business plan for income 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

• Making a property investment business plan
• Rental yield calculations
• Property investment strategies
• How to quit your job and invest in property

Setting investment goals

• Are property training courses worth the money?
• Do you need a property mentor?
• The process of buying an investment property
• How to evaluate a property investment
• Property assessment checklist
• The 4 types of property deal I look for (and why)
• How to find a property sourcer
• Deciding where to invest
• How to flip a house: the ultimate guide
• Rent-To-Rent: The ultimate guide
• Lease Options explained
• Lending against property
• Lessons from running a letting agency
• How to get started with limited funds
• Mortgages: The ultimate guide
• Mortgages for limited companies
• New mortgage rules: rental cover and portfolio landlords
• Interest-only vs repayment mortgages
• Bridging finance: the ultimate guide
• Property joint venture agreements – The ultimate guide
• Recycling your cash
• Self-manage or use a letting agent?
• Landlord insurance guide
• How to find tenants
• Writing a tenancy agreement
• What does self-managing a property involve?
• Rent guarantee insurance
• The 18-year property cycle
• Will London house prices crash?
• Avoiding Inheritance Tax
• Exit strategies
• Mortgage interest relief
• Buying through a company

How to create a rental property business plan (and why you need one)

Last updated: 21 October 2022

Take it from someone who’s spoken to a lot of investors over the last few years: almost everyone who achieves great success started out with a solid plan.

All businesses start out with a plan . Even if that plan is just “I think I can buy this widget for £1 and sell it for £1.50”, it’s still a statement of what the business will do and how it will make a profit.

But many – in fact, most – wannabe property investors start out without even the most basic of plans. Often, people have nothing more than vague thoughts like “ property prices go up, so it’s a good investment ” or “ most wealthy people seem to own property ”.

It might feel like sitting around planning is just delaying you from getting out to look at properties and start making money. But take it from someone who’s spoken to a lot of investors over the last few years: almost everyone who achieves great success started out with a solid plan.

(Or to put it another, more painful way: almost everyone who didn’t start with a plan ends up disappointed with where they end up – however much effort, money and time they put in.)

What does a rental property business plan look like?

It certainly doesn't need to be 100 spiral-bound pages of projections and fancy charts. In fact, the best plan would be so simple that it fits on the back of an index card – meaning that you can commit it to memory and use it to drive every decision you make.

In order to get to that simplicity though, you might need to do some seriously brain-straining thinking first.

It's not easy, but it is simple: your plan basically just needs to set out…

Where you are now

• Where you want to get to, and
• What actions you're going to take to bridge the gap

DOWNLOAD MY BUSINESS PLAN WORKSHEET

Get your plan down on paper by downloading my printable worksheet that takes you through the planning process

You'll receive a one-off email with your download link, and be subscribed to my Sunday email where I round up the main property news stories of the week. You can unsubscribe at any time, and your data will never, ever be passed to anyone else.

To give a cheesy analogy, you can't plan a route unless you know where you're starting from.

Working out your starting point is the easiest part, because it involves information that's either known or easily knowable to you.

You'll need to be clear about:

• The amount of money you've got to invest
• The amount of savings you can allocate to property investment in future years
• The time you can invest each week or month
• The skills and knowledge you can apply to your property business

Note that I said it was the easiest part, but still not easy – because it involves honesty about what you can commit, and self-knowledge to determine where your strengths lie.

Knowing how much money you've got to invest should be straightforward, but it's probably worthwhile speaking to a mortgage broker to check that you'll have borrowing options – because this will determine your total investment figure. A broker will also be able to tell you about your options around releasing equity from your own home, if that's something you want to consider.

I'd also strongly encourage you to consider what “emergency fund” you want to keep in cash, and deduct that from your total investable funds. I suggest having at least six months' expenses in the bank at all times: the last thing you want is to plough every last penny into investments, then lose your job the next day and be unable to pay your bills.

Where you want to get to

So now you know where you're starting from, where do you want to end up? In other words, what's your goal?

Yes, you want to be “rich”, or “secure”, or “build a future” – but what does that actually mean, in pounds and pence terms, for you?

And just as importantly, when do you want to have achieved that?

You might be surprised by how much thought is involved in answering these questions properly. It's easy to throw around terms like “enough to fund my lifestyle” and assume that it might involve an income of £10,000 per month, but it's another matter entirely to look honestly at your ideal lifestyle and determine what a genuinely meaningful figure is.

