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How To Start A Rental Property Business Like A Pro
What is a rental property business?
Starting a rental property business
Writing a business plan
Is a rental property business a good investment?
As Antoine de Saint-Exupery once said, “A goal without a plan is just a wish.” Consequently, the best plans have developed a reputation for helping people in every industry realize their own goals, no matter how lofty they may be. There literally isn’t a single professional who couldn’t benefit more from a well-crafted strategy, and real estate investors are no exception. When learning how to start a rental property business , buy-and-hold investors in particular stand to improve their long term outlook by establishing a rental property business plan.
A proven rental property business plan can help layout the systems and benchmarks investors need to realize success at a higher level. That said, only one question remains: what does a rental property business plan look like?
If you are interested in starting a rental property business, there are several valuable lessons to take away from experience. Meanwhile, here’s a guide for developing a bullet-proof rental property business plan; it may be just what you have been waiting for.
On the FortuneBuilders Real Estate Investing Show , join our host, Jeffrey Rutkowski, as he talks to Gregg Cohen, the Co-Founder of JWB Real Estate Capital, on the subject of passive income and rental properties. Listen to the podcast here:
What Is A Rental Property Business?
A rental property business is a venture through which an investor will purchase and manage one or more income-producing properties. These properties can have one or more units leased out to tenants in exchange for monthly rental fees. Investors can have an effective rental plan without directly managing these properties; property management companies can be hired to carry out the duties often associated with landlords, such as rent collection and maintenance.
Is My Rental Property A Business?
Renting a house may be considered a business endeavor, depending on who you ask. This may seem like a controversial question, and there are at least two answers to consider. From a financial standpoint, renting a residential property may result in passive income. It is important to note that investors do not have to pay self-employment taxes when reporting their rental properties. Therefore, many would argue that owning a rental property is not considered a “business,” specifically in the lens of tax filing. However, from a career standpoint, many individuals live on passive income derived from their rental property companies; in this lens, renting a house can be considered a business. It’s entirely possible to manage a rental property portfolio as a business. Still, those with a single rental property may not need to start a company to collect passive income. It’s only once the portfolio starts to grow that turning the practice of renting into a business becomes more important.
How To Start A Rental Property Business
Learning how to start a rental property business isn’t all that different from just about every other entrepreneurial endeavor. Investors need to identify several key elements before getting started; that way, they can start their business on a solid foundation. Here are some of the most important steps to consider when drafting a rental property business plan and becoming a real estate entrepreneur:
Join a local REI club and start networking
Pick a niche and choose your rental property market
Figure out the proper financing and secure it
Conduct the appropriate research and hire a manager
Implement systems to improve efficiency
Manage the properties and scale the business at a sustainable pace
1. Join A Real Estate Investor Club
Joining a local real estate investing club or association provides networking opportunities, not the least of which may actually help rental property investors find a partner—or perhaps anyone else who may help them further their rental property business plan. Nathan Hughes at DiggityMarketing suggests that “investors need to identify various factors before entering the rental property business. Investors should join some real estate investors clubs as a beginner”. There’s absolutely no reason to think new investors, specifically aspiring rental property owners, can’t find a helpful hand at a real estate investor club. These types of meet-ups are specifically designed to help their attendees, and there’s always someone willing to lend a hand. At the very least, investors will gain insight into local professionals who are most likely already doing the one thing they want to do.
2. Pick A Niche & Choose A Market
Determining where to invest can often be more important to investors than how much capital or experience they bring to the table. After all, the golden rule of real estate persists: location, location, location. There is perhaps no more influential factor to a rental property investor’s success than the location in which they choose to invest. The location will determine everything from demand and price, not to mention the property’s long-term potential. Therefore, a truly great rental property business plan will want to make sure it answers these questions and many more like them:
How distant a market am I willing to invest in?
Do I have a team in place to handle the day-to-day, or will I have to commute back-and-forth?
How much will commute and market research cost me?
How stable and diverse is the economy in a market? Are there various business sectors that can help keep jobs and businesses? Is there one main employer?
What’s the average market price for property acquisition?
What’s the average rental price?
No rule says investors need to live in the markets they invest in, but there is no excuse for neglecting to mind due diligence and research the local housing market. To invest successfully, investors need to know every detail about a specific area, not to mention the specific niche they intend to serve.
Jordon Scrinko, the Founder & Marketing Director of Precondo states that “Investors’ decisions on where to invest are frequently more significant than their capital or experience. After all, when it comes to real estate, location is the most important. The area in which a rental property owner chooses to invest is possibly the most important aspect in determining their success”.
If for nothing else, investors need to know their renters just as much as the area they are investing in. Picking a niche, not unlike focusing on college housing or single-family homes, is the easiest way to target a specific audience. Therefore, at this time, rental property investors should decide who they will serve; only then will they be able to tailor their rental property business plan to see their audience’s needs.
3. Figure Out Financing
Securing financing is probably the biggest hurdle rental property investors face. However, financing a real estate deal isn’t nearly as hard as many new investors make it out to be. As it turns out, there are countless lenders just waiting for an opportunity to give savvy investors the money they need to invest in real estate. Like institutionalized banks, today’s real estate investors have access to more funding sources outside of traditional sources than ever before. Private money lenders and hard money lenders, in particular, have become synonymous with the best ways to secure funding and are as willing to work with investors as investors are eager to work with lenders.
These “alternative” sources tend to coincide with higher interest payments (often three to four times higher than traditional banks), but the added cost is well worth it. In exchange for their higher rates, investors not only receive the money they need to complete a deal, but they also receive it a lot faster than they would if they went through a bank. Whereas banks can take upwards of a few months to distribute funds, alternative lenders can have the money in investors’ hands in as little as a few days—if not hours.
It is also important to note that securing financing should be done before even looking for a home. That way, the investor will know exactly how much home they can afford and which investments are worth pursuing further.
4. Conduct Research & Hire A Property Manager
Becoming a landlord means investors will be responsible for maintaining the appearance and function of the rental property. However, whether or not the investor is a handyman is a moot point, as hiring a property manager is highly recommended. While it helps to know everything about a subject property, enlisting a third-party property manager’s services is an essential step in a rental property business plan. Through their help, investors may expand their portfolio without adding on countless hours of work. If for nothing else, a property manager will take care of everything. From finding tenants to collecting rent, property managers will see to it that everything is covered. Meanwhile, the investor is free to add more assets to their portfolio and increase their passive income cash flow.
There are many rental plan options for landlords, such as specializing in low-income neighborhoods or university towns. Alternatively, they can choose to specialize in higher-income, urban neighborhoods. Different strategies require different skill sets, so landlords may find better success if they pick a niche in which they specialize. However, landlords will need to set up a system for running applications, credit, and background checks regardless of the niche. Adding proven systems to a rental property business plan is the surest way to make success habitual. Therefore, investors will need to create a system for every single process associated with rental property investing. That way, there will always be an appropriate course of action, regardless of the situation. Property managers, for that matter, make it a lot easier to implement systems.
6. Manage The Properties
Managing a rental property is about far more than just hiring a property manager; it’s about figuring out exactly what systems will be put in place to keep the properties in good shape and the cash flowing in. This means answering queries like:
Are you going to be a landlord? (Or will you hire a property manager?)
Who will find and select tenants?
Will you perform repairs to maintain the property? (Or hire a contractor?)
Who will perform yard maintenance and other duties?
Your answers will depend on your budget and available time. The key is to use your rental property business plan to map out all management systems beforehand and ensure no last-minute surprises.
Why Write A Business Plan
A well-crafted business plan will help in more ways than one as you learn to navigate the real estate industry. You can establish a clear framework of your goals and overall mission by writing a business plan. It should also include the reason why you want to start investing. This will ensure you remain focused as you make investment decisions and eventually grow your business. Think of a business plan as a roadmap for your future.
A business plan is also highly useful when speaking to potential lenders, designing marketing campaigns, and hiring new employees. These tasks will be made easier if you have a clear outline of what your business does (and how). For example, when you begin raising funds for your first deal, you will likely need to present your business goals to potential investors. A business plan can help take the pressure off — as the information will already be written down. If you are even slightly considering opening a rental real estate business, learning how to write a business plan is a great first step.
How To Write A Rental Property Business Plan
Starting a rental property business is one thing, but learning how to write a rental property business plan is entirely different. While the two sound similar, the latter is critical to making the former even stronger. At the very least, knowing how to start a rental property business must come before actually starting one. As a result, investors will need to familiarize themselves with the most important steps first:
Determine a vision and write a mission statement
Set passive income and business goals
Build a team structure that is conducive to success
Gain a high-level overview perspective of the company as a whole
Develop marketing systems and funnels tailored to a specific audience
1. Vision & Mission
A truly great rental property business plan must emphasize one thing above everything else: the investor’s vision or mission. What an investor hopes to achieve by investing in real estate may simultaneously serve as motivation and a guide when times are less than ideal. Therefore, investors must take a minute to think about why they are investing. Is it to retire comfortably? Is it to spend more time with family and friends? Is it both of these things? Knowing their “why” will help investors build out a sound business strategy, one that gets them closer to their goals with every investment. Consequently, those without a mission won’t know what direction to head, which doesn’t bode well for any rental property business.
2. Passive Income Goals
While closely related to one’s own vision or mission, passive income goals identify how much cash flow will be necessary to satiate investors’ appetites. That said, passive income goals should help investors meet their own mission statement. Likewise, if an investor wants to retire comfortably, they will need to set their passive income goals high enough to facilitate their desired retirement. While everyone’s passive income goals will be different, a general rule of thumb accounts for how much cash flow will be necessary to maintain their preferred lifestyle.
Remember, goals should be realistic and directly related to the reason someone wants to invest. Seeing overly ambitious goals can deter many investors from progressing, so the goals must be achievable. The sense of accomplishment developed from realizing a goal is, oftentimes, a powerful motivator.
Determining passive income goals will also help answer the most important question of them all: what type of rental property will I focus on? Residential? Commercial? Multi-family? Start from the end and work backward for better results; it’s the best and most efficient way to build a business.
Starting a rental property business may lead many investors to hire a team. After all, it’s true what they say: many hands make light work. The more qualified individuals investors have worked towards a common goal, the more likely they are to realize success. Not only that but hiring a competent real estate team is simply one more step towards investors removing themselves from the equation and earning more passive income. That said, it’s not enough to hire just anyone; the employees need to bring something new to the table. Investors need to hire a team that complements their skills—not that replicates them. That way, the team structure is more well-rounded and capable of accomplishing more tasks.
4. High-Level Overview
Investors need to look beyond the prospects of a single investment property and towards the potential of an entire portfolio. While a single home can produce encouraging cash flow levels, an entire portfolio can help investors realize financial freedom. Therefore, it’s important not to forget the “bigger picture.” Sure, start with a single home, but plans should inherently be scalable. When writing a rental property business plan, see that everything can be expanded to include future growth.
Buying a rental property is just the first step on a passive income investing journey. At some point, investors need to figure out how to find tenants to bring in cash flow. More often than not, investors will rely on their property managers to fill vacancies. However, in the event an investor neglects to hire a property manager, there are various ways to find tenants, not the least of which include:
Local bulletin boards
Direct mail campaigns
Is A Rental Property Business A Good Investment?
Investors will know if a rental property is a good investment if their net cash flow remains consistently positive. Seasoned real estate investors know that to have a solid rental plan and business, they must first mind their due diligence and ensure that a rental property is indeed a good investment. There are several measurements available to help investors get an idea of the profit-making potential for a property. Make use of 10 real estate calculators that are helpful for any type of real estate investor.
Features of Successful Rental Properties
You don’t have to reinvent the wheel to be successful. Many successful rental properties can serve as a model for your business. Here are some distinct features of profitable rental properties:
Location: Real estate is always about location. The location of your rental property will be a major determinant of the type of tenants you will attract. For example, if you purchase a rental property at the edge of a university, you’ll naturally get applications from many college students. Consider the neighborhood and how it could influence your tenant profile, behavior, income, and vacancies.
Taxes: The location will also influence the property taxes that you end up paying. High property taxes may be well-worth it if your property is located in a great area that attracts high-paying tenants. However, property taxes could be a burden if your financials don’t make sense. Find out your property tax rate by contacting the local assessor’s office.
Schools: The ratings of local schools will help indicate what type of tenants you’ll attract. Rental properties near distinguished school systems will help draw in families willing to pay higher rental rates.
Safety: No one wants to walk home while constantly checking over their shoulder, or living in fear that their car will get broken into. Check local crime statistics and pay attention to trends. A reg flag could be a stead increase in criminal activity, even if it’s in a neighborhood that was known to be safe in the past.
Employment: A hot job market can help draw in larger groups of tenants, thus creating a healthy demand for your property. This could bring in benefits such as higher rental rates and lower vacancy rates. Growing employment opportunities can also boost your local economy and local amenities.
Local amenities: Tenants are constantly looking to balance rental rates with quality and easy of life. If your rental property is located near public transit systems, shopping, restaurants, gyms, and entertainment, you may find yourself having to field competitive offers from many tenants.
Economy: The local economy and horizon of industrial developments can also be a good indicator of rental property performance in a given area. The resulting improvement of local infrastructure could vastly improve the neighborhood and tenant pool. However, watch out for noisy construction that could hurt rental rates temporarily, plus new housing developments that could put a strain in competition.
Rental rates: Be sure to research a local neighborhoods average rental rate. This number can help you conduct a financial analysis to determine whether owning a rental property in the area would be feasible. Be sure to factor in costs such as property taxes, maintenance, repairs, and mortgage payments.
Vacancy rates: If you notice that the neighborhood has an abnormally high number of listings, it could signal that demand is low and vacancy rates are up. You may not want to invest in an area that is on the decline.
How To Determine Rent
Rent can typically be determined by analyzing other properties in the area. Start by reviewing the average rental rates, and then look at similar units to see what they go for. Pay attention to properties with the same number of bedrooms, bathrooms, and amenities. This will give the best idea of what you can charge.
Another approach is to take your monthly loan repayment as a baseline, and raise the rate to cover maintenance and repairs. Maintenance costs can vary significantly, so again pay attention to the typical market. If your rental property is in a college town, you may want extra room for maintenance. However, if you already know you are renting to a tenant you know you may be able to leave less room for repairs.
The final number should stay in the range of other properties in the area. However, they may be some wiggle room to decide exactly where to land for your own property. Just remember: charge too much and you risk vacancies, charge too little and you lose out on valuable income. If you want to learn more about determining rent , be sure to read our guide.
Confidence isn’t simply a positive mood based on affirmations and “feel-good” mantras. Confidence, according to Webster’s Dictionary, is the “state of feeling certain about something.” As you learn how to start a rental property business , there may be no greater confidence-booster than a business plan that comes to fruition. By mapping out your precise goals—and the systems you’ll employ to achieve them—you’ll find wealth-building objectives more attainable than you ever thought possible.
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Guide to Portfolio Building
Starting and growing a real estate portfolio the right way, how to start a real estate business in 10 steps [updated 2023], investor's guide to the real estate contingency contract.
Start Your Rental Property Business in Minutes
How to Start a Profitable Rental Property Business in 11 Steps
Ever dreamt of being your own boss, with a steady income that doesn't require you to be stuck in a 9-to-5 grind? Welcome aboard, future property mogul! You're about to embark on a potentially lucrative journey of starting your very own rental property business.
Our Shortlist Steps to Start a Profitable Rental Property Business:
- Draft a rental property business plan.
- Pick a business name & business entity that works best for you.
- Find ways to finance your rental property startup.
- Open a professional business bank account.
- Set up your accounting & tax reporting.
- Obatin the necessary licenses & permits for your rental property business.
- Purchase the equipment, software, & tools needed.
Startup Costs for a Rental Property Business:
Initiating a rental property business can involve substantial financial commitment, the scale of which is significantly influenced by factors such as geographical location, market dynamics, and operational expenses, among others. Nonetheless, our extensive research and hands-on experience have revealed an estimated starting cost of approximately $274000 for launching such a rental propertybusiness. Please note, not all of these costs may be necessary to start up your rental property business.
- Rental Property Startup Expenses
Table of Contents: (Page Navigation)
11 steps to start a profitable rental property business with little to no money:, 1. rental property business plan..
Developing a business plan for your rental property business is essential for success. It serves as a guide to help you make informed decisions, provide direction and manage resources. A business plan should include a detailed mission statement, financial projections, marketing plan and an analysis of the competition. Additionally, it should provide a detailed description of the rental property business, including the services you offer, the target market and the structure of the business. Here are some of the key components that should be included in your business plan:
- Mission statement
- Financial projections
- Detailed description of the rental property business
- Target market
- Marketing plan
- Analysis of the competition
- Structure of the business
- Check out our entire small business plan directory
2. Form the Legal Business Entity.
Are you looking for ways to start your own rental property business business? You'll want to consider officially registering your business with local and federal governments. There are four different types of entities you can choose from, each with their own pros and cons.
Sole proprietorship :
- The simplest type of business to set up
- Offers no personal liability protection
Corporate organization :
- Shareholders elect board members to run things
- Requires an annual meeting with stockholders' meetings every three months
Limited Liability Company :
- Provides extra protection for investors by limiting their liability exposure
- Allows flexibility in operating their businesses
- Business owner plus partners
- Can offer personal liability protection
When deciding what type of business entity is right for your rental property business company, it's important to consider what kind of liability exposure you want and what your goals are for the business. If you're just starting out and selling to family and friends, a sole proprietorship may be enough. But if you're looking for more protection or to grow the business, a corporate organization or LLC may be a better choice.
No matter what type of business entity you choose for your rental property business business, be sure to register it with the state in which you'll be doing business. This will give you the legal protections you need to operate your business and protect your personal assets. To register your business, you'll need to file the appropriate paperwork with your state's Secretary of State office . You can find more information on how to do this on their website.
Once you've registered your rental property business business, you'll need to get a business license from your local city or county. This will allow you to legally operate your business in your area. To get a business license, you'll need to fill out an application and submit it to your local licensing authority. They will then review your application and decide whether or not to issue you a license.
Now that you know how to register your rental property business business, it's time to get started! Follow the steps above to get started on the right foot and be sure to consult with an attorney if you have any questions. Good luck!
- Check out our U.S. Registered Agent Directory
- Check out our U.S. LLC Directory
Form an LLC in your state!
3. Source Financing for Your Rental Property Business.
There are several different ways to go about sourcing financing options for your rental property business business, but it’s extremely important to think through each and every method because each decision may have financial implications on you and your business in the long term.
Some new founders may find themselves in a situation where your rental property business startup costs are actually only a few hundred dollars to get started, but we thought it was important to share the below methods in case you’re thinking of ideas down the road.
Here are 5 financing options for your rental property business business:
- Raising money from friends and family
- Bootstrapping by tapping into your own savings account
- Sourcing investment from outside investors
- Obtaining a bank loan
- Getting money from a hard money lender
Now, there are of course many other alternatives to financing your business, but these 5 options are just a few that come to mind.
It’s also important to stress the importance of decisions and only make the decision you believe is the best fit for your current situation. There is no right answer when deciding how much money should go into starting up your own company, but there may be some guidance from below regarding what type of financing would work best for someone like yourself - so take note before making any final decisions about which path will suit both yourself and your rental property business business best! We definitely recommend advising your accountant before making any final decisions.
4. Open a Business Bank Account.
Opening a business bank account for your rental property business company can be a daunting task, especially if you're not sure what you're doing. But it doesn't have to be! There are different types of accounts that you can open for your rental property business business, depending on what you need and how much money you're looking to deposit.
We'll go over some of the advantages and disadvantages of each type of account, so you know what to expect from each one.
Checking Account: The most common type of business bank account is a checking account. Checking accounts are easy to open and offers a variety of features and benefits that can be helpful for businesses. One of the biggest advantages of a checking account is that it allows you to easily deposit and withdraw money as you need it. You can also write checks from your checking account, which can be helpful for paying bills or suppliers.
