real estate rental business plan

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How to Start a Rental Property Business in 7 Steps

Last Updated: March 29, 2024 by Cameron Smith

To start a rental property business, you’ll need to figure out your financial goals, property acquisition, financing, property management, corporate business structure, and much more.

What is a Rental Property Business?

A rental property business simply means that you’re earning income from at least one rental property. Some people see their business as a way to earn a few extra hundred dollars per month while the property appreciates, while others have thousands of properties that earn millions of dollars per year.

One huge benefit of owning a rental property business is that rental income isn’t subject to self-employment tax. It’s reported to the IRS as ordinary income, so the government doesn’t categorize your rental income as coming from a business.

Why You Should Invest in Rental Properties

Many investors will tell you that owning property is the best investment out there. There are a lot of reasons for this, including:

• Appreciation.   Your property is going to go up in value significantly over time.
• Leverage.   You can purchase a property with only 20% down and finance the rest. Any gains made on the value come back to you as if you’d bought the entire property with cash.
• No mortgage payment.   Your tenants cover the mortgage on your asset.
• Cash flow.   Done right, you should also be earning some cash flow. This may be small in the beginning, but as rental prices increase, you’ll earn more and more.
• Tax benefits. You can  deduct most expenses for your rental business. You can even deduct the value of the house spread out over 27.5 years (known as depreciation).
• Asset control.   You get full control over when you decide to sell, the improvements you want to make, and who gets to live in the property. This isn’t the case when you buy a stock.

How to Start a Rental Property Business

To get your rental property business running, here are the steps you’ll want to take:

• Develop Your Goals
• Decide How You’ll Find Properties
• Determine Financing
• Get the Property Ready to Rent
• Manage the Property
• Plan for Unexpected Costs
• Systematize

1. Develop Your Goals

The main thing to ask yourself when developing your goals is this:

What does your perfect rental business look like?

From there, you can start brainstorming. Get as specific as you like, because it’s often those kinds of details that help your business solidify in your mind.

Here are a few things that you should consider addressing when answering this question and setting goals:

• How much money do you want to earn per month or year from rental income?
• How many properties do you need to hit this income goal?
• How long until you want to hit this goal?
• How many properties do you need to acquire per year?
• Are you only going to work with rental properties, or use other strategies as well?
• Are you planning to manage the properties yourself?
• What’s your exit plan for the properties? Do you want to sell them at a high point, when you retire, or never?
• Are you planning to pay off the rentals as quickly as you can or make the minimum mortgage payment?

There are plenty more that you can ask at this point, but much more will be answered in the next steps of starting your rental business.

2. Decide on Property Acquisition

If you’re considering a rental property business, then you’ve likely already thought about how you want to acquire properties.

However, it can be different for your first property than it is for acquiring many properties over the years.

Acquiring your first property

Many investors get into their first rental property when they want to move and turn their current home into a rental unit.

New investors like this strategy because it’s simple. You already know the neighborhood, the condition of the house, and what upkeep it needs. A new, strange house can be scarier to rent out.

It can also be cheaper to acquire a house this way, as you might be able to buy your new home using an FHA loan. This means you can pay 3.5% down rather than 20%.

If your current home is an FHA loan, you’ll need to refinance before you can purchase your next home with an FHA loan. You can’t hold two at the same time.

If you are interested in buying a separate rental property, you’ll likely be required to put 20% down. Some people choose to buy brand new properties, as they require less maintenance at first. Many new investors find that a less scary prospect.

3. Determine Financing

The scariest part of getting into a rental property is bringing that initial chunk of cash. Generally, if you’re looking at a $500k property, you’ll need $100k cash on hand to make the deal work.

However, there are other ways that you can find ways to finance your rentals:

• BRRRR   – This stands for Buy, Rehab, Rent, Refinance, Repeat. Basically, you treat the house as if you’re going to do a fix and flip where you first secure a hard money loan (some have 0% down options). Then, instead of reselling the house, you refinance into a long-term loan and rent out the house.
• Find a Partner   – If you’re willing to do the work of finding and managing the rental, you can often find someone who’s willing to put up some or all of the money upfront for you. You can go to your friends and family, but also networking at events is a great way to find partners.
• Refinance Your House   – If you can pull $100k out of your home’s equity, that’s the easiest possible solution.
• Home Equity Loans   – Rather than pulling out equity, you can borrow   against   your equity and pay it off over time.

4. Preparing the Property

Now, you’re the proud owner of a new rental property. Is it time to throw it up on the market?

Rarely will your property be 100% rental-ready. Consider a brand new home, for example. There’s a good chance you’ll need to landscape the yards, install curtains, purchase a fridge, and do whatever else is necessary to make it a liveable property.

If you’ve purchased an older house, some maintenance will be necessary.

With rentals, it’s important to make the place look nice, but not to go overboard. Sure, you may think the property would look better with new marble countertops, but how long will it take to earn back that cost in rental income?

In many cases, your best options are to fix anything that is obviously broken, give the walls a fresh coat of paint, and professionally clean the carpets. These are lower-cost activities that still make the property presentable.

5. Manage the Property

The ongoing management of the property takes a lot of work with many moving parts to sort out. Here are just some of the tasks you’ll have to figure out:

• Marketing your rental . Are you going to run Facebook ads? Put up signs in front of the property? Which rental listing sites are you going to use? You’ll also have to write headlines and descriptions for these sites as well.
• Screening applications. You’ll need to decide on a tenant screening service and what your minimum requirements are for credit scores, bankruptcies, and more. You’ll also need to check in on references (landlords, employer, personal) and also conduct open houses with a bit of an interview with attendees.
• Property maintenance requests. When something goes wrong, the tenants need to call someone to get it sorted out. Will that person be you? If so, you’ll need to have trusted vendors on speed dial.
• Emergency response. If the house floods in the middle of the night, you’ll need a plan for handling it.
• Regular communication. You’ll need to schedule inspections, handle complaints, and communicate about lease end dates and possible renewals.

DIY or Property Manager

Of course, much of managing a property can be outsourced to a property manager. You’ll sleep better at night and have more free time.

However, you might also eat through the last of your thin monthly margin. Is it worth having little-to-no passive income at the beginning to hire a property manager?

Many investors will handle the upkeep for a few properties in order to pocket more money. However, upon expansion, you’ll certainly need a property manager who can spend much more time than you can (or want to).

6. Manage Finances

If you’re going to run your rentals like a true business, that means that you need complete transparency and understanding about what’s happening to every penny.

There’s nothing worse than realizing you have a big tax bill with nothing set aside or confusion about why your business is in the red.

At the very least, you should keep a spreadsheet with all of your income and expenses. One of the easiest ways to manage this is to keep an entirely separate bank account so all of the funds are easy to manage.

Then, be sure that you understand future costs. This includes taxes, planned renovations, vacancies (where you have to cover the mortgage), and emergency repairs. Without money set aside for these, your business may be short-lived.

7. Systematize and Grow

All the steps covered so far are generally more for starting and managing your first few rental properties.

But if you’re planning to expand into dozens or hundreds of rentals, you’ll need to figure out a few more things along the way.

Mass Acquisition of Properties

When it’s time to scale, it’s likely going to become too time-consuming to evaluate every property from scratch. It’s not efficient to research an entirely new area or type of property with each property you want to acquire.

For this reason, it makes sense to pick a niche. For example, some people buy up student housing near a single university. You can quickly understand rent prices and know exactly how much you can pay for a new property. Research becomes automatic.

Or perhaps, you only buy new townhomes within a certain part of a single city. Or, you decide to do a lot of research at once and go in on a large apartment building.

Funding Properties

Funding a property or two at the beginning is much different than funding dozens in a short amount of time. If you’re lucky enough to have a bunch of cash on hand, perhaps you can afford to keep putting down 20% yourself on every property.

Or, maybe you’ll need to refinance those first few properties to afford adding more to your portfolio, although that isn’t a well that you can draw from forever.

Often, your best solution is to find a financing partner. Rather than a bank with strict rules and regulations, you can find a private lender who may be willing to put up all the money while you handle the business side of things.

This goes much easier once you already have a portfolio of successful properties.

Property Manager

As mentioned before, you’ll certainly need a property management company to handle your properties once you have several in your portfolio.

At some point, it may also make sense to hire a full-time property manager who works only for you. Many owners prefer this because they can retain more control than they could by handing everything to a third-party company.

You’ll likely need an online rental management software that can handle things like:

• Collecting rental applications
• Sending and collecting signed contracts
• Collecting rent
• Recording rent
• Taking maintenance requests

Business Structure

You’ll certainly want to form your rental business into an actual company, and there are plenty of options at your disposal.

A common one is to   form an LLC , but be sure to talk to a lawyer before settling on a final decision. The tax implications alone can be enormous.

 Top Reasons Rental Owners Quit and How to Avoid Them

Rental property owners often get frustrated and decide to sell their properties, sometimes on a whim to a fix & flip investor who sent them a postcard.

While it may end up being the right decision for you, it does mean you’re missing out on the long-term appreciation.

Here are three of the most common reasons rental owners quit and how you can protect yourself against those reasons.

Bad Tenant Behavior

Every rental owner has nightmares about showing up to their property one day and seeing the windows broken, the walls graffitied, and everything inside destroyed.

Landlords who get in this situation and then receive a postcard from an investor who wants to buy the home may find this offer tempting.

Tenants can also infuriate owners with behavior such as:

• Constant maintenance requests
• Refusal to follow all lease rules
• Poor communication
• Frequent complaints
• Late rent payments

How to Avoid Bad Tenant Behavior

There are two main solutions to handling bad tenant behavior:

• Hire a property manager . The bad behavior may still be there, it just won’t be you dealing with it on a day-to-day basis.
• Find top-notch tenants . Always follow up with their employers, previous landlords, and personal references. Get the most comprehensive tenant screening reports. It’s worth a bit extra time and money to get a tenant who will treat the property like they own it.

Unexpected Costs

Most landlords deal with fairly thin margins those first few years. There’s nothing more infuriating than unexpected costs showing up and wiping out any profit you thought you’d earned.

Some unexpected costs include:

• Roof replacement
• Burst pipes
• HVAC needs to be replaced
• Long vacancies

How to Avoid Unexpected Costs

Handling unexpected costs isn’t easy, because (by definition) you can’t predict them. But, you   can   run your business as if there’s always an unexpected cost around the corner.

There are a few ways experts suggest for determining how much money to set aside:

• 1% – 2% of the value of your home each year
• $1 per square foot per year

Whichever method you choose, try to be generous in what you set aside. One year, your maintenance might be minimal, while the next year you might replace a roof.

In addition, unexpected costs are generally lower on new properties. While a bit pricier to purchase, it might be worth it with higher rental rates and lower maintenance.

Need Liquid Money

Perhaps another investment opportunity comes your way that you’re more excited about than a rental. Or, you might need some cash to pay off another debt or life expenses if you lose your job.

While owning rentals can be profitable, they can also be frustrating with how effectively they tie up your cash.

