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Rental Properties Business Plan Template

Written by Dave Lavinsky

Rental Properties Business Plan

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 Rental Properties 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 for a Rental Properties Business

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.

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How to write a business plan for a rental property company.

Your business plan should include 10 sections as follows:

Executive Summary

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.  

Company Analysis

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.

Industry Analysis

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.

Customer Analysis

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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Competitive Analysis

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.

rental property competition

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.  

Marketing 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

Operations Plan

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.  

Management Team

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.  

Financial Plan

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.

Income Statement

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.

sales growth

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

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

business costs

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.

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.

Don’t you wish there was a faster, easier way to finish your Rental Properties business plan?

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.

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Rental Properties Business Plan Template

Written by Dave Lavinsky

Rental Properties Business Plan

You’ve come to the right place to create your Rental Property business plan.

We have helped over 10,000 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 property business plan.

Executive Summary

Business overview.

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.

Product Offering

Noble Properties offers a variety of 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

Customer Focus

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.

Management Team

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.

Success Factors

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.

Financial Highlights

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

financial projections for Noble Properties

Company Overview

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

Industry analysis.

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.

Customer Analysis

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:

Customer Segmentation

Noble Properties will primarily target the following customer profiles:

  • Young adults
  • Individuals who earn the region’s median income or more

Competitive Analysis

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.

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

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’s rental property portfolio provides multiple rental apartments according to the customer’s needs and requirements.

Seattle Properties

Seattle Properties is a local rental property 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.

Competitive Advantage

  • The company will purchase rentals in popular areas around the city, making our rentals in high demand.

Marketing Plan

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.

Promotions Strategy

The promotions strategy for Noble Properties is as follows:

Print Advertising

Noble Properties will invest in professionally designed print ads to display in programs or flyers at industry networking events and relevant local establishments.

Website/SEO Marketing

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.

Referrals  

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.

Operations Plan

The following will be the operations plan for Noble Properties.

Operation Functions:

  • 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.

Milestones:

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.

Financial Plan

Key revenue & costs.

Noble Properties’ revenue will come from rental income, property management fees 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

Key assumptions.

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

Financial Projections

Income statement, balance sheet, cash flow statement, rental properties business plan faqs, what is a rental property business plan.

A rental property  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 Property Businesses?

There are a number of different kinds of rental property companies , some focus on Single family homes, Multi-family properties and others on Short-Term Rental properties.

How Do You Get Funding for Your Rental Property Business Plan?

Rental Property 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.

A well-crafted rental property business plan is essential to securing funding from any type of potential investor.

What are the Steps To Start a Rental Properties Business?

Starting a rental property 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 Property 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 a market analysis, information on the services you will offer, marketing strategy, 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

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Property Rental Business Plan PDF Example

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  • February 28, 2024
  • Business Plan

the business plan template for a property rental business

Creating a comprehensive business plan is crucial for launching and running a successful property rental business. This plan serves as your roadmap, detailing your vision, operational strategies, and financial plan. It helps establish your property rental business’s identity, navigate the competitive market, and secure funding for growth.

This article not only breaks down the critical components of a property rental business plan, but also provides an example of a business plan to help you craft your own.

Whether you’re an experienced entrepreneur or new to the real estate industry, this guide, complete with a business plan example, lays the groundwork for turning your property rental business concept into reality. Let’s dive in!

Our property rental business plan is structured to cover all essential aspects needed for a comprehensive strategy. It outlines the rental operations, marketing strategy , market environment, competitors, management team, and financial forecasts.

  • Executive Summary : Offers an overview of the property rental business’s concept, market analysis , management, and financial strategy.
  • Properties, Amenities & Services: Describes the diverse range of properties, from urban apartments to countryside cottages, each equipped with customized amenities and services to cater to various guest preferences.
  • Properties Deep Dive: Offers a detailed look into each property, including design style, location, key features, and financials related to purchase and renovation.
  • Key Stats: Shares industry size , growth trends, and relevant statistics for the short-term rental market.
  • Key Trends: Highlights recent trends affecting the short-term rental sector, such as the rise of eco-friendly properties, technology integration, and the shift towards local experiences.
  • Key Competitors : Analyzes main competitors and differentiates the business based on unique property offerings and guest experiences.
  • SWOT: Strengths, weaknesses, opportunities, and threats analysis.
  • Marketing Plan : Strategies for marketing the properties to maximize occupancy and revenue.
  • Timeline : Key milestones and objectives from property acquisition and planning through launch and operational optimization.
  • Management: Information on who manages the property rental business and their roles.
  • Financial Plan : Projects the business’s financial performance, including revenue, profits, and expected expenses, with a focus on achieving profitability and sustainable growth.

the business plan template for a property rental business

Property Rental Business Plan (Airbnb / VRBO)

business plan for residential rental apartments

Fully editable 30+ slides Powerpoint presentation business plan template.

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Executive Summary

The Executive Summary introduces your property rental business plan, providing a succinct overview of your rental operation and its offerings. It should detail your market positioning, the variety of properties you manage, their locations, sizes, and an overview of day-to-day management practices.

This section should also discuss how your property rental business will fit into the local real estate market, including the number of direct competitors in the area, identifying who they are, along with your business’s unique selling points that set it apart from these competitors.

Moreover, it’s important to include information about the management and co-founding team, detailing their roles and contributions to the business’s success. Additionally, a summary of your financial projections, including revenue and profits over the next five years, should be presented here to provide a clear picture of your property rental business’s financial plan.

Make sure to cover here _ Business Overview _ Market Overview _ Management Team _ Financial Plan

Property Rental Business Plan executive summary

Dive deeper into Executive Summary

Business Overview

For a Property Rental Business, the Business Overview section can be effectively divided into 2 main sections:

Properties & Locations

Describe the range and types of properties within your portfolio, such as apartments, single-family homes, vacation rentals, or commercial spaces. Emphasize the diversity and quality of your properties, including any unique features or high-demand attributes they may have. Discuss the locations of your properties, stressing their accessibility and the convenience they offer to tenants.

Highlight properties that are strategically located near key amenities, such as public transport, business districts, schools, or recreational areas. Explain why these locations are beneficial in attracting and retaining your target tenants.

Amenities & Services

Detail the amenities and features available with your properties, such as in-unit laundry, security systems, fitness centers, communal spaces, or eco-friendly installations. Highlight how these amenities meet the needs and preferences of your target tenant demographic.