Savings Account: Another popular type of business bank account is a savings account. Savings accounts earn interest on the money that you deposit, so they can be a great way to grow your rental property business business's cash reserve. However, savings accounts typically have lower interest rates than checking accounts and may have withdrawal limits.
Business Card Card: If you're looking for a more robust bank account for your business, you may want to consider opening a business credit card. Business credit cards can be very helpful for businesses that need to make large purchases or need to build up their credit history. However, business credit cards typically have high-interest rates and may have annual fees.
No matter what type of business bank account you choose, be sure to shop around and compare features and fees before making a decision. Once you've found the right account for your business, you'll be on your way to the next step in building your rental property business business! As always, be sure you advise your certified professional accountant before making any final financial decisions.
5. Set up Your Accounting and Taxes.
As a new rental property business business owner, you have a lot on your plate. There are so many things to think about and so much to do in order to get your business off the ground.
But one of the most important things you need to do is set up a proper accounting system. This will help you track your expenses , revenue, receipts, taxes owed, and much more.
There are a couple of different ways that you can set up your rental property business accounting system.
- You can use an online accounting software like QuickBooks or Xero
- Hire an accountant to do it for you.
If you decide to do it yourself, make sure you choose a system that is easy to use and understand.
Once you have your accounting system set up, start tracking your income and expenses. This will help you see where your money is going and where you need to cut back. It will also help you budget for the future.
Make sure you keep up with your accounting regularly. This means setting aside time each month to reconcile your accounts and update your records. This may seem like a lot of work, but it will save you a lot of headaches in the long run.
If you have any questions about setting up your accounting system, talk to your accountant or financial advisor . They can help you choose the right system for your business and make sure you are using it correctly.
- Find account software for your business
6. Obtain Rental Property Business Permits and Licenses.
Starting a new rental property business business can be a daunting task, but there are some important things to keep in mind that can make the process a bit smoother. One of the most important things to do when starting a new business is to obtain the proper licenses and permits from the appropriate government agencies.
There are a number of different business licenses and permits that may be required, depending on the type of rental property business business you are starting and where it will be located. The best way to find out which licenses and permits you need is to contact your local business licensing office or chamber of commerce. They will be able to provide you with information on which licenses and permits are required in your area.
Once you have obtained the necessary rental property business licenses and permits, you will be able to officially open your business and start operating. Congratulations! You are now on your way to becoming a successful business owner.
7. Purchase Equipment, Software, Supplies & Tools Needed.
There's a lot to think about when starting a rental property business business. One of the most important elements is equipment, tools, and supplies.
Here's a few tips to help you:
- Determine what equipment, tools, and supplies you need. This will depend on the type of business you're starting and the products or services you'll be offering. Make a list of everything you need, including both big-ticket items (like office furniture) and smaller items (like paper clips).
- Research different suppliers. Once you know what you need, it's time to start shopping around. Compare prices and quality between different suppliers to find the best deal.
- Consider equipment rental or leasing. If you're on a tight budget, you may want to consider renting or leasing equipment instead of purchasing it outright. This can be a good option for expensive items that you won't need to use on a regular basis.
- Get everything in writing. Once you've decided on a supplier, make sure to get all the details in writing before making a purchase. This will help avoid any misunderstandings later on.
- Stay organized and keep track of your inventory. It's important to stay organized when running a business. Keep track of your equipment, tools, and supplies so you know what you have and what needs to be replenished.
By following this process will help ensure that you have the equipment, tools, and supplies you need to run your business smoothly.
- Check out our small business software & tools review directory
8. Create a Brand Identity for Your Rental Property Company.
Creating a brand identity for your rental property business company can be very difficult. There are so many factors to consider, from the logo design to the colors you use. But if you take the time to plan and focus on what you want your customers to feel, you can create a brand identity that will set your business apart from the rest.
Here's how to get started:
1. Define your rental property business company's purpose and values.
What do you want to achieve with your business? What kind of feeling do you want your customers to have when they think of your rental property business brand? These are important questions to answer before you start creating any visuals for your brand.
2. Choose a color scheme that reflects your company's personality.
Colors can communicate a lot about a brand, so it's important to choose wisely. If you're not sure where to start, try looking at other brands in your industry and see what colors they use.
3. Develop a unique logo that represents your rental property business brand.
This is often the first thing people will think of when they hear your company name, so it's important to make it memorable. Work with a professional designer to create a logo that's both visually appealing and reflective of your brand values.
4. Create consistent branding across all channels.
Once you have your logo and color scheme, make sure you use them consistently across all of your marketing materials, from your website to your business cards. This will help reinforce your brand identity and make it easier for customers to recognize your company.
Creating a strong brand identity is essential for any rental property business business, but it doesn't have to be complicated. By focusing on your company's purpose and values, you can develop a brand that will resonate with your target audience. With a little planning and some creativity, you can create a brand identity that will make your rental property business company stand out from the rest.
9. Build a Beautiful Website.
In today's world, and no matter what type of business you're in, it's always best to have a beautifully designed website to share with your customers. For your rental property business business, you may not need one right away, but it's best to plan for this!
There are a few key steps to building a beautiful website for your new rental property business business:
- Hiring a professional website designer or working with a freelancer - make sure to look at their portfolio and get recommendations from others in the industry.
- Planning out your website's structure and hierarchy - this includes deciding what pages and baby clothing content will be included on the website, and how it will all be organized.
- Creating stunning visuals and graphics - images, videos, and other visual elements should be high-quality and reflect your brand identity.
- Writing compelling website copy - the text on your website should be well-written, informative, and persuasive.
- Testing the website before launch - it's important to test all the website's features and functionality to ensure everything works correctly.
Following these steps will help you create a website that is both visually appealing and effective in promoting your rental property business business. If you have any questions or need help getting started, feel free to contact us and we would be happy to assist you.
10. Create a Company Email Address & Phone Number.
With a company phone number and email address, you'll be able to give your business a more professional appearance and stay in touch with customers more easily.
Here's how to set them up:
- Purchase a business phone number . You can do this through a telecom provider like Twilio or Grasshopper.
- Register the phone number by creating an account with the telecom provider.
- Set up a professional email address using a service like Google Workspace or Microsoft 365 .
- Configure your email account to forward messages to your business phone number.
Note: When you're first starting out your rental property business business, you can definitely use your personal phone number and email address, but as it grows, be sure to look into other communication options!
Once you're all set up, you'll now be able to more easily communicate with customers more professionally!
11. Make a Go-To Market Launch Strategy.
You’ve done all of the hard work up until this point and prepared your rental property business business for launch – Now, it’s time to get your rental property business business name out there and start generating customers!
You’ll likely already have worked on a bit of your marketing plan during the build out of your business plan, but now you’ll take a magnifying glass to your strategy and plan out how you’ll obtain your first few customers.
To get things started, below are a few marketing strategies you can steal from:
- Reach out to local newspapers about your launch
- Identify social media influencers your customers follow
- Host a business launch event at your office, storefront
- Run a business launch sale to attract first time customers
- Run a few ads online to attract customers
- Get your friends and family to share your products on social media
- Partner up with other local businesses in the area to share your business
Again, remember, marketing is never a “said it and forget” method. You must always be iterating on your strategy and doubling down on what worked and what your customers love most. Also, always be sure you’re never overspending in this area so that it doesn’t cut into your margins.
- Check out all of our small business marketing ideas
You have questions, we have answers.
Frequently Asked Questions:
Below, based on our research are some of the most common questions entrepreneurs have when thinking about starting a business.
What does it cost to start a Rental Property business?
Are rental property businesses profitable, how to come up with a name for your rental property business, what do you need to do to define your target audience for your rental property business, how does a rental property business make money, list of software, tools and supplies needed to start a rental property business:.
More business resources to help you get started:
External resources:, business blogs and magazines to read:.
- Business Insider
- Fast Company
- Harvard Business Review
- The Wall Street Journal
- The Economist
- Bloomberg Businessweek
Small Business Websites:
- https://www.sba.gov/about-sba/sba-locations - Additional resources for small businesses
- Department of Commerce, Community, and Economic Development - ( https://www.commerce.gov/ ) - Information on local, state, and federal programs, provides information on local business events, and provides loans and other funding opportunities
- Department of Law - ( https://www.justice.gov/agencies/list ) - Provides information on business regulations
- Department of Revenue - ( https://www.irs.gov/ ) - Provides information on taxation regulations
rental property business Tax Information:
The IRS has all the information you need on tax deductions, tax preparation, filing, forms and much more. IRS.gov also has a wealth of information for small businesses, nonprofits, and other special groups.
Keeping up with information is important:
The world of business is always changing, and keeping up with it all can be difficult. Here are some different ways that you can make sure you are up to date on the latest news and information, both in your industry and beyond.
- Specific rental property business business-related content so you can keep up with trends, and consumer behavior over time.
- TV/Newspaper: Though this may seem like a basic tip, watching the right TV shows and newspaper headlines can save you a lot of time. There are many daily news shows geared to specific industries that will cover the most important topics relevant to you.
- Podcasts : Podcasts have become very popular in the last few years, but they aren't just for entertainment purposes. There are many business podcasts that highlight current issues, trends, or events from around the world that could impact your company.
- Social Media: Social media has become a major source for both personal and professional interactions over the past decade or so - make sure to keep up with your accounts! Social media platforms like Twitter allow users to follow topics in addition to people; this way when something related pops up on someone's feed (or even just their newsfeed) they'll see it immediately. In addition, there are many sites dedicated solely to business news such as "Fortune."
- Rental Property Business Names
- Rental Property Business Plan Template & Guidebook
- Best Real Estate Business Ideas & Examples in 2023
- 75+ Unique, Creative & Funny Rental Property Business Slogans
- List of the Best Marketing Ideas For Your Rental Property Business:
I'm Nick, co-founder of newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality.
Through meticulous research and firsthand experience, I uncover the essential steps, software, tools, and costs associated with launching and maintaining a successful business. By demystifying the complexities of entrepreneurship, I provide the guidance and support needed for others to embark on their journey with confidence.
From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.
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How to Write a Business Plan as a Landlord
Editor's Note: This post was originally published in April 2020 and has been completely revamped and updated for accuracy and comprehensiveness.
Buying investment properties and renting them out to tenants is a great way to diversify your real estate portfolio and earn passive income. If you are considering becoming a landlord, writing a rental property business plan is vital to make your investment thoughtfully and deliberately. A well-crafted business plan can help you secure financing from lenders. A business plan demonstrates that you clearly understand your business and its potential, making you more attractive to potential lenders. Let's begin! This piece will walk you through what a rental property business plan is, why you should create one, and how to put one together.
What is a rental property business plan?
Most simply, a rental property business plan is a document that describes the following:
- You and your rental business.
- What your intentions and goals are with a property.
- Your plan for executing these goals.
Your rental property business plan will outline the strategies and goals for managing your properties.
Why should you develop a rental business plan?
Here are some reasons why you should create a rental property business plan:
- Provides a clear direction: A business plan outlines the goals and objectives of the rental property business, which helps you stay focused on achieving your vision. It also provides a roadmap for decision-making and ensures all activities align with the overall strategy.
- Helps secure financing: A business plan shows that you understand your business well, making your business more appealing to lenders.
- Identifies potential risks: A business plan identifies potential risks associated with the rental property business and provides strategies to mitigate them. This helps to avoid costly mistakes and ensures that you're well-prepared for any challenges that may arise.
- Enhances property management: A business plan includes a strategy outlining how you will manage your rental properties effectively.
- Enables monitoring and evaluation: A business plan provides performance metrics that will help you to monitor and evaluate your progress. This also allows you to identify areas for improvement and adjust your strategy accordingly.
First things first — set your business plan objectives.
Before creating your business plan, consider your specific objectives for your rental business. By setting your objectives, you're providing yourself with a target to aim for. A SMART goal incorporates all of these criteria to help focus your efforts and increase the chances of achieving your goal. This is a specific, measurable, achievable, relevant, and time-bound goal commonly used in business and project management to set and achieve goals.
The acronym SMART stands for:
- S - Specific: The objective should be clear and well-defined so everyone involved understands what they need to accomplish.
- M - Measurable: The objective should be quantifiable to measure and track progress over time.
- A - Achievable: The objective should be realistic and achievable based on available resources and the timeframe.
- R - Relevant: The objective should be relevant to your business's or project's overall mission or goals.
- T - Time-bound: The objective should have a specific deadline or timeframe for completion so you can monitor progress and make adjustments as needed.
Here are some examples of SMART goals for a rental investment business:
- Own four properties by the end of the year
- Earn $5k in rental revenue per month
- Earn $150k in rental profit by the end of year 5
- Hire a team of 4 business partners and open an office in Nashville, TN, in the next five years
- Find 15 tenants by the end of next year
You may only have one key objective or multiple, but each goal should have strategies and tactics to help achieve it.
Strategies and tactics for your SMART objectives
Let's take the relatively straightforward objective — own four properties by the end of the year. Easier said than done, right? Your strategy will be your rough game plan to achieve this goal. Here are some examples of strategies you may employ:
- Study local housing markets to find undervalued neighborhoods.
- Use hard money lending groups and meetups to help secure capital.
- Specialize in and become a master of a specific housing type (single-family homes, duplexes, apartments, townhouses, etc.)
You can then drill down each strategy into specific tactics. Here's what that looks like:
Study local housing markets to find undervalued neighborhoods:
- Study Zillow and MLS listings to see locations and figures of sales.
- Physical drive-thrus of neighborhoods to see house styles, number of For Sale signs
- Attend foreclosure auctions in different Tennessee counties
- Leverage social media to identify potential properties
- Try creative methods to find undervalued properties beyond the MLS
Use hard money lending groups and meetups to secure affordable and scalable financing:
- Join online hard money communities and see which lenders offer low rates, good terms, etc.
- Go to real estate conferences and network with lenders, wholesalers, etc.
Specialize in and become a master of a specific housing type:
Focus on 3br/2b single-family homes between 1500-2500 sq feet
How to write a rental property business plan
Now that you've thought about precisely why and how you will structure your business and execute your investment, it's time to write it! A rental property business plan should have the following components: The business plan typically includes the following elements:
- Executive Summary
- Business Description
- Market Analysis
- Marketing and Advertising
- Tenant Screening
- Financial Projections
- Exit Strategy
Let's go through each of them separately.
The executive summary of a rental property business plan provides an overview of the key points of the plan, highlighting the most critical aspects. Here's an example of an executive summary:
[Your Business Name] is a real estate investment firm focused on acquiring and managing rental properties in [location]. The business aims to provide tenants high-quality rental properties while generating a steady income stream for investors. The rental property portfolio comprises [number] properties, including [type of properties]. These properties are located in [location], a growing market with a high demand for rental properties. The market analysis shows that rental rates in the area are stable, and the demand for rental properties is expected to increase in the coming years. The business's marketing and advertising strategies include online advertising, signage, and word-of-mouth referrals. The tenant screening process is thorough and includes income verification, credit checks, and rental history verification. The property management structure is designed to provide tenants with excellent service and to maintain the properties in excellent condition. The business works with a team of experienced property managers, maintenance staff, and contractors to ensure that the properties are well-maintained and repairs are made promptly. The financial projections for the rental property portfolio are promising, with projected revenue of [revenue] and net income of [net income] over the next [timeframe]. The risks associated with owning and managing rental properties are mitigated through careful screening of tenants, regular maintenance, and appropriate insurance coverage. Overall, [Your Business Name] is well-positioned to succeed in the rental property market in [location], thanks to its experienced team, careful management, and commitment to providing high-quality rental properties to tenants while generating a steady stream of income for investors.
Your executive summary is the Cliff Notes version of the complete business plan. Someone should be able to understand the full scope of the project just by reading this section. When writing your executive summary, assume it is the only part of your plan that someone reads. Aim for a half-page to full-page in length.
The business description section of a rental property business plan provides an overview of the company, including its mission, history, ownership structure, and management team. Here's an example of a company description section:
[Your Company Name] is a real estate investment company focused on acquiring and managing rental properties in [location]. The company was founded in [year] by [founder's name], who has [number] years of experience in the real estate industry.
Mission: Our mission is to provide high-quality rental properties to tenants while generating a steady income stream for our investors. We aim to be a trusted and reliable partner for tenants, investors, and stakeholders in our communities.
Ownership structure: [Your Company Name] is a privately held company with [number] of shareholders. The majority shareholder is [majority shareholder name], who holds [percentage] of the company's shares.
Management team: The management team of [Your Company Name] includes experienced professionals with a proven track record of success in the real estate industry. The team is led by [CEO/Managing Director's name], who has [number] years of experience in real estate investment and management. The other members of the management team include:
[Name and position]: [Brief description of their experience and role in the company] [Name and position]: [Brief description of their experience and role in the company]
Researching neighborhood trends can help you identify areas poised for long-term growth. This can enable you to make strategic investments that will appreciate over time, providing a stable source of income for years to come. The Market Analysis section of a rental property business plan for landlords should provide a comprehensive overview of the local rental market. Below are some key elements you should include in the Market Analysis section of your rental property business plan.
- Property Value: The value of a rental property is highly dependent on its location. By researching neighborhood trends, landlords can stay updated on changes in property values, both positive and negative. They can make informed decisions about whether to purchase, hold or sell their properties based on changes in the area.
- Rental Rates: Knowing the rental rates in a neighborhood can help landlords determine how much to charge for rent. Understanding how much other landlords charge for similar properties in the area can help a landlord price their property competitively and attract quality tenants.
- Tenant Preferences: Different neighborhoods appeal to different types of tenants. For example, families with children may prefer neighborhoods with good schools and parks, while young professionals may prefer areas with trendy restaurants and nightlife. By understanding neighborhood trends, landlords can cater to the preferences of their target tenants.
- Neighborhood Safety: Safety is a significant concern for tenants, and landlords can be held liable for any harm that befalls their tenants due to unsafe conditions on the property. Competitive landscape: There are several steps that landlords can take to research the competitive landscape of a rental market. These include identifying competitors, analyzing rental rates, researching amenities offered by competitors, and checking their online reviews.
- Growth potential: Consider external factors that may affect the rental market, such as population growth, job growth, or changes in zoning laws. This can help landlords identify potential growth opportunities in the market.
The marketing strategy section of your rental property business plan outlines how you will promote and advertise your rental properties to potential tenants. Below are some key elements to include in this section.
- Target Market: Identify the target market for rental properties, such as young professionals, families, or retirees. Describe their demographics, interests, and needs, and explain how the rental properties cater to these groups.
- Unique Selling Proposition: Identify the unique selling proposition of the rental properties, such as location, amenities, or affordability. Explain how these factors differentiate the properties from competitors in the market.
- Advertising Channels: Describe the advertising channels you'll use to promote the rental properties, such as online rental listings, social media, or local newspapers. Explain how you'll use these channels to reach the target market.
- Promotion Strategy: Describe the promotion strategy to attract tenants to the rental properties, such as discounts, referral bonuses, or move-in incentives. Explain how you'll communicate promotions to potential tenants and how they will be tracked and measured for effectiveness.
- Branding: Develop a branding strategy for the rental properties, including a logo, website, and promotional materials. Explain how the branding will reflect the unique selling proposition of the properties and how it will be used consistently across all marketing channels.
- Budget: Develop a marketing budget outlining each advertising channel's expected costs and promotion strategy. Explain how you'll track and adjust the budget as needed to ensure maximum return on investment.
This section should outline the steps you or your property manager will take to evaluate potential tenants and ensure they fit your rental property well. This can ensure that your company has a thorough and fair process for evaluating potential tenants and selecting the best fit for their rental property. B elow are some critical components to include in this section.
- Criteria for Screening: Define the criteria you will use to evaluate potential tenants. This includes credit score, income, employment, criminal, and rental history.
