Guides
The plan behind a property management business: what to write down
Property management plan sections, each with the question it must answer and the test a lender or a prospective owner will apply to it before believing it.
What to take away
- Two different readers pick up this document, and they read for different things. A lender reads for repayment. A prospective owner reads for whether their building is safe with you. The plan has to survive both.
- Below is the section list with, for each one, the question it must answer and the test a skeptical reader applies. A section that cannot pass its test is padding and should be cut rather than lengthened.
- The section most plans get wrong is the service promise, because it is written as an intention instead of as a measured commitment the company has already met.
The two readers
A lender asks when the company covers its costs, what happens if it does not, and what the owner has personally at stake.
A property owner asks who answers the phone, where the money sits, and what happens when a tenant stops paying.
Almost nothing satisfies both readers at once. The plan states which sections belong to which and does not blur them.
The sections, and what each has to answer
| Section | The question it must answer | How a reader tests it |
|---|---|---|
| What the company does | Which shape of management, for which owners, in which territory | Does one sentence exclude anything? A description that excludes nothing describes nothing |
| Service promise | What the company commits to on response, reporting, and money handling | Has the company measured this, or is it aspiration? |
| Territory | Where the units are and how far apart | Parcel counts and drive times, not a city name |
| Owner segment | Who signs the agreement and what they buy | Can the plan name where to find twenty of them this month? |
| Legal footing | Which license, which trust-account rule, which statute | Is a body named beside each, or is the section generic? |
| The lease and the standard | Which documents the company will use and who reviewed them | Attorney named, review dated |
| Operations | How a request becomes a completed job with a record | Does it survive one worked example, start to finish? |
| Staffing | Which roles exist and when each is added | Is the trigger hours, or is it hope? |
| Money | Fee structure, cost to serve, break-even, reserves | Does the arithmetic hold if occupancy falls? |
| Risk | What ends this business, and what reduces each risk | Are the risks real, or are they the polite ones? |
| Review | When the plan is next examined and by whom | Is there a date, and does somebody own it? |
The sections worth expanding
Service promise. Write the response time the company has already achieved in a test, not the one it hopes to achieve. This is the section owners actually read, and it is the promise they will measure the company against. The seven gates before opening puts the proving step ahead of the selling step for this reason.
Who governs each legal line
- State real estate commissionlicense, trust account
- State landlord-tenant statutedeposits, notices
- Local housing or code officehabitability, registration
- HUD and state or city agencyscreening, advertising
Territory. Name the boundary and show the count of small rental buildings inside it from the county assessor's records. A plan that names a metropolitan area has not chosen a territory. How the territory is read before the office is chosen is the method behind this section.
Legal footing. Every line here names a body: the state real estate commission for the license and the trust account, the state landlord-tenant statute for deposits and notices, the local housing or code office for habitability and registration, and HUD's fair housing rights and obligations plus the state or city agency for screening and advertising. Do not state a requirement as fact in the plan; state the body and the date you asked. The map of who governs what is the source for this section.
Money. Federal registrations and record obligations belong here, and the IRS page on starting a business is the reference for what a new employer takes on. The break-even is stated as an occupancy level and a door count, both derived from the company's own cost to serve one unit rather than from a published benchmark.
Staffing. Say what triggers each hire in hours consumed, not in doors managed. What each role is accountable for turns the trigger into a job description.
What to leave out
- Market size figures the company cannot source. A parcel count is evidence. A national growth rate is decoration.
- Competitor fee levels presented as fact. Advertised fees are advertised.
- A five-year projection. Nobody believes it, and writing it costs a day that the territory research needs.
- Any statement of a legal requirement without the body that sets it.
Keeping it usable
The plan is a working document, not a submission. Put a version date on the front page, and keep superseded copies out of the shared folder.
Review it after the first ten management agreements, when the company knows what a unit really consumes.
The Small Business Administration's general planning guidance for owners covers the surrounding steps, and the shape the business has chosen determines which of them apply.
Common questions
How long should it be?
Short enough that the founder can recite the service promise, the territory, and the break-even from memory. If the plan needs an executive summary to be readable, the plan is the summary.
Does a lender need a different version?
A lender needs the money and risk sections in full and the rest in outline. An owner needs the service, legal, and operations sections in full. Write one document and hand over the relevant part.
What if the numbers are guesses?
Then label them as assumptions with the source of each guess, and set a date to replace them with measured figures. A guess marked as a guess is honest. A guess formatted as a finding is not.
When is the plan finished?
It is not. It is revised after the first hire, after the first eviction, and after the first owner leaves, because each of those teaches the company something the plan assumed.