Outline your leasing terms and pricing strategy , ensuring they align with the value provided by your properties and the competitive market landscape. Discuss any flexible leasing options, promotional offers, or loyalty incentives you provide to enhance tenant retention and attract new tenants.

Make sure to cover here _ Properties, Amenities & Services _ Properties Deep Dive

Business Plan_Property Rental properties

Market Overview

Industry size & growth.

In the Market Overview of your property rental business plan, begin by examining the size of the property rental industry and its growth potential. This analysis is vital for understanding the market’s breadth and pinpointing opportunities for expansion.

Key Market Trends

Next, discuss recent trends in the property rental market, such as the growing demand for flexible leasing options, the rise of smart home technology in rental properties, and the increasing preference for properties with green, sustainable features. Highlight the shift towards more personalized tenant experiences and the popularity of properties that offer unique amenities, such as co-working spaces or pet-friendly environments.

Key Competitors

Finally, assess the competitive landscape, which ranges from large property management companies to individual landlords, as well as emerging short-term rental trends facilitated by platforms like Airbnb. Focus on what sets your rental business apart, be it superior tenant services, innovative property features, or niche market focus. This section will outline the demand for rental properties, the competitive environment, and how your business is uniquely positioned to succeed in this dynamic market.

Make sure to cover here _ Industry size & growth _ Key market trends _ Key competitors

Property Rental Business Plan market overview

Dive deeper into Key competitors

First, conduct a SWOT analysis for your property rental business, identifying Strengths (like diverse property portfolio and prime locations), Weaknesses (such as maintenance costs or vacancy rates), Opportunities (for instance, the growing demand for flexible housing and rental spaces), and Threats (like market saturation or regulatory changes impacting rental operations).

Marketing Plan

Then, devise a marketing strategy that details how to attract and retain tenants through strategic online listings, virtual tours, referral incentives, a strong online presence, and engagement with the local community.

Lastly, establish a comprehensive timeline that marks key milestones for the launch of your rental operations, marketing initiatives, tenant engagement plans, and growth or diversification goals, ensuring the business progresses with a focused and strategic approach.

Make sure to cover here _ SWOT _ Marketing Plan _ Timeline

Property Rental Business Plan strategy

Dive deeper into SWOT

Dive deeper into Marketing Plan

The Management section focuses on the property rental business’s management and their direct roles in daily operations and strategic direction. This part is crucial for understanding who is responsible for making key decisions and driving the property rental business towards its financial and operational goals.

For your property rental business plan, list the core team members, their specific responsibilities, and how their expertise supports the business.

Property Rental Business Plan management

Financial Plan

The Financial Plan section is a comprehensive analysis of your financial projections for revenue, expenses, and profitability. It lays out your property rental business’s approach to securing funding, managing cash flow, and achieving breakeven.

This section typically includes detailed forecasts for the first 5 years of operation, highlighting expected revenue, operating costs and capital expenditures.

For your property rental business plan, provide a snapshot of your financial statement (profit and loss, balance sheet, cash flow statement), as well as your key assumptions (e.g. number of customers and prices, expenses, etc.).

Make sure to cover here _ Profit and Loss _ Cash Flow Statement _ Balance Sheet _ Use of Funds

Property Rental Business Plan financial plan

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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.

  • Opportunities:

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.

Check List/Milestone

  • 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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Rental Properties Business Plan Template [Updated 2024]

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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

Business overview.

[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

Customer Focus

[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%
  • Families-14%

Management Team

[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.).

Success Factors

[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.

Financial Highlights

[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.

Customer Segmentation

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.

Competitive Advantage

[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.

Promotions Strategy

[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.

Pricing Strategy

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

Functional roles.

To execute on [Company Name]’s business model, the company needs to perform many functions, including the following:

Administrative Functions

  • 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.

Hiring Plan

[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:

Key Assumptions

  5 Year Annual Income Statement

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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.

BLOG_Rental_Property_Business_Plan_Infographic_1_SMART

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

Property Management

  • Financial Projections

Risk Management

  • Exit Strategy

Let's go through each of them separately.

Executive summary

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.

Business description

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]

Market analysis

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.

BLOG_Rental_Property_Business_Plan_Infographic_2_Market_Analysis

  • 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.

Marketing strategy

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.

BLOG_Rental_Property_Business_Plan_Infographic_3_Marketing_Strategy

  • 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.

Tenant screening

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.

BLOG_Rental_Property_Business_Plan_Infographic_4_Tenant_Screening

  • 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.

BLOG_Rental_Property_Business_Plan_Infographic_5_Property_Management

  • 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.

BLOG_Rental_Property_Business_Plan_Infographic_6_Financials

  • 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.

BLOG_Rental_Property_Business_Plan_Infographic_7_Risk_Management

  • 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.

Exit strategy

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.

Final thoughts

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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BUSINESS STRATEGIES

How to start a rental property business in 7steps

  • Annabelle Amery
  • 14 min read

How to start a rental property business

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

Secure financing

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.

how to start a rental property business, business plan

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.

how to start a rental property business, register your business in the us

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: Making a website for your rental property business is important. You can use small business 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.

Can I start a rental property business with no experience?

Yes, it's possible to start a rental property business with no prior experience, but it's important to approach it carefully and educate yourself to increase your chances of success. Here are some key steps to consider:

Educate yourself: Learn about the real estate market, property management and landlord-tenant laws. Understanding the basics is crucial for making informed decisions.

Research the market: Conduct thorough market research to identify potential areas for investment. Look for locations with growing demand, low vacancy rates and potential for rental income.

Create a business plan: Develop a comprehensive business plan outlining your goals, target market, financial projections and strategies for property management. This plan will serve as a roadmap for your business.

Build a knowledge network: Connect with experienced professionals in the real estate industry, such as real estate agents, property managers and other investors. Their insights and advice can be valuable as you navigate the business.

Start small: Consider beginning with a smaller property to minimize risk and gain hands-on experience. As you become more comfortable and experienced, you can explore larger investments.

Financing: Explore financing options and understand the costs involved. This includes the purchase price, property maintenance, insurance, property taxes and potential vacancies.

Legal compliance: Familiarize yourself with local landlord-tenant laws and regulations. Compliance is crucial to avoid legal issues and ensure a positive landlord-tenant relationship.