- Application Process: Detail the application process that potential tenants will go through. This may include the application form, application fee, and required documentation such as pay stubs, rental history, and references.
- Background Checks: Describe the background checks you'll conduct on potential tenants. This may include a credit check, criminal background check, and reference checks with previous landlords.
- Approval Process: Outline the process for approving or denying a tenant application. This may include a review of the applicant's qualifications, background check results, and a decision based on the landlord's discretion.
- Fair Housing Compliance: Include a statement about compliance with fair housing laws. Landlords and property managers must ensure they do not discriminate against applicants based on protected classes such as race, color, religion, sex, national origin, disability, or familial status.
This section should outline the steps you or the property manager you have hired will take to manage the rental property effectively and ensure a positive experience for tenants. Below are some key components to include in the property management section of a rental property business plan.
- Maintenance and Repairs: Outline the process for addressing maintenance and repair issues. This may include a description of how tenants can report problems, the timeline for responding to requests, and the types of repairs that are the landlord's responsibility versus the tenant's responsibility.
- Rent Collection: Detail the process for collecting rent from tenants. This may include the due date for rent payments, late fees, and consequences for non-payment.
- Lease Agreement: Describe the lease agreement that tenants will sign. This may include the length of the lease, rent amount, security deposit, and rules and regulations for the property.
- Tenant Communications: Outline your approach to communicating with tenants. This may include regular newsletters or updates on property maintenance, a process for addressing tenant concerns, and emergency contact information.
- Compliance and Risk Management: Include a statement about compliance with regulations and risk management. This may include descriptions of insurance coverage, safety protocols, and any regulatory requirements the business must follow.
The financials section of your rental property business plan is crucial for demonstrating the business's financial feasibility and potential profitability of the investment. Let's take a look at what you can include.
- Income projections: Start by estimating the expected rental income from the property. This should be based on market rates for similar properties in the area, considering location, size, amenities, and condition. Consider any potential income streams beyond rent, such as laundry facilities or parking fees.
- Expense projections: Next, estimate the ongoing expenses associated with owning and managing the property, including mortgage payments, property taxes, insurance, utilities, maintenance and repairs, and property management fees, if applicable. Be sure to factor in seasonal or irregular expenses, such as snow removal or landscaping.
- Cash flow projections: Based on the income and expense projections, calculate the expected net cash flow for the property monthly and annually. This will give you a sense of how much income the property will likely generate after paying expenses.
- Financing plan: If you plan to finance the purchase of the property, outline your financing plan, including the loan amount, interest rate, and repayment terms. Be sure to calculate the impact of financing on your cash flow projections.
- Return on investment: Calculate the property's expected ROI based on the initial investment and projected cash flows over a specified time (e.g., five years). This will give you a sense of whether the investment will likely be profitable in the long term.
- Sensitivity analysis: Conduct sensitivity analysis to assess the potential impact of changes in key assumptions (e.g., vacancy rate, rental income, expenses) on your cash flow projections and ROI. This will help you identify potential risks and make informed decisions about the investment.
As a landlord, you must include a risk management section in your rental property business plan to address potential risks and establish strategies for mitigating them. Below are some key steps you can take to create a risk management section for your business plan.
- Identify potential risks: Identify risks associated with your rental property business. This may include risks related to property damage, tenant safety, liability, financial loss, and legal compliance.
- Assess the likelihood and impact of each risk: Once you have identified potential risks, assess the likelihood and potential impact of each risk on your rental property business. This will help you prioritize which risks to address first and determine the resources you must allocate to manage each risk.
- Establish risk management strategies: Develop a plan for managing each identified risk. This may include measures to prevent the risk from occurring, as well as steps to mitigate the impact of the risk if it does happen. For example, you may establish a routine property inspection program to identify and address maintenance issues before they become significant problems. You may also require tenants to carry renters' insurance to mitigate financial loss if they cause damage to the property.
- Review and update your risk management plan regularly: Risks can change over time, so it's essential to review and update your plan regularly. This will help you ensure that your strategies are still effective and that you are prepared to manage new risks as they arise.
- Seek professional advice: Consider seeking professional advice from a lawyer, insurance agent, or another expert to help you identify potential risks and develop effective risk management strategies. This can help you ensure your business is well-protected and minimize risk exposure.
By including a comprehensive risk management section in your rental property business plan, you can demonstrate to potential investors, lenders, and tenants that you are committed to running a safe and sustainable rental property business.
An exit strategy is integral to any rental property business plan as it helps you plan for the future and maximize your ROI. You most likely plan on renting out your property for a long or indefinite time. If you have a shorter or more definite timeline, like renting it out for ten years and then selling it, mention it here. Should your property go vacant for a long time, or economic circumstances, cause rent prices to fall dramatically, maintaining your property may no longer be sustainable. You should have a plan, or at least a framework, to decide what to do if this happens. Otherwise, your exit strategy should be your backup plan if things don't go as planned.
Creating a comprehensive rental property business plan provides you with a clear direction for your business, helps secure financing, identifies potential risks, enhances property management, and enables monitoring and evaluation of performance. A business plan is valuable for landlords who want to run a successful rental property business.
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The above is provided as a convenience and for informational purposes only; it does not constitute an endorsement or an approval by Kiavi of any of the products, services or opinions of the corporation or organization or individual. The information provided does not, and is not intended to, constitute legal, tax, or investment advice. Kiavi bears no responsibility for the accuracy, legality, or content of any external content sources.
Rental Properties Business Plan Template
Written by Dave Lavinsky
Rental Property Business Plan
Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their rental property business. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a rental property business plan template step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
What Is a Business Plan?
A business plan provides a snapshot of your rental property business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to purchase a rental property, multiple rental properties, or add to your existing rental properties business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your rental property business in order to improve your chances of success. Your rental property business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Rental Property Companies
With regards to funding, the main sources of funding for rental properties are personal savings, credit cards, mortgages, and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.
The second most common form of funding for a rental property is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund a rental property company. They might consider funding a rental property company with a national presence, but never an individual location. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual location could never achieve such results.
How to Write a Business Plan for a Rental Property Company
Your business plan should include 10 sections as follows:
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of rental property you are operating and the status; for example, are you a startup, or do you have a portfolio of existing rental properties that you would like to add to?
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the rental properties industry. Discuss the type of rental property you are offering. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
In your company analysis, you will detail the type of rental properties you are offering.
For example, you might offer the following options:
- Single family homes – This type of rental property is often owned by a single individual, rather than a company, who acts as both landlord and property manager.
- Multi-family properties – These types of properties can be subcategorized by the number of units per site. Buildings with 2 – 4 units are the most common (17.5%), while multistory apartment complexes with more than 50 units represent the next-largest, at 12.6% of the industry.
- Short-Term Rental properties – These are fully furnished properties that are rented for a short period of time – usually on a weekly basis for vacation purposes.
In addition to explaining the type of rental property you operate, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to question such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include occupancy goals you’ve reached, number of property acquisitions, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry analysis, you need to provide an overview of the rental properties industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the rental property industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy, particularly if your research identifies market trends.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your rental property business plan:
- How big is the rental properties industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your rental property. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population or tourist arrivals.
The customer analysis section of your rental property business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: households, tourists, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of rental property you offer. Clearly, vacationers would want different amenities and services, and would respond to different marketing promotions than long-term tenants.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
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Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other rental property companies.
Indirect competitors are other options customers may use that aren’t direct competitors. This includes the housing market, or hotels. You need to mention such competition to show you understand that not everyone who needs housing or accommodation will seek out a rental property.
With regards to direct competition, you want to detail the other rental properties with which you compete. Most likely, your direct competitors will be rental properties in the vicinity.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What lease lengths or amenities do they offer?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide superior properties?
- Will you provide services that your competitors don’t offer?
- Will you make it easier or faster for customers to book the property or submit a lease application?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a rental property business plan, your marketing plan should include the following:
Product : in the product section you should reiterate the type of rental property business that you documented in your Company Analysis. Then, detail the specific options you will be offering. For example, in addition to long-term tenancy, are you offering month-to-month, or short-term rental?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the properties and term options you offer and their prices.
Place : Place refers to the location of your rental property. Document your location and mention how the location will impact your success. For example, is your rental property located in a tourist destination, or in an urban area, etc. Discuss how your location might draw customer interest.
Promotions : the final part of your rental property marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
- Advertising in local papers and magazines
- Reaching out to local websites
- Social media marketing
- Local radio advertising
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your rental property business, such as customer service, maintenance, processing applications, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect 100% occupancy, or when you hope to reach $X in sales. It could also be when you expect to acquire a new property.
To demonstrate your rental property business’ ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in rental property management. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in real estate, and/or successfully running small businesses.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you have 1 rental unit or 10? And will revenue grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $200,000 on purchasing and renovating your rental property, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $200,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a rental property business:
- Location build-out including design fees, construction, etc.
- Cost of equipment like computers, software, etc.
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your property blueprint or map.
Putting together a business plan for your rental properties company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the rental property industry, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful rental properties business.
OR, Let Us Develop Your Plan For You
Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.
Click here to see how Growthink’s professional business plan consulting services can create your business plan for you.
Rental Properties Business Plan FAQs
What is the easiest way to complete my rental properties business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Rental Properties Business Plan.
What is the Goal of a Business Plan's Executive Summary?
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of rental property business you are operating and the status; for example, are you a startup, do you have a rental properties business that you would like to grow, or are you operating multiple rental property businesses.
Other Helpful Business Plan Articles & Templates
How to Start a Home Rental Business
In the rental property industry, entrepreneurs invest in one or more single family homes. These income-producing properties are either self-managed by the owner or by a property management company. Owners lease their rental units out to tenants in exchange for rental fees.
Learn how to start your own Home Rental Business and whether it is the right fit for you.
Ready to form your LLC? Check out the Top LLC Formation Services .
Start a home rental business by following these 10 steps:
- Plan your Home Rental Business
- Form your Home Rental Business into a Legal Entity
- Register your Home Rental Business for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Home Rental Business
- Get the Necessary Permits & Licenses for your Home Rental Business
- Get Home Rental Business Insurance
- Define your Home Rental Business Brand
- Create your Home Rental Business Website
- Set up your Business Phone System
We have put together this simple guide to starting your home rental business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas .
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
What will you name your business?
- What are the startup and ongoing costs?
- Who is your target market?
How much can you charge customers?
Luckily we have done a lot of this research for you.
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Home Rental Business Name Generator
If you operate a sole proprietorship , you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.
When registering a business name , we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability .
It's very important to secure your domain name before someone else does.
Want some help naming your home rental business?
Business name generator, what are the costs involved in opening a home rental business.
Financing for investment properties is very different from securing a personal home loan. Rules change periodically, so make sure you understand the down payment required prior to making any major decisions. Under today’s financing, investors who own more than four rental properties are expected to put down 25%. 20% down is required for entrepreneurs who own less than four. If you have enough cash flow to pay for your investment in full, consider this decision carefully. Many investors recommend using this capital to purchase multiple properties. This should increase both your monthly income and long-term equity.
Each rental property should have adequate insurance to protect both the property and your liability. A portion of your budget should also be set aside to make any necessary improvements and to maintain the property.
What are the ongoing expenses for a home rental business?
There are a number of expenses associated with a home rental business. Seek guidance from other professionals in the community or organizations such as the Institute of Real Estate Management when setting a budget and rental rates.
- Standard expenses include:
- Property taxes
- Loan interest
- Some landlords absorb the cost of lawn maintenance, while others require their tenants to cover these costs.
Who is the target market?
When considering potential investments, consider your target market. Do you want to fill your portfolio with HUD housing or do you wish to target tenants in a different demographic? While both are positive investments, defining your demographics will ensure you purchase property that can yield your target returns.
How does a home rental business make money?
As a landlord, you will collect rent from each of your tenants on a monthly basis. This does not, however, guarantee that your investment will generate passive income. When determining your rental rates, carefully consider all ongoing expenses. Collecting rent higher than the property’s expenses will ensure an income each month. Entrepreneurs just starting out in this industry are urged to invest in properties that can generate a steady cash flow and to set money aside each month for unexpected expenses that will come up from time to time.
The most significant income, however, comes from your long-term investment. The equity in each property will be a meaningful asset in your portfolio. A majority of rent collected will go towards your business’ profits and, when you so choose, you can sell the home at a higher price than your initial investment.
Rental fees vary based on location, the specifics of the property, and landlord costs. When setting your rates, carefully consider all costs.
How much profit can a home rental business make?
Profit is directly tied to the number of properties you own, loan amounts, ongoing expenses, and the amount of rent you charge. A professional accountant should be able to assist you in determining your rate of return on investment prior to purchasing.
How can you make your business more profitable?
The most obvious way to increase your profits is to invest in as much quality property as possible. Investors are urged to minimize costs and pay off loans as quickly as possible. Many business owners opt to partner with another investor, significantly reducing expenses and responsibilities.
Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!
STEP 2: Form a legal entity
The most common business structure types are the sole proprietorship , partnership , limited liability company (LLC) , and corporation .
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your home rental business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Have a Professional Service Form your LLC for You
Two such reliable services:
You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services . You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN through the IRS website . If you would like to learn more about EINs, read our article, What is an EIN?
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil .
Open a business bank account
Besides being a requirement when applying for business loans, opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Get a business credit card
Getting a business credit card helps you:
- Separate personal and business expenses by putting your business' expenses all in one place.
- Build your company's credit history , which can be useful to raise money later on.
Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a home rental business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits .
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses .
Certificate of Occupancy
If you grow your business to the point where you own multiple properties, it is likely your business will be run out of an office. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location :
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a home rental business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location :
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your home rental business will be in compliance and able to obtain a CO.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance . This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance . If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
FInd out what types of insurance your Home Rental Business needs and how much it will cost you by reading our guide Business Insurance for Home Rental Business.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners , we'll give you helpful tips and advice for creating the best unique logo for your business.
Recommended : Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker .
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator . Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
How to promote & market a home rental business
Most cities across the United States have a real estate investment club. Networking with other members will prove invaluable. Most are willing to share the knowledge they have gained over years in the industry. This should include strategies regarding finding quality tenants. Marketing techniques vary based on demographics, but landlords have found success through: rental sites, newspaper ads, realtors, word of mouth, and social media.
How to keep customers coming back
Tenant retention is the most effective way to maintain profits and avoid destruction of property. A thorough screening process is important. Once your tenant moves in, try to maintain a balanced relationship. Check in periodically, but give them their space. Avoid large increases in rent at lease renewal. Most importantly, when a renter calls about a complaint or issue, work to resolve the problem swiftly and at minimal inconvenience to them.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business .
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Recommended : Get started today using our recommended website builder or check out our review of the Best Website Builders .
Other popular website builders are: WordPress , WIX , Weebly , Squarespace , and Shopify .
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
TRUiC's Startup Podcast
Welcome to the Startup Savant podcast , where we interview real startup founders at every stage of the entrepreneurial journey, from launch to scale.
Is this Business Right For You?
Many people are drawn to this business venture, as they recognize the short and long-term value of investing in real estate. Through their tenants’ rent payments, owners are able to successfully manage each property’s mortgage and expenses, while building equity and further expanding their portfolio. Those with discipline and a sound business plan are able to reach their passive income goals on schedule and under budget. This business is not right for everyone, however. Successful home rental business owners must be confident enough to take investment risks and disciplined in saving money, both for additional investments and to ensure their current investments are properly maintained.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a home rental business?
Until you have accrued a great deal of property investments, the home rental business will typically not require your attention on a daily basis. In fact, many business owners choose to use this as their primary source of income, while working on part-time projects they are passionate about.
Your responsibilities include:
- Finding and screening tenants when one of your properties comes up for rent.
- Having leases drawn up and signed by both you and your tenants.
- Managing properties, handling issues as they arise.
- Researching common repairs that are typical in rental properties and interview contractors, plumbers, and/or handymen, etc. that can handle problems you are unable to address yourself.
- Networking within the community would also prove beneficial. Many property owners choose to join local real estate investing associations. This can lead to potential business partners. Additionally, the contacts you make will prove invaluable in ensuring you are able to manage your property successfully and economically.
What are some skills and experiences that will help you build a successful home rental business?
Success in this business requires a certain set of skills. You must possess strong business acumen and understand the intricacies of real estate investment. Not all properties are created equal. If this is not a personal strength, consider seeking the advice of someone more knowledgeable on the subject.
Being a landlord is not as easy as many make it sound. It is important that you treat it like a business. This means being financially frugal during the initial years, maintaining the property at all times, and making difficult decisions regarding tenants who are not fulfilling their lease responsibilities.
A personable personality and the ability to make connections spanning a broad spectrum of people would also prove beneficial. Connecting with others will help keep your tenants around for years. It could prove beneficial when a property needs attention that is outside of your capabilities.
New investors are urged to attend REIA meetings. A Landlord’s Association is also recommended. These groups will offer support and education throughout your journey. They also provide access to business tools such as lease contracts, tenant application forms, and credit search services.
What is the growth potential for a home rental business?
This business venture offers significant opportunity for growth. While some landlords choose to stick to local investments, the only real limitations are available cash flow and your personal vision. Many entrepreneurs choose to expand their portfolio to include properties across the country, or even the world. When considering investment opportunities outside of your region, it’s important to conduct thorough research. Not all properties increase in value or offer enough rent to cover all expenses.
TRUiC's YouTube Channel
For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe to view later.
Take the Next Step
Find a business mentor.
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a home rental business?
Successful home rental business owners indicate they have made a lot of mistakes throughout their years in the industry. To help set you up for success, they offer the following tips:
- Leave no stone unturned when writing your lease agreement. If it is not written down, tenants will find a way around your rules.
- Self management vs. hiring a property management company - They each have their own benefits and drawbacks. Property managers charge a monthly rate, cutting into your profits. Without their assistance, however, you are responsible for handling every issue that comes up. This can prove challenging, particularly if you own rental properties in other parts of the country. If you are considering hiring a property manager, Biggerpockets shares the critical questions you should ask prior to making a decision.
- Carefully consider your target demographic prior to investment. Ask yourself - Is this in a good neighborhood? What size homes are they looking to rent? What is their price point? Is a quiet street and/or a fenced in backyard important to them?
- Keep in mind that problems are guaranteed to come up. Don’t get caught off guard. Plan and save accordingly.
- Have a defined exit strategy. Do you want to maintain your investments until retirement or sell in ten years? Timelines can be adjusted, but it’s important to have a plan of action.
- Conduct background checks on every potential tenant. When you find one that pays on time and maintains the property, do what you can to keep them, even if it means reducing your profits a small percentage.
- Remember, this is a business. Stick to the terms of the agreement. If you give tenants a little leeway, they will make it a habit to take as much as they can from you.
How and when to build a team
As previously mentioned, building a team is a matter of personal preference. With the right skills, knowledge, and time, much of your business can be run without assistance. When physical issues, such as roof replacement, electrical work, or plumbing come up, you will want to consider hiring a professional to tackle the problem. Many property owners welcome the peace of mind that comes with having a management company maintain their rentals. Additionally, a financial advisor, attorney, and/or respected insurance agent could prove a valuable asset to your team.
- National Rental Home Council
- American Rental Association
- How To Start A Rental Property Business Like A Pro
- How to Write a Rental Property Business Plan for Landlords
Have a Question? Leave a Comment!
How to start a rental property business in 14 steps
Real estate investing is a popular choice for entrepreneurs looking to create passive income and sustainable wealth. In particular, rental properties provide you the opportunity to create a diverse portfolio with multiple revenue streams. There are multiple ways you can approach a rental property business, but to rent out that first property, you’ll need to know how to start your business officially. Let’s take a look at the 14 steps you should follow to open your investment property business.
Can I start a rental property business with no experience?
