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How To Start A Rental Property Business Like A Pro

best business plan for rental property

What is a rental property business?

Starting a rental property business

Writing a business plan

Is a rental property business a good investment?

As Antoine de Saint-Exupery once said, “A goal without a plan is just a wish.” Consequently, the best plans have developed a reputation for helping people in every industry realize their own goals, no matter how lofty they may be. There literally isn’t a single professional who couldn’t benefit more from a well-crafted strategy, and real estate investors are no exception. When learning how to start a rental property business , buy-and-hold investors in particular stand to improve their long term outlook by establishing a rental property business plan.

A proven rental property business plan can help layout the systems and benchmarks investors need to realize success at a higher level. That said, only one question remains: what does a rental property business plan look like?

If you are interested in starting a rental property business, there are several valuable lessons to take away from experience. Meanwhile, here’s a guide for developing a bullet-proof rental property business plan; it may be just what you have been waiting for.

On the FortuneBuilders Real Estate Investing Show , join our host, Jeffrey Rutkowski, as he talks to Gregg Cohen, the Co-Founder of JWB Real Estate Capital, on the subject of passive income and rental properties. Listen to the podcast here:

What Is A Rental Property Business?

A rental property business is a venture through which an investor will purchase and manage one or more income-producing properties. These properties can have one or more units leased out to tenants in exchange for monthly rental fees. Investors can have an effective rental plan without directly managing these properties; property management companies can be hired to carry out the duties often associated with landlords, such as rent collection and maintenance.

Is My Rental Property A Business?

Renting a house may be considered a business endeavor, depending on who you ask. This may seem like a controversial question, and there are at least two answers to consider. From a financial standpoint, renting a residential property may result in passive income. It is important to note that investors do not have to pay self-employment taxes when reporting their rental properties. Therefore, many would argue that owning a rental property is not considered a “business,” specifically in the lens of tax filing. However, from a career standpoint, many individuals live on passive income derived from their rental property companies; in this lens, renting a house can be considered a business. It’s entirely possible to manage a rental property portfolio as a business. Still, those with a single rental property may not need to start a company to collect passive income. It’s only once the portfolio starts to grow that turning the practice of renting into a business becomes more important.

business

How To Start A Rental Property Business

Learning how to start a rental property business isn’t all that different from just about every other entrepreneurial endeavor. Investors need to identify several key elements before getting started; that way, they can start their business on a solid foundation. Here are some of the most important steps to consider when drafting a rental property business plan and becoming a real estate entrepreneur:

Join a local REI club and start networking

Pick a niche and choose your rental property market

Figure out the proper financing and secure it

Conduct the appropriate research and hire a manager

Implement systems to improve efficiency

Manage the properties and scale the business at a sustainable pace

1. Join A Real Estate Investor Club

Joining a local real estate investing club or association provides networking opportunities, not the least of which may actually help rental property investors find a partner—or perhaps anyone else who may help them further their rental property business plan. Nathan Hughes at DiggityMarketing suggests that “investors need to identify various factors before entering the rental property business. Investors should join some real estate investors clubs as a beginner”. There’s absolutely no reason to think new investors, specifically aspiring rental property owners, can’t find a helpful hand at a real estate investor club. These types of meet-ups are specifically designed to help their attendees, and there’s always someone willing to lend a hand. At the very least, investors will gain insight into local professionals who are most likely already doing the one thing they want to do.

2. Pick A Niche & Choose A Market

Determining where to invest can often be more important to investors than how much capital or experience they bring to the table. After all, the golden rule of real estate persists: location, location, location. There is perhaps no more influential factor to a rental property investor’s success than the location in which they choose to invest. The location will determine everything from demand and price, not to mention the property’s long-term potential. Therefore, a truly great rental property business plan will want to make sure it answers these questions and many more like them:

How distant a market am I willing to invest in?

Do I have a team in place to handle the day-to-day, or will I have to commute back-and-forth?

How much will commute and market research cost me?

How stable and diverse is the economy in a market? Are there various business sectors that can help keep jobs and businesses? Is there one main employer?

What’s the average market price for property acquisition?

What’s the average rental price?

No rule says investors need to live in the markets they invest in, but there is no excuse for neglecting to mind due diligence and research the local housing market. To invest successfully, investors need to know every detail about a specific area, not to mention the specific niche they intend to serve.

Jordon Scrinko, the Founder & Marketing Director of Precondo states that “Investors’ decisions on where to invest are frequently more significant than their capital or experience. After all, when it comes to real estate, location is the most important. The area in which a rental property owner chooses to invest is possibly the most important aspect in determining their success”.