How to Avoid Needing Liquid Money

The best advice here is to understand that owning a rental likely isn’t for you if money is tight elsewhere. Wait until you have sufficient cash reserves before investing in a rental property (this helps you avoid unexpected costs, as well).

If you have equity in the property, consider a cash-out refinance. This can raise your monthly mortgage payment, but may be worth it to pull out a considerable lump sum.

More Property Management Resources

Benefits of Owning Rental Property

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

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

• February 28, 2024
• Business Plan

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.

Property Rental Business Plan (Airbnb / VRBO)

Download an expert-built 30+ slides Powerpoint business plan template

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

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

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

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

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.

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

Privacy Overview

Rental Properties Business Plan Template

Written by Dave Lavinsky

Rental Property Business Plan

Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their rental property business. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a rental property business plan template step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Business Plan?

A business plan provides a snapshot of your rental property business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan

If you’re looking to purchase a rental property, multiple rental properties, or add to your existing rental properties business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your rental property business in order to improve your chances of success. Your rental property business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Rental Property Companies

With regards to funding, the main sources of funding for rental properties are personal savings, credit cards, mortgages, and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

The second most common form of funding for a rental property is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund a rental property company. They might consider funding a rental property company with a national presence, but never an individual location. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual location could never achieve such results.

Finish Your Business Plan Today!

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.

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.

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

Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a rental property business:

• Location build-out including design fees, construction, etc.
• Cost of equipment like computers, software, etc.
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your property blueprint or map.  

Putting together a business plan for your rental properties company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the rental property industry, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful rental properties business.

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.

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Click here to see how Growthink’s professional business plan consulting services can create your business plan for you.

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Rental Property Business Plan

After getting started with Upmetrics , you can copy this rental property business plan example into your business plan and modify the required information and download your rental property business plan pdf and doc file. It’s the fastest and easiest way to start writing your business plan.

How to write a rental property business plan?

Before writing a business plan, it is always good to ask yourself a few questions. It would surely make the process shorter and easier.

You should think about the following questions:

• What do you wish to achieve with your business?
• Who is your target audience?
• How would your business model work?
• What are your sources of funding?
• What would be your marketing strategy and so on?

All these questions would help you understand what you are getting yourself into. After that, you can start writing a business plan that focuses on all the different aspects of your business.

You can easily write such a plan either by using a premade template on the internet or through an online business plan software that’ll help you write a flexible and ever-changing plan.

What to include in a rental property business plan?

This section would give you a brief overview of the segments you can include in your business plan to make it a well-rounded one. They are as follows:

1. Executive Summary

The executive summary section contains a precise summary of all that your business stands for. If written well, it can help your business in getting funded. As it is mostly the only page an investor would read.

Professionals frequently suggest that this section should be written at the very end while writing your business plan, even if it is the first page. This helps you in summing up your business ideas properly.

2. Company Description

This section would consist of all the information about your business including its location, the services you offer, and your team.

It would also have information about your company’s history and its current position in the market. You can also include information about the projects you have worked on in the past.

3. Market Analysis

This is one of the chief sections of any business plan. It helps you understand what you are getting yourself into.

In this section, write down everything you can find out about the market. Include your target market, ways of reaching out to them, your market position, etc. Also, it is a good practice to include competitive analysis and take note of what your direct and indirect competitors are doing.

4. Marketing Strategy

While market analysis helps you in understanding the market, a marketing strategy helps you while getting into the market.

While formulating a marketing strategy, the most important thing is to have your target audience and market position in mind. Besides, keep in mind that your branding campaign should resonate with the client base you plan on serving.

5. Organization and management

This section includes information about the functioning aspects of your firm as well as about your team.

Include the roles and responsibilities of your team members as well as the progress they are making in their work.

If you write this section clearly and precisely, you’ll be able to identify the gaps you have in your team and your management system. This helps you in resolving those issues on time.

6. Financial Plan

This is one of the most crucial aspects of your business plan. More so in the rental property business. Planning your finances early on saves you from having financial troubles later on.

A financial plan section includes everything from your financial history, funding options, and requirements to projected cash flow and profits.

Download a sample rental property business plan

Need help writing your business plan from scratch? Here you go;  download our free rental property business plan pdf  to start.

It’s a modern business plan template specifically designed for your rental property business. Use the example business plan as a guide for writing your own.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

Rental property business plan summary

In conclusion, a good business plan can help you have good finances, a proper marketing strategy, a well-managed company and team as well as clear business goals.

Especially, in the rental property business, planning the flow and structure of your business as well as your finances can take you a long way.

A rental property business depends highly upon well-managed finances and strategies. Planning your business is necessary to make it a good source of passive or primary income.

Moreover, it also makes the process of carrying out your business easier and smoother. So, if you are ready to start your rental property business, go ahead and start planning.

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Rental Property Business Plan

Used 4,872 times

Develop a rental property business plan tailored to serve as a valuable resource for entrepreneurs to organize their rental business.

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Created by:

​ [Sender.FirstName] [Sender.LastName] ​

​ [Sender.Company] ​

Prepared for:

​ [Recipient.FirstName] [Recipient.LastName]

​ [Recipient.Company] ​

Executive Summary

​ [Sender.Company] is a reputable rental business located in [Sender.StreetAddress] [Sender.City] [Sender.State] [Sender.PostalCode] (Company Location), specializing in property management, rental, and leasing.

Through expert knowledge and technological innovation, [Sender.Company] strives to make the property rental journey as straightforward as possible. The online platform, in particular, serves as a user-friendly hub where clients can effortlessly navigate and find properties that precisely align with their unique preferences and requirements. This emphasis on simplification ensures clients enjoy a hassle-free and tailored experience throughout their rental process.

​ [Sender.Company] 's commitment to enhancing the rental experience underscores its mission to provide clients with a seamless and customized journey, setting it apart as a leader in the industry.

Company Description

Who is [sender.company] .

​ [Sender.Company] is located in [Sender.StreetAddress] [Sender.City] [Sender.State] [Sender.PostalCode] and operates as a rental property agency specializing in providing short-term and long-term rentals and leased properties to the local community. The rental properties offered by [Sender.Company] are distinguished by their clean and modern aesthetics, perfectly aligned with the preferences of today's renters.

All properties managed by [Sender.Company] are fully furnished and equipped with high-end technology and modern accessories, ensuring tenants a hassle-free and comfortable living experience.

​ [Sender.Company] is under the ownership of (Owner Name), a seasoned professional in the rental property industry. [Sender.FirstName] [Sender.LastName] (Founder's Name) decided to launch [Sender.Company] in (month, date), driven by a recognition of the growing demand from students, working professionals, and individuals relocating from overseas.

With a keen focus on meeting the diverse housing needs of the local community, [Sender.Company] is committed to delivering outstanding rental property services. Under (Owner Name)'s guidance, the company is well-positioned to thrive and make a lasting impact in the rental property industry.

​ [Sender.Company] ’s Products

Some of the offerings available through [Sender.Company] include:

(Company Product/Option): (Insert description)

Industry Analysis

Customer analysis, profile of target market.

The target market of [Sender.Company] includes consumers from all demographics. The market [Sender.Company] serves value-conscious, with a preference for excellent comfort and basic amenities aimed at families, students, and the working population.

The following are the exact demographics of (Location) where the business is located:

Localities:

Economic levels:

Customer Segmentation

​ [Sender.Company] will target the following customer segments:

Working Professionals

High-Income Earners

Competitive Analysis

Main competitors.

(Competitor Name 1) – (Brief Overview of Competitor 1)

(Competitor Name 2) – (Brief Overview of Competitor 2)

(Competitor Name 3) – (Brief Overview of Competitor 3)

Competitive Advantage

​ [Sender.Company] has several competitive edges over its competitors. These edges are the following:

(Competitive Advantage 1)

(Competitive Advantage 2)

(Competitive Advantage 3)

Marketing and Strategy Implementation

​ [sender.company] ’s branding and positioning.

​ [Sender.Company] places a strong emphasis on its unique value proposition, which encompasses several key aspects:

Rental Offerings

​ [Sender.Company] specializes in offering various rental properties designed to meet different customer segments' specific needs and preferences. From spacious family homes to budget-friendly options for students, upscale residences for working professionals, and welcoming accommodations for international migrants.

Strategic Location

​ [Sender.Company] is dedicated to offering a broad range of rental homes in carefully selected areas. This variety in locations means that residents can enjoy different amenities and services and choose the lifestyle that best suits their preferences and requirements.

Exceptional Customer Service

Exceptional customer service is the cornerstone of the [Sender.Company] . Their dedicated team is always available to assist with inquiries, property viewings, lease agreements, and maintenance requests.

Innovative Technology Integration

​ [Sender.Company] stays at the forefront of technology trends by integrating smart home solutions and digital platforms to enhance convenience and security for their tenants. This includes keyless entry systems, remote property management tools, and online rent payment options.

Promotions Strategy

​ [Sender.Company] anticipates its primary target audience to consist of students, international migrants, the working population, and local families residing primarily in the [Sender.StreetAddress] [Sender.City] [Sender.State] [Sender.PostalCode] . To effectively engage with these potential clients, the company has developed a comprehensive promotion strategy, which encompasses the following key elements:

Referrals: (Description).

Advertisement: (Description).

Public Relations: (Description).

Social Media Marketing: (Description).

Print Advertising: (Description).

Website/SEO Marketing: (Description).

Pricing Strategy

​ [Sender.Company] is dedicated to offering a variety of flexible payment alternatives tailored to accommodate diverse customer preferences. The following list provides a comprehensive overview of these payment options, which can be customized as necessary:

(Payment Option 1)

(Payment Option 2)

(Payment Option 3)

By offering these flexible payment choices, [Sender.Company] aims to ensure that its valued customers have a range of selections to suit their financial requirements and preferences, thus enhancing their overall satisfaction.

Operations Plan

Organizational structure.

At [Sender.Company] , the rental property management team is composed of a diverse and skilled group of individuals, each contributing their unique talents to drive the success of the company's property ventures.

CEO/Founder

As the visionary leader of the rental property management team, (Mr./Mrs./Ms.) (Name) is deeply committed to excellence. He/she lays the foundation for the creative journey while guiding everyone towards new heights of achievement in the rental property sector.

Office Manager

(Mr./Mrs./Ms.) (Name) is the creative force behind [Sender.Company] 's property management efforts, ensuring rental properties provide exceptional living experiences. He/she meticulously oversees property details, from maintenance to tenant satisfaction.

Maintenance Director

(Mr./Mrs./Ms.) (Name) leads maintenance and property improvement initiatives, consistently exceeding industry standards in property upkeep, repairs, and enhancement.

Additional Team Members

Beyond the core team, [Sender.Company] has a dedicated group of professionals, including property managers, maintenance staff, leasing agents, and administrative personnel, who work cohesively to deliver exceptional rental property management services.

Over the following (Number of Months) months, [Sender.Company] has set ambitious milestones to accomplish in its journey toward establishing a strong and prosperous presence in the (Industry Name).

Financial Plan

Source and use of funds.

​ [Sender.Company] will get (Amount) from (Source of Fund) to start its rental property business.