The same is true for “when” – and it's an often-ignored factor that actually cuts to the heart of the most basic of investment decisions.

For example, take a choice between two properties:

• Property 1 will give a return on your investment of 15% but will probably never increase in value
• Property 2 will give a return of 7% but has the potential to double in value over the next decade.

If your goal is to create a certain monthly income within three years, the Property 1 is likely to be a better choice. Growth is unlikely to happen to any great extent over that time, so you need to optimise for cash in the bank right now.

On the other hand, if you have a decade before you want to have achieved your goal, Property 2 is probably the better bet. It very much is a “bet” because you're taking something of a gamble on capital growth, but it's got a lot of time to happen – and when it does, your returns will dwarf the higher rental income you'd have made from the other property.

That's just one example of why making even simple decisions in your property business are impossible without having that most basic ingredient of your plan: where you ultimately want to end up, and when.

So, by this point in the plan you need to:

• Assess your finances to build up an honest picture of where you are now
• Put some serious thought into where you want to get to, and when

If you need help with this goal-setting process, I co-own Property Hub Invest which offers free strategy meetings . It's often easier to work this stuff out in conversation with someone who knows their stuff, rather than doing it all in your own head.

That's a great start, but for most people it'll produce an uncomfortable insight: the gap between where you are and where you want to be seems impossibly large! With the resources you've got now, how are you possibly going to reach your goal in a sensible period of time?

Well, that's where it's time to start thinking about the details of the third step: the strategy you'll use to pursue your goal.

A strategy to bridge the gap

The steps you take to get from Point A to Point Z are what's commonly referred to as your strategy – and strategy is a vital component of your business plan.

The way I like to think about strategy is the way you compensate for a lack of cash . It's an unusual way to look at it, but I find it useful – because it tells you (given your timeframe and your goal) how much heavy-lifting your strategy will need to do to keep you on track.

Think of it like this: if you had £10m in the bank and your goal was to make an income of £5,000 per month within a year, you wouldn't need any strategy at all . You could just use your £10m to buy any properties, anywhere – you wouldn't need to maximise the rent, manage them well or even keep them all occupied at all times! You'd be able to buy so much property that you really couldn't fail.

Sure, it'd be a pretty stupid thing to do – you should really have had a more ambitious goal – but you get the point.

Obviously, most of us aren't in that position – and that's why we need a strategy.

So, just what position are you in?

A rule of thumb

A handy way of looking at it is to take the amount of money you've got to invest in property, and assume that you can get a 5% annual return on that money (ROI) – which is a rough rule-of-thumb for a normal property bought with a 75% mortgage.

So, if you've got £100,000, you can generate a (pre-tax) profit of £5,000 per year – or £416 per month.

That's unlikely to be enough to hit most people's goals – but then there's the time factor. If you save up the rental income for 20 years, you'll be able to buy another batch of properties just like the first – so you'll now have income of £832 per month.

If you're happy with that, then you've already got your strategy: buy properties that will give you your desired ROI, then wait!

Portfolio-building strategies

But most people will want more than that: we've hardly been talking about life-changing sums, and 20 years is a long time to wait before you can buy again!

This is where more of an advanced strategy comes in, allowing you to get better results, faster.

This might include:

• Buying properties and adding value, so you can refinance at the higher value and buy your next property more quickly ( learn more about this strategy )
• Buying properties at a discount, allowing you again to refinance at the higher value and move on to the next one
• Turning properties into HMOs, so you can generate a higher ROI on them
• “Flipping” properties for a profit, so you can replenish your cash more quickly ( read my guide to flipping )

…or something else entirely.

I go into different strategies in enormous detail in my book, The Complete Guide To Property Investment .

Simply appreciating the need for one of these strategies from the start is a really big deal.

Most people don't: they'll rush in, use all their money to buy properties that generate (say) £500 profit per month, then…what? They'll be stuck – because they didn't go in with a plan for how they were going to get to their target number . They'll effectively be starting from scratch, having to scrape together the money to go again.

It's extremely common, and it doesn't surprise me – but it does frustrate me. If they'd started with just a bit of time making a plan, they wouldn't have made this mistake – because it would have become very obvious that they wouldn't reach their goal without applying some strategy.

Any of the strategies I listed (or a different one, or a combination of several of them), when applied effectively, can get you to where you need to be. But that's not to say that all of them will be equally good for you. Each of them has different risk factors, requires different time commitments, are suited to different skill sets, and so on.

That's why this is your business plan: copying someone else's homework isn't going to do you any good, because their skills, attributes and preferences will be different from yours.

