With the Texas housing market cooling off in 2022, many folks are looking to rent for now while they save up or wait to put in an offer on a house once prices approach pre-pandemic levels. Many would-be homebuyers are now looking to rent properties in the Lone Star state, with an influx of people moving from California to Texas. Many are taking advantage of this prime opportunity by dipping their toes into property management.
Starting a property management company is the perfect way to invest in and work with real estate without forking over your own money. For many, it can be a lucrative and rewarding job.
Now is the perfect time to learn how to start a property management company in Texas. Doing the appropriate research before you hang up a shingle (no pun intended) is essential. Otherwise, you might miss a critical step, a sometimes costly mistake.
Our firm has helped numerous Texas business owners get their companies up and running. Plus, we routinely handle real estate transactions of all shapes and sizes in Texas, so we understand the market and what to look for.
What Is a Property Management Company? Is It the Same Thing as a Landlord?
A property management company is a business that helps manage other people’s properties. Unlike a landlord, a property manager may not own or lease out the properties they manage.
A property manager may show prospective tenants the property, giving them a tour of the grounds and explaining the perks of renting from the company.
For current tenants, property managers give them peace of mind by taking care of maintenance requests, fielding complaints, and helping to resolve issues concerning the property. Landlords or investors—whoever owns the property—can rest easy knowing that the property manager is taking care of the grounds and will let them know if something goes awry.
In exchange for their services, property managers typically receive a fixed percentage of the rent each month for the properties they manage. Not a bad deal, right?
Being a property manager can be a rewarding job. So what do you need to start a property management company in Texas?
How to Start a Property Management Company in Texas
Starting a property management company in Texas takes more than just a good idea and gumption. You need a plan and to follow the correct procedure.
Talking to a business attorney is wise, especially before accepting money from investors or entering into contracts. Our firm provides skillful representation to new and seasoned Texas business owners.
Do Market Research
Questions to ask yourself when deciding whether to start a property management business in Texas include:
- Who is my competition?
- How is my competition faring?
- What can my business provide that other companies don’t?
- How many new property management businesses are there in the area?
- What areas do I want my business to serve?
- What can I do to set my company apart from the competition?
- How much can I invest in the business?
Answering these questions can help guide your research and also comes in handy for the next step: writing a business plan.
Write a Business Plan
Now that you have the market research under your belt, it’s time to write a business plan. Business plans are the blueprint for starting your business, covering critical details like:
- Summary of your business’s mission and what your business will do or provide;
- Summary of the market research you did;
- Structure of your business;
- How you plan to reach customers;
- Financial details of your business;
- Startup costs and who is providing those;
- Where your business will be located; and
- Your target customer is.
Having this business plan in place is essential to give you direction as you start a property management business. Likewise, potential and current investors want you to have a plan in place before they hand over money.
Legally Form Your Business
Legally forming your business is an essential and exciting step in every entrepreneur’s journey. To form your business, you need to:
- Pick a name—The name must meet the Texas business naming rules and be distinguishable from all the other Texas businesses.
- Choose a business entity type—Common business types include a limited liability company, corporation, or partnership.
- Appoint a registered agent—They receive legal and governmental paperwork on behalf of your business.
- File the registration paperwork—File the appropriate registration forms with the Texas Secretary of State.
- Apply for an Employer Identification Number—Your business gets this number from the IRS and the Texas Comptroller. You need it to hire employees, pay taxes, and open a bank account.
A business formation attorney can help you understand the different types of business entities out there and decide which one is appropriate for your circumstances.
Get the Appropriate Licenses
After legally forming your business, one of the most important requirements to start a property management company in Texas is getting the appropriate licenses. Depending on your business’s role, you may need a real estate license from the Texas Real Estate Commission, typically if you plan to show the property to a prospective tenant.
Curley Law Firm—We Can Help You Start a Property Management Business in Texas
Enlist the help of a trusted and knowledgeable business attorney. Many business disputes arise because of mismatched expectations or misunderstandings. Help insulate yourself from those problems by doing proper research and ensuring that the important stuff is in writing. Our firm dedicates its time to helping Texas businesses flourish by addressing critical tasks early on. With over a decade of experience in the business space, Adam Curley is The Heights lawyer you can count on. Call us today at 832-225-3448, or contact us online.