​ [Sender.Company] will use the funds to secure the initial rental and office space and purchase supplies and equipment. The proposed startup costs are shown in the table below:

Financial Projections

These are [Sender.Company] 's pro forma financial statements for the next five (5) years. It contains the business's income statement, balance sheet, and cash flow statement.

​ [Recipient.FirstName] [Recipient.LastName] ​

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BUSINESS STRATEGIES

How to start a rental property business: A comprehensive guide

• Annabelle Amery
• 14 min read

Owning rental properties can be a great way to generate passive income and build wealth over time. But it's not as easy as buying a few properties and collecting rent checks. There's a lot of work involved in managing tenants, maintaining properties and staying up-to-date on the latest laws and regulations.

In this comprehensive guide, we will walk you through the fundamental steps of starting a rental property business. Learn everything from creating your business plan to build your business website and spreading the word about your new venture.

What is a rental property business?

A rental property business is a business venture in which an investor purchases and manages one or more income-producing properties. These properties can have one or more units leased out to tenants in exchange for monthly rental fees. Rental property businesses can be operated by individuals, or they can be more complex operations involving multiple properties and team members.

Is your rental property a business?

Whether or not your rental property is considered a business depends on a number of factors, including:

Your level of involvement in the management of the property. If you're actively involved in managing the property, such as by handling maintenance requests, showing the property to prospective tenants and collecting rent, then your rental property is more likely to be considered a business.

The number of properties you own. If you own multiple rental properties, then your rental activity is more likely to be considered a business.

The amount of income you generate from your rental properties. If you generate a significant amount of income from your rental properties, then your rental activity is more likely to be considered a business.

If you meet all of the following criteria, then your rental property is likely to be considered a business:

You rent the property to earn a profit.

You work at the property regularly and continuously.

You provide significant services to your tenants, such as maintenance and repairs.

You have a significant investment in the property.

If your rental property meets all of these criteria, then you may be able to deduct certain expenses related to the property from your personal income taxes. You may also be able to claim certain tax credits, such as the qualified business income (QBI) deduction.

If you're not sure whether your rental property is considered a business, you should consult with a tax advisor.

Why should you start a rental property business?

Approximately 10.6 million in the U.S. declared rental income when filing taxes, with the average landlord bringing in $61,920 annually . Along with the financial benefits, there are many reasons to start a business in rental property and enter the real estate market.

Firstly, it allows you to create passive income with minimal daily involvement by generating consistent rental payments. You also have the potential for long-term wealth accumulation through property appreciation and the combo of cash flow and equity growth. On top of that, owning rental properties enables you to diversify your investment portfolio, providing stability and acting as a hedge against stock market volatility. There are also various tax advantages to consider, such as depreciation, mortgage interest deductions, property tax deductions and eligible expenses.

How to start a rental property business

To set yourself up for success, follow these steps to start your rental property business:

Define your business goals

Conduct market research

Create a business plan

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.

04. Secure financing

Determine your financing needs and explore how to raise money for your business . These may include traditional bank loans, private investors, partnerships, crowdfunding or using personal funds. Prepare a solid financial plan, including cash flow projections, expenses and potential return on investment, to present to lenders or investors. Once you’ve secured financing you’ll be able to register your business to make it official.

05. Identify and acquire properties

Once you have secured financing, start searching for suitable properties that align with your investment goals. Consider factors such as location, property condition, potential rental income and market appreciation. Conduct property inspections, perform due diligence and negotiate purchase prices.

06. Set up property management systems

Establish efficient property management systems to handle tenant relations, rent collection, property maintenance and legal compliance. Consider using property management software or hiring a professional property management company to streamline operations.

07. Market and advertise your rental properties

Develop a marketing strategy to attract potential tenants. List your properties on rental listing websites, utilize social media platforms and try networking with local real estate agents or relocation services. Create compelling property listings with high-quality photos, detailed descriptions and competitive rental prices.

How to write a rental property business plan

To write a rental property business plan, you need to consider the following sections:

Executive summary: The executive summary is a brief overview of your entire business plan. It should include your business goals, target market and competitive advantage.

Company description: The company description section provides more detail about your business, such as your business structure, ownership and services offered.

Market analysis: The market analysis section provides an overview of the rental property market in your area. It should include information about the demographic makeup of your target market, the supply and demand for rental properties, and the average rental rates.

Marketing strategy: The marketing strategy section describes how you plan to attract and retain tenants. It should include information about your target market, your marketing channels and your pricing strategy.

Management and operations: The management and operations section describes how you plan to manage your rental properties. It should include information about your team, your maintenance procedures and your tenant screening process.

Financial projections: The financial projections section provides an overview of your expected revenue and expenses. It should include information about your startup costs, your monthly operating expenses and your cash flow statement.

Exit strategy: The exit strategy section describes how you plan to exit your rental property business in the future. It could include selling your properties, passing them down to your heirs or exchanging them for other assets.

Once you have written your rental property business plan, you should review it with a trusted advisor, such as a lawyer or accountant. This will help you identify any potential problems and make sure that your plan is sound.

Here are some additional tips for writing a rental property business plan:

Be specific. Don't just say that you want to "make money." Instead, set specific goals, such as "I want to generate a 10% return on my investment within five years."

Be realistic. Don't overstate your income potential or underestimate your expenses.

Be flexible. Your business plan should be a living document that you can update as needed.

Seek feedback from others. Ask a lawyer, accountant or other experienced real estate investor to review your business plan and provide feedback.

With a well-written rental property business plan, you will be well on your way to success.

How much does it cost to start a rental property business?

The cost to start a rental property business can vary depending on a number of factors, including the type of property you buy, the location of the property and the condition of the property. However, there are some general costs that you can expect to incur, including:

Down payment: Most lenders will require you to make a down payment of at least 20% of the purchase price of the property.

Closing costs: Closing costs can range from 2% to 5% of the purchase price of the property.

Repairs and renovations: You may need to make some repairs or renovations to the property before you can rent it out.

Appliances and furniture: If the property is unfurnished, you will need to purchase appliances and furniture.

Marketing and advertising: You will need to market and advertise your property to potential tenants.

Landlord insurance: Landlord insurance will protect you financially in the event of a lawsuit or other covered event.

In addition to these upfront costs, there are also ongoing costs that you will need to budget for, such as property taxes, homeowner's association fees and maintenance and repairs.

According to a recent survey by the National Association of Realtors, the median down payment for a rental property purchase was 23% in 2022. The median closing costs were 2.1% of the purchase price. And the median amount spent on repairs and renovations was 1.2% of the purchase price.

Based on these estimates, you can expect to spend around 25%-26% of the purchase price of the property on upfront costs. So, if you are buying a $300,000 rental property, you can expect to spend around $75,000-$78,000 on upfront costs.

Of course, the actual cost of starting a rental property business will vary depending on your specific circumstances. It's important to do your research and create a budget before you start investing in rental properties.

Can a rental property business be profitable?

The profitability of a rental property business can vary significantly based on factors such as property location, market conditions, rental rates, expenses, and financing terms.

The "1% rule" is a general guideline often used by real estate investors to quickly evaluate the potential profitability of a rental property. It says that a rental property's monthly rental income should be at least 1% of the property's total acquisition cost. This is used as a quick initial screening tool to determine if a property might be worth the investment.

Here's how the 1% rule works:

1% Rule:** Monthly Rental Income ≥ 1% of Property Acquisition Cost

For example, if you're considering purchasing a rental property for $200,000, the monthly rental income should ideally be at least 1% of $200,000, which is $2,000.

Keep in mind that the 1% rule is a simplified guideline and shouldn't be the sole determining factor for making an investment decision. It's important to consider other factors such as location, market conditions, property management costs, financing terms, potential for appreciation, and the overall financial feasibility of the investment. The 1% rule can provide a quick initial assessment, a thorough analysis that takes into account all relevant factors is necessary to make informed investment decisions in the real estate market.

Properties that meet the 1% rule often have a higher likelihood of generating positive cash flow, where rental income exceeds expenses like mortgage payments, property taxes, insurance, and maintenance costs. However, markets with higher property prices and lower rental rates may make it challenging to find properties that meet the 1% rule while still being viable investment opportunities.

How to manage a rental property business effectively

Managing a rental property business requires effective systems, strong communication and ongoing attention to detail. More specifically, you’ll want to pay special attention to:

Tenant screening: Implement a thorough tenant screening process to ensure you select reliable and responsible tenants. Screen applicants' credit history, employment status and rental history, plus conduct background checks to minimize risks.

Lease agreements: Develop clear and comprehensive lease agreements that outline tenant responsibilities, rent payment terms, property rules and lease duration. Consult a legal professional to double-check that your lease agreements comply with local regulations and protect your interests.

Property maintenance and repairs: Regularly inspect and maintain your rental properties to keep them in good condition. Promptly address maintenance requests and conduct repairs as needed. Establish relationships with reliable contractors or property maintenance teams to ensure efficient service.

Rent collection and financial management: Establish streamlined rent collection processes. Clearly communicate rent payment methods and due dates to tenants. Utilize property management software or online platforms to track rent payments, generate financial reports and monitor cash flow.

Legal compliance: Stay informed about local and national rental regulations, fair housing laws and landlord-tenant rights. Make sure that your rental property business complies with these laws to avoid legal issues or disputes. Speak with legal professionals or local housing authorities when needed.

Regular communication: Foster good tenant relations through clear and open communication. Respond to inquiries or concerns promptly, provide regular updates or newsletters and address issues professionally and efficiently. Good communication builds trust and reduces conflicts.

How to promote your rental property business

As you’re looking to market your business, you’ll need to make sure that your brand's look and feel is professional. Consider things like how to name a business effectively so that your audience remembers you. If you’re struggling, you could use a business name generator . You’ll also need to design an eye-catching logo. Use a logo maker and/or check out these construction logo ideas for a little inspiration. Once you’re happy with your branding, it’s time to get promoting.

Create a professional website: 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:

Start a business in Pennsylvania

Start a business in Connecticut

Start a business in Texas

Start a business in New York

Start a business in Arizona

Start a business in Tennessee

Or, if you’re looking to learn about other business types , check out these related posts:

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How to start a consulting business

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How to start a fitness clothing line

How to start a makeup line

How to start a candle business

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How to create a rental property business plan

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How to Write a Business Plan as a Landlord

Editor's Note: This post was originally published in April 2020 and has been completely revamped and updated for accuracy and comprehensiveness.

Buying investment properties and renting them out to tenants is a great way to diversify your real estate portfolio and earn passive income. If you are considering becoming a landlord, writing a rental property business plan is vital to make your investment thoughtfully and deliberately. A well-crafted business plan can help you secure financing from lenders. A business plan demonstrates that you clearly understand your business and its potential, making you more attractive to potential lenders. Let's begin! This piece will walk you through what a rental property business plan is, why you should create one, and how to put one together.

What is a rental property business plan?

Most simply, a rental property business plan is a document that describes the following:

• You and your rental business.
• What your intentions and goals are with a property.
• Your plan for executing these goals.

Your rental property business plan will outline the strategies and goals for managing your properties.

Why should you develop a rental business plan?

