We provide a number of relevant bits of advice on opening an apartment rental agency.
The Burgeoning U.S. Rental Market
The housing crisis has had a dramatic impact on the residential rental market. Currently, 38% of U.S. households are renters, a number that is expected to easily top 40% over the next few years. Yet despite the demand for quality rental housing, apartments and leased homes don't fill themselves and the need for apartment rental agencies is more critical than ever.
Apartment rental agencies handle many of the details that landlords don't want to address. A typical agency is tasked with advertising, showing, renting and sometimes managing their clients' rental units. Although it sounds like a lot, it's actually quite manageable considering the agency continues to collect as much as 10% of collected rents long after the renter has moved into the unit.
For startup entrepreneurs, an apartment rental agency startup is appealing because it offers high profit potential and a minimum startup investment. You'll earn your money as an agency owner, but you'll do it by leveraging hustle and organization rather than a huge, upfront capital investment.
Key Features of Successful Apartment Rental Agency Startups
The most successful apartment rental agencies are highly organized operations led by business-savvy entrepreneurs who intentionally stay abreast of industry developments through participation in organizations like the National Apartment Association. Here are a few other key features you'll want to incorporate into your agency startup.
- Broker Networking. Real estate brokers can deliver a steady stream of renters to your agency. Aggressive business networking can yield reciprocal agreements in which brokers send you renters, and you send them renters interested in transitioning to home ownership.
- Referral Rewards. Don't rely exclusively on advertising. Instead, design a referral program with cash incentives for other renters, friends and others to refer prospective renters to your agency.
- Client Relationships. The amount of upfront time you invest in clarifying your relationship with your clients will more than pay off down the road. Starting with the fact that you will be paid on a percentage of rents received (rather than net income), your client contracts will need to clearly articulate the expectations and responsibilities attached to your role.
Best Practices: Business Plans for Apartment Rental Agencies
A great business plan will lay a strong foundation for growth in your startup apartment rental agency.
Business plans address a wide range of issues, including startup financials. Since investors and lenders rely heavily on your business plan's financial forecasts, fudged numbers and vague forecasting are a sure way to sabotage your funding efforts.
Subsequently, a thorough understanding of business plan financial basics is a prerequisite to effective business plan writing for apartment rental agencies.
Review the Competition
Prior to opening an apartment rental agency in your town, it's a smart move to determine how strong the competition is. Use the link below to get a list of local competitors nearby. Complete the form by entering your city, state and zip code to get a list of apartment rental agencies that are close by.
Is the established competition doing a good job? It's important to understand their strengths and weaknesses and think through how you'll stake up against those established businesses.
Learn from Others Who Are Already In This Space
If you are seriously contemplating launching an apartment rental agency, be sure to learn from folks who are already in business. If you think owners of nearby apartment rental agencies will give you advice, think again. The last thing they want to do is help you to be a better competitor.
Thankfully, an owner of a an apartment rental agency in another town may be more than happy to give you a few tips, once they realize that you are not going to directly compete with them in their community. In fact, they are often very willing to share startup advice with you. If you are persistent, you can find a business mentor who is willing to help you out.
How do you locate an owner of an apartment rental agency who is willing to talk to you but doesn't live nearby?
Simply, try our helpful link below, type in a random city/state or zipcode, and start calling.
Apartment Rental Agency Acquisitions: Financial Considerations
Startup apartment rental agencies carry a host of financial risks and concerns. Without an operational history, it's hard to predict how your startup will actually perform in the marketplace.
Financial risk management requires you to at least consider the possibility of setting your startup plans aside to explore acquisition opportunities. Many entrepreneurs buy an existing business for the sole purpose of tapping into the financial benefits of an established customer base.
Based on the acquisition target's financial records, you should be able to piece together a realistic forecast of your new company's financial picture for the first year and beyond. If you need assistance, we suggest talking to an accountant or professional business planning consultant.
Explore Franchising Options
Your chances for surviving in business immediately improve if you become a franchisee and benefit from the prior work of others and their lessons learned.
If your goal is to start an apartment rental agency, you would be wise to investigate whether purchasing a franchise might help you on your entrepreneurial journey.
The link below gives you access to our franchise directory so you can see if there's a franchise opportunity for you. You might even find something that points you in a completely different direction.
These additional resources regarding starting a business may be of interest to you.
If you currently own an apartment rental agency, these resources will come in handy:
If you came here to learn about selling to apartment rental agencies, we've got better information for you elsewhere on our site. Try these resources instead:
If you are interested in starting a different kind of business, please browse our directory of guides below.