You are not required to have a particular license to buy and sell a rental property. However, you will need to have a strong business sense and an in-depth understanding of real estate investing before you can confidently make both investment and property management decisions. You can go to school to learn this information or work directly with a mentor or other real estate-oriented professional who is willing to guide you through the process and teach you what you need to know.
1) Business plan
Now that you know you’re ready to start your rental property business, you’ll need a written business plan. A rental property business plan acts as both a map for you to stay on track as you build and grow your business and as a concrete document that proves to banks and investors why they should lend to or partner with you.
A strong business plan will have the following components:
- Executive Summary: A high-level overview of your entire business plan. What does success look like for you in this business, and how do you plan to reach that level of success?
- Industry Analysis: What is the state of the housing market? What insights can you glean from local real estate research? Where do you see investment opportunities?
- Competitive Analysis: Are there any direct competitors with your business, and how will you differentiate yourself?
- Marketing Plan: How will you source and secure quality tenants for your properties?
- Management: What is your plan for property management? Do you intend to work with a property manager, or do you plan to handle all maintenance and tenant activities on your own?
- Operations: How will you ensure that your properties are maintained in addition to the everyday operations of your business? Will you have offices? Will you hire staff members?
- Financial Plan: Do you have a clear understanding of how your proposed or intended rental properties will generate cash flow for your business? Will there be enough rental income to make your mortgage payment and then some? Do you have startup costs? What is your plan for continued growth and investment in additional properties over the next several years?
2) Business structure
As part of your business plan, you’ll also need to determine the right business model for you. There are multiple business structures you can set up for your rental property business. These are:
- Sole proprietorship
- Limited liability Company (LLC)
There are additional options within some of these categories. Review your choices carefully and select the business structure that’s best for your business goals.
3) Business name
Your business name will appear on your business cards, website, brochures, and any other marketing materials you use. A solid business name is:
- Clear, simple, and memorable
- Easy to say and spell
- Relevant to your type of business (for example, you could include the word “rental property” in your business name)
- In line with your brand
Use a business name generator to help you brainstorm. No matter which name you choose, make sure the matching website domain and social media handles are available.
4) Ideal clients
While it’s important to consider who you want to do business with when it comes to purchasing property, your ideal clients, in this case, are actually your tenants. If you could choose the perfect tenant to rent from you forever, who would they be? Consider the following questions when determining your ideal tenant type:
- Are they residential or commercial clients?
- What is their annual income or revenue?
- What do they do for a living, or what sort of business are they?
- Are they looking to become homeowners eventually, or do they only want to rent?
- Have they ever owned their own home before?
- What do they value in a rental property?
- Are they married? Single? In a relationship?
- Do they have children?
- Do they like to use their rental home, apartment, or business for parties or social events? How often?
- What social media platforms do they use?
You’ll continue to clarify who your ideal tenant is as you fill your rental property and see what type of person is truly the best fit. Hone your marketing strategy (which we’ll discuss later in this guide) to target your ideal client.
5) Niche, unique value proposition, and branding
Are you interested in filling your portfolio with a very specific type of property? If so, you have a niche. Some niche examples include:
- Vacation rental properties (such as Airbnb)
- Luxury rental properties
- Multi-family rental units
- Single-family homes
- Short-term rentals
You do not have to have a niche, but it can be useful if you identify a market gap or have specific deep knowledge of your selected property type.
Unique Value Proposition (UVP)
Unlike your niche, your UVP has less to do with the type of property you own and more to do with how you operate your business. What can you offer to your prospective tenants that's so compelling they feel they simply must reach out to learn more about your properties?
Branding for a rental property business includes defining who you are as a business and what your prospective or current tenants can expect from your properties. Your branding should include:
- Color palette
- Mission statement
- Managing style
- Ideal tenant type
- Property type and style
- Design aesthetic
- Rental packages and special offers
Ensure that your branding is cohesive not just in your marketing but also across all your rental properties.
Think of your services as what your tenants receive when they choose to rent from you. What are the perks of renting from you over a competitor’s property? What’s included in the rent? Is the management team responsive? These included services help to justify your pricing, so make sure they’re clearly promoted in your marketing.
You know how much location matters when making a rental property purchase. But, have you thought about your business location as well? Do you require an office location, or will you operate from your home? If you feel that leasing a space is your best option, work with a real estate agent. Realtors can help you find the right fit for your budget and needs.
Rental properties require a lot of maintenance and repairs to remain competitive in the market. You may find that your properties need additional fixtures, appliances, and repairs before they’re ready to rent out. You will need to work both the materials cost and the labor cost into your startup budget so that you can achieve a quality product without financial strain.
You will need to be able to qualify for a loan from a bank or other lender to finance the full amount of each of your properties, minus the down payment, which is paid out-of-pocket.
Your chosen bank will probably require that specific types of insurance coverage are in place before they lend to you. They will also want to see your business plan to understand in detail how you intend to pay off any loan they may give you.
Beyond the initial investment, recurring costs are also a factor in your overall budget. These can include property management fees, property taxes, legal and accounting fees, and more. Ensure that all these are accounted for in your business plan.
As a new real estate business owner, you must have certain small business insurance policies in place. This applies to all businesses. However, the exact type of insurance coverage needed changes based on the type of business you are in. As a rental property business owner, you’ll require a specific set of policies . Some of these policies may include:
- Workers' Compensation : If you have one or more employees, you are required to have workers’ comp. This form of insurance covers you if one of your employees becomes injured or sick at work. Securing workers’ compensation used to be a long process, but now you can purchase it online . Get a fast estimate of your workers’ comp premium with Huckleberry’s 60-second workers' compensation calculator .
- General Liability Insurance : Covers your business if you are ever sued for injury or property damage .
- Business Property Insurance : Protects your building in case of serious damage. This policy also applies to any fixed components of your building, such as permanently installed equipment. It does not cover removable items.
- Business Owner's Policy : A Business Owner’s Policy bundles several insurance policies together. Your Business Owner’s Policy may include general liability and business property insurance, among others.Find out your estimated business insurance expenses with a fast and free quote from Huckleberry.
11) Paperwork, licenses, permits, and accounts
You’re almost ready to rent out your property, but first, there’s some important administrative work to handle.
- Register your business name: Go through the Small Business Association (SBA) website to learn how to register your business name.
- Get your Employer Identification Number (EIN): Your EIN acts as a Social Security Number (SSN) for your business. An EIN gives you multiple benefits , so get yours ASAP.
- Secure your business license: Each state is different, so check with your state to see how to get your business license. Each property you rent may need its own business license, so read your state’s guidelines carefully.
- Open a business credit card and business bank account: A business bank account keeps your personal and professional finances separate—very important come tax time. In addition, a business credit card ensures that you can clearly show your business spending were the IRS ever to audit you.
Check with your local government for any other specific licensing requirements you must fulfill.
You will likely need to hire an employee of some kind, whether as a full-time, part-time , or contracted worker. When that time comes, you’ll need the proper paperwork. You can easily download essential hiring forms such as a W-4 and W-9 online. Remember that your employees are as much a reflection of your brand as any other part of your business. Hire wisely to ensure that your partnership with them provides a positive impact for all involved.
13) Marketing strategy
A well-designed marketing strategy will help you keep all your rental properties filled with quality tenants year after year. There are multiple ways you can reach your potential tenants. Let’s take a look at some of the most popular and effective marketing methods.
Your rental property website is often a potential tenant’s main destination when determining whether or not they want to reach out to you to schedule a tour or even rent on the spot. Make sure your website is fast, mobile-friendly, and built with the customer’s experience in mind. Slow load speeds, outdated information, and unintuitive search functionality will only deter your site’s visitors.
Work with a web developer, copywriter, and Search Engine Optimization (SEO) strategist to help you build a website that shows your rental properties in the best light possible.
Email marketing is a great way to follow up with potential tenants who may have submitted their information to learn more about a property but have yet to rent from you. Design a series of newsletters or marketing emails meant to educate and build trust. You can also advertise new property rentals as you have them. The more helpful your email marketing content is to your reader, the more likely they will want to work with you in the future.
Social Media Marketing
Social media allows you to promote your vacancies as well as your company. Build brand authority with great photography and helpful, informative captions. You can also add ways for interested parties to get in touch with you about a property.
Some major social media platforms to consider for your marketing strategy are:
Google My Business
Google My Business helps your company get found on—you guessed it—Google. This applies most specifically to Google local search but may also help you rank better nationally when paired with an effective SEO strategy. Register for a free account, enter your business information, and you’re set!
Word-of-mouth and referrals
When you find a great tenant, you want to keep them. What’s more, you probably want to find more tenants just like them. That’s where word-of-mouth and referrals come in.
Offer an incentive to current tenants if they refer more potential tenants your way. A common incentive is to offer a certain dollar amount off their rent the month after a referred tenant signs a lease. Remember that you can harness social media for word-of-mouth as well, so encourage the circulation of your “available for rent” posts on all your platforms.
14) Additional resources
The life of a rental property business owner is fast-paced and filled with a lot of hard work. Sometimes that can make life a little stressful . To help you stay grounded, focused, and growth-oriented along your real estate journey, check out these and other real estate investment resources.
- Small Business Monthly Checklist
- Investopedia’s List of 9 Essential Books for Rental Property Investors
- BiggerPockets: A popular networking site for real estate investors
- Property search engines such as Trulia and Zillow
Congratulations! You’ve made it to the end of our step-by-step guide, and you’re that much closer to starting your rental property business. At this rate, you’ll have your first rental property ready for renters in no time.
Cross “get insurance” off your rental property business to-do list with Huckleberry small business insurance
At Huckleberry , our mission is to make procuring quality rental property business insurance fast and simple. Snag a quick workers’ comp quote from us or see how you can get insured online in minutes .
Buy business insurance online in less than 5 minutes.
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Rental Properties Business Plan Template
Rental properties business plan.
You’ve come to the right place to create your Rental Properties business plan.
We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their rental property business.
Rental Property Business Plan Example
Below is a template to help you create each section of your Rental Properties business plan.
Noble Properties is a rental property agency in Seattle, Washington, that specializes in managing, renting, and leasing properties. Our mission is to provide luxury rentals that tenants can call home for years to come. Noble Properties rents out hundreds of homes across the Seattle area, including apartments, single-family homes, and trailers. To help prospective tenants find the perfect home, the company has created an online platform that allows them to search by their specific criteria (number of bedrooms, amenities, rent, etc.). We aim to be one of the most popular rental agencies in the area that customers can depend on again and again for their housing needs.
Noble Properties is founded and run by Joseph Pierce. He has worked in the industry for decades and has extensive knowledge of all aspects of the business. He will be in charge of most of the operations but will hire other staff to help with marketing, accounting, and managing the rentals.
Noble Properties offers a variety of rental properties for prospective tenants to choose from. Some of the options we provide include:
- 1-3 bedroom apartments
- Single-family homes
- Multi-unit buildings
- Short-term rentals
- Mobile homes or trailers
Noble Properties will target renters located throughout the Seattle area. Most renters are under the age of 40 and earn about the median income. This means that we will primarily market to younger demographics and those who earn around the local median income or more.
Noble Properties is led by Joseph Pierce, who has been in the rental property industry for 20 years. Throughout that time, he worked in various positions in local rental property agencies but is now eager to start a rental property business of his own. During his extensive experience in the rental property industry, he acquired an in-depth knowledge of the local area, local regulations, facilities, and the characteristics of different neighborhoods. He also has extensive experience in handling business management activities.
Karen Miller has been Joseph Pierce’s loyal administrative assistant for over ten years at his former rental agency. Joseph relies strongly on Karen’s diligence, attention to detail, and focus when organizing his clients, schedule, and files. Karen has worked in the rental agency industry for so long that she has a thorough knowledge of all aspects required to run a successful rental agency. She will help out with administrative tasks and some of the initial marketing efforts.
Noble Properties will be able to achieve success by offering the following competitive advantages:
- The founder, Joseph Pierce, has decades of extensive experience and knowledge of the industry that will prove invaluable for the company.
- The company will purchase rentals in popular areas around the city, putting our rentals in high demand.
- Noble Properties offers reasonable and affordable rates for all our rentals. Our pricing will be far more cost-effective than the competition.
Noble Properties is seeking $1,100,000 in debt financing to launch its rental property agency. The funding will be dedicated to securing initial rental spaces, securing an office space, and purchasing office equipment and supplies. Funding will also be dedicated toward six months of overhead costs, including payroll, rent, and marketing costs. The breakdown of the funding is below:
- Purchasing initial rentals: $600,000
- Office space build-out: $20,000
- Office equipment, supplies, and materials: $20,000
- Six months of overhead expenses (payroll, rent, utilities): $350,000
- Marketing costs: $50,000
- Working capital: $60,000
Who is noble properties, noble properties’ history.
After decades of working for other rental agencies, Joseph Pierce decided to launch an agency of his own. He conducted extensive research on the rental market in the Seattle area. This helped him determine the best spots to find in-demand rentals and how much he should rent them out for. He also did extensive marketing research to determine the best customer segments to market to. After conducting this research and finding a potential office location, Joseph Pierce incorporated Noble Properties as an S-Corporation.
Noble Properties’ operations are currently being run out of Joseph Pierce’s home office but will move to the office location once the lease is finalized.
Since incorporation, Noble Properties has achieved the following milestones:
- Developed the company’s name, logo, and website
- Determined rent/leasing and financing requirements
- Found a potential office location and signed a Letter of Intent to lease it
- Began recruiting key employees with experience in the rental homes/apartment industry
Noble Properties’ Products
The rental market is expected to continue to grow over the next five years. According to RentCafe, the average rent for a Seattle apartment is around $2,300 per month. This value is only expected to increase as the demand for apartments and other rentals skyrockets. Furthermore, Seattle’s vacancy rate is incredibly low and expected to decrease further, meaning there aren’t enough rentals to keep up with demand.
The growth is primarily driven by increasing housing prices. Now that housing prices have increased substantially, fewer and fewer people can afford to buy a home. Therefore, many people seek out rentals to live in since they are far more affordable.
Another factor that will help the Seattle rental market is the increasing population. More people are moving to the city, meaning the demand for homes and rentals will continue to soar. This will only push rental prices even higher, which will increase the local rental market’s value substantially.
This is a great market to start a rental agency in. By capitalizing on these trends, Noble Properties is expected to have great success.
Demographic profile of target market.
Noble Properties’ target market includes people of all demographics. We are open to offering rentals to people of all ages and groups as long as they can afford to pay their rent. From our initial market research, we expect most of our marketing efforts will target young adults, medium and high-income individuals, and families.
The precise demographics for Seattle, Washington, are:
Noble Properties will primarily target the following customer profiles:
- Young adults
- Individuals who earn the region’s median income or more
Direct and indirect competitors.
Noble Properties will face competition from other companies with similar business profiles. A description of each competitor company is below.
Leasing Inc. is a marketplace for finding rental homes and apartments in multiple metropolitan areas around the country. It originally started more than a decade ago as a networking tool for real estate agents, but today it is a fully searchable online database of homes for both sale and rent. Leasing Inc. offers ideal rental properties, all with different amenities that can best suit the tenant’s requirements. Leasing Inc.’s properties are well furnished with all modern accessories and priced competitively.
Rental Barn is the most visited rental agency website in the United States. Rental Barn and its affiliates offer customers an on-demand experience for selling, buying, renting, and financing with transparency and nearly seamless end-to-end service. The company provides multiple rental apartments according to the customer’s needs and requirements.
Seattle Properties is a local rental properties business that has dominated the market since 1982. The company manages and rents out hundreds of properties all across the city, including apartments, single-family homes, and mobile homes. All prices are competitive, and some rentals qualify for government programs to help low-income individuals. The company also utilizes a well-designed website to help prospective tenants find their perfect home based on rent, location, and accessories.
- The company will purchase rentals in popular areas around the city, making our rentals in high demand.
Brand & value proposition.
The Noble Properties brand will focus on the company’s unique value proposition:
- Offering homes/apartments for rent suited for families and working professionals.
- Offering a diverse range of rental homes in a prime location for a competitive rate.
- Providing excellent customer service.
The promotions strategy for Noble Properties is as follows:
Noble Properties will invest in professionally designed print ads to display in programs or flyers at industry networking events and relevant local establishments.
Noble Properties has designed a website that is well-organized and informative, and lists all our available properties. The website also lists the company’s contact information and other services it provides. We will utilize SEO marketing tactics so that anytime someone types in the Google or Bing search engine “Seattle rental properties” or “rentals near me,” Noble Properties will be listed at the top of the search results.
Noble Properties understands that the best promotion comes from satisfied tenants. The company will encourage its tenants to refer other individuals by providing economic or financial incentives for every new tenant produced. This strategy will increase effectiveness after the business has already been established.
Social Media Marketing
Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The company will use social media to develop engaging content that will increase audience awareness and loyalty. Engaging with prospective clients and business partners on social media platforms like Facebook, Instagram, Twitter, and LinkedIn will also help understand the changing customer needs.
The real estate industry fluctuates, and therefore, rental prices, for the most part, are usually out of a company’s control. However, Noble Properties will market its properties at a competitive rate to ensure we do not have vacant properties. We will also keep tight control of costs in order to maximize profits.
The following will be the operations plan for Noble Properties.
- Joseph Pierce will be the Owner and President of the company. He will oversee all staff and manage tenant relations. Jay has spent the past year recruiting the following staff:
- Karen Miller will serve as the Office Manager. She will manage the office administration, client files, and accounts payable. She will also handle much of the marketing efforts until the agency becomes large enough to hire a marketing team.
- Tim Johnson will be the Maintenance Director, who will provide all maintenance at the properties.
- Joseph will outsource professionals to handle the accounting and human resources aspects of the business.
- Joseph will also hire Rental Managers for the various properties as the agency continues to grow.
Noble Properties will have the following milestones completed in the next six months.
5/1/202X – Finalize contract to lease office space.
5/15/202X – Finalize personnel and staff employment contracts for the Noble Properties team.
6/1/202X – Begin moving into Noble Properties office.
7/1/202X – Finalize purchases of initial properties that will be rented.
7/15/202X – Begin networking and marketing efforts.
8/1/202X – Noble Properties opens its office and rentals for business.
Key revenue & costs.
Noble Properties’ revenue will come from the rent and deposits received from tenants.
The major costs for the company will be staff salaries and property maintenance. In the initial years, the company’s marketing spending will be high to establish itself in the market.
Funding Requirements and Use of Funds
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and to pay off the startup business loan.
- Number of Managed Properties Per Month: 10
- Average Rent Per Month: $2,300
- Office Lease per Year: $100,000
Income statement, balance sheet, cash flow statement, rental properties business plan faqs, what is a rental properties business plan.
A rental properties business plan is a plan to start and/or grow your rental properties business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your rental properties business plan using our rental properties Business Plan Template here .
What are the Main Types of Rental Properties?
There are a number of different kinds of rental properties , some examples include: Single family homes, Multi-family properties, or Short-Term Rental properties.
How Do You Get Funding for Your Rental Property Business Plan?
Rental Properties Businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding. This is true for a real estate rental business plan or a rental property business plan.
What are the Steps To Start a Rental Properties Business?
Starting a rental properties business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Rental Properties Business Plan - The first step in starting a business is to create a detailed business plan for a rental property that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your rental properties business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your rental properties business is in compliance with local laws.
3. Register Your Rental Properties Business - Once you have chosen a legal structure, the next step is to register your rental properties business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your rental properties business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Rental Properties Equipment & Supplies - In order to start your rental properties business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your rental properties business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
Learn more about how to start a successful rental properties business:
- How to Start a Rental Properties Business
How to start a rental property business: A comprehensive guide
- Annabelle Amery
- 12 min read
Owning rental properties can be a great way to generate passive income and build wealth over time. But it's not as easy as buying a few properties and collecting rent checks. There's a lot of work involved in managing tenants, maintaining properties and staying up-to-date on the latest laws and regulations.