Here are some reasons why you should create a rental property business plan:

• Provides a clear direction: A business plan outlines the goals and objectives of the rental property business, which helps you stay focused on achieving your vision. It also provides a roadmap for decision-making and ensures all activities align with the overall strategy.
• Helps secure financing: A business plan shows that you understand your business well, making your business more appealing to lenders.
• Identifies potential risks: A business plan identifies potential risks associated with the rental property business and provides strategies to mitigate them. This helps to avoid costly mistakes and ensures that you're well-prepared for any challenges that may arise.
• Enhances property management: A business plan includes a strategy outlining how you will manage your rental properties effectively.
• Enables monitoring and evaluation: A business plan provides performance metrics that will help you to monitor and evaluate your progress. This also allows you to identify areas for improvement and adjust your strategy accordingly.

First things first — set your business plan objectives.

Before creating your business plan, consider your specific objectives for your rental business. By setting your objectives, you're providing yourself with a target to aim for. A SMART goal incorporates all of these criteria to help focus your efforts and increase the chances of achieving your goal. This is a specific, measurable, achievable, relevant, and time-bound goal commonly used in business and project management to set and achieve goals.

The acronym SMART stands for:

• S - Specific: The objective should be clear and well-defined so everyone involved understands what they need to accomplish.
• M - Measurable: The objective should be quantifiable to measure and track progress over time.
• A - Achievable: The objective should be realistic and achievable based on available resources and the timeframe.
• R - Relevant: The objective should be relevant to your business's or project's overall mission or goals.
• T - Time-bound: The objective should have a specific deadline or timeframe for completion so you can monitor progress and make adjustments as needed.

Here are some examples of SMART goals for a rental investment business:

• Own four properties by the end of the year
• Earn $5k in rental revenue per month
• Earn $150k in rental profit by the end of year 5
• Hire a team of 4 business partners and open an office in Nashville, TN, in the next five years
• Find 15 tenants by the end of next year

You may only have one key objective or multiple, but each goal should have strategies and tactics to help achieve it.

Strategies and tactics for your SMART objectives

Let's take the relatively straightforward objective — own four properties by the end of the year. Easier said than done, right? Your strategy will be your rough game plan to achieve this goal. Here are some examples of strategies you may employ:

• Study local housing markets to find undervalued neighborhoods.
• Use hard money lending groups and meetups to help secure capital.
• Specialize in and become a master of a specific housing type (single-family homes, duplexes, apartments, townhouses, etc.)

You can then drill down each strategy into specific tactics. Here's what that looks like:

Study local housing markets to find undervalued neighborhoods:

• Study Zillow and MLS listings to see locations and figures of sales.
• Physical drive-thrus of neighborhoods to see house styles, number of For Sale signs
• Attend foreclosure auctions in different Tennessee counties
• Leverage social media to identify potential properties
• Try creative methods to find undervalued properties beyond the MLS

Use hard money lending groups and meetups to secure affordable and scalable financing:

• Join online hard money communities and see which lenders offer low rates, good terms, etc.
• Go to real estate conferences and network with lenders, wholesalers, etc.

Specialize in and become a master of a specific housing type:

Focus on 3br/2b single-family homes between 1500-2500 sq feet

How to write a rental property business plan

Now that you've thought about precisely why and how you will structure your business and execute your investment, it's time to write it! A rental property business plan should have the following components: The business plan typically includes the following elements:

• Executive Summary
• Business Description
• Market Analysis
• Marketing and Advertising
• Tenant Screening

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.

• 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.

• 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.

• Criteria for Screening: Define the criteria you will use to evaluate potential tenants. This includes credit score, income, employment, criminal, and rental history.
• Application Process: Detail the application process that potential tenants will go through. This may include the application form, application fee, and required documentation such as pay stubs, rental history, and references.
• Background Checks: Describe the background checks you'll conduct on potential tenants. This may include a credit check, criminal background check, and reference checks with previous landlords.
• Approval Process: Outline the process for approving or denying a tenant application. This may include a review of the applicant's qualifications, background check results, and a decision based on the landlord's discretion.
• Fair Housing Compliance: Include a statement about compliance with fair housing laws. Landlords and property managers must ensure they do not discriminate against applicants based on protected classes such as race, color, religion, sex, national origin, disability, or familial status.

This section should outline the steps you or the property manager you have hired will take to manage the rental property effectively and ensure a positive experience for tenants. Below are some key components to include in the property management section of a rental property business plan.

• Maintenance and Repairs: Outline the process for addressing maintenance and repair issues. This may include a description of how tenants can report problems, the timeline for responding to requests, and the types of repairs that are the landlord's responsibility versus the tenant's responsibility.
• Rent Collection: Detail the process for collecting rent from tenants. This may include the due date for rent payments, late fees, and consequences for non-payment.
• Lease Agreement: Describe the lease agreement that tenants will sign. This may include the length of the lease, rent amount, security deposit, and rules and regulations for the property.
• Tenant Communications: Outline your approach to communicating with tenants. This may include regular newsletters or updates on property maintenance, a process for addressing tenant concerns, and emergency contact information.
• Compliance and Risk Management: Include a statement about compliance with regulations and risk management. This may include descriptions of insurance coverage, safety protocols, and any regulatory requirements the business must follow.

The financials section of your rental property business plan is crucial for demonstrating the business's financial feasibility and potential profitability of the investment. Let's take a look at what you can include.

• Income projections: Start by estimating the expected rental income from the property. This should be based on market rates for similar properties in the area, considering location, size, amenities, and condition. Consider any potential income streams beyond rent, such as laundry facilities or parking fees.
• Expense projections: Next, estimate the ongoing expenses associated with owning and managing the property, including mortgage payments, property taxes, insurance, utilities, maintenance and repairs, and property management fees, if applicable. Be sure to factor in seasonal or irregular expenses, such as snow removal or landscaping.
• Cash flow projections: Based on the income and expense projections, calculate the expected net cash flow for the property monthly and annually. This will give you a sense of how much income the property will likely generate after paying expenses.
• Financing plan: If you plan to finance the purchase of the property, outline your financing plan, including the loan amount, interest rate, and repayment terms. Be sure to calculate the impact of financing on your cash flow projections.
• Return on investment: Calculate the property's expected ROI based on the initial investment and projected cash flows over a specified time (e.g., five years). This will give you a sense of whether the investment will likely be profitable in the long term.
• Sensitivity analysis: Conduct sensitivity analysis to assess the potential impact of changes in key assumptions (e.g., vacancy rate, rental income, expenses) on your cash flow projections and ROI. This will help you identify potential risks and make informed decisions about the investment.

As a landlord, you must include a risk management section in your rental property business plan to address potential risks and establish strategies for mitigating them. Below are some key steps you can take to create a risk management section for your business plan.

• Identify potential risks: Identify risks associated with your rental property business. This may include risks related to property damage, tenant safety, liability, financial loss, and legal compliance.
• Assess the likelihood and impact of each risk: Once you have identified potential risks, assess the likelihood and potential impact of each risk on your rental property business. This will help you prioritize which risks to address first and determine the resources you must allocate to manage each risk.
• Establish risk management strategies: Develop a plan for managing each identified risk. This may include measures to prevent the risk from occurring, as well as steps to mitigate the impact of the risk if it does happen. For example, you may establish a routine property inspection program to identify and address maintenance issues before they become significant problems. You may also require tenants to carry renters' insurance to mitigate financial loss if they cause damage to the property.
• Review and update your risk management plan regularly: Risks can change over time, so it's essential to review and update your plan regularly. This will help you ensure that your strategies are still effective and that you are prepared to manage new risks as they arise.
• Seek professional advice: Consider seeking professional advice from a lawyer, insurance agent, or another expert to help you identify potential risks and develop effective risk management strategies. This can help you ensure your business is well-protected and minimize risk exposure.

By including a comprehensive risk management section in your rental property business plan, you can demonstrate to potential investors, lenders, and tenants that you are committed to running a safe and sustainable rental property business.

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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How to start a rental property business in 6 steps

People invest in rental property for a number of reasons, including recurring rental income, appreciation in property value, investment diversification, and tax benefits. 

While there are numerous potential benefits to owning real estate, it’s important to have a plan in place to increase the odds of success. In this article, we’ll explain how to start a rental property business by following 6 important steps.

Key takeaways

• Owning rental property helps investors diversify investment portfolios, manage risk by avoiding stock market volatility, and generate recurring rental income.
• Following a systematic approach to starting a rental property business can help investors avoid costly mistakes and allow investors to scale up and grow.
• The key steps to starting a rental property business include learning about the real estate business, researching investment and financing options, and having a system in place to grow the business. 

6 steps to start a rental property business

The steps for starting a rental property business are similar to most other business ventures. It’s much easier to achieve your investment goals and financial objectives when you have a plan in place.

While every real estate investor may take a slightly different path, here are the 6 main steps to follow to start a rental property business.

1. Networking and education

A good education is the foundation of a solid rental property business. That’s because the real estate business is all about who you know and what you know. An investor can become educated by reading books and blogs, attending in-person networking events to rub shoulders with other investors, or signing up for online real estate courses.

When choosing a good real estate education course, it’s important to look for things such as the ability to move at your own pace, the opportunity for customized classes and one-on-one coaching, options for networking via dedicated communities and online forums.

Roofstock Academy is an online option worth checking out. There are 3 plans to fit different investing timelines, learning styles, and budgets. Classes include exclusive lectures, group and one-on-one coaching, access to a private investor community, and more, depending on the membership plan selected.

2. Research investment options

Many first-time rental property investors choose single-family homes and small multifamily properties. That’s because houses and apartments are everywhere, easy to understand, and have a variety of financing options available.

There are also different investment strategies used to make money in real estate. One of the most common investment options in real estate is buying and holding single-family rental (SFR) homes. Rental property can be rented in the long term using a one-year lease, or it can be used as a short-term vacation rental. Both options work a little bit differently, and, when starting a rental property business, investors may wish to explore the pros and cons of each before settling on an investment strategy.

Methods for finding homes for sale that can be used as rentals include traditional sources, like real estate agents and the multiple listing service (MLS) or websites like Zillow, Redfin, or Roofstock. Of these options, Roofstock is the only platform specifically developed for buying and selling SFR homes, small multifamily properties, and short-term vacation rentals.

Roofstock simplifies the process of remotely investing in real estate. Every investment property listed for sale on the Roofstock Marketplace includes details to make research easier, including:

• Property inspection and valuation on certain properties
• Title report and insurance quote
• Neighborhood Rating and local school scores
• Current lease information and rent payment history if the property is already rented
• Interactive tools for visualizing and measuring key financial metrics, such as cash flow, cash-on-cash return, gross yield, and appreciation 

3. Run the numbers

Rental property investors look for homes that generate cash flow, appreciation, or a combination. Investors use a variety of financial metrics to analyze the potential returns from rental properties, including:

• Gross rental income
• Operating expenses
• Net operating income (NOI)
• Capitalization rate
• Cash-on-cash return
• Appreciation and rent growth
• Internal rate of return

Rather than focusing on one return metric, investors generally consider all of the above data points to create a holistic picture of potential returns. 