If for nothing else, investors need to know their renters just as much as the area they are investing in. Picking a niche, not unlike focusing on college housing or single-family homes, is the easiest way to target a specific audience. Therefore, at this time, rental property investors should decide who they will serve; only then will they be able to tailor their rental property business plan to see their audience’s needs.

3. Figure Out Financing

Securing financing is probably the biggest hurdle rental property investors face. However, financing a real estate deal isn’t nearly as hard as many new investors make it out to be. As it turns out, there are countless lenders just waiting for an opportunity to give savvy investors the money they need to invest in real estate. Like institutionalized banks, today’s real estate investors have access to more funding sources outside of traditional sources than ever before. Private money lenders and hard money lenders, in particular, have become synonymous with the best ways to secure funding and are as willing to work with investors as investors are eager to work with lenders.

These “alternative” sources tend to coincide with higher interest payments (often three to four times higher than traditional banks), but the added cost is well worth it. In exchange for their higher rates, investors not only receive the money they need to complete a deal, but they also receive it a lot faster than they would if they went through a bank. Whereas banks can take upwards of a few months to distribute funds, alternative lenders can have the money in investors’ hands in as little as a few days—if not hours.

It is also important to note that securing financing should be done before even looking for a home. That way, the investor will know exactly how much home they can afford and which investments are worth pursuing further.

4. Conduct Research & Hire A Property Manager

Becoming a landlord means investors will be responsible for maintaining the appearance and function of the rental property. However, whether or not the investor is a handyman is a moot point, as hiring a property manager is highly recommended. While it helps to know everything about a subject property, enlisting a third-party property manager’s services is an essential step in a rental property business plan. Through their help, investors may expand their portfolio without adding on countless hours of work. If for nothing else, a property manager will take care of everything. From finding tenants to collecting rent, property managers will see to it that everything is covered. Meanwhile, the investor is free to add more assets to their portfolio and increase their passive income cash flow.

5. Systemize

There are many rental plan options for landlords, such as specializing in low-income neighborhoods or university towns. Alternatively, they can choose to specialize in higher-income, urban neighborhoods. Different strategies require different skill sets, so landlords may find better success if they pick a niche in which they specialize. However, landlords will need to set up a system for running applications, credit, and background checks regardless of the niche. Adding proven systems to a rental property business plan is the surest way to make success habitual. Therefore, investors will need to create a system for every single process associated with rental property investing. That way, there will always be an appropriate course of action, regardless of the situation. Property managers, for that matter, make it a lot easier to implement systems.

6. Manage The Properties

Managing a rental property is about far more than just hiring a property manager; it’s about figuring out exactly what systems will be put in place to keep the properties in good shape and the cash flowing in. This means answering queries like:

Are you going to be a landlord? (Or will you hire a property manager?)

Who will find and select tenants?

Will you perform repairs to maintain the property? (Or hire a contractor?)

Who will perform yard maintenance and other duties?

Your answers will depend on your budget and available time. The key is to use your rental property business plan to map out all management systems beforehand and ensure no last-minute surprises.

rental

Why Write A Business Plan

A well-crafted business plan will help in more ways than one as you learn to navigate the real estate industry. You can establish a clear framework of your goals and overall mission by writing a business plan. It should also include the reason why you want to start investing. This will ensure you remain focused as you make investment decisions and eventually grow your business. Think of a business plan as a roadmap for your future.

A business plan is also highly useful when speaking to potential lenders, designing marketing campaigns, and hiring new employees. These tasks will be made easier if you have a clear outline of what your business does (and how). For example, when you begin raising funds for your first deal, you will likely need to present your business goals to potential investors. A business plan can help take the pressure off — as the information will already be written down. If you are even slightly considering opening a rental real estate business, learning how to write a business plan is a great first step.

How To Write A Rental Property Business Plan

Starting a rental property business is one thing, but learning how to write a rental property business plan is entirely different. While the two sound similar, the latter is critical to making the former even stronger. At the very least, knowing how to start a rental property business must come before actually starting one. As a result, investors will need to familiarize themselves with the most important steps first:

Determine a vision and write a mission statement

Set passive income and business goals

Build a team structure that is conducive to success

Gain a high-level overview perspective of the company as a whole

Develop marketing systems and funnels tailored to a specific audience

1. Vision & Mission

A truly great rental property business plan must emphasize one thing above everything else: the investor’s vision or mission. What an investor hopes to achieve by investing in real estate may simultaneously serve as motivation and a guide when times are less than ideal. Therefore, investors must take a minute to think about why they are investing. Is it to retire comfortably? Is it to spend more time with family and friends? Is it both of these things? Knowing their “why” will help investors build out a sound business strategy, one that gets them closer to their goals with every investment. Consequently, those without a mission won’t know what direction to head, which doesn’t bode well for any rental property business.