For example, one person's plan might be to get their hands dirty by renovating properties for resale – completing two projects per year, and using the profits to buy an HMO. Within five years they'll have five HMOs, which will give them all the income they need.

Someone else might be hopeless at anything hands-on, but a master negotiator. Their plan could be to buy at enough of a discount that they can pull at least half of their funds back out again by refinancing – and keep doing that until in ten years' time they have 15 single-let properties giving them their target income figure.

(That's why when someone emails me asking if their strategy “sounds good”, I have to say that I don't know: usually it sounds like on paper like it would work for someone , but I have no idea if they're the right person to execute it.)

So, coming up with your strategy involves:

• Starting with an assessment of where you are now
• Deciding where you want to get to, and by when
• Seeing how far you'll fall short by just buying “normal” properties
• Thinking about your own skills, time and preferences to choose which strategy (or strategies) you'll use to fill in the gap

It might take a while, and that's OK – it's not an easy decision . To take the pressure off though, remember: your plan isn't set in stone. It's important to start with a clear vision and not get distracted by every new opportunity that comes your way, but every plan is just a starting point: you'll be seeing what works, reviewing and adjusting course along the way.

Once you've got a strategy down on paper, that's a huge step – and you should congratulate yourself, because it's a step that most people will never make (and will suffer for).

But of course, the act of writing the plan isn't going to magic it into existence: you need to get out there and execute on the plan.

Turning your property business plan into action

Having an appropriate goal and a solid strategy to get you there are essential, sure – but nothing is going to happen until you actually take the steps that are necessary to execute that strategy.

If you don't take the time to identify the steps and make a plan to carry them out, you'll end up in “pulling an all-nighter the day before your homework is due in” mode. And you don't want that: it's no good setting a five-year goal, feeling all virtuous for being such a strategic and big-picture thinker, then realising in four years and 364 days that you've not actually got any closer towards making it a reality!

So let's get those steps in place. And the good news is…it's really simple. (The best things usually are.)

Breaking it down

However big, ambitious and far in the future a goal seems to be, all goals are achieved in exactly the same way : by breaking them down into individual tasks, and working through those tasks one by one.

As you work through those tasks, it’s important to have sub-goals as “checkpoints” along the way.

Sub-goals are how you stay on track: by setting a deadline for each sub-goal, you can make sure that your progress is fast enough. They also keep you motivated, because it means you’ll always have a small “win” on the horizon: you won’t just be looking at the main goal (potentially) years off in the future. Think of them as mile markers at the side of a marathon course.

To put it another way:

Small task + Small task + Small task = Sub-goal Sub-goal + Sub-goal + Sub-goal = Overall goal

It's those small daily tasks that are the foundations of your achievement. And that's the beauty of a good plan: all you need to concentrate on is ticking off your tasks each day, and your overall goal is achieved automatically!

So, this final step in your plan is about breaking that big goal down into sub-goals, and those sub-goals down into bite-sized individual tasks. That's it!

As you break it down, there are a few things I find are useful to think about…

One-off tasks v recurring tasks

Your business will have two types of task:

• One-off tasks , like finding a mortgage broker
• Recurring tasks , like viewing properties and making offers

These two types of task will both appear in your weekly, monthly and quarterly to-do lists. A useful way of planning your time is to start by filling in your recurring tasks – like going through portals to find new potential acquisitions every day, and calling agents to follow up on offers once per week – then adding your recurring tasks on top.

By thinking about both types, you'll make sure you're not dropping the ball on the important day-by-day stuff, but you're also not ignoring the big-picture one-offs that are going to make a huge difference to your business in the long run.

The first, simplest step

Just like you break a goal down into sub-goals and sub-goals down into tasks, I favour breaking every one-off task down into the smallest possible unit .

For example, “find a mortgage broker” could be an important one-off task for you, but it's not something you can just sit down and do until it's done. Because it seems nebulous and you can never identify a block of time when you can do it from start to finish, you can end up never doing it at all.

Instead, you'll make yourself feel better by ticking off smaller tasks that seem easier – but are often less important.

The solution is to break every task down into as many sub-tasks as possible. So instead of “find a mortgage broker”, the tasks become :

• Email 3 contacts to ask for recommendations
• Post on The Property Hub forum to ask for recommendations
• Email everyone who is recommended to set up a quick call
• Draw up a shortlist of 2-3 people to have a longer conversation with
• Pick a winner

Doesn't that seem much easier already? You can imagine sitting down and bashing out the first task in five minutes right now, then you're underway!

