Updated: Sep 30, 2022
The real estate market has become an increasingly hot topic–nearly every time you turn on the news, it’s being discussed in one way or another. Real estate plays an inextricable role in the Canadian economy, and another industry is gaining traction alongside those expensive home sales: property management.
Currently, over 40% of the Canadian real estate market is purchased and owned by real estate investors. In fact, there are several investors Real Property Management works with whose investment properties represent a primary or supplementary source of income to them. So, what does it take to become a part of this $8.2 billion industry? Let’s look at a quick snapshot of how to start a property management company.
Step 1: Research your provincial regulations for operations
The very first thing on your checklist should be contacting your provincial real estate body to inquire about licensing and registration. Very similar to realtors and mortgage brokers, property managers may be required by provincial law and regulation to obtain a license to operate.
Step 2: Research your local market
When starting off in property management it's important to understand how the market is affected in your local neighborhood(s). Rents vary across the country, from as little as $800 for a one-bedroom apartment to more than $5,000 for a single-family home. There are a variety of factors which contribute to a great rental market, such as: location, population, and seasonal demographics (just to name a few!)
Step 3: Register your business with your municipal, provincial and federal government (where applicable)
Alright, you have done your research and put together a structured plan to start your business! Before ANY business in Canada can operate it must be registered with the appropriate governmental bodies. Your provincial website will have plenty of information on how to register. Contacting and retaining a lawyer (and an accountant) is highly recommended at this stage.
Step 4: Review and pick the best software for your business
This is a crucial step in property management, and one that often gets overlooked. The software you decide on will determine how you set up and maintain the internal systems and processes for your business. There have been many advances in property management technology to assist with everything from rent collection, leasing, advertising, resident maintenance, and more! Your business may need a couple of different programs to work cohesively, so a little testing can build a strong foundation. Want some quick tips and examples? Reach out to us through the contact form, and one of our representatives will schedule a technology demo for you.
"Spend time upfront to invest in systems and processes to make long-term growth sustainable."
-Jeff Platt, CEO of SkyZone
Step 4: Build community relationships
One trend we’ve noticed amongst our investors is that they take their properties seriously–to the point they may even categorize their properties as additional family members in some cases. However, just as you wouldn’t call any babysitter to take care of a family member, investors don’t want to call just any property manager to take care of their property. Here at RPM we believe “credibility + visibility = profitability.” Looking at the most successful RPM offices, there is one asset that stands out the most: community involvement. Their owners and managers sit on local Chamber of Commerce boards, thrive on fundraising efforts, and are genuinely engaged and in-tune with their neighborhood. After all, it is within your community where you will find your next investor and quality residents.
Step 5: Vet and qualify new residents
Now that you’ve done your research and explored the newest and best technology for leasing properties, what’s next? Finding quality residents for those properties, of course! Property management companies are always looking for the highest quality residents as this really is the base of the relationship. The resident you select will be the primary caretaker of the home and become the eyes and ears for you to determine the status of the property. A great resident will report maintenance issues (before they become an emergency), be a friendly neighbor to your other residents, and pay all rents on time.
Step 6: Build asset management plans with your investor
Many Canadians enter the world of real estate investing for a variety of reasons. It could be interest and passion for real estate or–something we see happen very commonly–they may have become an “accidental landlord” due to a marriage or inheritance. Due to the different ways investors have acquired their properties, there are different desired outcomes for why they want to rent. For some, they are waiting for the “right time in the market to sell”; for others, they enjoy the passive income and want to own the property for 20+ years. Sit down with your investor and listen to their needs so you can determine what the best steps for the property are.
Step 6: Rinse and repeat steps 4 - 6
Of course, there are myriad details and tasks between each of the above-defined steps–too many for the overarching guide this post represents. Each property, investor, and resident will come with their own needs, and the best property managers are able to balance this relationship to satisfy all parties. If you are ready to start your property management business, contact us at Real Property Management to get the tools, resources, systems and process started.
Interested in learning more about the property management industry and joining Canada's only franchise in this space? Fill in our quick contact form and our franchise success team will each out to you.