In this comprehensive guide, we will walk you through the fundamental steps of starting a rental property business. Learn everything from creating your business plan to build your business website and spreading the word about your new venture.
What is a rental property business?
A rental property business is a business venture in which an investor purchases and manages one or more income-producing properties. These properties can have one or more units leased out to tenants in exchange for monthly rental fees. Rental property businesses can be operated by individuals, or they can be more complex operations involving multiple properties and team members.
Is your rental property a business?
Whether or not your rental property is considered a business depends on a number of factors, including:
Your level of involvement in the management of the property. If you're actively involved in managing the property, such as by handling maintenance requests, showing the property to prospective tenants and collecting rent, then your rental property is more likely to be considered a business.
The number of properties you own. If you own multiple rental properties, then your rental activity is more likely to be considered a business.
The amount of income you generate from your rental properties. If you generate a significant amount of income from your rental properties, then your rental activity is more likely to be considered a business.
If you meet all of the following criteria, then your rental property is likely to be considered a business:
You rent the property to earn a profit.
You work at the property regularly and continuously.
You provide significant services to your tenants, such as maintenance and repairs.
You have a significant investment in the property.
If your rental property meets all of these criteria, then you may be able to deduct certain expenses related to the property from your personal income taxes. You may also be able to claim certain tax credits, such as the qualified business income (QBI) deduction.
If you're not sure whether your rental property is considered a business, you should consult with a tax advisor.
Why should you start a rental property business?
Approximately 10.6 million in the U.S. declared rental income when filing taxes, with the average landlord bringing in $61,920 annually . Along with the financial benefits, there are many reasons to start a business in rental property and enter the real estate market.
Firstly, it allows you to create passive income with minimal daily involvement by generating consistent rental payments. You also have the potential for long-term wealth accumulation through property appreciation and the combo of cash flow and equity growth. On top of that, owning rental properties enables you to diversify your investment portfolio, providing stability and acting as a hedge against stock market volatility. There are also various tax advantages to consider, such as depreciation, mortgage interest deductions, property tax deductions and eligible expenses.
How to start a rental property business
To set yourself up for success, follow these steps to start your rental property business:
Define your business goals
Conduct market research
Create a business plan
Identify and acquire properties
Set up property management systems
Market and advertise your rental properties
01. Define your business goals
Determine your investment goals and strategy. Consider factors like property types (residential or commercial), location preferences, target tenant market and desired return on investment (ROI). Establish a clear vision for your rental property business.
02. Conduct market research
Thoroughly research your target market to identify areas with strong rental demand, favorable vacancy rates and potential for property appreciation. Analyze rental rates, property prices, local regulations and economic indicators. Evaluate the competition and your unique selling proposition to assess the viability of your rental business in the chosen market.
03. Create a business plan
Develop a comprehensive business plan that outlines your investment strategy, financial projections, marketing strategies, executive summary , property management processes and risk management strategies. A well-crafted rental property business plan serves as a roadmap for your rental property business and helps you attract potential investors or secure financing.
04. Secure financing
Determine your financing needs and explore how to raise money for your business . These may include traditional bank loans, private investors, partnerships, crowdfunding or using personal funds. Prepare a solid financial plan, including cash flow projections, expenses and potential return on investment, to present to lenders or investors. Once you’ve secured financing you’ll be able to register your business to make it official.
05. Identify and acquire properties
Once you have secured financing, start searching for suitable properties that align with your investment goals. Consider factors such as location, property condition, potential rental income and market appreciation. Conduct property inspections, perform due diligence and negotiate purchase prices.
06. Set up property management systems
Establish efficient property management systems to handle tenant relations, rent collection, property maintenance and legal compliance. Consider using property management software or hiring a professional property management company to streamline operations.
07. Market and advertise your rental properties
Develop a marketing strategy to attract potential tenants. List your properties on rental listing websites, utilize social media platforms and try networking with local real estate agents or relocation services. Create compelling property listings with high-quality photos, detailed descriptions and competitive rental prices.
How to write a rental property business plan
To write a rental property business plan, you need to consider the following sections:
Executive summary: The executive summary is a brief overview of your entire business plan. It should include your business goals, target market and competitive advantage.
Company description: The company description section provides more detail about your business, such as your business structure, ownership and services offered.
Market analysis: The market analysis section provides an overview of the rental property market in your area. It should include information about the demographic makeup of your target market, the supply and demand for rental properties, and the average rental rates.
Marketing strategy: The marketing strategy section describes how you plan to attract and retain tenants. It should include information about your target market, your marketing channels and your pricing strategy.
Management and operations: The management and operations section describes how you plan to manage your rental properties. It should include information about your team, your maintenance procedures and your tenant screening process.
Financial projections: The financial projections section provides an overview of your expected revenue and expenses. It should include information about your startup costs, your monthly operating expenses and your cash flow statement.
Exit strategy: The exit strategy section describes how you plan to exit your rental property business in the future. It could include selling your properties, passing them down to your heirs or exchanging them for other assets.
Once you have written your rental property business plan, you should review it with a trusted advisor, such as a lawyer or accountant. This will help you identify any potential problems and make sure that your plan is sound.
Here are some additional tips for writing a rental property business plan:
Be specific. Don't just say that you want to "make money." Instead, set specific goals, such as "I want to generate a 10% return on my investment within five years."
Be realistic. Don't overstate your income potential or underestimate your expenses.
Be flexible. Your business plan should be a living document that you can update as needed.
Seek feedback from others. Ask a lawyer, accountant or other experienced real estate investor to review your business plan and provide feedback.
With a well-written rental property business plan, you will be well on your way to success.
How much does it cost to start a rental property business?
The cost to start a rental property business can vary depending on a number of factors, including the type of property you buy, the location of the property and the condition of the property. However, there are some general costs that you can expect to incur, including:
Down payment: Most lenders will require you to make a down payment of at least 20% of the purchase price of the property.
Closing costs: Closing costs can range from 2% to 5% of the purchase price of the property.
Repairs and renovations: You may need to make some repairs or renovations to the property before you can rent it out.
Appliances and furniture: If the property is unfurnished, you will need to purchase appliances and furniture.
Marketing and advertising: You will need to market and advertise your property to potential tenants.
Landlord insurance: Landlord insurance will protect you financially in the event of a lawsuit or other covered event.
In addition to these upfront costs, there are also ongoing costs that you will need to budget for, such as property taxes, homeowner's association fees and maintenance and repairs.
According to a recent survey by the National Association of Realtors, the median down payment for a rental property purchase was 23% in 2022. The median closing costs were 2.1% of the purchase price. And the median amount spent on repairs and renovations was 1.2% of the purchase price.
Based on these estimates, you can expect to spend around 25%-26% of the purchase price of the property on upfront costs. So, if you are buying a $300,000 rental property, you can expect to spend around $75,000-$78,000 on upfront costs.
Of course, the actual cost of starting a rental property business will vary depending on your specific circumstances. It's important to do your research and create a budget before you start investing in rental properties.
Can a rental property business be profitable?
The profitability of a rental property business can vary significantly based on factors such as property location, market conditions, rental rates, expenses, and financing terms.
The "1% rule" is a general guideline often used by real estate investors to quickly evaluate the potential profitability of a rental property. It says that a rental property's monthly rental income should be at least 1% of the property's total acquisition cost. This is used as a quick initial screening tool to determine if a property might be worth the investment.
Here's how the 1% rule works:
1% Rule:** Monthly Rental Income ≥ 1% of Property Acquisition Cost
For example, if you're considering purchasing a rental property for $200,000, the monthly rental income should ideally be at least 1% of $200,000, which is $2,000.
Keep in mind that the 1% rule is a simplified guideline and shouldn't be the sole determining factor for making an investment decision. It's important to consider other factors such as location, market conditions, property management costs, financing terms, potential for appreciation, and the overall financial feasibility of the investment. The 1% rule can provide a quick initial assessment, a thorough analysis that takes into account all relevant factors is necessary to make informed investment decisions in the real estate market.
Properties that meet the 1% rule often have a higher likelihood of generating positive cash flow, where rental income exceeds expenses like mortgage payments, property taxes, insurance, and maintenance costs. However, markets with higher property prices and lower rental rates may make it challenging to find properties that meet the 1% rule while still being viable investment opportunities.
How to manage a rental property business effectively
Managing a rental property business requires effective systems, strong communication and ongoing attention to detail. More specifically, you’ll want to pay special attention to:
Tenant screening: Implement a thorough tenant screening process to ensure you select reliable and responsible tenants. Screen applicants' credit history, employment status and rental history, plus conduct background checks to minimize risks.
Lease agreements: Develop clear and comprehensive lease agreements that outline tenant responsibilities, rent payment terms, property rules and lease duration. Consult a legal professional to double-check that your lease agreements comply with local regulations and protect your interests.
Property maintenance and repairs: Regularly inspect and maintain your rental properties to keep them in good condition. Promptly address maintenance requests and conduct repairs as needed. Establish relationships with reliable contractors or property maintenance teams to ensure efficient service.
Rent collection and financial management: Establish streamlined rent collection processes. Clearly communicate rent payment methods and due dates to tenants. Utilize property management software or online platforms to track rent payments, generate financial reports and monitor cash flow.
Legal compliance: Stay informed about local and national rental regulations, fair housing laws and landlord-tenant rights. Make sure that your rental property business complies with these laws to avoid legal issues or disputes. Speak with legal professionals or local housing authorities when needed.
Regular communication: Foster good tenant relations through clear and open communication. Respond to inquiries or concerns promptly, provide regular updates or newsletters and address issues professionally and efficiently. Good communication builds trust and reduces conflicts.
How to promote your rental property business
As you’re looking to market your business, you’ll need to make sure that your brand's look and feel is professional. Consider things like how to name a business effectively so that your audience remembers you. If you’re struggling, you could use a business name generator . You’ll also need to design an eye-catching logo. Use a logo maker and/or check out these construction logo ideas for a little inspiration. Once you’re happy with your branding, it’s time to get promoting.
Create a professional website: Make a website for your rental property business. You can use website builders like Wix to showcase your properties, provide property details, highlight amenities and allow prospective tenants to contact you easily. Note that in 2022, renters used mobile devices (74%) to research rental properties, so you’ll want to ensure that your site’s mobile-friendly.
Optimize online listings: List your rental properties on popular rental listing websites like Zillow, Apartments.com or Rent.com. Optimize your listings with high-quality photos, detailed descriptions and competitive rental prices to attract potential tenants.
Leverage social media: Utilize social media platforms like Facebook, Instagram or LinkedIn to promote your rental properties. Create engaging content, share property photos or virtual tours and interact with potential tenants. Consider running targeted ads to reach your desired audience.
Network with local real estate agents: Build relationships with local real estate agents who can refer potential tenants to your rental properties. Offer incentives or commissions for successful referrals to encourage collaboration.
Offer incentives and referral programs: Attract tenants by offering incentives like move-in specials, discounted rent for the first month or referral programs. Encourage satisfied tenants to refer their friends, family or colleagues to your properties.
Showcase tenant testimonials: Collect testimonials from satisfied tenants and showcase them on your website, social media platforms or promotional materials. Positive reviews and testimonials can instill confidence in potential tenants.
Enhance curb appeal: Maintain attractive and well-maintained exteriors for your rental properties. Enhancing curb appeal through landscaping, exterior upgrades or fresh paint (see our guide on how to start a painting business ) can attract potential tenants and create a positive first impression.
In summary, here are the top benefits of starting a rental property business:
Cash flow: Rental properties generate rental income that can provide consistent cash flow. With proper management and strategic property selection, you can ensure a positive cash flow that covers expenses and generates profit.
Appreciation: Real estate properties have the potential to appreciate in value over time. As the value of your properties increases, so does your equity, allowing you to build wealth through appreciation.
Equity build-up: Each mortgage payment made by tenants helps to build equity in the property. Over time, as the mortgage balance decreases, your ownership stake increases, leading to increased wealth and financial stability.
Control and flexibility: As the owner of rental properties, you have control over property selection, rental prices, tenant screening and property management. This provides you with flexibility in decision-making and the ability to shape your business according to your goals.
Challenges of running a rental property business
While starting a rental property business has its advantages, it can come with its fair share of challenges. Here are some common challenges to be aware of:
Initial capital investment: Acquiring rental properties requires a significant upfront investment. Costs include property purchase, down payment, closing costs, property improvements and potentially renovations or repairs. Securing financing or having access to sufficient startup capital is crucial.
Property management: Managing rental properties involves various responsibilities, such as screening tenants, collecting rent, property maintenance, addressing tenant concerns and ensuring legal compliance. Effective property management requires time organization and problem-solving skills.
Tenant relations: Dealing with tenants can present challenges, including late rent payments, property damage, tenant turnover and potential conflicts. Building good tenant relationships and addressing issues promptly are key to maintaining a successful rental property business.
Market fluctuations: Real estate markets can experience fluctuations and cyclical patterns. Economic downturns, changes in demand or local market factors can affect rental rates, property values and vacancy rates. Staying informed about market trends and business cycle and adjusting your strategies accordingly is essential.
Features of successful rental properties
Successful rental properties typically have the following features:
Location: The property is located in a desirable area with good amenities, such as schools, shopping and public transportation.
Condition: The property is in good condition and well-maintained.
Price: The property is priced competitively and offers good value for tenants.
Target market: The property is appealing to a specific target market, such as families, students or professionals.
Management: The property is well-managed, with a system in place to handle maintenance requests, tenant screening and rent collection.
In addition to these general features, there are some specific features that may be more important for certain types of rental properties. For example, vacation rentals may need to have certain amenities, such as a pool or hot tub, in order to be successful. Commercial rental properties may need to be located in a high-traffic area with plenty of parking.
Here are some additional features that can make rental properties more successful:
Energy efficiency: Energy-efficient properties save tenants money on their utility bills, which makes them more attractive.
Security features: Security features, such as alarm systems and security cameras, can make tenants feel safer and more secure.
Pet-friendly policies: Pet-friendly rental properties are in high demand, as many people have pets.
Outdoor spaces: Outdoor spaces, such as patios, balconies and yards, are a valuable amenity for tenants.
Smart home features: Smart home features, such as thermostats and door locks, can make rental properties more convenient and efficient for tenants.
By investing in a property with these features, you can increase your chances of success as a landlord.
Example of rental property businesses built on Wix
Need a little extra inspiration? Check out these rental property businesses on Wix.
TurnkeyRents has been managing rental homes in Columbus, Indiana since as early as 1994. The company offers newly renovated homes, and provides its application docs and Airbnb calendar right from its Wix site.
Rent DIICO provides a simple landing page for viewing all of its available properties in Southern California. Rental units include apartments, studios and bungalows in some of the hottest parts of town.
Looking to start your business in a new state?
If you're eager to launch your rental business in a particular state, check out these helpful articles:
Start a business in Pennsylvania
Start a business in Connecticut
Start a business in Texas
Start a business in New York
Start a business in Arizona
Start a business in Tennessee
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How to build a website from scratch in 11 steps (for beginners)
How to start a business in 14 steps: a guide for 2024
How to create a rental property business plan
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Rental Property Business Plan
A rental property business is a great way of earning a passive income. It can help you have great finances if you go about it in the right way.
The rental property market stood at a size of 174.2 bn dollars in the US in 2021. And with the subsiding pandemic isn’t about to shrink any time soon.
Now, if you are planning to become a landlord, you might need just one thing before you start your business. A business plan.
A business plan would become a guide in your business journey. It would also make your journey a less difficult and more successful one. So, if you are ready to start your rental property business , read on to find out all about a rental property business plan.
How can a rental property business plan help you?
A rental property business plan can help you have a clear goal, a well-defined business model, and strategies that work. It can also help you navigate smoothly through roadblocks in your journey and steer clear of costly business mistakes.
Also, putting your idea on paper makes it look more real and clear. Moreover, a business plan also comes in handy while you explain your ideas to your collaborators and investors.
All in all a business plan will help you figure out your way around obstacles through rigorous analysis and strategic planning. This brings us to our next section, how to write a business plan.
Rental Property Business Plan Outline
This is the standard rental property business plan outline which will cover all important sections that you should include in your business plan.
- Business Objectives
- Mission Statement
- Guiding Principles
- Keys to Success
- Start-Up Summary
- Location and Facilities
- Products/Services Descriptions
- Competitive Comparison
- Market Size
- Industry Participants
- Main Competitors
- Market Segments
- Market Tests
- Market Needs
- Market Trends
- Market Growth
- SWOT Analysis
- Strategy Pyramid
- Unique Selling Proposition (USP)
- Competitive Edge
- Positioning Statement
- Pricing Strategy
- Promotion and Advertising Strategy
- Marketing Programs
- Sales Forecast
- Sales Programs
- Exit Strategy
- Organizational Structure
- Steve Rogers
- Linda Rogers
- Management Team Gaps
- Personnel Plan
- Important Assumptions
- Start-Up Costs
- Source and Use of Funds
- Projected Profit and Loss
- Projected Cash Flow
- Projected Balance Sheet
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After getting started with Upmetrics , you can copy this rental property business plan example into your business plan and modify the required information and download your rental property business plan pdf and doc file. It’s the fastest and easiest way to start writing your business plan.
How to write a rental property business plan?
Before writing a business plan, it is always good to ask yourself a few questions. It would surely make the process shorter and easier.
You should think about the following questions:
- What do you wish to achieve with your business?
- Who is your target audience?
- How would your business model work?
- What are your sources of funding?
- What would be your marketing strategy and so on?
All these questions would help you understand what you are getting yourself into. After that, you can start writing a business plan that focuses on all the different aspects of your business.
You can easily write such a plan either by using a premade template on the internet or through an online business plan software that’ll help you write a flexible and ever-changing plan.
What to include in a rental property business plan?
This section would give you a brief overview of the segments you can include in your business plan to make it a well-rounded one. They are as follows:
1. Executive Summary
The executive summary section contains a precise summary of all that your business stands for. If written well, it can help your business in getting funded. As it is mostly the only page an investor would read.
Professionals frequently suggest that this section should be written at the very end while writing your business plan, even if it is the first page. This helps you in summing up your business ideas properly.
2. Company Description
This section would consist of all the information about your business including its location, the services you offer, and your team.
It would also have information about your company’s history and its current position in the market. You can also include information about the projects you have worked on in the past.
3. Market Analysis
This is one of the chief sections of any business plan. It helps you understand what you are getting yourself into.
In this section, write down everything you can find out about the market. Include your target market, ways of reaching out to them, your market position, etc. Also, it is a good practice to include competitive analysis and take note of what your direct and indirect competitors are doing.
4. Marketing Strategy
While market analysis helps you in understanding the market, a marketing strategy helps you while getting into the market.
While formulating a marketing strategy, the most important thing is to have your target audience and market position in mind. Besides, keep in mind that your branding campaign should resonate with the client base you plan on serving.
5. Organization and management
This section includes information about the functioning aspects of your firm as well as about your team.
Include the roles and responsibilities of your team members as well as the progress they are making in their work.
If you write this section clearly and precisely, you’ll be able to identify the gaps you have in your team and your management system. This helps you in resolving those issues on time.
6. Financial Plan
This is one of the most crucial aspects of your business plan. More so in the rental property business. Planning your finances early on saves you from having financial troubles later on.
A financial plan section includes everything from your financial history, funding options, and requirements to projected cash flow and profits.
Download a sample rental property business plan
Need help writing your business plan from scratch? Here you go; download our free rental property business plan pdf to start.
It’s a modern business plan template specifically designed for your rental property business. Use the example business plan as a guide for writing your own.
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Rental property business plan summary
In conclusion, a good business plan can help you have good finances, a proper marketing strategy, a well-managed company and team as well as clear business goals.
Especially, in the rental property business, planning the flow and structure of your business as well as your finances can take you a long way.