Who will do each job?

Here's a potential lightbulb moment: you don't have to do everything in your business yourself.

Any business has different “functions”, or departments – like sales, manufacturing, and admin. A property business is no exception.

The basic functions of all property businesses are the same:

• Acquisition
• Refurbishment
• Refinancing/selling

The types of task that fall within each function will depend on your business plan. For example, if your aim is to find properties you can buy “below market value”, acquisition could be a major part of the business – involving direct-to-vendor marketing, networking with estate agents, and attending auctions.

On the other hand, if your model involves buying properties that you think will experience strong capital growth, there could be a lot more tasks in the “research” part of the business – and acquisition could be very straightforward once you’ve identified the opportunity itself.

Could you do every task within every function yourself? Maybe.

Could the business achieve better results if you bring in specialists to do what they do best? Definitely .

You could go big and employ an assistant to view properties and make offers for you, or just make sure you outsource functions like management and accountancy to the relevant professionals.

Whatever you do, once you start thinking about your property venture as a business with various departments, you'll start to break away from the idea that this is something you have to do all on your own – and that's a very powerful insight.

OK, this has been a long one – but we've covered a lot of ground.

To recap, those critical steps are:

• Assess where you are now
• Work out where you want to be, and by when
• Outline a strategy to get you there
• Fill in the detail, to get you from “big picture” to individual steps

It's a process that's worked for me, and I've seen it work for many investors I've encouraged to put it into action too.

Its power is in its simplicity: you take the time to intelligently decide exactly what you need to do, then you figure out a way to (to borrow a registered trademark) just do it . As long as you show up and work through your to-do list each day, the big, scary, long-term goal takes care of itself!

Of course, you'll need to assess your progress and adjust course along the way: nothing will pan out exactly as expected, and there's a lot that can change over a timespan of several years.

But by having your plan, what you won't do is get distracted by every new idea that comes your way – researching HMOs one day, and holiday lets the next – and end up getting nowhere.

(You'd be amazed by how many plan-less people that description fits to a tee.)

So now you know how to put a property business plan together. It's not a plan that will necessarily get you funding from the bank, but it's something more important than that: a plan you can use every day to make sure you stay on track to hit your goals.

The one thing that every successful investor does

• iPropertyManagement
• Rental Property Investing
• Start Rental Business

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 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:

• Property Marketing . 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.
• Applicant Screening. 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 Profit

Rental Property Expenses

Rental Tax Deductions

Buy Property without Money

Rental Renovations

BUSINESS STRATEGIES

How to create a rental property business plan

• Annabelle Amery

In the dynamic realm of real estate and rental properties, a well-designed business plan is the cornerstone of starting a thriving rental property venture . It goes beyond a mere document, serving as a strategic guide that shapes your goals, operations and adaptability.

Your business plan plays a vital role in making informed decisions and navigating market shifts. Moreover, it enhances your credibility with potential partners and investors, showcasing your grasp of the industry. When you’re starting a business in the real estate industry, a solid business plan can truly pave the way for rental property triumph.

Looking to expand your business online by making a website ? Check out Wix’s website builder .

How to write a rental property business plan in 6 steps

Writing a comprehensive business plan for your rental property business is crucial for setting a solid foundation and ensuring long-term success. It provides a roadmap for your business, outlining your goals, strategies, and financial projections. Here are the six main parts of a rental property business plan:

Executive summary

Business and domain names

Market analysis and research

Operation plan

Marketing and advertising plan

Financial plan

01. Executive summary

The executive summary is the first section of your rental property business plan. It provides an overview of your business and highlights the key points from each section of the plan. The executive summary should be concise, clear and engaging to capture the reader's attention. It should include:

A brief description of your rental property business

Your mission statement and vision for the business

A summary of your target market and competition

An overview of your marketing and growth strategies

Your financial projections and funding requirements

Example of an executive summary for rental property businesses

“ABC Rentals is a leading provider of high-quality rental properties in the city. Our mission is to provide comfortable and affordable housing solutions for individuals and families. With a strong focus on customer satisfaction, we aim to exceed our tenants' expectations by offering well-maintained properties, excellent customer service and competitive rental rates.

In an increasingly competitive rental market, ABC Rentals stands out by offering unique amenities such as on-site laundry facilities, secure parking and pet-friendly options. Our marketing strategies include targeted online advertising, partnerships with local businesses and word-of-mouth referrals. With an initial investment of $500,000 from private investors, we project steady growth over the next five years.”

