy rates indicate the relationship between industry supply and demand. High rates represent an oversupply of residential rental property relative to demand. These rates are also a good indicator of trends in industry revenue and profitability. Profit margins tend to shrink as vacancy rates grow because residential rentals are being underused.
Choose the Most Suitable Legal Entity
When considering starting a rental property company, the legal entity you choose will go a long way to determine how big the business can grow; some rental property companies design their business for city wide market, while others for national market via franchising.
Generally, you can choose a general partnership, or limited liability company which is commonly called an LLC for your rental property business. Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk.
It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your rental property business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
If you take your time to critically study the various legal entities to use for your rental property business with the ability to sell franchise and having offices and corporate clients all across the United States of America, you will agree that limited liability company; an LLC is most suitable.
You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or ‘S’ corporation especially when you have the plans of going public. Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your rental property company so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company.
Choose a Catchy Business Name from the ideas Below
When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Typically, it is the norm for people to follow the trend in the industry they intend operating from when naming their business.
If you are considering starting your own rental property business in the United States of America, here are some catchy names that you can choose from;
- Garry Williams® Rental Property Company
- Blue Berry® Rental Property, Inc.
- Every Apartment© Rental Property, Inc.
- Lugard Lodge® Rental Property Company, Ltd
- Harmony Apartments™ Rental Property Company, Ltd
- Nath Fred & Co™ Real Estate Development Group
- Kimberly McKesson© Rental Property Company, Ltd
- Texas Sanctuary® Rental Property Company, Inc.
- Bethel O’conor© Rental Property Company, Inc.
- Bruno Anderson& Sons© Rental Property Company, Ltd
Discuss with an Agent to Know the Best Insurance Policies for You
In the United States of America, you can’t operate a business without having some of the basic insurance policies that are required by the industry you want to operate from. Thus, it is imperative to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your business.
Here are some of the basic insurance policies that you should consider purchasing if you want to start your own rental property business in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Risk Insurance
- Income Protection Insurance
- Workers Compensation
- Property/Building Insurance
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
You can contact the following leading insurance companies in the United States of America to purchase the needed insurance policies for your rental property business;
- Allstate Insurance Group
- Liberty Mutual
- Progressive Insurance Group (PGR)
- Health Care Service Corporation (HCSC)
- New York Life Insurance Company
- Lincoln National Life Insurance Company
- MassMutual (Massachusetts Mutual Life Insurance Company)
- Northwestern Mutual Life Insurance Company
Protect your Intellectual Property with Trademark, Copyrights, Patents
If you are considering starting your rental property company, usually you may not have any need to file for intellectual property protection/trademark. This is because the nature of the business makes it possible for you to successful run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.
Get the Necessary Professional Certification
Aside from the results you produce as it relates to running a rental property company, professional certification is one of the main reasons why some rental property companies stand out. If you want to make an impact in the Apartment Rental industry, you should work towards acquiring all the needed certifications in your area of specialization.
Certification validates your competency and shows that you are highly skilled, committed to your career, and up-to-date in this competitive market. These are some of the certifications you can work towards achieving if you want to run your own rental property company;
- Certified Commercial Investment Member (CCIM)
- Real Estate Investment Certificate
- Real Estate Professional Assistant (REPA) Certification
- Certified Commercial Real Estate Advisor (CCREA)
- Chartered Real Estate Professionals – CREP
- Degree / Diploma in Real Estate and Building Engineering Related Courses
Get the Necessary Legal Documents You Need to Operate
It is a fact that you cannot successfully run any business in the United States of America without the proper documentations. If you do, it won’t be too long before the long hands of the law catch up with you. These are some of the basic legal documents that you are expected to have in place if you want to legally run your own business in the United States of America;
- Certificate of Incorporation
- Business License (Real Estate License and Real Estate Broker License)
- Business and liability insurance
- Council Permit
- Global Real Estate License (Optional)
- Tax Payer’s ID/Tax Identification Number
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
Raise the Needed Startup Capital
Starting a rental property business is capital intensive even if you choose to start on a small scale. Securing a standard office space in a business district, and raising working capital et al are part of what will consume a large chunk of your startup capital.
If you choose to start the business on a large scale, then you need to source for fund to finance the business because it is expensive to start a standard large scale rental property business. No doubt when it comes to financing a business, one of the first things you should consider is to write a good business plan.
If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business. Here are some of the options you can explore when sourcing for startup capital for your rental property business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank
- Pitching your business idea and applying for business grants and seed funding from, government, donor organizations and angel investors
- Source for soft loans from your family members and your friends.
Choose a Suitable Location for your Business
Generally, in business, it cannot be overemphasized that the location you choose to start your business is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where there are high real estate activities.
If you make the mistake of renting or leasing an office facility for your real estate development business in a not too visible or hidden location simply because it is cheap, then you must be prepared to spend more in promoting the business.
It is important to note that a business facility in good location does not come cheap hence you should be able to allocate enough fund for leasing / renting in your budget. If you are new to the dynamics of choosing a location for your business, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city and perhaps country you intend starting your rental property business.
Most importantly, before choosing a location for your rental property business, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out. Which is why it is very important to gather as much facts and figures before choosing a location to set up your own rental property business.