Property management: Decide whether you will manage the property yourself or hire a professional property management company. Managing on your own may save costs but requires a commitment of time and effort.

Example of rental property businesses built on Wix

Need a little extra inspiration? Check out these rental property businesses on Wix.

TurnkeyRents

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.

How to start a rental property business FAQ

Is a rental property a good investment.

Yes, rental properties can be a good investment. They offer potential for passive income through rental payments and the opportunity for property appreciation over time. Additionally, real estate investments provide tax benefits, including deductions for mortgage interest, property taxes and operating expenses.

What rental properties are most profitable?

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:

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How To Start A Rental Property Business Like A Pro

business plan for residential rental apartments

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.

business

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.

5. Systemize

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.

rental

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.

3. Structure

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.

5. Marketing

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:

Rental websites

Social media

Print media/newspaper

Local bulletin boards

Local Realtors

Word-of-mouth marketing

Direct mail campaigns

Previous renters

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.

business plan for rental properties

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.

If you're interested in investing in real estate, but don't have the time or experience to start, click the banner below to see JWB Real Estate Capital's full-service solution for a truly stress-free investing experience.

business plan for residential rental apartments

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 2024], investor's guide to the real estate contingency contract.

Housing Rental Business Plans

Real estate management business plan.

MSN Real Estate is an Oregon-based real estate company that will offer benchmarked rental units for the Eugene, Oregon community.

Rental Remodeling Business Plan

Victorian Renovations are contractors who buy, restore, and then rent out turn-of-the-20th-Century houses.

Airbnb Business Plan

The Tracktown Townhome is a Eugene based Airbnb rental that offers a comfortable stay and exposure to the rich track and field history of the area.

The housing market is more competitive than ever. Rental prices are rising and the availability is fairly limited. There’s a need for customers to find rentals and even for current housing to be updated and remodeled.

If you have experience managing properties or working as a contractor, now is a great time to open a rental business. Download one of our sample housing rental business plans today and get started on your own plan.

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business plan for residential rental apartments

Examples

Rental Property Business Plan

business plan for residential rental apartments

A rental property business is perfect for anyone who wants an easy way into the world of business ownership. You simply need a house or an apartment building to rent, and a solid business plan as a ticket to the industry. Of course, preparation is always the key to success. If you really want to make money by investing in a property, you first need to have a solid plan on how to make it work. Otherwise, your future investment will not be any different to throwing your money and hoping it will multiply and come back to you. You may also see  real estate investor marketing plan examples .

Planning will involve analyzing your goals as an investor and your goals for the investment property. Are you doing this to have a steady stream of income, or because you have an unused property at your disposal and you want to make the best out of it? Perhaps it’s because you’re simply bored and tenants would help create a noisy environment for you?

11+ Rental Property Business Plan Examples

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Rental Property Business Plan Template

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Nine Questions that can help you Develop and Focus your Plan

Whatever the reason may be, there are certain questions you can ask yourself to help you put together a strategy for a long-term success. These questions will help you focus by answering the  who, what, when, where, why,  and how of starting a business. You may also see  rental inventory examples .

Unfortunately for you, you can’t skip this part since there is no cookie cutter for starting a business. Each one of us will have different goals and objectives when investing in real estate , which means that we can’t simply follow other people’s footsteps. We need to make our own. The secret lies in defining your personal objectives and then developing specific strategies and plans of action to meet them. You may also see  real estate strategic plan examples .

You can start by asking yourself how you can make money through real estate, and deciding how much  exactly  it is that you want to earn per month. However, to be more specific, here are nine questions that can help you develop and focus your plan:

1. What is your goal as a property investor?

You need to decide exactly how you are planning to earn money as a property investor so that we can start focusing all of our efforts toward that goal. Is being a landlord a side job, or do you want to quit your day job to do this full-time? Do you want to make a quick profit by selling the house instead? Or do you want to buy and hold a property for capital appreciation and to make passive income each month?

Whatever your answer to this question is, it will help you understand the course you will take. It will identify the next big decisions you will be making, each one of them relevant to achieving your goal. You may also see  real estate sales plan examples .

2. Do you understand the different types of investment properties?

There are many different ways to invest in real estate. Are you sure you are aware of your choices? Rental properties are a great choice. It offers you a steady source of income without compromising your ownership of the building; however, there are also other choices at your disposal. You may also see  self-catering business plan examples .

Before you make any permanent decisions, make sure that you’ve gone through all of your choices and equally considered each one so that you can choose the one or two that are most in line with your goals as a person and a future businessman, with your finances, and even with your personality type.

By conducting a thorough research, you may learn more about the industry that you are getting yourself into. Make sure you’ve chosen, and that you’ve chosen well. After all, you’ll be stuck with your business for a long time. You may also see company plan examples .

3. Where will the property be located compared to your current home?

Decide how far away you are willing to have the property, especially if you are yet to purchase the real estate. Take costs into consideration. How much money will you need for transportation from your house to your rental property? How much gas will you consume? Will you need a bus, train, or plane ticket to get there?

The opportunity cost associated with travel time can be considered lost productivity, so this early on, start calculating how much time you can lose. Some investors make the mistake of investing in a property that is too far from where they live. If you want to be a hands-on owner, proximity will matter. You may also see  apartment marketing plan examples .

4. What will it cost?

Of course, we need to think about the initial investment . How much exactly is it? If you don’t have enough money on your own for it, how will you afford it? How much monthly expenses do you think you will have because of it? Are you being realistic with your numbers? Make sure that you are, otherwise, you will end up with a crunch in your numbers when the actual paying comes. You may also see  commercial real estate marketing plan examples .

Mortgage payment, monthly maintenance, taxes, and insurance are just some of the bills you need to prepare for. You should also consider having a reserve account from which you can take funds to cover emergency repairs and unforeseen vacancies in your rental property.

Anticipate the exact amount of monthly income you will have. This means that you need to foresee the vacancy rate in the area where your rental property is located. You also need to calculate how much you can charge for the rent. You may also see risk management examples .

5. How will you market your property?

This one can be a little tricky. Once you have the numbers set and waiting, the next thing you will have to do is to find tenants whose monthly rent you will need to realize the numbers you’ve predicted. Think: will you be posting advertisements online? Will you use a realtor? Is your property appealing enough to prospective tenants?