4. Financing options

Real estate investors finance rental property for a variety of reasons, such as making a small down payment to control 100% of the property, diversifying capital across several investments, and using other people’s money in the form of a loan to increase cash-on-cash returns.

There are a wide range of options for financing rental property, including:

• Conventional loans
• Federal Housing Administration (FHA) financing
• FHA 203(k) loans
• Veterans Affairs financing
• Self-directed individual retirement accounts (SDIRA) for real estate
• Home equity loans
• Home equity lines of credit (HELOC)
• Private money loans
• Hard money loans
• Portfolio loans
• Blanket mortgages
• Group investing
• Owner financing

Financing a rental property with a fixed-rate, long-term loan is an option used by buy-and-hold real estate investors to lock in low interest rates as a hedge against future interest rate increases. 

The online mortgage rate calculator available on Roofstock helps investors to explore different financing options offered by third party lenders that are based on down payment amount, credit score, loan terms, and location.

After running the numbers, investors can connect with lenders to get preapproved before making an offer.

5. Management responsibilities

Some investors choose to self-manage rental property to gain the hands-on experience of being a landlord. However, trying to self-manage an out-of-state rental property can be difficult. 

That’s why remote real estate investors generally hire a local, professional property management company to take care of tasks such as communicating with tenants, making repairs, and complying with local, state, and federal housing laws.

Management responsibilities of owning and operating a rental property include:

• Running rent comparables to determine the fair market rent
• Quickly making a home rent-ready between tenants
• Advertising and marketing for a new qualified tenant to minimize the vacancy rate
• Screening prospective tenants by running background checks, credit reports, rental history reports, and speaking to references
• Collecting security deposits and monthly rent, assessing late fees, and exploring options for increasing rental income, such as pet rent or roommate rent
• Enforcing the terms and conditions of the lease and handling tenant communication and complaints
• Coordinating maintenance and repairs with in-house staff or cost-effective third-party vendors
• Ensuring rental property complies with building codes, health and safety regulations, and state and federal landlord-tenant laws
• Conducting move-in and move-out inspections and periodic property inspections 
• Making monthly owner distributions from a cash-flowing property and providing routine financial performance reports

6. Grow the business

Systemizing a rental property business by automating routine tasks can make it much easier to scale up and grow. Signing up for a free account with Stessa is the first step to track and optimize a real estate business. 

Rental property financial management software from Stessa helps investors to maximize profits through smart money management, automated income and expense tracking, and personalized recommendations to help maximize property performance. 

Rental property owners can use Stessa for SFR homes, small multifamily buildings, short-term vacation rentals, and multiple portfolios of rental property. 

When tax time rolls around, investors can generate tax-ready financial reports and access the Stessa Tax Center to claim free resources created in partnership with The Real Estate CPA, as well as an exclusive TurboTax discount.

Closing thoughts

Starting a rental property business is about a lot more than applying for a loan and buying a home. Having a step-by-step plan in place for education, networking, research, financial analysis, and property management can help an investor stay focused on business goals and financial success.

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios.

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A good business plan is the first step in recession-proofing your business. Check out some sample business plans for real estate, mortgage broker, realtor, property management, and similar businesses to get ideas for your own business plan.

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How to Develop a Rental Property Business Plan

“I’ve been in the industry for a few years, and I’m doing well without a rental property business plan. Do I really need one?”

Yes! Developing a business plan is equally important for new as well as experienced real estate investors. It’s an essential step to starting a rental property business . And as you grow your portfolio as a real estate investor, it becomes even more crucial to have a rental property business plan .

What Is a Rental Property Business Plan?

A rental property business plan is a strategy for acquiring and running rental property investments . Real estate investors who use well-thought-out business plans are more likely to succeed when they start renting in today’s highly competitive real estate industry .

Real estate is like any other business. To treat it as a business, you should prepare a business plan for rental property. Follow these 5 steps to learn how to make a business plan for success:

5 Steps to Developing a Rental Property Business Plan

#1. set the right goals.

Setting goals in real estate helps you measure and evaluate performance. If you didn’t meet your goal to achieve $1700/month in April in Airbnb rental income, you’d need to evaluate to see what went wrong and take the steps to move forward.

Ever heard of SMART goals? These are goals that are specific, measurable, attainable, relevant and time-bound. To set goals for your business plan, begin by determining your mission statement and your vision. This is the larger goal or the purpose of your business.

After you’ve set your goals, it’s time to write out some objectives and tactics to achieve those goals. For example, what are you going to do to achieve the $1700 in April from your Airbnb investment property ? You may want to consider adjusting the price, work on receiving better reviews, or posting excellent quality photos to better market your property. These are all tactics to achieve the objective of $1700, which goes into the overall goal of making a profit. If you do not achieve your goal, and there’s nothing left to do, maybe the goal you set was unattainable. So continue to test and adjust your real estate business plan accordingly – that’s the key to developing an unmatched rental property plan!

Related: 5 Real Estate Goals You Should Set for 2020 (And How to Achieve Them)

#2. What rental strategy are you opting for?

After you’ve set your goals, it’s time to select a rental strategy to pursue to achieve the above goals. Generally, you can choose one of two rental strategies; long-term (traditional) or short-term (Airbnb) . With long-term rental investments, you’re renting out to a single tenant with a lease usually no shorter than 6 months. With short-term rental investments, you can list your property on home-sharing platforms such as Airbnb, and rent it out on a per-night basis.

Your rental property business plan will differ based on the strategy you opt for. So make sure you explore the pros and cons of these strategies and decide on the best fit for you. Usually, your choice will depend on your availability, the city or state you’re investing in, as well as your real estate goals. For example, if you’re investing in the New York City real estate market, it may be smarter to opt for a traditional rental strategy due to the current Airbnb legal status in the city. If you’re investing in a more Airbnb-friendly city, such as the Philadelphia real estate market, you have more of a choice to make.

Related: How to Choose the Right Rental Property Investment Strategy for You

#3. Develop a financial plan

You can’t do anything in real estate if you haven’t done any financial planning . When investing in rental properties , it’s crucial to consider potential revenue and associated costs to evaluate expected rental income for a property. When buying rental property , you can use Mashvisor to obtain data on expected rental income, to run costs analysis, and to assess potential profit. Before you jump into an investment, you ought to ensure that it’s a profitable one. Learn more about our product .

Sign Up for Mashvisor

Before becoming a real estate investor , you also need to assess your current financial situation and ability to access funds to buy an investment property . A large chunk of your rental property business plan should include a strategy to finance your real estate investment. If you have access to cash, can take out a mortgage , or are planning to partner with another investor, go ahead and proceed with the steps to develop a rental property business plan !

Related: 3 Useful Hints for Keeping in Control of Real Estate Business Finances

#4. Marketing your rental property, finding the right tenants

Developing a marketing strategy is one of the most vital elements when it comes to writing a business plan. You can do everything right and still struggle in the industry if you don’t market your rental property correctly.

Marketing your property will depend on which rental strategy you choose. If you choose short-term rentals, your Airbnb business plan for marketing will look slightly different from traditional. With Airbnb, you can use the platform for the bulk of the marketing efforts. If you optimize the use of the website, Airbnb algorithms will be in your favor. You can use Airbnb.com to market your rental property by uploading high-quality photos, adding a thorough and appealing description, by acquiring positive Airbnb reviews , and by attempting to achieve a Superhost Badge .

As for traditional rental properties, real estate marketing can be a little different. You can advertise online, offline, or both, with a variety of means. You can use traditional means such as word of mouth (WoM) marketing through your real estate network , and traditional means such as newspapers and magazines. If you’re targeting a younger demographic, you might want to shift your efforts to digital marketing and social media marketing . Many investors today are choosing online marketing as an easier and more efficient way to find the right tenants.

#5. Outline a clear team structure

Creating your business plan will eventually leave you with a set of tasks that you need to accomplish. And if you have a real estate team at your business, you’re going to need to outline a clear team structure as part of your rental property business plan . This includes dedicating roles and tasks to different team members, making sure no overlap occurs. If you’re buying your first rental property , you may not have a team yet, so you can forgo this point at the time being, but revisit when you do create a team.

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How to start a rental property business in 14 steps

Real estate investing is a popular choice for entrepreneurs looking to create passive income and sustainable wealth. In particular, rental properties provide you the opportunity to create a diverse portfolio with multiple revenue streams. There are multiple ways you can approach a rental property business, but to rent out that first property, you’ll need to know how to start your business officially. Let’s take a look at the 14 steps you should follow to open your investment property business.

Can I start a rental property business with no experience?

You are not required to have a particular license to buy and sell a rental property. However, you will need to have a strong business sense and an in-depth understanding of real estate investing before you can confidently make both investment and property management decisions. You can go to school to learn this information or work directly with a mentor or other real estate-oriented professional who is willing to guide you through the process and teach you what you need to know.

1) Business plan

Now that you know you’re ready to start your rental property business, you’ll need a written business plan. A rental property business plan acts as both a map for you to stay on track as you build and grow your business and as a concrete document that proves to banks and investors why they should lend to or partner with you.

A strong business plan will have the following components:

• Executive Summary: A high-level overview of your entire business plan. What does success look like for you in this business, and how do you plan to reach that level of success?
• Industry Analysis: What is the state of the housing market? What insights can you glean from local real estate research? Where do you see investment opportunities?
• Competitive Analysis: Are there any direct competitors with your business, and how will you differentiate yourself?
• Marketing Plan: How will you source and secure quality tenants for your properties?
• Management: What is your plan for property management? Do you intend to work with a property manager, or do you plan to handle all maintenance and tenant activities on your own?
• Operations: How will you ensure that your properties are maintained in addition to the everyday operations of your business? Will you have offices? Will you hire staff members?
• Financial Plan: Do you have a clear understanding of how your proposed or intended rental properties will generate cash flow for your business? Will there be enough rental income to make your mortgage payment and then some? Do you have startup costs? What is your plan for continued growth and investment in additional properties over the next several years?

2) Business structure

As part of your business plan, you’ll also need to determine the right business model for you. There are multiple business structures you can set up for your rental property business. These are:

• Sole proprietorship
• Limited liability Company (LLC)
• Partnership
• Corporation

There are additional options within some of these categories. Review your choices carefully and select the business structure that’s best for your business goals.

3) Business name

Your business name will appear on your business cards, website, brochures, and any other marketing materials you use. A solid business name is:

• Clear, simple, and memorable
• Easy to say and spell
• Relevant to your type of business (for example, you could include the word “rental property” in your business name)
• In line with your brand

Use a business name generator to help you brainstorm. No matter which name you choose, make sure the matching website domain and social media handles are available.

4) Ideal clients

While it’s important to consider who you want to do business with when it comes to purchasing property, your ideal clients, in this case, are actually your tenants. If you could choose the perfect tenant to rent from you forever, who would they be? Consider the following questions when determining your ideal tenant type:

• Are they residential or commercial clients?
• What is their annual income or revenue?
• What do they do for a living, or what sort of business are they?
• Are they looking to become homeowners eventually, or do they only want to rent?
• Have they ever owned their own home before?
• What do they value in a rental property?
• Are they married? Single? In a relationship?
• Do they have children?
• Do they like to use their rental home, apartment, or business for parties or social events? How often?
• What social media platforms do they use?