Having said that, these are some of the cities in The United States of America where you can locate your rental property business;
- Los Angeles, California
- New York City, New York
- Nevada, Las Vegas
- Daytona Beach, Florida
- Chicago, Illinois
- Houston, Texas
- Washington, District of Columbia
- Boston, Massachusetts
Hire Employees for your Technical and Manpower Needs
On the average, there are no special technology or equipment needed to run a rental property company but you will definitely need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst other and all these can be gotten as fairly used.
As regards leasing or outright purchase of an office facility, the choice is dependent on your financial standings, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent/lease while test running the business in the location.
If things work out as planned, then you go on a long – term lease or outright purchase of the property but if not, then move on and source for other ideal location / facility for such business.
When it comes to hiring employees for a standard rental property company with plans to have corporate clients all across major cities in the United States of America, you should make plans to hire a competent Chief Executive Officer/President (you can occupy this role), Admin and Human Resources Manager, Project Manager, Company’s Lawyer / Secretary, Head of Construction, Head of Assets Management, Head of Acquisition and Disposition, Real Estate Agents/Sales and Marketing Officer, Accounting Clerk, and Front Desk Officer.
On the average, you will need a minimum of 5 to 10 key staff members to run a small – scale but standard rental property company.
The Service Delivery Process of the Business
The way rental property companies work varies from one company to another, but ideally, a rental property company is expected to first and foremost build a robust company profile, and pool investment capital from investors before going out there to acquire properties, renovate and equip the properties and then put the properties for lease or rent.
Please note that rental property companies in the United States of America are improvising on more means of making money in the Apartment Rental industry and as matter of fact they are also acting as property developers and home staging agents amongst many other functions.
It is important to state that a rental property company may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated rental property business process is not cast on stone.
Write a Marketing Plan Packed with Ideas & Strategies
Generally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a rental property business, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determines the market direction for rental property line of business.
So, when you are drafting your marketing plans, make sure that you create a compelling company profile. Aside from your qualifications and experience in the Apartment Rental industry, it is important to clearly state what you have been able to achieve in time past. This will help boost your chances in the market place.
Here are some of the platforms you can utilize to market your rental property business;
- Introduce your rental property company by sending introductory letters alongside your brochure to households, immigration consultants, estate managers, corporate organizations, small scale businesses, medium scale businesses and other key stake holders throughout the city where your rental property company is located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business so as to give your business an online presence
- Directly market your services
- Join local rental property business associations for industry trends and tips
- Join local chambers of commerce and industry with the aim of marketing your services
- Advertise our business in community – based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word of mouth marketing (referrals)
Work Out a Reasonable Pricing for your Services & Products
One key factor that will help you rent or lease your rental apartments or properties at a price that is highly attractive is to ensure that you source your startup capital from sources that won’t put pressure on you or high interest rate.
So also, it is important that you purchase your properties directly from the owners of the property as against buying from a third-party dealer. When it comes to building materials and electrical and plumbing accessories, it is advisable that you also purchase them directly from the manufacturers or from wholesalers.
Another strategy that will help you get the right price is to ensure that you cut operational cost to the barest minimum and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your services.
So also, if you are able to secure business partnership as it relates to getting referrals, then you will be able to get the right pricing and of course maximize profits from your business.
Develop Iron-clad Competitive Strategies to Help You Win
The availability of a huge working capital base, your business process and of course your pricing model are part of what you need to stay competitive in the industry.
Another possible competitive strategy for winning your competitors in this particular industry is to build a robust clientele base and business network. Over and above, ensure that your organization is well positioned, key members of your team are highly qualified and your facilities and offers to investors can favorably compete with some of the best in the industry.
Brainstorm Possible Ways to Retain Clients & Customers
When it comes to business, no matter the industry you choose to pitch your tent in, one of the easiest ways to increase customer retention and perhaps attract new customers is to produce results and satisfy your customers always. If your customers are satisfied with your products and service delivery, they can hardly source for alternative service providers.
If your services and customer service fluctuate, you are likely going to struggle to get your customers retaining your services. Ensure that you offer your customers incentives if you want to retain them and of course continue to generate repeated sales from them and also to attract new customers.
Part of what you need to do to achieve this is to track progress, results or outputs with the aim of improving on them quickly as the case demands. When it comes to managing your customers and building a loyal clientele base, you should purchase a customized CRM software.
With a customized CRM system, you can easily stay in touch with your clients (you can carry out quick surveys, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can keep track of their progress, you can send bulk sms and customized e – mails and above all, you can easily receive compliant and feedback from them).
Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you are in business and you are not conscious about boosting your brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be.
One of the secrets of larger corporations is that they are willing to spend good money year in and year out to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them to be.
No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market.
Here are the platforms you can leverage on to boost your brand and create a corporate identity for your rental property business;
- Place adverts on both print (newspapers and real estate related magazines) and electronic media platforms
- Sponsor relevant community – based events/programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your rental property business
- Install your Bill Boards in strategic locations all around the locations where you operate
- Distribute your fliers and handbills in target areas
- List your rental property business in local directories / yellow pages
- Advertise your rental property business in your official website and employ strategies that will help you pull traffic to the site.
- Position your Flexi Banners at strategic positions in the locations where your rental property business operates.
- Ensure that all your staff members wear your branded shirts and all your vehicles and vans are well branded with your company logo et al.
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