A rental property business depends highly upon well-managed finances and strategies. Planning your business is necessary to make it a good source of passive or primary income.
Moreover, it also makes the process of carrying out your business easier and smoother. So, if you are ready to start your rental property business, go ahead and start planning.
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About the Author
Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more
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Rental Properties Business Plan Template [Updated 2023]
Rental Properties Business Plan Template
If you want to start a Rental Property business or expand your current Rental Property business, you need a business plan.
The following Rental Property business plan template gives you the key elements to include in a winning Rental Properties business plan.
You can download our Business Plan Template (including a full, customizable financial model) to your computer here.
Rental Property Business Plan Example
Below are the key sections of a successful rental property business plan. Once you create your plan, download it to PDF to show banks and investors.
I. Executive Summary
[Company Name] is a rental property agency in [location name] that specializes in managing, renting and leasing properties. [Company Name] rents homes in dozens of markets across the country and has an online platform that allows customers to search by their specific criteria (number of bedrooms, region, amenities, etc.) to find a property that’s right for them in their preferred location.
Products Served/Service offering
The Company offers a variety of rental properties, listed below:
- 1-3 bedroom apartments
- Single family homes
- Multi-unit buildings
- Short-term rentals
- Rental of mobile homes or trailers
[Company Name] will primarily provide its offerings to local renters, students and local professionals. The demographics of the customers are given as below:
- First time renters-29%
- Young adults-21%
- Perma – renters-16%
- Middle income boomers-11%
[Company Name] is led by [Founder’s name], who has been in the rental property industry for [x] years. During his extensive experience in the rental property industry, he [founder] acquired an in-depth knowledge of the local area, local regulations, facilities, and the characteristics of different neighborhoods. He also holds rich experience in handling business management activities (i.e., staffing, marketing, etc.).
[Company Name] is qualified to succeed due to the following reasons:
- There is currently a high demand for rental property services in the community. In addition, the company surveyed the local population and received highly positive feedback pointing towards an explicit demand for the products, supporting the business after launch.
- The Company’s online marketplace offers a high-volume traffic area and will thus be highly convenient to a significant number of residents living anywhere.
- The management team has a track record of success in the rental property business.
- The rental property business has proven to be a successful industry in the United States.
[Company Name] is currently seeking $370,000 to launch its rental property business. Specifically, these funds will be used as follows:
- Website design/build and startup business expenses: $120,000
- Working capital: $250,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
II. Company Overview
Who is [company name].
[Company Name], located in [insert location here], is a rental property agency focusing on providing short-term and long-term rentals, as well as leased properties to the local community. [Company Name’s] rental properties have a clean and modern appearance that appeals to the current renter’s market. The [Company]’s properties will be fully furnished and include high-end technology and modern accessories.
[Company Name] is owned by [Founder’s Name]. While [Founder’s Name] has been in the rental property industry for some time, it was in [month, date] that he decided to launch [Company Name]. He evaluates that the growing number of students, working professionals, and overseas relocations create a need and expects growth in the country’s rental property market.
[Company Name]’s History
Upon surveying the local customer base and finding the potential retail location, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].
[Founder’s Name] has selected an initial office location and is currently undergoing due diligence on each property and the local market to assess the most desirable location for additional offices.
[Company’s Name] operations are currently being run out of [Founder’s Name] home office.
Since incorporation, the company has achieved the following milestones:
- Developed the company’s name, logo, and website
- Determined rent/leasing and financing requirements
- Began recruiting key employees with experience in the rental homes/apartment industry
[Company Name]’s Products
Iii. industry analysis.
You can download our Rental Property Business Plan Template (including a full, customizable financial model) to your computer here. The market size of the rental property industry in the US increased immensely, and the market size, measured by revenue, of the rental property industry, is $174.2 billion. Rental income units are an increasingly important part of the US housing market. The return on expenditure in the property market is much better than in many economic sectors.
With tenant demand in the US increasing last year, this is thought to be related to tenants looking to downsize or move further out to save money. Most rental housing in the US is developed, financed, and owned by a diverse group of private, for-profit companies.
As the economy of the US began to grow and demand for rental apartments rose, industry revenue grew at a rapid pace, hence opening vast opportunities for rental property companies.
Another obvious trend that is common with rental property companies in the US is that most of them are improvising on more means of making money in the apartment rental industry; they are also acting as property developers and home staging agents, amongst other things.
IV. Customer Analysis
Demographic profile of target market.
[Company Name’s] target market include people of all demographics. The market [Company Name] serves is value-conscious and desires high comfort and basic amenities geared towards families, students, and the working population.
The Company will primarily target the following three customer segments:
- High-Income Individuals: The Company will attract individuals with higher incomes who are looking for a rental property with modern furnishings and technology.
- Families: The Company will attract families looking for turn-key properties that are furnished and offer an array of amenities to suit their busy family life.
- Working Professionals: [Company name] is located along a well-traveled commute route, by offering a smart property to working professionals with walking distance (not more than 10 minutes) to a means of transport.
V. Competitive Analysis
Direct & indirect competitors.
Leasing Inc Leasing Inc is a marketplace to find rental homes in the country. It originally started more than a century ago as a networking tool for real estate agents, but today it is a fully searchable online database of homes for both sale and rent. Leasing Inc offers an ideal rental property with different amenities that can best suit the customer’s requirements. Leasing Inc’s properties are well furnished with all modern accessories.
Rental Barn Rental Barn is the most visited real estate website in the United States. Rental Barn and its affiliates offer customers an on-demand experience for selling, buying, renting, and financing with transparency and nearly seamless end-to-end service. The Company provides multiple rental apartments according to the customer’s needs and requirements.
Homewood Properties Homewood Properties is a leading digital marketing solutions company that empowers millions nationwide to find apartments and houses for rent. Customers can click on the items that are important to them, from hardwood floors to walk-in closets, and select the property which they are looking for according to their needs.
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Client-oriented service: [Company Name] will have a full-time sales manager to stay in contact with clients and answer their everyday questions. [Founder’s Name] realizes the importance of accessibility to his clients and will further keep in touch with his clients through newsletters.
- Robust clientele base: Another possible competitive strategy for winning the competitors in this particular industry is to build a robust clientele base and ensure that the company’s properties are top-notch and trendy. The Company is well-positioned, key members of its team are highly competent, and can favorably compete with some of the best players in the industry.
- Management: The Company’s management team has X years of business and marketing experience that allows them to market and serve customers in an improved and sophisticated manner than the competitors.
- Relationships: Having lived in the community for xx years, [Founder’s Name] knows all leaders, newspapers, and other influencers, including the local leaders who fought the [Competitor] opening xx years ago. It will be relatively easy for the company to build branding and awareness of the rental property industry.
VI. Marketing Plan
The [company name] brand.
The [Company Name] brand will focus on the company’s unique value proposition:
- Offering homes/apartments for rent suited for families, students, working professionals, landowners, foreign investors, and international migrants.
- Offering a diverse range of rental homes in a prime location.
- Providing excellent customer service.
[Company Name] expects its target market to be students, international migrants, the working population, families mainly from surrounding locations in the [Location]. The Company’s promotions strategy to reach these individuals includes:
Phone Prospecting [Company Name] will assign salespeople to contact and work with clients to help them buy, sell or rent real estate properties. Salespeople will use their in-depth knowledge of the real estate market to help clients find rental properties and execute all the required formalities.
Advertisement Advertisements in print publications like newspapers, magazines, etc., are an excellent way for businesses to connect with their audience. The Company will advertise its offerings in popular magazines and news dailies. Obtaining relevant placements in industry magazines and journals will also help in increasing brand visibility.
Public Relations [Company Name] will hire an experienced PR agency/professional(s) to formulate a compelling PR campaign to boost its brand visibility among the target audience. It will look to garner stories about the company and its offerings in various media outlets like newspapers, podcasts, television stations, radio shows, etc.
Referrals [Company 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 effectiveness after the business has already been established. Additionally, [company name] will aggressively network with useful sources such as home contractors, real estate development companies, and businesses. This network will generate qualified referral leads.
Social Media Marketing Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The Company will use social media to develop engaging content that will increase audience awareness and loyalty. Engaging with prospective clients and business partners on social media platforms like Facebook, Instagram, Twitter, and LinkedIn will also help understand the changing customer needs.
Part of the [Company Name’s] business strategy is to ensure that it will work within the budget of its clients to deliver excellent properties. The real estate industry fluctuates and therefore, rental prices, for the most part, are usually out of a company’s control. However, the company will market their properties at a competitive rate to ensure they do no have vacant properties. They will also keep a tight control on costs in order to maximize profits.
VII. Operations Plan
To execute on [Company Name]’s business model, the company needs to perform many functions, including the following:
- General & administrative functions including legal, marketing, bookkeeping, etc.
- Hiring and training staff
Service and Operations Functions
- Rental property maintenance
- Website maintenance, updates, and bug-fixing
- Ongoing search engine optimization
VIII. Management Team
Management team members.
[Company Name] is led by [Founder’s Name], who has been in the rental property business for xx years. He has worked in the industry most recently as a [Position Name] and has held various different positions in the management chain over the last xx years. As such, [Founder] has an in-depth knowledge of the rental property business, including operations and business management.
[Founder] has also worked as a real estate consultant on a part-time basis over the past xx years.
[Founder] graduated from the University of ABC and has done Master of Professional Studies in Real Estate.
[Founder] will serve as the [Position Name]. In order to introduce the rental property business, the company needs to hire the following personnel:
- Real estate agent (should have real estate sales experience in residential and commercial property)
- Property Manager
- Marketing and Sales Executive
- Part-Time Bookkeeper (will manage accounts payable, create statements, and execute other administrative functions)
- Customer Service Manager
IX. Financial Plan
Revenue and cost drivers.
[Company Name]’s revenue will come from the renting properties. The major costs for the company will be staff salaries and property maintenance. In the initial years, the company’s marketing spend will be high to establish itself in the market.
Capital Requirements and Use of Funds
[Company Name] is currently seeking $370,000 to launch its rental property business. The capital will be used for funding capital expenditures, workforce costs, marketing expenses, and working capital. Specifically, these funds will be used as follows:
5 Year Annual Income Statement
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Vacation Rental Business Plan: 15 Steps for Success (Free Template)
Investing in a vacation rental business isn’t a decision that’s made lightly. There are many factors to consider; however, as the short-term rental industry continues to grow , 2023 could be the perfect time to do so.
The success of any short-term rental business will depend on having actionable goals and clear objectives based on thorough market research, whether you’re a newbie or an experienced property investor.
It’s crucial to create a strategic vacation rental business plan before you hand over a deposit or receive the keys. A viable business and management plan will help you identify the risks and prepare you for the challenges ahead.
Don’t see the form to download our Business Plan? Click here .
In this article, we look at what a business plan is, give you samples and templates to use, and analyze the 15 steps your vacation rental business plan needs to help you get started.
What is a vacation rental business plan?
Simply put, your business plan is an overarching set of rules, goals, and frameworks to help you make decisions for your new business and its future.
Not only will a vacation rental business plan help you define your strategy, but you can repeatedly refer back to it to ensure you are going in the right direction.
Why do you need a business plan for your vacation rental property?
Vacation rental owners are eager to hit the ground running when they buy their first properties – who wouldn’t be? Any vacancy or downtime on the property means more money that’s coming out of your pocket. A vacation rental business plan will guide you through the initial steps and beyond, helping you maximize your profit and success as a host.
Beyond just making money, having a good business plan for your vacation rental will allow you to measure success and identify areas for improvement accurately. For example, it will help you focus on key metrics, such as your budget, local market insights, and expansion opportunities.
What’s the secret to a good short-term rental business plan?
It’s all about timing. Writing a business plan before buying the rental home is advisable, so you can truly judge if it is a worthwhile investment and business venture. Remember that a vacation rental is no small project, so before being strapped with $200,000+ of debt, make sure the ends justify the means by guaranteeing a secure investment through a well-thought-out business plan.
If you want to succeed with your business, we also recommend asking the experts; those who already have a thriving and profitable business in the rental market and those who work daily with rental owners worldwide.
That’s exactly what we did to write this article. We contacted Antonio Bortolotti , Cynthia Chan and Karen Spencer – all professionals in the field who are ready to get you through your business plan.
We asked them a few questions to help you craft the perfect vacation rental business plan template.
What should my vacation rental business plan include?
Knowing what to include in your strategic plan can be confusing for those venturing into business for the first time.
We want to make things easier for budding vacation rental entrepreneurs, so below, you’ll find the 15 steps to help you succeed.
You can follow this template with sample questions and example answers to make it easier to understand how to create your short-term rental management and business plan.
Step 1. Executive summary
For people outside Fortune 500 companies, writing an ‘executive summary’ can be a bit scary. However, it’s a lot simpler than you may think!
When you go to a bookstore searching for a new book to buy, you usually read the synopsis on the back to get a short, comprehensive idea of what it’s about, right? That’s exactly what an executive summary is.
It’s just a few sentences that summarize your vacation rental business and includes all the essential information you want to get across. This is so that anyone can read the first page of your plan and know, at a glance, what your business entails.
Start by asking yourself the famous five W’s: Who? What? Where? When? Why? This will ensure you include the key details.
Ask yourself the following questions:
Where is my vacation house located?
- Is it by the beach?
- Is it in the middle of the city?
- Is it in the countryside?
What is it?
- Is it a family vacation home?
- Is it suited to business travelers ?
- Is it a glamping accommodation ?
Who is it for?
- Large groups of friends?
When is it best to stay at my rental?
- Is it a summer rental?
- Is it suitable all year round?
- Is it perfect for winter vacations ?
Why do you have this property?
- Is this a spare room you’re renting out for extra cash?
- Is this to top up your pension if you’re retired?
- Is this your main form of income?
Of course, you do not need to follow this structure, but this will help you outline what information you would like to include in your executive summary, which you can then rewrite to make sure it sounds professional and eye-catching to the reader.
Note: If you are still unsure about the details of your Executive Summary, feel free to do it at the end of your business plan – it’s a case of saving the best until last!
Step 2. Business goals
Your executive summary is going to give you a broad overview of where your business is going, but the goals section will help to further solidify this vision. Goals are what help you to set markers for what success in your business looks like.
Are you satisfied with a couple of bookings a month, or are you expecting a full reservation calendar by the end of the year? You’ll need to set goals to help pin this down.
It might sound elementary, but it will help your business succeed.
Is your business goal Smart? Is it Measurable? Attainable? Relevant? Time-based? Setting good goals is the basis for any successful vacation rental business plan.
Step 3. Value proposition
As with any business, you’ll need to state why customers are going to choose your business. It’s difficult to take yourself out of the equation when evaluating your business. After all, you’ve poured your blood, sweat, and tears into this project, so why wouldn’t guests choose you?
No amount of effort is enough if it’s not adding any value to your vacation rental. Consider how your vacation rental will provide a guest experience that the other properties in your area simply can’t provide.
Step 4. Company analysis
In this section, you should aim to explain the Unique Selling Points (USP) of your new vacation rental business, outlining the unique characteristics and offerings it will bring to the existing market.
Ok, but how?
Performing a short analysis of your company and finding your USP is much easier than you think. All it takes is a few simple questions to figure out how you’re different (and better) than other rental properties out there. After all, once you are confident in your strengths, your guests will be, too!
Here are a few examples:
Is it better than others because of its location?
- Is it close to the beach?
- Main public transport lines?
- Is it off-the-grid?
Is the price of your accommodation better?
- Are you the cheapest accommodation around?
- Are you the best value?
- Do you offer discounts at certain times of the year?
Are the interiors of your property different or better than the rest?
- Do you offer a cozy, rustic getaway?
- Do you offer a fireplace where a family can sit at night?
- Is it a themed vacation rental ?
Step 5. Industry analysis
If you want to be successful in the rental business industry, you’ll need to be strategic and competitive in your company management plan. So, this section is where you state some key facts about current trends and expectations.
One of the ways to do this is by carrying out an industry analysis – this is basically looking at other vacation rental businesses and evaluating them.
This will help you develop a successful business strategy and ensure you’re the owner that comes out on top. After all, knowledge is power!
Here are some sample questions that will help start your industry analysis:
What do vacation rentals near me charge per night?
- Would you class it as affordable or good value?
- Is it less than $50 per night? Or Is it more than $300?
- Think about the figures you come up with in relative terms, weighing up the value of what the business is offering against the price they charge – this will help you start to price competitively.
Who is their target audience and clientele?
- Are they families?
- Couples looking for a romantic break?
- Do they target students and school groups who need large but basic accommodations?
Are they luxury units or more basic rentals?
- Are they upmarket rentals in the most expensive parts of your area?
- Or are they modest vacation home rentals that students could afford?
- Do the rentals tend to fall in one end of the price range, leaving a gap in the market?
Are they self-catered or Bed & Breakfast?
- Do they offer a light breakfast?
- Or do they offer a breakfast buffet?
What websites/agencies do they use for bookings and advertisements?
- Are all your competitors advertising on Airbnb, TripAdvisor, etc.?
- Do they collaborate with local tourism agencies?
- Are they all missing out on a popular booking website that only you know about?
“I recommend owners to focus on profit per booking, not occupancy rates. We’re in it to make money, not fill as many nights as possible (that comes next). We could all be 100% full if we undervalued what we were offering. That doesn’t make good business sense. Be prepared to spend more when you first start out, to bring a quality product to the market – you’ll soon reap the rewards mid-term this investment in your future business will bring.” – Karen Spencer
Step 6. Customer analysis
Your customers – or rather, your guests – are how you are going to make your money. That’s why it’s important to understand and target them properly. In your plan, create different buyer personas based on the types of guests you want to attract.
This is like a profile of your ideal customer, from age to income. You should try to make it as detailed as possible because it will help your business grow later.
These buyer personas will be used repeatedly in all aspects of your business to help you achieve more bookings.
People say that the customer is always right – but if you truly get to know your customers and what they want, you can ensure that you and your business are always right.
A customer analysis is just getting to know your customers and what they want and need from a rental property and a vacation.
Here are some key questions you should ask yourself about your ideal guest:
What’s their name?
- This may seem silly to name a fictional person, but it will bring your customer analysis to life and help you imagine the buyer persona.
What do they work as?
- Is he/she a high-flying banker?
- Is he/she a medical professional?
- Is he/she involved with a local school?
What age are they?
Do they have a family?
- No, they are single.
- Yes, only one child.
- Yes, several children.
Keep going with questions like this until you’ve built an entire profile of the person, which will then help you understand their values and spending habits.
Sometimes old cliches can be true – if you fail to prepare, you prepare to fail! Through this, you’ll be able to understand common complaints you will face, likes and dislikes they have in a property rental, and amenities the travelers will expect to find within the property.
Step 7. Competitive analysis
As well as focusing on your business, one element of your vacation rental business plan is conducting competitor research.
Take a look at the market to find your direct competitors and analyze them to see how your business can thrive.
Competitive analysis is similar to industry analysis, but this time you’re going to focus on your immediate competitors rather than the industry as a whole.
For example, if your short-term rental is a house by the beach, your direct competitors would be other accommodation providers on the beach.
With competitive analysis, you want to look at the people who may win a booking over you and use what you find to put yourself on top.
How much are my competitors charging per night?
- Competitor 1 – $100
- Competitor 2 – $150
- Competitor 3 – $200
- Using this information, you may decide to drop your prices below $100 to become the cheapest option among your competitors and increase your booking rates.
What standard of accommodation do they offer?
- Are they all standard camping sites?
- Or are they high-end units?
- Are they somewhere in between, suitable for most travelers?
Do they offer airport transfers/pick-up service?
- Yes, but for a very high price.
- Yes, and for a reasonable price.
Do they offer a wide range of amenities in the house?
- No, most don’t even offer WiFi.
- Yes, some offer basic things like a washing machine and television.