6. How will you manage the property?

Do you have enough time in your hands to become the landlord, or will you hire a property manager? If so, you will need to research for management companies or interview superintendents to find out how much they will charge for that so you can add it to your expenses. You may also see budget action plan examples .

But before deciding, you must remember that the upkeep of your property is your obligation. All these preparations, all these planning are all for nothing if you will only leave the welfare of your property in the hands of unprofessional strangers who are not interested in doing what’s best for your property. You still need to have a say in it to make sure that your rental property will be maintained. You may also see property survey examples .

7. How will you manage tenants?

What will you require from your tenants as they move in? How much will you charge for the security deposit ? Landlords usually charge on to one and a half month’s rent. Will you apply the same rule? How will you select the right tenants? After all, you just can’t have  anyone living in your property, can you? Will you run a credit check on prospective tenants, or will you choose to give them all the benefit of the doubt?

Do you have all of the proper legal forms such as the lease, rental application, or the notice to quit, or will all of this be conducted without that sort of formality? Do you understand what fair housing is? Do you understand how to evict a tenant? Will you make your property pet-friendly, or are these cute little creatures banned from it?

Being a landlord is not limited to having a property, renting it, and then collecting the money at the end of the month. There are legal preparations that need your attention and documents you need to have. You will be responsible for an entire inhabited building. Make sure you are ready for that responsibility. You may also see  wholesale real estate marketing plan examples .

8. How will you maintain the property?

Of course, you can’t possibly place an immaculate, beautiful building up for renting only to give it up to neglect after a year or so. You constantly need to think about remodeling, renovations, and the basic cleaning maintenance. Think: will you hire a contractor for that, or will you do the repairs yourself?

How will you take care of yard maintenance such as mowing the lawn and shoveling snow? What about the general appearance of the place? These are important things to consider since you don’t want your tenants to end their contract with you just because you’ve allowed the place to look shabby. You may also see free business plan examples .

9. Do you have a plan if your investment fails?

We don’t want to entertain the thought of failure when the business hasn’t even started yet, but it’s a possibility we can’t shake off. Do you have an exit strategy should the worse happen? And should  that  exit strategy end, do you have another one?

Building Your Business Plan

The trick is not only to  build your business plan but also to accomplish everything in it. Here are some exercises you can do to document everything from your long-term vision to your day-to-day tasks.

Ask yourself, if it was a perfect world, where would you be in five years? What does a perfect day look like to you? Your vision can be something as realistic as paying off your house, or it could be something as absurd and far-fetch as earning $500,000 doing what you love. Understand what you want to make happen. You may also see importance of business plan examples .

What is your personal mission? What are you trying to achieve for yourself? It could be to gain financial freedom through investing in a real estate property , or it could be educating the world on the different ways to finance real estate. Your mission is the thought, the idea of achieving something that can give you a sense of success and accomplishment. You may also see business plan outline examples .

3. Objectives

Try to create measurable short- and long-term goals that will help you calculate and measure your success along the way. Start with something small like reaching $10,000 total revenue by the end of a year, or ending it with 3 solid lending partners. Create benchmarks and tiny milestones to show yourself that you are actually achieving something, that you are getting somewhere. You may also see  advertising and marketing business plan examples .

4. Strategies

Identify how you will reach these objectives. Will you do it by networking with other businessmen and cultivating relationships with people who can help you in your journey? What about getting referrals from other real estate investors? Or are you planning on simply working hard, lone wolf style? Whatever it may be, make sure you know how to proceed with this. You may also see  annual plan examples .

5. High-level plans

High-level plans will help you create a road map for implementing your strategies and achieving your objectives. Although technically, your business plan is a road map in itself, high-level plans will bring more concentration into your every step.

6. Daily plans

Ideally, you will break down your high-level plans into daily plans so that every day, you will be working toward your long-term goals. It’s easy to push aside your plans thinking, “I’ll do it later,” but we all know where  that attitude can get us. If you work for at least 15 minutes a day on a project, your plans will accelerate more than you think. You may also see  network marketing business plan examples .

How to Be Successful in Your Rental Property Business

If you are in the rental property industry or you’re planning to be, you already have one sound advantage: you own an asset that can help you generate income, as opposed to having assets that mostly yield to expenses. Even experts admit that in an equation, the former has more good weight to boast of. It is undeniable, of course, since property purchase to be rented out does generate a more consistent amount of income compared to when it is limited to personal use or kept idle. You may also see bar business plan examples .

However, this doesn’t grant you immunity to the many common pitfalls for not-so-successful landlords and how they approach property rental as a business. Learn from them by following these tips.

1. Know who your market is.

Narrow down your market based on the property you offer. Make sure you have a keen understanding of what they require from the use of your space. The location will also play an important role here. You may also see  tutoring business plan examples .

2. Set aside a budget.

The properties and facilities that you will offer to your tenants will need a budget. Set aside an ample amount for the upkeep of your property. You can also check  social media business plan examples .

3. Have everything in writing.

Like every smart businessman, you should have  literally everything in formal writing. You should have your tenants sign an official lease agreement ; they should sign a copy of your rules so that you have a document to back you up should you need one; you should settle payment terms and lease duration in writing; any specific cleanliness guidelines that they need to adhere to; and when the rent is exactly due and what happens for late payments.

4. Keep track of your cash flow.

What differentiates a successful rental business from failed ones is that the former is capable of maintaining a healthy cash flow, which means that they make sure that what they are earning from the monthly rent is more than enough to cover their expenses.

5. Fulfill your duties and obligations as landlord and property owner.

The best way to get your tenants to meet their obligations is to make sure that you do too. Your job is not only to take the rent money, but you also need to make sure that your tenants are living well  inside your building  and that your property is always suitable for human inhabitants. You may also see  market analysis business plan examples .

Starting your business can be daunting, but with the right business plan to guide your way, success can be a sure destination. You may also see  affiliate marketing business plan examples .

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business plan for residential rental apartments

How to start and operate an apartment rental business

The United States apartment rental industry is booming! The market size of this specific type has grown 1% per year on average between 2017 and 2022. By 2023, it’s projected that revenue will reach $229 billion- which means there are plenty more opportunities for those looking to get into the rental property business or buy their first investment property unit as well!!