02. Business and domain names

Choosing the right business name for your rental property is crucial for building brand awareness and trust. Start by brainstorming ideas that reflect the essence of your business and resonate with your target market. You can use a business name generator tool for inspiration and to check the availability of domain names .

When choosing a domain name make sure to keep it short, memorable and easy to spell. Include relevant keywords and avoid numbers, hyphens or special characters.

After you’ve decided on a name and the right legal structure, make sure to register your business .

03. Market analysis and research

Including a market analysis and research section in your rental property business plan is essential for understanding the competitive environment and developing effective business strategies. Conduct market research to identify trends, demand and competition in the rental property market.

Your market analysis should cover:

An overview of the rental property market in your target area

Demographic information about your target audience

Competitor analysis, including their strengths and weaknesses

Pricing strategies and rental rates in the market

Opportunities for differentiation and unique selling propositions

04. Operations plan

The operations plan outlines the logistical aspects of your rental property business. It covers important details such as location, premises, equipment and staffing needs.

Detail the ideal location for your rental properties based on target market preferences and accessibility to amenities. Include in this the size and layout of the premises, including the number of units and common areas. Remember to list all of the necessary equipment for property management, maintenance and tenant services.

You should also include staffing requirements. This includes property managers, maintenance personnel and administrative staff.

05. Marketing and advertising plan

Your rental property business plan should include a detailed marketing and advertising plan to attract tenants. Some strategies to consider: online advertising through rental listing websites, social media platforms and targeted online ads.

You can also look into traditional advertising methods like print ads in local newspapers or magazines—and at the same time partnerships with local businesses or organizations for referral programs. Don’t forget to create a business website to showcase your services and land more leads.

No matter where you promote your business, you’ll want to keep your branding consistent. As a first step, use a logo maker to generate real estate logo ideas .

06. Financial plan

When it comes to a rental property business, the financial plan lays out the money side of things, like how much it'll cost to start up, where the funds are coming from, how much you expect to earn and when you're likely to start making a profit. This section isn't just about showing your business's money smarts, but it's also a way for potential backers and lenders to figure out what they might get out of investing in your business.

Rental property business plan examples

Creating a business plan for your rental property business is essential for setting a solid foundation and ensuring long-term success. To help you get started, here are two draft business plans for a hypothetical rental property business.

Business plan template 1: Urban Rentals

Urban Rentals is a premier rental property business specializing in providing high-quality urban living spaces for young professionals and students in the city. Our mission is to offer modern, well-designed apartments in desirable locations at competitive rental rates. With a focus on customer satisfaction, we aim to create a hassle-free rental experience for our tenants.

Company and domain names

The company name, Urban Rentals, reflects our target market and the type of properties we offer. We have secured the domain name urbanrentals.com, which aligns perfectly with our brand identity and makes it easy for potential tenants to find us online.

We have conducted extensive market research to understand the demand for rental properties in urban areas. Our target audience consists of young professionals and students seeking convenient, stylish and affordable apartments. We have identified several competitors in the market but believe that our unique amenities and competitive pricing will set us apart.

Operations plan

Urban Rentals plans to acquire properties in desirable urban neighborhoods close to public transportation, restaurants, and entertainment options. We will renovate these properties to meet modern standards and provide essential amenities such as high-speed internet, laundry facilities, and secure access. Our dedicated property management team will handle tenant inquiries, maintenance requests, and ensure that all properties are well-maintained.

To attract tenants, we will utilize a multi-channel marketing approach. This includes online advertising through rental listing websites and social media platforms, as well as targeted online ads. We will also establish partnerships with local colleges and universities to reach student tenants. Additionally, we will implement referral programs and incentivize word-of-mouth marketing through satisfied tenants.

Urban Rentals will be initially funded through a combination of personal savings and a small business loan. We project steady growth over the next five years, with a focus on maintaining high occupancy rates and increasing rental income. Our financial plan includes detailed revenue projections, expense forecasts and cash flow analysis.

Business plan template 2: Coastal Properties

Coastal Properties is a rental property business specializing in providing beachfront vacation homes for tourists and travelers seeking a luxurious coastal experience. Our mission is to offer premium properties with stunning ocean views, top-notch amenities and exceptional customer service. We aim to create unforgettable vacation experiences for our guests.

The company name, Coastal Properties, reflects our focus on beachfront locations and coastal living. We have secured the domain name coastalproperties.com, which perfectly represents our brand and helps potential guests find us easily online.