You’ll continue to clarify who your ideal tenant is as you fill your rental property and see what type of person is truly the best fit. Hone your marketing strategy (which we’ll discuss later in this guide) to target your ideal client.

5) Niche, unique value proposition, and branding

Are you interested in filling your portfolio with a very specific type of property? If so, you have a niche. Some niche examples include:

• Vacation rental properties (such as Airbnb)
• Luxury rental properties
• Multi-family rental units
• Single-family homes
• Short-term rentals
• Condominiums

You do not have to have a niche, but it can be useful if you identify a market gap or have specific deep knowledge of your selected property type.

Unique Value Proposition (UVP)

Unlike your niche, your UVP has less to do with the type of property you own and more to do with how you operate your business. What can you offer to your prospective tenants that's so compelling they feel they simply must reach out to learn more about your properties?

Branding for a rental property business includes defining who you are as a business and what your prospective or current tenants can expect from your properties. Your branding should include:

• Color palette
• Mission statement
• Managing style
• Ideal tenant type
• Property type and style
• Design aesthetic
• Rental packages and special offers

Ensure that your branding is cohesive not just in your marketing but also across all your rental properties.

6) Services

Think of your services as what your tenants receive when they choose to rent from you. What are the perks of renting from you over a competitor’s property? What’s included in the rent? Is the management team responsive? These included services help to justify your pricing, so make sure they’re clearly promoted in your marketing.

7) Location

You know how much location matters when making a rental property purchase. But, have you thought about your business location as well? Do you require an office location, or will you operate from your home? If you feel that leasing a space is your best option, work with a real estate agent. Realtors can help you find the right fit for your budget and needs.

8) Equipment

Rental properties require a lot of maintenance and repairs to remain competitive in the market. You may find that your properties need additional fixtures, appliances, and repairs before they’re ready to rent out. You will need to work both the materials cost and the labor cost into your startup budget so that you can achieve a quality product without financial strain.

9) Finances

You will need to be able to qualify for a loan from a bank or other lender to finance the full amount of each of your properties, minus the down payment, which is paid out-of-pocket.

Your chosen bank will probably require that specific types of insurance coverage are in place before they lend to you. They will also want to see your business plan to understand in detail how you intend to pay off any loan they may give you.

Beyond the initial investment, recurring costs are also a factor in your overall budget. These can include property management fees, property taxes, legal and accounting fees, and more. Ensure that all these are accounted for in your business plan.

10) Insurance

As a new real estate business owner, you must have certain small business insurance policies in place. This applies to all businesses. However, the exact type of insurance coverage needed changes based on the type of business you are in. As a rental property business owner, you’ll require a specific set of policies . Some of these policies may include:

• Workers' Compensation : If you have one or more employees, you are required to have workers’ comp. This form of insurance covers you if one of your employees becomes injured or sick at work. Securing workers’ compensation used to be a long process, but now you can purchase it online . Get a fast estimate of your workers’ comp premium with Huckleberry’s 60-second workers' compensation calculator .
• General Liability Insurance : Covers your business if you are ever sued for injury or property damage .
• Business Property Insurance : Protects your building in case of serious damage. This policy also applies to any fixed components of your building, such as permanently installed equipment. It does not cover removable items.
• Business Owner's Policy : A Business Owner’s Policy bundles several insurance policies together. Your Business Owner’s Policy may include general liability and business property insurance, among others.Find out your estimated business insurance expenses with a fast and free quote from Huckleberry.

11) Paperwork, licenses, permits, and accounts

You’re almost ready to rent out your property, but first, there’s some important administrative work to handle.

• Register your business name: Go through the Small Business Association (SBA) website to learn how to register your business name.
• Get your Employer Identification Number (EIN): Your EIN acts as a Social Security Number (SSN) for your business. An EIN gives you multiple benefits , so get yours ASAP.
• Secure your business license: Each state is different, so check with your state to see how to get your business license. Each property you rent may need its own business license, so read your state’s guidelines carefully.
• Open a business credit card and business bank account: A business bank account keeps your personal and professional finances separate—very important come tax time. In addition, a business credit card ensures that you can clearly show your business spending were the IRS ever to audit you.

Check with your local government for any other specific licensing requirements you must fulfill.

12) Employees

You will likely need to hire an employee of some kind, whether as a full-time, part-time , or contracted worker. When that time comes, you’ll need the proper paperwork. You can easily download essential hiring forms such as a W-4 and W-9 online. Remember that your employees are as much a reflection of your brand as any other part of your business. Hire wisely to ensure that your partnership with them provides a positive impact for all involved.

13) Marketing strategy

A well-designed marketing strategy will help you keep all your rental properties filled with quality tenants year after year. There are multiple ways you can reach your potential tenants. Let’s take a look at some of the most popular and effective marketing methods.

Your website

Your rental property website is often a potential tenant’s main destination when determining whether or not they want to reach out to you to schedule a tour or even rent on the spot. Make sure your website is fast, mobile-friendly, and built with the customer’s experience in mind. Slow load speeds, outdated information, and unintuitive search functionality will only deter your site’s visitors.

Work with a web developer, copywriter, and Search Engine Optimization (SEO) strategist to help you build a website that shows your rental properties in the best light possible.

Email marketing

Email marketing is a great way to follow up with potential tenants who may have submitted their information to learn more about a property but have yet to rent from you. Design a series of newsletters or marketing emails meant to educate and build trust. You can also advertise new property rentals as you have them. The more helpful your email marketing content is to your reader, the more likely they will want to work with you in the future.

Social Media Marketing

Social media allows you to promote your vacancies as well as your company. Build brand authority with great photography and helpful, informative captions. You can also add ways for interested parties to get in touch with you about a property.

Some major social media platforms to consider for your marketing strategy are:

Google My Business

Google My Business helps your company get found on—you guessed it—Google. This applies most specifically to Google local search but may also help you rank better nationally when paired with an effective SEO strategy. Register for a free account, enter your business information, and you’re set!

Word-of-mouth and referrals

When you find a great tenant, you want to keep them. What’s more, you probably want to find more tenants just like them. That’s where word-of-mouth and referrals come in.

Offer an incentive to current tenants if they refer more potential tenants your way. A common incentive is to offer a certain dollar amount off their rent the month after a referred tenant signs a lease. Remember that you can harness social media for word-of-mouth as well, so encourage the circulation of your “available for rent” posts on all your platforms.

14) Additional resources

The life of a rental property business owner is fast-paced and filled with a lot of hard work. Sometimes that can make life a little stressful . To help you stay grounded, focused, and growth-oriented along your real estate journey, check out these and other real estate investment resources.

• Small Business Monthly Checklist
• Investopedia’s List of 9 Essential Books for Rental Property Investors
• BiggerPockets: A popular networking site for real estate investors
• Property search engines such as Trulia and Zillow

Congratulations! You’ve made it to the end of our step-by-step guide, and you’re that much closer to starting your rental property business. At this rate, you’ll have your first rental property ready for renters in no time.

Cross “get insurance” off your rental property business to-do list with Huckleberry small business insurance

At Huckleberry , our mission is to make procuring quality rental property business insurance fast and simple. Snag a quick workers’ comp quote from us or see how you can get insured online in minutes .

Buy business insurance online in less than 5 minutes.

No paperwork. Instant coverage. No-commitment quote.

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Real Estate Rental Business Plan

A real estate rental business plan is the first step in establishing what your expectations and goals are for the rental business. 3 min read updated on February 01, 2023

What You Need to Know About a Real Estate Rental Business Plan

Elements of a Business Plan

• Objectives.
• Strategies.
• High-Level Plans.
• Daily Plans.

Setting Passive Income Investing Goals

When creating the rental business plan , there are two questions that will need answering: How much passive income do you hope to earn on a monthly basis, and how much time and money are you in a position to invest?

As you consider the answers to these questions, keep in mind that your goals should be realistic in terms of the amount of time you have to invest and the money you hope to earn. If you plan to start out working part-time, your goals can be less ambitious as compared to having unlimited time to invest and financing is already in place. Keep the time frame realistic but don't be afraid to reach to make your dream of a successful business become reality.

Another question to consider is what type of rental property you want to focus on. Your options are:

• Residential
• Multi-family

Determine what you want the end result to be. Then, work backward to help guide you to the best result.

Choosing Your Market

Determining the area/region you plan to invest in is an even more important decision than how much experience or capital you have to offer. The questions you'll want to research before answering include:

• Is there a limit to the distance to the market you're investing in?
• Do you have a team in the market area to handle daily operations, or will it be necessary for you to commute back and forth?
• What will the cost of commuting and market research cost you?
• Is the economy in the market you're considering stable and diverse?
• Does the market offer various business sectors to help in keeping jobs and businesses?
• Is there one main employer in a specific market?
• What is the average market price for the acquisition of property?
• What is the average price of a rental?

It isn't necessary that you reside in a market to invest in it, but you do need to know the ins and outs of a market to ensure it works to your advantage.

Financing and Expenses

A big hurdle you will face as a rental property investor is the financing of your business venture. Understanding what you need and how you will pay for the business can alleviate stress and bring clarity to finding solutions and/or alternatives to fund the company.

The business plan should clearly outline:

• The amount of money needed to get started.
• Plans to raise financing if you do not already have financing in place.
• The amount of rehab construction to budget for.
• An estimate of what monthly expenses will cost.

Marketing Strategies

Once you have a rental property, the next step is putting a plan of action into play to bring in tenants to generate cash flow. Some of the most common options include:

• Local bulletin boards.
• Local realtors.
• Print media/newspaper.
• Rental websites.
• Social media.
• Word of mouth.

The specific marketing channels you choose to use will depend on your selected market. The more specific you can be with marketing, the more you can budget for marketing costs accordingly.

Managing Your Rental Property

There are additional questions to ask and answer regarding the management of the rental property as well as maintaining the rental properties to keep them in good shape and to maintain a steady cash flow. This means having answers to these queries:

• Do you plan to be a landlord or hire a property manager?
• Who will have the task of finding and selecting tenants?
• Will you perform repairs or hire a professional contractor?
• Who will maintain the yard and other duties?

Your answers to these questions depend on several factors, such as the budget you have to work with and available time. Also, having the business plan mapped out with all management systems in place beforehand helps ensure there will be no last-minute surprises.

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How To Write A Real Estate Business Plan

What is a real estate business plan?

8 must-haves in a business plan

How to write a business plan

Real estate business plan tips

Success in the real estate investing industry won’t happen overnight, and it definitely won’t happen without proper planning or implementation. For entrepreneurs, a  real estate development business plan can serve as a road map to all of your business operations. Simply put, a real estate business plan will serve an essential role in forming your investing career.

Investors will need to strategize several key elements to create a successful business plan. These include future goals, company values, financing strategies, and more. Once complete, a business plan can create the foundation for smooth operations and outline a future with unlimited potential for your investing career. Keep reading to learn how to create a real estate investment business plan today.