So, if you’re looking for a new business idea , consider starting an apartment rental business. This is a great opportunity to enter the housing market, and there are several things you need to do to get started. This article will discuss the basics of starting and operating an apartment rental business. We’ll also cover important topics such as licensing and insurance. So if you’re ready to get started, keep reading!

Before buying or leasing a property, it’s important to do your due diligence. This will help you map out the important steps you need to take to get your business up and running. It will also give you an idea of what expenses you’ll need to cover and how much revenue you can expect to generate.

  • Understand what you’re getting into- The first step is to understand the ins and outs of the apartment rental industry. This includes learning about the cap rate, NOI (net operating income), and other key financial concepts that will be important when making investment decisions.
  • Research the local market and find out what people are looking for in an apartment.
  • It’s also important to inspect the property thoroughly before making any decisions. This includes checking for potential damage, such as water leaks or mold.
  • It’s also a good idea to have a professional appraiser inspect the property to determine its value. This will help you set a fair price for rent and avoid overpaying for a property.
  • When you are expanding your business, you might need to find suitable office space. This can be challenging, especially if you’re on a tight budget. But it’s important to have a dedicated space for your business, even if it’s just a small office or studio apartment.
  • You’ll also need to factor in mortgage payments if you plan to buy a property. And if you’re renting, you’ll need to budget for utilities and property taxes .
  • Finally, you’ll need to set aside money for marketing and advertising. This is important to get the word out about your business and attract potential customers.

A business plan covering all of these aspects will help you get started on the right foot.

Decide if you want to be a property manager or an owner

One of the first things you need to decide when starting an apartment rental business is whether you want to be a property manager or an owner. Each option has pros and cons, so it’s important to weigh your options carefully before making a decision.

  • If you decide to manage your rental property yourself, you will be responsible for finding and screening tenants, collecting rent, handling maintenance and repair issues, and dealing with problem tenants. This can be a lot of work, but it can also be very rewarding because you will save the money that a manager can charge you for these tasks.
  • If you decide to be just the owner, you need to hire a property management company to take care of all operating tasks. You have to dedicate a portion of your monthly income to the managing company, but this also means you would have a lot of time to spend on market research, buying more rental units, and expanding your business.

So, which option is right for you? Of course, only you can decide that. But, whichever option you choose, there are some things you need to keep in mind to be successful.

Establish a good relationship with your local mortgage lender

As an apartment rental business owner, you’ll need to establish a good relationship with your local mortgage lender. This is important because you’ll need financing for your rental properties. A good relationship with your lender will help you get the best interest rates and terms for your loans.

It’s also important to have a good relationship with your lender because you’ll need to be able to refinance your properties when necessary. For example, if you’re trying to buy a new property but don’t have enough cash, you may need to refinance one of your existing properties to get the cash you need.

Get to know your local real estate market.

business plan for residential rental apartments

As a real estate investor, getting to know your local real estate market is important. This will help you find the right properties to purchase. In addition, you’ll need to know about things like median rental prices, vacancy rates, and other factors that affect the demand for rentals in your area.

You can learn about your local real estate market by reading articles, talking to other landlords and property managers, and attending local real estate events. In addition, a trusted real estate agent can give you the upper hand as you start to look for properties.

Register your business

You need to register your business with the state. This is typically done through the Secretary of State’s office. You will need to fill out a form and pay a filing fee. The form will ask for basic information about your business, such as the business name, address, and contact information. You will also need to provide a description of the business.

After your business is registered, you will need to get a business license.

Get a residential license.

In addition to registering your business with the state, you will also need to obtain a business license from the city or county where your business is located. The process for obtaining a business license varies from one location to another, but it typically involves filling out an application and paying a fee.

If you plan to have apartments in more than one city or county, you will need to obtain a business license for each one.

Check with your local zoning laws.

Before renting out apartments, you must ensure that doing so is allowed in your area. Zoning laws vary from location to location, and some areas do not allow businesses to operate in residential areas.

If you’re unsure whether or not you are allowed to rent out apartments in your area, you can check with your local zoning office. They will be able to tell you what the laws are and whether or not you need to obtain a special permit to do business.

Get insurance

Another important thing to do when you start an apartment rental business is to get insurance . This will protect you in case something happens to your property or if one of your tenants gets hurt while on the premises.

There are a few different types of insurance you can get for your business, so you’ll need to talk to an insurance agent to figure out which kind is right for you.

Find the right property.

Of course, you will also need to find a property you can rent. There are a few different ways to go about this. You can either buy an already existing apartment or convert single-family homes into apartment complexes.

If you decide to buy an existing apartment building, you will need to ensure that it is up to code and meets all the necessary safety requirements.

You will also need to ensure that the building is in a good location and reasonably priced. It’s fine to buy apartments in big rental buildings, but you don’t want to compete with corporate housing complexes.

If you decide to convert a residential property into an apartment complex, you will need to make sure that the property is zoned for commercial property. You will also need the necessary permits and approval from the city or county.

Market your business

Once you have everything set up, you will need to market your business. There are a few different ways to do this. You can put up signs in the area, hand out flyers, or take out ads in the local newspapers. You can also list your business in online directories or on classified websites.

A professional approach to a good marketing strategy is by knowing your market. Do your research to see who are your potential customers.

Are you more interested in long-term tenants with fewer challenges, or would you like to attract short-term renters willing to pay more like business travelers?

Negotiate and sign leases with tenants

The first step in starting your own apartment rental business is to find tenants. You’ll need to negotiate and sign leases with them, which will outline the terms of their rental agreement. Be sure to review the lease carefully before signing it, as it will be binding on both parties.

business plan for residential rental apartments

If you already have a tenant, it’s always better to negotiate a rate increase with your tenants before looking for new ones. This is because it’s easier and cheaper than finding a replacement tenant while also avoiding the high cost of turnover that comes from having many empty apartments or rooms on your property at any given time.

