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.
RELATED Property Management Business Plan [Sample Template]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.
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.
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 – CEO (President):
Company’s Lawyer/Secretary/Legal Counsel
Admin and HR Manager
Real Estate Agents
Marketing and Sales Executive/Business Developer
Accountant
Front Desk/Customer’s Service Officer
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.
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.
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;
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.
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;
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;
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.
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.
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;
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.
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.
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.
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;
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.
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.
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.
Check List/Milestone