- Yes, all offer basic amenities, and some even include luxury amenities (like a swimming pool or gym).
Step 8. Operations plan
The operations plan is quite simply, an insight into how you are going to run your new business on a day-to-day basis.
It will consider whether you will hire any staff, what standards you will set, and how you will keep track of inventory and other administrative duties.
This will be one of the most straightforward parts of your business plan; chances are, you already have all of this planned.
Here are a few helpful prompts and examples in case you get stuck:
Am I going to hire any staff?
- No, I’m only renting out one room in my home, which I can do myself.
- Yes, I’m renting out several large apartments, and I have a separate, full-time job.
- No, my partner and I will do the work together.
Who is going to clean the rentals between guests?
- A cleaning agency?
- A neighbor?
Do I need to hire an accountant to help me handle the finances of my business?
- No, I’m comfortable dealing with all of those things.
- Yes! I don’t know the first place to start when dealing with taxes or business records.
Who will deal with bookings and customer complaints?
- Myself, with only one room it will be very manageable.
- I will hire an assistant to help with all of this administration stuff, I won’t have time!
- My daughter/son, it will be a good part-time job for them to give them an allowance.
- To keep things simple, you can also use software such as our own Lodgify vacation rental booking system and channel manager tool.
Step 9. Marketing plan
Explain which strategies you have decided will be best to use when targeting your key markets to achieve bookings.
Think about both online and offline marketing, as well as any campaigns or promotions you plan to run externally.
Your marketing plan is just how you’ll advertise your business to customers and how you’ll generate bookings. This is when your buyer persona (which you created earlier) will come in handy.
If you know the people you’re trying to target, you’ll know what websites they use and what type of marketing will be suitable for them.
Your marketing strategy can be really diverse and varied. For example, you could use several online marketing strategies like Google Ads and listing your property on different rental websites (or your own !). Still, you can also use offline strategies like leaving flyers or business cards at local tourist attractions.
For example, here are some questions that can help you sketch out your marketing plan:
What methods of online marketing should I use?
- I will just list my bookings on one travel website because that is enough for me.
- I will have my own, personal vacation rental website . My site, my rules!
- I have several properties to rent, so I will list them on several websites to increase traffic and booking numbers.
- I will pay for Google Ads in my local area.
What methods of offline marketing should I use?
- None, online marketing will be enough for me.
- I will print flyers and leave them in local tourist offices.
- I will give each guest business cards and ask them to recommend me to friends and colleagues.
Do I have a website?
- No, I don’t want/need to create one.
- No, but I want one! I need to hire someone to create one for me or try a professional website builder .
- Yes, I have one, and I’m going to hire a Search Engine Optimization specialist to help me increase the number of visits to it.
Have I got business cards ?
- No, I don’t need any.
- Yes, I have some but I won’t use them.
- Yes, I have some, and I’m going to use them as part of my marketing strategy.
“As all good things, being successful and keeping up with everything takes time, elbow grease, long nights and hard work. But if you have the passion, the clarity and the determination to succeed, you’ll find the formula to make your rental business successful.
While I’m not sure there is a one-formula-fits-all, there are a few things that helped me: a great website, awesome warm-hearted, personal communication skills, finely tweaked standards, procedures and operations, an open mind and willingness to widen your horizon by questioning what you’ve achieved and learning what’s next. Because we are in an ever-changing and challenging world and only those willing to adapt to the changes will survive.” – Antonio Bortolotti
Step 10. Task delegation and employee management plan
It pays off to dream big, but make sure you have the capacity to do so. How will you manage guest turnover if you’re planning to rent your property every night? Better yet, who will manage guest turnover? Depending on the scale, your goals will take some serious work to get there – make sure you’ve factored in how you will manage it alone or how you plan to delegate tasks.
If you know that you’ll need to hire some staff, be it a property manager, cleaning service , or maintenance person, you’ll have to plan for how you’re going to distribute and delegate the work. Using task management tools and including them in your business plan outline will help you to make the most of your teams’ efforts.
Step 11. Distribution plan
Websites like Airbnb and Vrbo are referred to as OTAs ( Online Travel Agencies ). For all new hosts, presence on OTAs and listing sites to get bookings is essential.
Your distribution plan should consider which channels you’ll be advertising on, how much they’ll cost you, and how you’ll manage them (hint: you might need a channel manager ).
A distribution plan will help you understand how you’re going to advertise your business to generate bookings, and it will help you identify what websites you want to be on to help your visitors find out about and book a stay with you.
Here are some helpful example questions that should get you started writing a distribution plan:
Which OTAs do I want to list my property on?
- Every OTA that is available? I need lots of bookings!
How much will this cost me?
- Is it free?
- Do you have to pay monthly to list on these websites?
- Do they take a commission off bookings you receive from that website?
Are there any tools available to help me manage all of this?
- Yes! A channel manager .
- A channel manager is a tool you can use to ensure all of your bookings, dates and arrangements remain in one place so you don’t get overwhelmed managing calendars from several different OTAs you’re using.
When I do get a booking, how will I receive the payment?
- PayPal account.
- Bank transfer.
- Cash/card payments directly from guests upon arrival.
“If a host’s goal is to maximize their revenue and bookings, it definitely makes sense to list on several platforms. Based on research from one of our partners, Tokeet, they found that some of their hosts had reported a 20% increase in bookings once they used a channel manager to list across several home-sharing sites. I would recommend that if a host is listing across several platforms, they should utilize a channel management program to make it easier to manage their listings and their calendars so they don’t double book.” – Cynthia Chan
Step 12. Revenue management plan
So, this is the numbers part. But don’t worry – revenue management is not as scary as it sounds!
In this section, you’ll have to include information about the rates you plan to charge for your vacation rental, alongside any details about pricing or yield management tools you will use.
When running a vacation rental business, you need to keep on top of your incomings, outgoings and general overall finances.
For people who feel overwhelmed by this, there are a lot of tools and software out there to help. To start with, we’ve written some quick questions to cover the basics of your revenue management plan to make sure your accounts and business stay well in the green.
How much will I charge per night?
- Fixed price: $100 per night
- I’ll use smart pricing, increasing the amount during busy periods.
- I’m still undecided.
What level of taxes will I have to pay to the government?
- I’m not sure – I need to research this before writing my revenue management plan.
What will my utility bills be?
- Water is $20 a month.
- Trash collection is $30 a month.
- Electricity will vary depending on how many guests I’ll have.
What will my staff costs be?
- Zero, I’m doing all of the work myself.
- Low, I’m paying my teenage children an allowance to help me with some household chores.
- High, I’m going to hire a cleaning agency, a marketing specialist, a website developer, etc.
What’s my target monthly income?
- Anything above $0 at the beginning?
“Set stretching yet realistic prices. Quality holiday homes can charge more (because they are worth more) than an average place. When it comes to setting your prices, you need to know what it costs you to welcome each set of guests and work up from there, ensuring a healthy profit per booking every time. The more you charge per week, the more revenue per booking, yet your changeover costs, your marketing costs, your time spent, will be the same.” – Karen Spencer
Step 13. Financial plan example
Think about how you are going to finance your new business. Of course, you’ve often asked yourself this question, ‘How am I going to afford this rental business?’ Will it be self-financed or are you planning on taking out a loan? Do you have no plan to spend any money because you’re simply renting out a spare bedroom?
These questions form your financial plan . It is just writing out, ‘Well, how am I going to pay for all of this?’ As we all know, money doesn’t grow on trees. Note down your estimates of expenditure and projected income for the first five years.
As with anything in life, proper budgeting and planning your finances will prevent any stress in the future, and it will mean that your business is ready to thrive.
So, what kind of information makes up a financial plan?
Will I need to take out a loan?
- No, I’m just renting out an existing property with everything ready to go.
- Yes, I will need a small loan to renovate this property.
- Yes, I will need a substantial loan to purchase the property/land where I’m going to build my rental.
What will the interest rates be?
Do I have savings I’m ready to invest into it?
- I don’t want to put my savings into it.
- Yes, I have a small amount that I’ll use for redecoration.
- Yes, I have lots of savings that I’ve been keeping for a project like this!
What level of monthly loan payments can I manage?
- None, my business has small incomings, so I don’t want to take a loan.
- $100 for a small loan?
- $750+ for substantial mortgage repayments?
“Sometimes not factoring in the cost of educating yourself is a luxury you can’t afford. The reason I’m part of online communities (I go to industry conferences like VRMA and I put together the Vacation Rental World Summit ) is because I’m the first one to not know everything.
I’m aware that if I want my business to thrive while this industry changes and crashes, I need to stay informed on what’s changing, adjust my strategies accordingly, and be prepared for what’s coming.
So I put together some of the best minds in our industry once a year – this year (2018) on Lake Como, Italy, in October – to enlighten us all on what we should be doing to ensure we have a sustainable and exciting business we keep loving for many years to come. – Antonio Bortolotti
Step 14. Key milestones and business future:
Write down your plans and goals for your business, plus what key milestones will help you achieve these targets.
When you start any project, whether it is going back to university, losing weight or starting a business, it is really important to track your project and also to track your progress. This section will be useful to refer back to and to ensure you’re on the right track.
After all, if you don’t set any goals, it might be easy to remain where you are.
Here are some good milestones to use for your rental business:
How much do I want to make a month?
- $500? $750? $3.000?
- This answer will be linked to your financial plan, so this is a good time to go back and look at what you wrote down in Point 10.
How many guests do I want in the first quarter?
- As many as possible – I know I’m still in the beginning.
What rate of growth do I want in my bookings year-on-year?
- I’ll figure this out in the second year, I’m just getting started at the moment.
How many returning clients do I want each year?
- At least 10?
- More than 20, I’m confident in the service I provide.
- As many as possible!
“The biggest hurdle that Airbnb hosts have to get through in their first few years of business is to get enough reviews on their listing so that guests are comfortable staying at your listing. The more reviews you have, the higher your listing appears in the search results as well, so the biggest focus for hosts should be to get as many good reviews as possible.” – Cynthia Chan
Step 15. Vacation rental business plan: Appendix
The appendix in your vacation rental business plan should include all of the relevant documents you have for your business, containing the vital information you need to keep things running.
What’s the number for a plumber, just in case I have problems with the pipes?
- Good point, I don’t have one!
- Yes, I have one, it is 123 456 7890.
Where are my tax registration details?
- I’m not sure, I’ll need to look for these and then add them to the appendix.
- I have them, ready to put in the folder.
Have I kept receipts of all of the things purchased for my business recently?
- Yes, I’m ready to add them to my tax records.
- No, I will buy a wallet to keep them in for future reference.
Have I backed up my online bookings and calendar somewhere?
- Yes, on Dropbox and an external hard drive.
- Yes, but offline, in my calendar in the kitchen.
What should you prioritize in your business plan for vacation rentals?
We know that with so many things to keep in mind for your business plan, it could be hard to focus on the most important ones. There are 15 steps, yet every piece seems crucial; what to do?
So we decided to turn to the experts: Antonio, Cynthia, and Karen for their suggestions!
“Looking at the way the industry evolves and its sheer competition, building a clear, easy-to-remember and appealing brand together with setting the infrastructure right is absolutely key. The main backbone of the brand is obviously your own fantastic and inspiring website: your personal Airbnb, your eBay, your Amazon, where you dictate the rules, and no one decides whether you live or die. But it must be productive and efficient.
This, of course, relies on among many things: carefully laying down a perfectly functioning operational structure, where you put in place automation, standardizations, and procedures to ensure your business runs smoothly even without you being at the desk 24/7.
Actually, owners do and should operate their businesses with little to no worries. In such a demanding and dynamic industry as ours finding the right combination of software that aligns with your individual business needs is key to accomplishing all this. And it’s not easy.
This is to keep firm in mind how the ultimate goal is to rely less on third parties for supply of bookings and more on their ability to excel as a way of driving guests and business home.” – Antonio Bortolotti
Brand consistency is vital for a business and should be established from the very beginning. A good branding outline in your business plan will keep your vacation rental looking professional.
Rather than emphasizing a particular aspect, Spencer points out the importance of quality throughout the entire business plan:
“Quality – in everything you do. From the product you bring to the market to the excellent customer service you offer your guests.” – Karen Spencer
It’s going to show if your vacation rental business plan falls short halfway through. You need to maintain high-quality standards and dedication throughout, so it can reflect in your vacation rental and result in happy customers and solid bookings.
Common mistakes found in short-term rental business plans
For many hosts, owning a vacation rental is their first business venture. With that in mind, many mistakes can be made along the way. Fortunately, we’ve covered you for what to avoid when creating your business plan. Here are some of the most common mistakes that vacation rental owners make with their business plans:
Of course, you want to welcome as many guest types as possible, but your vacation rental won’t be everyone’s cup of tea – and that’s okay! If you try to go too broad in targeting guest types, you’ll end up attracting none of them.
Some hosts don’t narrow down their target, and, as a result, their business suffers. Having too generic of a vacation rental will take away from the value you could be adding. Refer back to your value proposition: what extra perk do you want to provide customers? Once you have that, you can define exactly who those customers will be.
Ignoring the competition
You might think your vacation rental is the best on the block, but keep in mind that your competition feels the same way. Sometimes even the most luxurious vacation rentals are blown out of the water by their competition.
Rivals can outdo you in price, value, style, and availability! Try to evaluate your competitive edge from every perspective; how can you outdo the other vacation rentals in your area?
Unrealistic finance plan
We all want to make a million dollars in our first year of business, but that’s just not going to happen. One of the most common mistakes you can make is overestimating your revenue while underestimating your budget.
It’s great to think positively about your business and even be encouraged to dream big, but when it comes to money: make sure you’re being realistic.
Assuming standard home insurance covers you
Before you welcome any guests into your home, you’ll want to include vacation rental insurance in your business plan. Standard homeowner insurance will not cover the vast majority of problems that can affect short-term rentals. This is largely due to the increased likelihood of property damage caused by guest parties, misbehavior, and stolen items, making vacation properties high risk.
You’ll want to put in the time to research what policies protect vacation rental owners and which companies provide the best coverage and the best value for your short-term rental business.
Scaling your business with a vacation rental property business plan
So, are vacation rental business plans only reserved for newcomers? Of course not! If you’re wanting to restructure your business or scale it, having a new business plan is a great first step. A growing business usually needs a fresh slate, as the old business plan won’t cut it. With a larger business scale, you will need more staff, budget, time, and more.
Instead of building from your old vacation rental business plan, you might find that creating a new vacation rental business plan will be the best option as you’ll be approaching it with a fresh perspective and more ambitious goals.
Vacation rental business plan: tips & tricks
So, you’ve got a business plan full of really detailed information – great, you’re ready to go! Well, not quite. There are still a couple more things to consider before you put pen to paper and start with your own business plan.
With the industry growing increasingly competitive every day, with more websites opening up and listing your competitors’ rentals, you may be looking for that extra edge.
Here are four of our top tips and tricks to make sure you remain number one!
- Ever heard someone say that if you do what you love, you’ll never work a day in your life? This is completely true with vacation rentals.
- If you enjoy it and don’t let the stress get to you and affect your customer service skills, this will shine through to the guests, and you’ll notice they’ll keep coming back year after year.
You get back what you give out:
- With vacation rentals or with any business or skill, you will get out what you put in.
- If you invest time, money and effort into your business, you will reap financial and personal rewards.
- So many businesses in the tourism industry today simply put in the bare minimum to keep things running.
- For you to be number one, you need to invest more effort and time than your competitors, and you’ll notice very quickly that this investment has really high returns.
Quality over quantity:
- Don’t forget that most people will choose value over price, so don’t compromise one for the other.
Get yourself out there:
- Advertise, advertise, advertise! Really, the more places you advertise your business (your own site, OTAs, social media , etc), the more bookings you’re going to get.
- It is just a numbers game – the more people who look at your listing, the more guests you’ll have. Simple!
Your vacation rental deserves a proper vacation rental business plan. When you lead with a plan, you’re setting your new business venture up for success. It’s vital to detail every piece of information you can so there are no surprises when it comes to competition, operations, budget, and everything in between.
Even though your guests won’t see your business plan, implementing one makes sure your business runs smoothly and professionally, which helps contribute to the overall guest experience. We’ve even done the hard part by creating a vacation rental business plan template, so all you have to do is plug in your details, and you’re ready to move forward!
Download our free vacation rental business plan template
Don’t know where to start? Don’t worry! All you have to do is download our free vacation rental business plan template below and fill in your own information. Our handy guide includes all of the questions you need to ask yourself before starting your new venture.
We’ve consulted with the experts to make the best outline possible for your business to help you reach your goals. You can learn more about who Antonio, Cynthia and Karen are, when they started working in the holiday rental market and what they usually do to help rental owners like you to develop their business.
Antonio Bortolotti :
“I’m a property owner with a multi-property in Sardinia and I ventured into holiday rentals as a way of building myself an alternative to my previous life working for Alitalia.
My wife Cristina and I stumbled upon the ruins of an old house in Sardinia and it was love at first sight. We purchased part of it and renovated it; we rented it out to pay the mortgage and hopefully make some money. Fast forward 3 years later and we now own the entire villa with 3 units and I quit my job to focus full time on vacation rentals.
Meanwhile, I was invited to speak on stage at industry events to share how I turned rubbles to such great success – our units were outperforming all other rentals in the area by 4 times in terms of occupancy and duration of the season. I began sharing my know-how with my peers, and that led to hosting what’s become the Vacation Rental World Summit; an event that’s helped over 16,000 property owners and property managers in 50 countries since its first edition.
As a matter of fact, I want to thank you for asking me to respond to your questions by sharing with your readers the recording of Lodgify’s session on the principles of good web design that your very own Dennis Klett shared with us at the Vacation Rental World Summit edition held in Barcelona two years ago. While time goes by, certain things and principles never age.
Cynthia Chan :
“I’m Cynthia, and I’m one of the co-founders of Airhosts Forum . We’re the largest Airbnb host forum online, and we also have the largest Facebook page for Airbnb hosts.
We decided to start a forum so that we could get more information on how to be better hosts and also to help others who were in the same boat as us. Because there is such a need for a community where hosts can come together to share ideas, get tips and advice, and even just vent about their experiences, we quickly grew the community to the #1 Airbnb forum for hosts to come and discuss anything they wanted with other hosts.
We post reviews, useful tips for communicating with guests, information on Airbnb policies, insurance questions and much more, all with the aim of ensuring our members are kept up to date with all they need to know about Airbnb and hosting.”
Karen Spencer :
“I’m Karen Spencer, founder of The Business of Holiday Rental , and I help holiday homeowners to create a quality holiday home, to run it as a business, maximize their income and love what they do.
I’m a holiday cottage owner myself. I’ve worked for a holiday letting agency and have 10 years of experience in the self-catering industry, I’m a home stager and a formal departmental coach.
Combine all that industry knowledge, holiday home business know-how, corporate experience and training, and you get The Business of Holiday Rental. I can help you in group programs, working one to one, or in my off-the-shelf classes.”
Hi, Amazing article to learn from basics to advanced in vacation rental business. Thanks for sharing this wonderful article with us.
Fantastic article Jess as always. Even though we’re on our 2nd property and they both are doing well we are going to go back and go through the steps in the business plan. I bet it will help us refine our ideas for moving forward. Thanks again!
Well… consider yourself added to my blogroll. I have like six other blogs I read on a weekly basis, guess that number just increased to seven! Keep writing!
What kind of insurance is available?
I suggest you check out our article about the different types of vacation rental insurance available. You’ll find it here .
Riley & The Lodgify Team
Thanks for sharing this useful information! Hope that you will continue with the kind of stuff you are doing.
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1. What is your goal as a property investor?