We have conducted extensive market research to understand the demand for vacation rentals in popular coastal destinations. Our target audience consists of affluent travelers seeking high-end accommodations with breathtaking views. We have identified competitors in the market but believe that our exclusive properties and exceptional service will attract discerning guests.

Coastal Properties plans to acquire premium beachfront properties in sought-after coastal destinations. These properties will be fully furnished with upscale amenities like private pools, beach access and concierge services. We will work with reputable property management companies to handle guest inquiries, reservations and property maintenance.

To reach our target audience, we will implement a comprehensive marketing and advertising plan. This includes online advertising through vacation rental platforms and luxury travel websites. We will also collaborate with travel influencers and establish partnerships with local businesses to promote our properties. Additionally, we will leverage social media platforms to showcase stunning visuals of our properties and engage with potential guests.

Coastal Properties will be initially funded through a combination of personal investments and private investors. We project strong revenue growth based on high occupancy rates and premium rental rates. Our financial plan includes detailed income projections, expense forecasts and return on investment analysis.

Benefits of a rental property business plan

Writing a business plan for your rental property business is a crucial step in setting yourself up for success. It provides numerous benefits that can help attract investors and funding, ensure you have the necessary resources and staff, and create a plan to achieve long-term success.

Attracting funding: A well-written business plan is essential for attracting investors and raising money for your business . Investors want to see a clear and comprehensive plan that demonstrates your understanding of the market, your target audience and your strategies for success. A business plan that outlines your financial projections, marketing strategies and competitive analysis will give potential investors confidence in your ability to generate returns on their investment.

Resource requirements: Creating a business plan helps you understand the resources, supplies and staff required to start and operate your rental property business. It allows you to assess the upfront costs of acquiring properties, renovating them if necessary, and furnishing them with the necessary amenities. Additionally, it helps you determine the ongoing expenses like maintenance costs, property management fees and marketing expenses. By having a clear understanding of these resource requirements, you can budget effectively and avoid unexpected financial challenges.

Business success: A rental property business plan serves as a roadmap for achieving long-term success. It allows you to set specific goals and outline actionable steps to reach those goals. By identifying potential challenges and developing strategies to overcome them, you can mitigate risks and increase the likelihood of success. A well-thought-out business plan also helps you stay focused on your objectives and track your progress over time.

Guiding decision-making: A comprehensive business plan provides a framework for making informed decisions in your rental property business. It helps you evaluate potential investment opportunities, assess risks and prioritize tasks. When faced with important decisions, you can refer back to your business plan to ensure alignment with your overall vision and goals. This ensures that you make decisions that are in the best interest of your business's long-term success.

Financial forecasting: A crucial part of any business plan is the financial plan, which includes information on how your rental property business will be funded initially and its projected profitability over time. By outlining your sources of funding, such as personal savings or loans, you can ensure that you have the necessary capital to start and grow your business. Financial forecasting allows you to estimate future revenue, expenses and cash flow, helping you make informed financial decisions and plan for growth.

Other business ideas that may interest you

Still exploring other types of businesses ? Check out these step-by-step guides.

How to start an online business

How to start a consulting business

How to start a fitness business

How to start a fitness clothing line

How to start a makeup line

How to start a candle business

How to start a clothing business

How to start an online boutique

How to start a T-shirt business

How to start a jewelry business

How to start a subscription box business

How to start a beauty business

How to start a frozen food business

How to start a DJ business

How to start a flower business

How to start a plumbing business

How to start a baking business

How to start a babysitting business

How to start a virtual assistant business

How to start a car wash business

How to start a food prep business

How to start a pool cleaning business

Looking to start a business in a specific state?

How to start a business in Arizona

How to start a business in South Carolina

How to start a business in Virginia

How to start a business in Michigan

How to start a business in California

How to start a business in Florida

How to start a business in Texas

How to start a business in Wisconsin

Want to create another type of business plan?

How to create a real estate business plan

How to create a flower business plan

How to create a medical supply business plan

How to create a car wash business plan

How to create a contractor business plan

How to create a DJ business plan

How to create a dog walking business plan

How to create a clothing line business plan

How to create a construction business plan

How to create a painting business plan

How to create a plumbing business plan

How to create an eCommerce business plan

How to create a bar business plan

How to create a photographer business plan

How to create a cleaning business plan

How to create a restaurant business plan

How to create a coffee shop business plan

Related Posts

How to create an interior design business plan

Was this article helpful?