You can use a few tricks to get your tenants into negotiating and signing new leases. First, make sure the rent is fair for both parties. So it doesn’t matter if you’re renewing or starting with someone new; chances are that once they’ve seen what kind of place this truly was in terms of location and amenities, then negotiations will start happening on behalf of all involved! You should also remember not only how important good communication is between oneself as well other involved parties such as cleaners/handlers etc., but especially during talks surrounding any sort of agreement like an increase from $500-$550 per month ($10 extra), because sometimes these little things add up quickly if not kept in mind throughout the entirety of the conversation!

business plan for residential rental apartments

Maintain the property and handle repairs/maintenance as needed

When you start and operate an apartment rental business, you need to maintain the property and handle repairs/maintenance as needed. This includes regularly scheduled cleaning and upkeep, as well as responding to tenant requests for repairs promptly. You also need to be prepared for larger-scale projects like repainting the exterior or repairing the roof, as well as any emergency repairs that may come up. If you need some temporary staging furniture , look for your local staging rental company . This way, you don’t need to buy expensive items that you just need for a short-term tenant.

Having a good relationship with a local maintenance company can be helpful, as they can often provide discounts for regular work. You should also have a budget set aside each month for unexpected repairs. By being proactive about maintaining your property, you can avoid costly surprises down the road.

Collect payments and provide customer service

When you own an apartment complex, you are responsible for collecting the rent. This can be done in person, by mail, or online.

But if your place is maintained by a property management company (Or individual manager), you don’t need to be worried about collecting the fees. The company will take payments and deposit them into your account. You can also set up an automatic payment system, where the money is withdrawn from the tenant’s bank account and deposited into yours on a certain day each month.

How to manage your finances and keep track of expenses

Starting an apartment rental business can be a great way to earn extra income, but it’s important to keep track of your cash flow and finances. Here are some tips for managing your finances and keeping track of expenses:

  • Create a budget for your apartment rental business. This will help you track your rental income and expenses to see where your money is going.
  • Keep track of all of your expenses, including rent, utilities, advertising, and repairs. This will help you keep tabs on how much money you’re spending each month.
  • Make sure to set aside money for taxes. You’ll need to pay taxes on your income, so it’s important to save up for this. Talk to your accountant about tax deduction opportunities.
  • Keep track of your tenant’s payments and security deposits. This will help you stay organized and ensure that you’re getting paid on time.
  • Have a separate bank account for your apartment rental business. This will help you keep track of your finances and avoid mixing personal and business expenses.
  • It’s also important to save a portion of your income in an emergency fund in case repairs are needed, you have to evict a tenant, or you are just facing an economic downturn.
  • If you have a large inventory, then property rental management software makes your life easier.

Evict tenants who are not following the lease agreement

If your tenant is not following the terms of their lease agreement, you may need to evict them from your property. The eviction process can be complicated, so it’s important to understand your state’s laws and procedures before taking action. First, talk to your lawyer to know the general rules and explore the best ways to tackle this problem.

If you decide to proceed with an eviction, you’ll need to serve your tenant with a notice of eviction. This notice will state the reason for the eviction and give your tenant a specific amount of time to remedy the issue or move out of the property. If your tenant does not correct the issue or move out within the specified time frame, you can file for eviction with your local court.

Once you’ve filed for an eviction, the court will set a hearing date. At the hearing, both you and your tenant will have the opportunity to present your case. If the judge rules in your favor, they will issue an eviction order. This order will give your tenant a specific amount of time to vacate the property.

If your tenant still does not vacate the property after the eviction order has been issued, you can hire a professional to physically remove them from the premises. This process should only be used as a last resort, as it can be costly and time-consuming.

The eviction process can be complicated, so it’s important to understand your state’s laws and procedures before taking any action.

Legal considerations when running an apartment rental business

As a business owner, it’s important to be aware of the legal considerations when running an apartment rental business. Here are some things to keep in mind:

Zoning laws: Make sure you are familiar with the zoning laws in your area and obtain the proper permits before starting your business.

Fair housing laws: Be familiar with federal, state, and local fair housing laws. This includes understanding what types of discrimination are prohibited.

Lease agreements: Make sure you have well-written agreements that protect both you and your customers. Be clear about expectations, rules, and regulations.

Safety: Take measures to ensure the safety of your tenants. This includes things like maintaining the property in a safe and clean condition, having adequate lighting, and providing security features like deadbolts and security cameras.

Insurance: Make sure you have the proper insurance coverage for your business. This includes liability insurance in case someone is injured on your property.

Always keep yourself updated about new rules and regulations that may affect your business. By doing so, you can avoid any legal problems down the road.

Tips for maintaining a good relationship with your tenants

When you’re a landlord, it’s important to maintain good relationships with your tenants. After all, they are the ones who are renting your units and keeping your business running.

1. Be responsive to their needs.

Tenants want to know that their landlord is responsive to their needs. If they have a problem with their unit, they want to know that you’ll be there to fix it in a timely manner. If you’re not responsive, they will start to feel like they’re not a priority and may look for another place to live.

2. Be fair.

They want to know that they’re being treated fairly. If you’re constantly changing the rules or increasing rent without notice, they will feel like they’re being taken advantage of. As the apartment owner, it’s important to be consistent and transparent with your tenants to maintain a good relationship.

3. Communicate often.

Tenants want to know what’s going on with their rental property. If there are any changes or repairs that need to be made, they should be the first to know. Keeping them in the loop will help them feel like they’re a part of the decision-making process and not just an afterthought.

4. Be understanding.

Tenants are human beings, and things happen. If a tenant is late on a payment or needs to break their lease, try to be understanding. Work with them to find a solution that works for both of you. Showing them that you’re willing to work with them will go a long way in maintaining a good relationship.

5. Be available.

Tenants should be able to reach you when they need to. If you’re constantly unavailable or hard to get ahold of, they will start to feel like you don’t care about their needs. Make sure you’re accessible and easy to reach when someone needs you.

Following these tips will help you maintain a good relationship with your tenants. Remember, happy customers, are crucial to a successful rental business .

Running an apartment rental business can be a great way to earn some passive income and provide housing for people in your community. However, there are a few legal considerations to keep in mind. Be sure to familiarize yourself with zoning laws, fair housing laws, and lease agreements. You should also take measures to ensure the safety of your tenants and have adequate insurance coverage. By following these tips, you can avoid any legal problems and maintain a good relationship with your tenants.

Do you have any other tips for running an apartment rental business? Share your thoughts. Send us a message, and we will try to answer your concerns as soon as possible.

business plan for residential rental apartments

Apartments in Two Ruan Center building to have rooftop dog park, '80s-inspired work space

business plan for residential rental apartments

The proposed conversion of the landmark downtown Des Moines office building Two Ruan Center into multifamily housing will include a rooftop dog park and '80s-inspired co-working space, new renderings show.