What Is A Real Estate Investing Business Plan?

A real estate business plan is a living document that provides the framework for business operations and goals. A business plan will include future goals for the company and organized steps to get there. While business plans can vary from investor to investor, they will typically include planning for one to five years at a time.

Drafting a business plan for real estate investing purposes is, without a doubt, one of the single most important steps a new investor can take. An REI business plan will help you avoid potential obstacles while simultaneously placing you in a position to succeed. It is a blueprint to follow when things are going according to plan and even when they veer off course. If for nothing else, a real estate company’s business plan will ensure that investors know which steps to follow to achieve their goals. In many ways, nothing is more valuable to today’s investors. It is the plan, after all, to follow the most direct path to success.

8 Must-Haves In A Real Estate Business Plan

As a whole, a real estate business plan should address a company’s short and long-term goals. To accurately portray a company’s vision, the right business plan will require more information than a future vision. A strong real estate investing business plan will provide a detailed look at its ins and outs. This can include the organizational structure, financial information, marketing outline, and more.  When done right, it will serve as a comprehensive overview for anyone who interacts with your business, whether internally or externally.

That said, creating an REI business plan will require a persistent attention to detail. For new investors drafting a real estate company business plan may seem like a daunting task, and quite honestly it is. The secret is knowing which ingredients must be added (and when). Below are seven must-haves for a well executed business plan:

Outline the company values and mission statement.

Break down future goals into short and long term.

Strategize the strengths and weaknesses of the company.

Formulate the best investment strategy for each property and your respective goals.

Include potential marketing and branding efforts.

State how the company will be financed (and by whom).

Explain who is working for the business.

Answer any “what ifs” with backup plans and exit strategies.

These components matter the most, and a quality real estate business plan will delve into each category to ensure maximum optimization.

A company vision statement is essentially your mission statement and values. While these may not be the first step in planning your company, a vision will be crucial to the success of your business. Company values will guide you through investment decisions and inspire others to work with your business time and time again. They should align potential employees, lenders, and possible tenants with the motivations behind your company.

Before writing your company vision, think through examples you like both in and out of the real estate industry. Is there a company whose values you identify with? Or, are there mission statements you dislike? Use other companies as a starting point when creating your own set of values. Feel free to reach out to your mentor or other network connections for feedback as you plan. Most importantly, think about the qualities you value and how they can fit into your business plan.

Goals are one of the most important elements in a successful business plan. This is because not only do goals provide an end goal for your company, but they also outline the steps required to get there. It can be helpful to think about goals in two categories: short-term and long-term. Long-term goals will typically outline your plans for the company. These can include ideal investment types, profit numbers, and company size. Short-term goals are the smaller, actionable steps required to get there.

For example, one long-term business goal could be to land four wholesale deals by the end of the year. Short-term goals will make this more achievable by breaking it into smaller steps. A few short-term goals that might help you land those four wholesale deals could be to create a direct mail campaign for your market area, establish a buyers list with 50 contacts, and secure your first property under contract. Breaking down long-term goals is a great way to hold yourself accountable, create deadlines and accomplish what you set out to.

3. SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities, and threats. A SWOT analysis involves thinking through each of these areas as you evaluate your company and potential competitors. This framework allows business owners to better understand what is working for the company and identify potential areas for improvement. SWOT analyses are used across industries as a way to create more actionable solutions to potential issues.

To think through a SWOT analysis for your real estate business plan, first, identify your company’s potential strengths and weaknesses. Do you have high-quality tenants? Are you struggling to raise capital? Be honest with yourself as you write out each category. Then, take a step back and look at your market area and competitors to identify threats and opportunities. A potential threat could be whether or not your rental prices are in line with comparable properties. On the other hand, a potential opportunity could boost your property’s amenities to be more competitive in the area.

4. Investment Strategy

Any good real estate investment business plan requires the ability to implement a sound investment strategy. If for nothing else, there are several exit strategies a business may execute to secure profits: rehabbing, wholesaling, and renting — to name a few. Investors will want to analyze their market and determine which strategy will best suit their goals. Those with long-term retirement goals may want to consider leaning heavily into rental properties. However, those without the funds to build a rental portfolio may want to consider getting started by wholesaling. Whatever the case may be, now is the time to figure out what you want to do with each property you come across. It is important to note, however, that this strategy will change from property to property. Therefore, investors need to determine their exit strategy based on the asset and their current goals. This section needs to be added to a real estate investment business plan because it will come in handy once a prospective deal is found.

5. Marketing Plan

While marketing may seem like the cherry on top of a sound business plan, marketing efforts will actually play an integral role in your business’s foundation. A marketing plan should include your business logo, website, social media outlets, and advertising efforts. Together these elements can build a solid brand for your business, which will help you build a strong business reputation and ultimately build trust with investors, clients, and more.

First, to plan your marketing, think about how your brand can illustrate the company values and mission statement you have created. Consider the ways you can incorporate your vision into your logo or website. Remember, in addition to attracting new clients, marketing efforts can also help maintain relationships with existing connections. For a step by step guide to drafting a real estate marketing plan , be sure to read this guide.

6. Financing Plan

Writing the financial portion of a business plan can be tricky, especially if you are starting your business. As a general rule, a financial plan will include the income statement, cash flow, and balance sheet for a business. A financial plan should also include short and long-term goals regarding the profits and losses of a company. Together, this information will help make business decisions, raise capital, and report on business performance.

Perhaps the most important factor when creating a financial plan is accuracy. While many investors want to report on high profits or low losses, manipulating data will not boost your business performance in any way. Come up with a system of organization that works for you and always ensure your financial statements are authentic. As a whole, a financial plan should help you identify what is and isn’t working for your business.

7. Teams & Small Business Systems

No successful business plan is complete without an outline of the operations and management. Think: how your business is being run and by whom. This information will include the organizational structure, office management (if any), and an outline of any ongoing projects or properties. Investors can even include future goals for team growth and operational changes when planning this information.

Even if you are just starting or have yet to launch your business, it is still necessary to plan your business structure. Start by planning what tasks you will be responsible for, and look for areas you will need help with. If you have a business partner, think through your strengths and weaknesses and look for areas you can best complement each other. For additional guidance, set up a meeting with your real estate mentor. They can provide valuable insights into their own business structure, which can serve as a jumping-off point for your planning.

8. Exit Strategies & Back Up Plans

Believe it or not, every successful company out there has a backup plan. Businesses fail every day, but investors can position themselves to survive even the worst-case scenario by creating a backup plan. That’s why it’s crucial to strategize alternative exit strategies and backup plans for your investment business. These will help you create a plan of action if something goes wrong and help you address any potential problems before they happen.

This section of a business plan should answer all of the “what if” questions a potential lender, employee, or client might have. What if a property remains on the market for longer than expected? What if a seller backs out before closing? What if a property has a higher than average vacancy rate? These questions (and many more) are worth thinking through as you create your business plan.

How To Write A Real Estate Investment Business Plan: Template

The impact of a truly great real estate investment business plan can last for the duration of your entire career, whereas a poor plan can get in the way of your future goals. The truth is: a real estate business plan is of the utmost importance, and as a new investor it deserves your undivided attention. Again, writing a business plan for real estate investing is no simple task, but it can be done correctly. Follow our real estate investment business plan template to ensure you get it right the first time around:

Write an executive summary that provides a birds eye view of the company.

Include a description of company goals and how you plan to achieve them.

Demonstrate your expertise with a thorough market analysis.

Specify who is working at your company and their qualifications.

Summarize what products and services your business has to offer.

Outline the intended marketing strategy for each aspect of your business.

1. Executive Summary

The first step is to define your mission and vision. In a nutshell, your executive summary is a snapshot of your business as a whole, and it will generally include a mission statement, company description, growth data, products and services, financial strategy, and future aspirations. This is the “why” of your business plan, and it should be clearly defined.

2. Company Description

The next step is to examine your business and provide a high-level review of the various elements, including goals and how you intend to achieve them. Investors should describe the nature of their business, as well as their targeted marketplace. Explain how services or products will meet said needs, address specific customers, organizations, or businesses the company will serve, and explain the competitive advantage the business offers.

3. Market Analysis

This section will identify and illustrate your knowledge of the industry. It will generally consist of information about your target market, including distinguishing characteristics, size, market shares, and pricing and gross margin targets. A thorough market outline will also include your SWOT analysis.

4. Organization & Management

This is where you explain who does what in your business. This section should include your company’s organizational structure, details of the ownership, profiles on the management team, and qualifications. While this may seem unnecessary as a real estate investor, the people reading your business plan may want to know who’s in charge. Make sure you leave no stone unturned.

5. Services Or Products

What are you selling? How will it benefit your customers? This is the part of your real estate business plan where you provide information on your product or service, including its benefits over competitors. In essence, it will offer a description of your product/service, details on its life cycle, information on intellectual property, as well as research and development activities, which could include future R&D activities and efforts. Since real estate investment is more of a service, beginner investors must identify why their service is better than others in the industry. It could include experience.

6. Marketing Strategy

A marketing strategy will generally encompass how a business owner intends to market or sell their product and service. This includes a market penetration strategy, a plan for future growth, distribution channels, and a comprehensive communication strategy. When creating a marketing strategy for a real estate business plan, investors should think about how they plan to identify and contact new leads. They should then think about the various communication options: social media, direct mail, a company website, etc. Your business plan’s marketing portion should essentially cover the practical steps of operating and growing your business.

Additional Real Estate Business Plan Tips

A successful business plan is no impossible to create; however, it will take time to get it right. Here are a few extra tips to keep in mind as you develop a plan for your real estate investing business:

Tailor Your Executive Summary To Different Audiences: An executive summary will open your business plan and introduce the company. Though the bulk of your business plan will remain consistent, the executive summary should be tailored to the specific audience at hand. A business plan is not only for you but potential investors, lenders, and clients. Keep your intended audience in mind when drafting the executive summary and answer any potential questions they may have.

Articulate What You Want: Too often, investors working on their business plan will hide what they are looking for, whether it be funding or a joint venture. Do not bury the lede when trying to get your point across. Be clear about your goals up front in a business plan, and get your point across early.

Prove You Know The Market: When you write the company description, it is crucial to include information about your market area. This could include average sale prices, median income, vacancy rates, and more. If you intend to acquire rental properties, you may even want to go a step further and answer questions about new developments and housing trends. Show that you have your finger on the pulse of a market, and your business plan will be much more compelling for those who read it.

Do Homework On The Competition: Many real estate business plans fail to fully analyze the competition. This may be partly because it can be difficult to see what your competitors are doing, unlike a business with tangible products. While you won’t get a tour of a competitor’s company, you can play prospect and see what they offer. Subscribe to their newsletter, check out their website, or visit their open house. Getting a first-hand look at what others are doing in your market can greatly help create a business plan.

Be Realistic With Your Operations & Management: It can be easy to overestimate your projections when creating a business plan, specifically when it comes to the organization and management section. Some investors will claim they do everything themselves, while others predict hiring a much larger team than they do. It is important to really think through how your business will operate regularly. When writing your business plan, be realistic about what needs to be done and who will be doing it.