2. do you understand the different types of investment properties, 3. where will the property be located compared to your current home, 4. what will it cost, 5. how will you market your property, 6. how will you manage the property, 7. how will you manage tenants, 8. how will you maintain the property, 9. do you have a plan if your investment fails, 3. objectives, 4. strategies, 5. high-level plans, 6. daily plans, 1. know who your market is., 2. set aside a budget., 3. have everything in writing., 4. keep track of your cash flow., 5. fulfill your duties and obligations as landlord and property owner., more design, 8+ self-catering business plan examples, 8+ rental inventory examples, 7+rental application examples, 6+ real estate investor marketing plan examples, 6+ lease receipt examples, 5+ property inventory examples, 4+ property contract examples, sample receipt, 39+ inspection report examples.
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Rental Property Business Plan [Sample Template]
By: Author Tony Martins Ajaero
Home » Business Plans » Real Estate Sector
Are you about starting a rental property business? If YES, here is a complete sample rental property business plan template & feasibility report you can use for FREE .
The Apartment Rental industry is a very vast industry and there are loads of businesses opening up in the industry. There are several business opportunities an aspiring entrepreneur who has good capital base can start and one of such opportunities is a rental property business.
If you want to start a rental property business, then you need to write your own business plan. The essence of writing a business plan before starting any business is for you to have a blueprint of how you want to setup, manage and expand your business.
Below is a sample rental property company business plan template that will help you to successfully write yours with little or no stress.
A Sample Rental Property Business Plan Template
1. industry overview.
Rental property business is grouped under the Apartment Rental industry and this industry is made up of companies that rent one-unit structures, two- to four-unit structures, five- to nine-unit structures, 10- to 19-unit structures, 20- to 49-unit structures and 50- or more unit structures.
In the united states, states such as Texas, New York, and Colorado, make it mandatory for rental property companies to be licensed real estate brokers if they are going to be involved in collecting rent, listing properties for rent, helping to 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 own property are not required by the law to have a real estate license in many states; 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.
Statistics has it that in the United States of America alone, there are about 518,271 licensed and registered apartment rental companies scattered all across the country and they are responsible for employing about 769,588 employees.
The industry rakes in a whopping sum of $154 billion annually with an annual growth rate projected at 2.4 percent within 2013 and 2018. 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 2018; however, industry performance softened in 2017 and 2018 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 was 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 at an annualized 2.4 percent to $153.9 billion.
In the same timeframe, the number of businesses has grown by 0.5% and the number of employees has grown by 0.4 percent.
No doubt, if an 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.
2. Executive Summary
John Johnson & Co® Property Rental Agency, LLP is a real estate agency that will operate in all the West Coast of the United States of America but will be headquartered in San Diego – California. We intend to become specialists in owning, developing, acquiring, managing, selling and renting/leasing and disposing student accommodation, residential apartments, office apartments and hall facilities et al.
This can generally be summed up as clean, safe accommodation at an affordable price, and in our experience, the most consistent demand is for newly-built and pre-owned one and two-bedroom sectional title apartments with high tech security, parking and good access to shops and other amenities.
Part of our goal as a rental property company is to grow to become one of the top 5 largest real estate companies in the whole of West Coast in the United States of America and to rent/lease and manage properties across major cities in this region.
John Johnson & Co® Property Rental Agency, LLP will be committed when it comes to maintaining a diverse portfolio of quality apartments, office structures and hall facilities. We will also focus on providing a dynamic, proactive and vibrant work environment for all our employees such as mouthwatering bonus (commission) for every deal that comes through any of the staff member.
John Johnson & Co® Property Rental Agency, LLP is going to be a self-administered and a self-managed real estate investment trust (REIT). We will work towards becoming one of the largest rental property companies in The United States of America with active presence in major cities all across the West Coast in the United States of America.
As part of our plans to make our customers our number one priority and to become one of the leading rental property companies in the United States of America, we have perfected plans to adopt international best practices that can favorable compete with the best in the industry.
John Johnson & Co® Property Rental Agency, LLP have overtime perfected plans that will help us to become a specialist in our area of business.
John Johnson & Co® Property Rental Agency, LLP will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible.
We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.
John Johnson & Co® Property Rental Agency, LLP is founded by John Johnson, Carson Reeves and Lance Taylor. John Johnson is the company’s president and CEO. John Johnson has over 15 years’ real estate experience in significant senior management positions in the areas of sales, marketing and new technologies in the United States of America.
3. Our Products and Services
John Johnson & Co® Property Rental Agency, LLP is going to offer varieties of services within the scope of the Apartment Rental industry. We are prepared to make profits from the industry and we will do all that is permitted by the law in The United States of America to achieve our business goals, aim and ambition. Our business offerings are listed below;
- 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
- Real estate consultancy and advisory services
4. Our Mission and Vision Statement
- Our vision is to become one of the top 5 rental property companies in the West Coast of the United States within the first 10 years of starting John Johnson & Co® Property Rental Agency, LLP.
- Our mission of starting a rental property business is to grow the business beyond the city where we are going to be operating from to become a national and international brand by opening offices all across key cities in West Coast of the United States of America.
Our Business Structure
Our company’s structure is not entirely different from what is obtainable in the Apartment Rental industry. We have decided to create a structure that will allow for easy growth for all our employees and also, we have created platforms that will enable us attract some of the best hands in the industry.
We will ensure that we only hire people that are qualified, honest, hardworking, customer centric and are ready to work to help us build a prosperous business that will benefit all the stakeholders.
As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more depending how fast we meet our set target. John Johnson & Co® Property Rental Agency, LLP is fully aware of the modus operandi in the rental property business, hence adequate provision and competitive packages has been prepared for independent real estate agents.
Our marketing department will be responsible for managing this aspect of our business structure. Below is the business structure we will build John Johnson & Co® Property Rental Agency, LLP on;
- Chief Executive Officer
- Company’s Lawyer/Secretary
Admin and HR Manager
Real Estate Agents
- Business Developer/Sales and Marketing
- Customer Service Executive/Front Desk Officer
5. Job Roles and Responsibilities
Chief Executive Officer – CEO (President):
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results
- Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
- Accountable for fixing prices and signing business deals
- Responsible for providing direction for the business
- Accountable for signing checks and documents on behalf of the company
- Evaluates the success of the organization
Company’s Lawyer/Secretary/Legal Counsel
- Responsible for drawing up contracts and other legal documents for the company
- Consults and handles all corporate legal processes (e.g. intellectual property, mergers & acquisitions, financial / securities offerings, compliance issues, transactions, agreements, lawsuits and patents et al)
- Develops company policy and position on legal issues
- Researches, anticipates and guards company against legal risks
- Represents company in legal proceedings (administrative boards, court trials et al)
- Plays a part in business deals negotiation and takes minutes of meetings
- Responsible for analyzing legal documents on behalf of the company
- Prepares annual reports for the company
- Responsible for overseeing the smooth running of HR and administrative tasks for the organization
- Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
- Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
- Defines job positions for recruitment and managing interviewing process
- Carries out induction for new team members
- Responsible for training, evaluation and assessment of employees
- Responsible for arranging travel, meetings and appointments
- Oversees the smooth running of the daily office activities.
- In charge of leasing and renting out accommodations and other properties under our to-let list
- In charge of inspecting and reporting on the structural attributes of a building
- Assesses compliance with building, electrical, plumbing and fire codes
- Evaluates building plans and permits
- Keeps daily logs, including photographs taken during inspection
- Handles real estate consultancy and advisory services
Marketing and Sales Executive/Business Developer
- Identifies, prioritized, and reach out to new partners, and business opportunities et al
- Identifies development opportunities; follows up on development leads and contacts
- Responsible for supervising implementation, advocate for the customer’s need , and communicate with clients
- Documents all customer contact and information
- Represents the company in strategic meetings
- Helps to increase sales and growth for the company
- Responsible for preparing financial reports, budgets, and financial statements for the organization
- Provides managers with financial analyses, development budgets, and accounting reports
- Responsible for financial forecasting and risks analysis.
- Performs cash management, general ledger accounting, and financial reporting for one or more properties.
- Responsible for developing and managing financial systems and policies
- Responsible for administering payrolls
- Ensures compliance with taxation legislation
- Handles all financial transactions for the company
- Serves as internal auditor for the company
Front Desk/Customer’s Service Officer
- Receives Visitors/clients on behalf of the organization
- Receives parcels/documents for the company
- Handles enquiries via email and phone calls for the organization
- Distributes mails in the organization
- Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
- Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
- Manages administrative duties assigned by the line manager in an effective and timely manner
- Consistently stays abreast of any new information on the company’s properties that are put up for sale, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients when they make enquiries
6. SWOT Analysis
Starting a rental property business in the United States of America comes with its own fair share of challenges, you would have to abide by the law and also compete with other entrepreneurs in the business value chain who also are interested in making a living and building a business in San Diego, California.
In order to compete favorably in the rental property line of business we hired the services of tested and trusted business and HR consultants to help us conduct critical SWOT analysis for us. Here is a summary from the result of the SWOT analysis that was conducted on behalf of John Johnson & Co® Property Rental Agency, LLP.
The strength that we will be bringing to the table in the Apartment Rental industry is our robust relations with accommodation owners and properties investment moguls.
We have access to a pool of tenants and we equally have a team of experts who have cut their teeth in the Apartment Rental industry. Our commission structure and relationship with freelance real estate agents in San Diego, California will also count towards our advantage.
As a newbie in the Apartment Rental industry, we might have some challenges competing with big time realtors and other rental property companies that have been in the industry for many years; that perhaps is part of our weakness.
As the economy of the United States of America began to grow and demand for rental apartments rose, industry revenue grew at a rapid pace hence opening vast opportunities for rental property companies. We are well – positioned to take advantage of any opportunity that comes our way.
Some of the threats that we are likely going to face as a rental property company in the United States of America are unfavorable government policies , global economic downturn and unreasonable tenants.
7. MARKET ANALYSIS
- Market Trends
A close watch of happenings in the apartment rental industry shows that 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. Rental vacancy rates are expected to increase in 2018, posing a potential threat to the industry.
As a matter of international best practices, the national unemployment rate is a benchmark for determining the overall health of the US economy and has had mixed effects on industry demand. As the unemployment rate falls, individuals tend to have more money to spend on living expenses and afford higher rent prices.
Simultaneously, with more money to spend, individuals may choose to purchase a home rather than rent, which can adversely affect industry demand. The national unemployment rate is expected to drop in 2018, representing a potential opportunity for the industry.
Another obvious trend that is common with rental property companies in the United States of America is that most of them 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 that they are involved in.
One thing is certain for every rental property company; if they are hardworking, creative and proactive, they will always generate enough income to meet all their overhead and operational cost, keep their business going without struggle and make reasonable profits from all business deals that they are involved in.
8. Our Target Market
Our target market as a rental property company cuts across people of different class and people from all walks of life. Although finding tenants is relatively easy, but the truth is that finding qualified and law – abiding tenants can be somewhat challenging.
It is important to note that the target market for the rental property business goes beyond those who make use of the internet (Craigslist to search for properties; some of them only rely on the print media (local daily or weekly newspapers), some on word of mouth and others on street to street search.
The bottom line is that the market trend for rental property business is indeed a dynamic one. In other words, our target market is the whole of the United States of America and below is a list of the people and organizations that we have plans to do business with;
- Families who are interested in renting/leasing or acquiring a property
- Corporate organizations who are interested in renting/leasing or acquiring their own property/properties
- Land Owners and landlords who are interested in renting/leasing out their properties
- Corporate organizations (real estate agencies, property development companies et al) who are interested in renting/leasing out their properties
- Foreign investors who are interested in owning properties or leasing properties in the United States of America
- Managers of public facilities
Our competitive advantage
The availability of competent and reliable real estate agents under your payroll, our business process, the financial structure of the company, management of high-quality assets – portfolio, superior financial management and debt management and of course our pricing model et al are part of our competitive advantage.
Another possible competitive strategy for winning our competitors in this particular industry is to build a robust clientele base, and ensure that our properties cum apartments are top notch and trendy. Our organization is well positioned, key members of our team are highly competent and can favorably compete with the some of the best in the industry.
Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry. It will enable them to be more than willing to build the business with us and help deliver our set goals and objectives. We will also engage freelance marketing agents on a commission level to help us market our services.
9. SALES AND MARKETING STRATEGY
We quite mindful of the fact that there are stiff competitions in the rental property cum real estate market in The United States of America, hence we have been able to hire some of the best business developer to handle our sales and marketing.
Our sales and marketing team will be recruited based on their vast experience in the industry and they will be trained on a regular basis so as to meet their targets and the overall goal of the organization. The training is not restricted to only our full – time employees but will include our freelance brokers. John Johnson & Co® Property Rental Agency, LLP is set to make use of the following marketing and sales strategies;
- Introduce our rental property company by sending introductory letters alongside your brochure to tenants, corporate organizations and other key stakeholders throughout the city where our company is located.
- Print out fliers (list of accommodations for rent/lease) and business cards and strategically drop them in offices, car parks, libraries, public facilities and train stations et al.
- Use friends and family to spread word about our business
- Post information about our company and the services we offer on bulletin boards in places like car parks, schools, libraries, and local coffee shops et al
- Place a small or classified advertisement in the newspaper, or local publication about our company and the services we offer
- Leverage on referral networks such as agencies that will attract clients (tenants) who need our properties cum apartments
- Advertise our rental property company in relevant real estate magazines, newspapers, TV and radio stations.
- Attend relevant real estate expos, seminars, and business fairs et al to market our services
- Engage in direct marketing approach
- Encourage the use of Word of mouth marketing from loyal and satisfied clients
- Join local chambers of commerce and industry to market our product and services.
Sources of Income
John Johnson & Co® Property Rental Agency, LLP is established with the aim of maximizing profits in the industry. We have successfully built a vibrant real estate network that covers the whole of the West Coast in the United States of America so as to help us build a profitable business.
Below are the sources we intend exploring to generate income for John Johnson & Co® Property Rental Agency, LLP;
10. Sales Forecast
It is a known fact that as long as there are tenants in the United States of America, there will always be need to for them to hire the services of rental property companies from time to time.
We are well positioned to take on the challenges in the industry, and we are quite optimistic that we will meet out set target of generating enough income / profits from our first month of operation and grow the business beyond San Diego, California to other Provinces in the United States of America within record time.
We have been able to examine the rental property business, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast.
Below are the sales projections (commissions generated) for John Johnson & Co® Property Rental Agency, LLP it is based on the location of our business and the rental property and related services within the Apartment Rental industry that we will be offering;
- Rent / lease a minimum of 30 housing units to clients (flats, duplexes, studio apartment et al) within the first 6 months of operation
- Rent / lease a minimum of 20 office facilities to clients within the first 6 months of operation
N.B: Please note that we cannot put a specific amount to the projection because the prices and commissions vary for different properties. Part of our business strategy is to work within the budget of our clients to deliver quality property / properties hence it will be difficult to project what we are likely going to make from such deals.
But the bottom line is that we are definitely going to make reasonable profits from any business deal that we execute since we work based on commissions.
11. Publicity and Advertising Strategy
We have been able to work with our consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market.
We are set to take the Apartment Rental industry by storm which is why we have made provisions for effective publicity and advertisement of our company. Below are the platforms we intend to leverage on to promote and advertise our rental property business;
- Place adverts on both print and electronic media platforms
- Sponsor relevant TV shows so as to communicate our brand and what we do
- Maximize our company’s website to promote our business
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, LinkedIn, Google+ and other platforms (real estate online forums) to promote our business and list our properties for sale and for lease.
- Install our billboards in strategic locations in and around the university community/campus in San Diego, California
- Distribute our fliers and handbills in targeted areas from time to time
- Attend landlord association meetings with the aim of networking and introducing our business.
- Ensure that all our workers wear our branded shirts and all our vehicles and ambulances are well branded with our company’s logo et al.
12. Our Pricing Strategy
Part of our business strategy is to ensure that we work within the budget of our clients to deliver excellent properties to them. The real estate industry is based on commissions and properties are valued by professionals based on the area the facility is located, the type of facility and other factors.
Since we are not directly in control of the pricing system in the real estate industry, we can only abide by what is obtainable when it comes to pricing structure. Part of what we intended doing that will help us cut cost is to reduce to barest minimum all maintenance cost by renting/leasing any property under our care to responsible tenants who won’t cause damage to our facility.
- Payment Options
At John Johnson & Co® Property Rental Agency, LLP our payment policy is all inclusive because we are quite aware that different people prefer different payment options as it suits them but at the same time, we will not accept payment by cash because of the volume of cash that will be involved in most of our transactions.
Here are the payment options that John Johnson & Co® Property Rental Agency, LLP will make available to her clients;
- Payment by via bank transfer
- Payment via online bank transfer
- Payment via check
- Payment via bank draft
In view of the above, we have chosen banking platforms that will help us achieve our plans without any hitches and we will also pay our freelance sales agents (real estate brokers) with same platforms. Our bank account numbers will be made available on our website and promotional materials to clients who may want to deposit cash or make online transfer for our services.
13. Startup Expenditure (Budget)
From our market survey and feasibility studies, we have been able to come up with a detailed budget on achieving our aim of establishing a standard and highly competitive rental property company in San Diego, California and here are the key areas where we will spend our startup capital;
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits – $1,500.
- Marketing promotion expenses (8,000 flyers at $0.04 per copy) for the total amount of – $10,000.
- The total cost for hiring Business Consultant – $5,000.
- The amount needed for the purchase of insurance policy covers (general liability, workers’ compensation and property casualty) coverage at a total premium – $30,800.
- The total cost for the purchase of accounting software, CRM software and Payroll Software – $3,000
- The total cost for leasing facility for the business – $60,000.
- The total cost for facility remodeling to fit into the type of jet ski rental business facility – $30,000
- Other start-up expenses including stationery – $1000
- Phone and utility deposits – $3,500
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $40,000
- The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, tables and chairs et al) – $4,000.
- The cost of launching a Website – $600
- Miscellaneous – $5,000
Going by the report from the market research and feasibility studies conducted, we will need about two hundred and fifty thousand (250,000) U.S. dollars to successfully set up a medium scale but standard rental property business in the United States of America.
Generating Funds/Startup Capital for John Johnson & Co® Property Rental Agency, LLP
John Johnson & Co® Property Rental Agency, LLP is a business that will be owned and managed by John Johnson, Carson Reeves and Lance Taylor. They decided to restrict the sourcing of the startup capital for the business to just three major sources.
- Generate part of the startup capital from personal savings and sale of stocks
- Generate part of the startup capital from friends and other extended family members
- Generate a larger chunk of the startup capital from the bank (loan facility).
N.B: We have been able to generate about $100,000 (Personal savings $80,000 and soft loan from family members $20,000) and we are at the final stages of obtaining a loan facility of $150,000 from our bank. All the papers and documents have been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.
14. Sustainability and Expansion Strategy
The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and the business structure. If all of these factors are missing from a business, then it won’t be too long before the business closes shop.
One of our major goals of starting John Johnson & Co® Property Rental Agency, LLP is to build a business that will survive off its own cash flow without injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to rent out properties a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.
John Johnson & Co® Property Rental Agency, LLP will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.
As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
- Business Name Availability Check : Completed
- Business Incorporation: Completed
- Opening of Corporate Bank Accounts: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Renting of Office Facility and remodeling the facility in San Diego, California: Completed
- Conducting Feasibility Studies: Completed
- Generating capital from the CEO / President and Business Partners: Completed
- Applications for Loan from our Bankers: In Progress
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents and other relevant Legal Documents: In Progress
- Design of The Company’s Logo: Completed
- Printing of Promotional Materials: Completed
- Recruitment of employees: In Progress
- Purchase of furniture, office equipment, electronic appliances and facility facelift: In progress
- Creating Official Website for the Company: In Progress
- Creating Awareness for the business (Business PR): In Progress
- Health and Safety and Fire Safety Arrangement: In Progress
- Establishing business relationship with key players in the industry (networking and membership of relevant real estate bodies): In Progress
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