First announced last September, plans call for the largely vacant, 14-story office building at 601 Locust St. to become 221 apartments. The project's cost is now estimated to be over $81 million.

Scott Wells of architecture firm GastingerWalker told the city's Urban Design Review Board on Tuesday morning that the building also will have small theater, gym with strength training and group fitness classes, bike racks, a bike wash and repair station, a pet spa and covered indoor parking.

The rooftop community area would have a patio with Capitol views. A private, resident-only lounge on the second floor will have easy access to the skywalk system.

Wells said designers will emulate the "'80s look" in shared spaces in the circa-1981 building, incorporating "historic" features like carpet and drop ceilings when appropriate. The residential areas, though, will be more contemporary.

"It's what people are expecting to see in apartments," Wells explained.

Construction on Two Ruan is anticipated to begin at the end of 2024, with completion anticipated in 2026.

Will the Two Ruan office building be hard to convert?

Faced with decreases in Two Ruan's assessed value, Ruan, a major trucking, logistics and banking company, partnered with Block Real Estate Services and Foutch Brothers, the same architecture and real estate team that led the redevelopment of the Equitable Building directly across Locust Street from Two Ruan, into multifamily housing in 2016.

It's one of the latest conversions in a central business district plagued with an elevated office vacancy rate since 2020, when the advent of the COVID-19 pandemic resulted in many people working from home. The nearby Financial Center followed suit in March, announcing its own plans to convert more than half its floors to residential use .

But transforming an office building into apartments isn't easy. The Bipartisan Policy Center  in a 2023 report  suggested that challenges can include overcoming zoning and building code differences between office and residential structures; adding sufficient plumbing and electrical service for individual units ― utilities that often are centralized in office buildings; and ensuring each unit has a window to provide natural light and ventilation. 

Jesse Bunney, director of operations for the Financial Center's building owner Lawmark Capital, said that the company found that on average, only 20% of office buildings are easy to convert .

Two Ruan Center is one of the lucky ones, Wells said.

The building's relatively recent design, the shape of its core and its grid made it a good candidate for multi-family housing, Wells said. However, with the conversion from office to residential use, it will need to make "significant and complex" alterations to the building’s interior including HVAC, electrical, and mechanical upgrades, he added, but they're not insurmountable.

"Every building has its challenges, but this one has a lot less," Wells told the Register. "It worked out really well."

Are the developers getting city cash?

Last month, Des Moines City Council considered preliminary terms of a development agreement with Ruan, Block Real Estate Services and Foutch Brothers that would provide about $5.6 million in tax increment financing to the project.

According to a report from city staff, the team behind Two Ruan's redevelopment indicated that, without incentives, they would likely encounter a financial gap created by the continued rise in construction costs and higher interest rates. While an official development agreement has not been reached, the city's offer would comprise 3.4% of the total project cost.

Recently: Des Moines city leaders hold secret meetings on development agreements

In exchange, the project will include affordable housing, with 23 units offered at a monthly rent capped at $1,252 for one bedroom and $1,504 for two bedrooms. The affordable units will be available only to households earning 80% or less of the area median income, which in 2024 is $63,300 a year for a single person or $90,400 a year for a family of four,  according to the U.S. Department of Housing and Urban Development .

On top of the city's offer, the developers told staff they'll pursue state and federal historic tax credits, and all work will be undertaken following the U.S. secretary of the interior’s standards and guidelines for historic rehabilitation.

Will the building's distinct look change?

Two Ruan, known for its deliberately weathered and rusty-looking Cor-Ten steel exterior,  isn't considered one of Des Moines' prettiest buildings downtown , but its appearance is distinctive.

Wells noted that other that rooftop alterations to make way for penthouse amenities, Two Ruan will keep its rusted finish.

Addison Lathers covers growth and development for the Des Moines metro. Reach her at 608-931-1761 or [email protected], and follow her on X at @addisonlathers.

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How the FTC is showing its commitment to protecting renters’ rights

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Housing costs take a big bite out of most Americans’ budgets, especially consumers looking for a suitable place to live during a fluctuating rental market. That’s why the FTC has particular concerns when in their quest for one of the most basic human needs – a roof over their heads – prospective renters are subjected to practices that violate the law. If you’re a landlord, work for a property management company, or provide other services in the rental sector, heed the warning that the FTC looks askance at illegal conduct that could turn home sweet home into home cheat home for renters.

As a general rule, the FTC Act’s broad prohibition on deceptive or unfair practices applies in the rental market. In other words, long-standing legal fundamentals – for example, truthful advertising and clearly disclosed fees – protect consumers looking to rent a house or apartment. What’s more, the  Fair Credit Reporting Act requires landlords, property managers, and other housing providers, as well as companies that offer tenant background screening reports, to comply with the FCRA when it comes to background checks on prospective tenants.

Recent law enforcement actions demonstrate the FTC’s commitment to honest practices in the rental market and offer a five-point compliance refresher for businesses.  1.   Avoid misleading claims in advertising, including on websites, platforms, and social media.  Objective representations about properties or services are subject to established FTC truth-in-advertising standards. A case in point is  the FTC’s action against Roomster and its owners brought in partnership with the Attorneys General of New York, California, Colorado, Florida, Illinois and Massachusetts. According to the complaint, Roomster used phony listings on sites like Craigslist to drive consumers to Roomster’s platform. Consumers paid fees for access to supposedly available listings only to learn that the rentals didn’t exist. The FTC and AGs also alleged that Roomster hired a person to flood the internet with tens of thousands of phony four- and five-star reviews. The lawsuit resulted in hefty financial penalties, tough injunctive provisions. and a lifetime ban on the use of incentivized reviews.

The Roomster case offers two more key takeaways. The lawsuit named Roomster’s corporate officers in their individual capacities, as well as the person they paid to create all those bogus reviews. In other words, depending on the facts, individuals may be on the hook personally for violations of the law. Second, what you say online about your properties is advertising subject to the FTC Act’s prohibition on deceptive and unfair conduct. Thinking about priming the pump by having your staff post some positive reviews? Think again. The FTC has brought multiple actions against companies, corporate officers, and others who posted reviews without clearly disclosing their connection to the business. Read the  FTC Endorsement Guides and consult compliance resources about  endorsements, influencers, and consumer reviews .