Create Example Deals: At this point, investors will want to find a way to illustrate their plans moving forward. Literally or figuratively, illustrate the steps involved in future deals: purchases, cash flow, appreciation, sales, trades, 1031 exchanges, cash-on-cash return, and more. Doing so should give investors a good idea of what their deals will look like in the future. While it’s not guaranteed to happen, envisioning things has a way of making them easier in the future.

Schedule Business Update Sessions: Your real estate business plan is not an ironclad document that you complete and then never look at again. It’s an evolving outline that should continually be reviewed and tweaked. One good technique is to schedule regular review sessions to go over your business plan. Look for ways to improve and streamline your business plan so it’s as clear and persuasive as you want it to be.

Reevauating Your Real Estate Business Plan

A business plan will serve as a guide for every decision you make in your company, which is exactly why it should be reevaluated regularly. It is recommended to reassess your business plan each year to account for growth and changes. This will allow you to update your business goals, accounting books, and organizational structures. While you want to avoid changing things like your logo or branding too frequently, it can be helpful to update department budgets or business procedures each year.

The size of your business is crucial to keep in mind as you reevaluate annually. Not only in terms of employees and management structures but also in terms of marketing plans and business activities. Always incorporate new expenses and income into your business plan to help ensure you make the most of your resources. This will help your business stay on an upward trajectory over time and allow you to stay focused on your end goals.

Above all else, a  real estate development business plan will be inspiring and informative. It should reveal why your business is more than just a dream and include actionable steps to make your vision a reality. No matter where you are with your investing career, a detailed business plan can guide your future in more ways than one. After all, a thorough plan will anticipate the best path to success. Follow the template above as you plan your real estate business, and make sure it’s a good one.

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Massive Astoria project with 300 rental units moves forward

33-33 11th St.

Developer John Pantanelli is moving ahead with a massive Astoria project that will feature more than 300 residential rental units.

Pantanelli recently filed plans with the Department of Buildings for a project spanning about 286,000 square feet at 33-35 11th St. near the waterfront in the bustling Queens neighborhood. The development will stand 8 stories and 94 feet tall with 303 residential units and a 138-car parking garage. It will also feature ground-floor retail space and commercial space on the second floor.

Pantanelli filed demolition permits for the 1-story commercial building on the site, which encompasses multiple addresses on 33rd Road between 11th and 12th streets, in mid-March. He purchased the site in 2014 for $7 million, property records show.

The filing specifies that the development is part of the city's mandatory inclusionary housing program, which would require either 25% of the project to be affordable for households earning 60% of the area median income on average ($76,260 for a family of three) or 30% of it to be affordable for households earning 80% of the area median income on average ($101,680 for a family of three).

The major project appears to be part of an even larger one planned for the entire block, according to a 2022 article from the local news site Patch. The overall project would include two 8-story apartment buildings, along with space for two trade schools, art studios, a nonprofit and a wholesale food distribution center, the article said.

It was unclear if certain aspects of the project had changed since then. Pantanelli could not be reached for comment by press time.

Other major projects planned for the Astoria area include Innovation QNS from Silverstein Partners, BedRock Real Estate Partners and Kaufman Astoria, set to contain almost 3,000 residential units, and Halletts North , which would have more than 1,300 units.

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Major homebuilder eyes Muskegon for dozens of ‘workforce’ rental homes

One of Michigan’s largest homebuilders is moving forward with a plan to build infill rental housing across the city of Muskegon for the “missing middle” demographic.

Portage-based Allen Edwin Homes on March 27 acquired adjacent parcels at 1115 and 1123 Chestnut St. in Muskegon’s Angell neighborhood for $3,500 apiece from the Muskegon County Land Bank. The company plans to break ground this fall on two single-family rental homes on the vacant lots and wrap construction by midwinter. 

“We’re excited to be (in Muskegon),” Brian Farkas, director of workforce housing for Allen Edwin Homes, told Crain’s Grand Rapids Business. “You see a lot of resurgence going on with the downtown area and in the neighborhoods, and we’re very happy to be part of it.”

The deal represents the county land bank’s 1,000th property sale since its inception in 2006 and the first two of 36 properties Allen Edwin Homes plans to buy from the land bank to support the development of scattered-site infill rental housing in Muskegon’s core neighborhoods.

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The homes will be rented to households making 120% or less of area median income, which the Michigan State Housing Development Authority refers to as the “missing middle” bracket. For a family of four in Muskegon County, that’s up to $95,520 per family, according to the U.S. Department of Housing and Urban Development’s 2024 guidelines.

Tim Burgess, director of the Muskegon County Land Bank Authority, said he and Farkas got connected through Jake Eckholm, Muskegon’s director of development services, who is leading a project to infill hundreds of housing units in the city in partnership with private developers. 

As Crain’s Grand Rapids previously reported , the county land bank holds more than 300 properties that it typically acquires through foreclosure and then works to return to the tax rolls. 

“Jake purchased a few lots from us, but he wasn’t going to take on all of them,” Burgess said. “But he said, ‘Hey, I know there’s this other entity (Allen Edwin Homes) that’s trying to get in here and do some workforce housing.”

Before long, Farkas and Burgess struck up an agreement that Allen Edwin Homes would acquire 36 lots from the land bank for rental housing infill.

The Muskegon City Commission in January then approved its first-ever payment in lieu of taxes (PILOT) agreement for this project under state-enabling legislation passed in late 2022. The PILOT agreement will allow Allen Edwin Homes to pay 10% of rents on the 36 homes for 15 years instead of paying city property taxes. The agreement could then be renewed.

The PILOT agreement is meant to help defray losses the developer might incur by charging below-market rate rents. According to an estimate from city of Muskegon staff, Allen Edwin Homes will owe about two-thirds less to the city as a result of the PILOT.

Eckholm said it made sense for the city to support the project with a PILOT.

“If you look at Allen Edwin’s projected rental ranges … it fits right into our needs,” he said.

According to the city of Muskegon’s 2023 Housing Needs Assessment , of the 2,924 housing units the city of Muskegon is projected to need between now and 2027, the rental housing gap is 1,611 units, compared to the for-sale gap of 1,313 units.

Of those 1,600 units, about 403 units will be needed in the low-income rental bracket ($895-$1,430 per month), and another 295 will be needed in the moderate income bracket ($1,431-$2,145 per month), according to the report.

Allen Edwin said in documents filed with the city of Muskegon earlier this year that it plans to charge about $1,400 to $1,700 per month for the Muskegon rental houses, though Farkas said those numbers are subject to change.

The homes will be about 1,600 square feet each and will have three to four bedrooms and 2.5 bathrooms, Farkas said. He estimates they will cost about $250,000 apiece to build, for an estimated total investment of $9 million.

Farkas said this marks Allen Edwin’s second foray into Muskegon development after building seven homes there a few years ago under a contract with the city.

“(We) loved the market and … we’re happy to be back there investing in Muskegon,” Farkas said.

This is Allen Edwin’s second West Michigan project in the past few months that was enabled by the PILOT legislation. The other was an eight-unit rental project in White Cloud that broke ground in December.

Farkas told Crain’s Detroit last June that as a result of the state’s PILOT legislation, Allen Edwin Homes plans to invest between $20 million and $50 million annually to build 100 to 200 new units of workforce housing per year, in addition to the 800 homes the company builds annually for its traditional business of for-sale homes in the $300,000 to $500,000 range.

Other cities the homebuilder is eyeing for workforce housing development include Jackson, Niles, Three Rivers, Portage and Coldwater.

In total, Allen Edwin Homes has built more than 10,000 homes across Michigan and northern Indiana since 1995.

More from Crain’s Grand Rapids Business:

Researchers find widening gap as housing costs outpace wage growth in Kent County

Grand Rapids has the tightest industrial real estate market in the U.S., report finds

Mary Free Bed argues it owns disputed architectural designs for $60M pediatric hospital

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My Real Estate Finance Minor - How it’s Helped Me in My Career and Personal Life

Benton Greenwood

Coming into Purdue, I never thought that I would end up taking a real estate finance minor. Because I plan on owning rental properties in the future, I decided to pursue this program when it was first offered.

The faculty managing the coursework want to challenge the students to have a well-rounded knowledge of the real estate market, both the residential and commercial sides. I took the first course, Real Estate Fundamentals, during the first semester it was offered for the minor. It was challenging, but well worth my time and effort. We learned about real-estate and loans during this class. We also touched on investment, which led into the next classes, Real Estate Investment and Development and Real Estate Law. I learned there’s a lot more to real estate, even the fundamentals, than I realized.

I’ve seen firsthand how passionate people can be about real estate, my professor, Mike Eriksen, being one of them. Professor Eriksen has a very engaging and very enthusiastic teaching style, which made this difficult class easier to manage. He kept us on our toes and encouraged us to learn more. His enthusiasm toward the industry fueled my own interests and has proven to me that I'm taking the right path.

We had a lot of guest speakers in the first class I took. Listening to them talk makes me realize how dedicated they are to this field. Team members from the real estate company Jones Lang LaSalle Incorporated (JLL) came to speak with us in the Real Estate Fundamentals course. I loved the energy they brought, and they were very eager to answer any questions, encouraging us to apply for their internships in the process. In the Real Estate and Development class, Professor Eriksen brings in industry professionals from all sectors of real estate to speak to us and answer our questions.

Through these courses, I’ve been learning what will help me in my future, not only in my career, but also in my everyday life. It’s important to know about the financial aspects of life, especially when it comes to buying or renting a house. Since most people will buy a house or rent a place at some point in the future, I’m grateful for these classes for teaching me life skills. I learned how to calculate loan payments, which is relevant to almost everyone. We need to know information like this, and I think this minor could provide everyone with education on topics like loans and rentals.

In addition to helping me in my personal life, this path has also helped me gain leadership and real-world skills. As one of the founding members of the new Purdue Real Estate Society, I’ve had opportunities to develop professionally. Twenty students, including me, went to Chicago and met with experts from companies like Heitman, Avison Young, Marquette, Riverside Investment and Development, and Magellan. All of them, but especially the Purdue alumni, communicated their excitement to learn that the Daniels School now has the Real Estate Finance minor, saying they would have loved to have that option during college.

Though my marketing major is the path that will fuel my career in marketing in the automotive industry, I intend to make the most of this minor. While I don’t plan on going into the real estate field, I think the skills I learn will be very valuable assets both currently and for the future.

I would definitely recommend this minor. It’s important to keep an open mind to your future options while taking the coursework. I think it’s worth the time spent to take the extra classes to understand the real estate market and how it affects you, even if you want to simply learn more about buying your own house. Then again, there are a lot of career opportunities within real estate, which gives you more options with job hunting.

Benton Greenwood, from Centreville, Maryland, is a junior majoring in marketing and minoring in real estate finance. He is the vice president of communications and one of the founding members of the Purdue Real Estate Society (PRES). On campus, he works at Chick-fil-A. In addition to that, he holds two marketing jobs: one at POUNCE, a marketing agency and the other at Pecometh, a camp and retreat ministry near his home in Maryland.

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