2.   Exercise particular care when targeting lower-income consumers.  For low-income families, older adults, and disabled people, meeting the stringent requirements of the Section 8 voucher program is only the first step in their search for housing. They also must find a landlord willing to accept a voucher.  Apartment Hunters, Inc. and the individuals behind WeTakeSection8.com and other websites promised that consumers who paid weekly or monthly subscription fees would get access to “500,000+ Section 8 approved or low price apartments and homes for rent nationwide,” allowing them to “find a place within 5-7 days.” But according to the FTC, most of the properties the defendants listed either weren’t available or didn’t accept Section 8 vouchers.

The defendants’ actions subjected low-income consumers to a double whammy of injury. First, consumers had to stretch their already limited finances to pay for services that didn’t live up to the company’s advertising claims. Second, people can spend years on the Section 8 waiting list, but once they qualify, they have a narrow window to find an eligible rental. Time spent chasing down bogus leads puts them at risk of missing the deadline. The $6 million settlement demonstrates the importance of backing up claims about housing availabilities with facts, especially for rentals through government programs like Section 8. It also underscores that in addition to direct dollars-and-cents injuries, wasting renters’ time inflicts financial harm, too.  3.   The FTC Act prohibits illegal junk fees and deceptive or unfair pricing practices. It’s Consumer Protection 101: Consumers can’t meaningfully comparison shop for anything – including rental housing – if they don’t know the actual price they’ll have to pay or if companies fail to disclose mandatory fees or bury them in fine print, behind vague hyperlinks, or in dense blocks of legal jargon. The onus is on landlords and property management companies to make sure that consumers know exactly what their rent will be. The FTC has an established law enforcement record of actions challenging concealed charges. Most recently, the FTC has  proposed a rule that would help strengthen the long-standing fight against junk fees – hidden and bogus fees that harm consumers and undercut honest businesses. Companies also have an obligation to be transparent about material terms and conditions of consumer transactions, including in rental leases.

4.   It’s illegal to squelch renters’ right to post reviews about your properties or your service standards. The  Consumer Review Fairness Act (CRFA) protects consumers’ right to share their honest opinions in any forum, including social media, about a business’s products, services, or conduct, and makes it illegal for companies to use form contracts that prohibit or restrict that right. That’s good news for prospective renters looking for accurate information about particular landlords or property management companies. It’s also a welcome development for members of the rental industry who work hard to treat tenants fairly.

The FTC has taken action against companies that have attempted to prohibit consumers from expressing their opinions. For example, the FTC alleged that in the rental application process, Maryland-based  Staffordshire Property Management included a contract clause forbidding applicants from – among other things – disparaging the company or its employees. The settlement put provisions in place to monitor the company’s compliance with the CRFA. Looking for more about what the law requires? Read  Consumer Review Fairness Act: What Businesses Need to Know .  5.   Especially when it comes to tenant background screening reports, conduct a Fair Credit Reporting Act check to make sure your practices comply with the law. In considering a prospective tenant’s rental application or evaluating whether to renew a current tenant’s lease, landlords, property managers, or other housing providers may decide to run a background check using a company that compiles information for that purpose. Those reports are covered by the Fair Credit Reporting Act, which requires businesses to take certain steps at various points in the rental process.

You’ll want to read  Using Consumer Reports: What Landlords Need to Know for compliance guidance, but one key requirement is that if you reject an applicant, increase the rent or deposit, require a co-signer, or take any other adverse action based partly or completely on information in the report, you must give the consumer a notice of that fact, preferably in writing, and include the required information. If you use “investigative reports” – reports based on personal interviews concerning a person’s character, general reputation, personal characteristics, and lifestyle – you have additional requirements under the FCRA, including giving the consumer written notice that you’re requesting an investigative consumer report. If you report information about consumers to a consumer reporting agency (for example, a credit bureau or tenant screening company), you have other obligations under the FCRA and the FCRA’s  Furnisher Rule . Read  Consumer Reports: What Information Furnishers Need to Know for advice on the requirements.

And once you’re finished using a report, the FCRA requires you to securely dispose of it and any information you gathered from it.  Disposing of Consumer Report Information? Rule Tells How explains how that’s done.

Violations of the FCRA can be costly, as recent actions against companies in the tenant background screening business demonstrate. Consider the FTC and CFPB’s $15 million settlement with  Trans Union and subsidiary TransUnion Rental Screening Solutions ; a $5.8 million FTC settlement with background report providers  TruthFinder and Instant Checkmate ; a $4.25 million settlement with tenant background reporting company  AppFolio ; and a $3 million settlement with tenant screening company  RealPage . 

And consumers, we want to hear about your experiences in the rental market. Tell your story to the FTC.  

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La Bella Vista apts in South Houston, TX advertise they have a laundry facility but they haven't had one in about 3 yrs, the wood is all rotten both inside & out, and with every hard rain water comes up through the floor, we have reported at least 3 times and nothing is done

Excuse me? You are completely blinded by what is happening in reality. I have been a landlord for the past 15 years and can tell you that most renters need therapy and mental health help! Dont blame landlords! They came to me for shelter, then destroyed my property. YOU are creating a bias on the people that are helping society the most. If it werent for my services, these folks would be homeless. I am sick and tired of this bullying because you simply refuse to look at the big picture, and take responsibility of moving forward in a productive way. Instead, the FTC has decided to take a government grant and bully small landlords. Shame on you.

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IMAGES

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  5. Residential Building Plan : Basic Principles|| Residential Plan || House Plan Design

  6. The Impact of Investors on the Single-Family Rental Market and Housing Affordability

COMMENTS

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    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. ... (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 ...

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    BUSINESS PLAN [YEAR] Rental Property Where Dreams Come Home John Doe 10200 Bolsa Ave, Westminster, CA, 92683 (650) 359-3153 [email protected] https://upmetrics.co. Table of Contents Executive Summary 4 ... compared to an apartment complex, REV's target tenant prefers the former.

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    1 bd 441 sqft floor 5 Omsk. LOADING... USD 133 / month. Located in Омск. 689 sqft floor 5 Kirovskiy. LOADING... USD 177 / month. Located in Омск. 538 sqft floor 2 Tsentral'nyy.

  24. How to start and operate an apartment rental business

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  25. New renderings released for Two Ruan Center apartments in Des Moines

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