2. Passive Income Goals

While closely related to one’s own vision or mission, passive income goals identify how much cash flow will be necessary to satiate investors’ appetites. That said, passive income goals should help investors meet their own mission statement. Likewise, if an investor wants to retire comfortably, they will need to set their passive income goals high enough to facilitate their desired retirement. While everyone’s passive income goals will be different, a general rule of thumb accounts for how much cash flow will be necessary to maintain their preferred lifestyle.

Remember, goals should be realistic and directly related to the reason someone wants to invest. Seeing overly ambitious goals can deter many investors from progressing, so the goals must be achievable. The sense of accomplishment developed from realizing a goal is, oftentimes, a powerful motivator.

Determining passive income goals will also help answer the most important question of them all: what type of rental property will I focus on? Residential? Commercial? Multi-family? Start from the end and work backward for better results; it’s the best and most efficient way to build a business.

3. Structure

Starting a rental property business may lead many investors to hire a team. After all, it’s true what they say: many hands make light work. The more qualified individuals investors have worked towards a common goal, the more likely they are to realize success. Not only that but hiring a competent real estate team is simply one more step towards investors removing themselves from the equation and earning more passive income. That said, it’s not enough to hire just anyone; the employees need to bring something new to the table. Investors need to hire a team that complements their skills—not that replicates them. That way, the team structure is more well-rounded and capable of accomplishing more tasks.

4. High-Level Overview

Investors need to look beyond the prospects of a single investment property and towards the potential of an entire portfolio. While a single home can produce encouraging cash flow levels, an entire portfolio can help investors realize financial freedom. Therefore, it’s important not to forget the “bigger picture.” Sure, start with a single home, but plans should inherently be scalable. When writing a rental property business plan, see that everything can be expanded to include future growth.

5. Marketing

Buying a rental property is just the first step on a passive income investing journey. At some point, investors need to figure out how to find tenants to bring in cash flow. More often than not, investors will rely on their property managers to fill vacancies. However, in the event an investor neglects to hire a property manager, there are various ways to find tenants, not the least of which include:

Rental websites

Social media

Print media/newspaper

Local bulletin boards

Local Realtors

Word-of-mouth marketing

Direct mail campaigns

Previous renters

Is A Rental Property Business A Good Investment?

Investors will know if a rental property is a good investment if their net cash flow remains consistently positive. Seasoned real estate investors know that to have a solid rental plan and business, they must first mind their due diligence and ensure that a rental property is indeed a good investment. There are several measurements available to help investors get an idea of the profit-making potential for a property. Make use of 10 real estate calculators that are helpful for any type of real estate investor.

Features of Successful Rental Properties

You don’t have to reinvent the wheel to be successful. Many successful rental properties can serve as a model for your business. Here are some distinct features of profitable rental properties:

Location: Real estate is always about location. The location of your rental property will be a major determinant of the type of tenants you will attract. For example, if you purchase a rental property at the edge of a university, you’ll naturally get applications from many college students. Consider the neighborhood and how it could influence your tenant profile, behavior, income, and vacancies.

Taxes: The location will also influence the property taxes that you end up paying. High property taxes may be well-worth it if your property is located in a great area that attracts high-paying tenants. However, property taxes could be a burden if your financials don’t make sense. Find out your property tax rate by contacting the local assessor’s office.

Schools: The ratings of local schools will help indicate what type of tenants you’ll attract. Rental properties near distinguished school systems will help draw in families willing to pay higher rental rates.

Safety: No one wants to walk home while constantly checking over their shoulder, or living in fear that their car will get broken into. Check local crime statistics and pay attention to trends. A reg flag could be a stead increase in criminal activity, even if it’s in a neighborhood that was known to be safe in the past.

Employment: A hot job market can help draw in larger groups of tenants, thus creating a healthy demand for your property. This could bring in benefits such as higher rental rates and lower vacancy rates. Growing employment opportunities can also boost your local economy and local amenities.

Local amenities: Tenants are constantly looking to balance rental rates with quality and easy of life. If your rental property is located near public transit systems, shopping, restaurants, gyms, and entertainment, you may find yourself having to field competitive offers from many tenants.

Economy: The local economy and horizon of industrial developments can also be a good indicator of rental property performance in a given area. The resulting improvement of local infrastructure could vastly improve the neighborhood and tenant pool. However, watch out for noisy construction that could hurt rental rates temporarily, plus new housing developments that could put a strain in competition.

Rental rates: Be sure to research a local neighborhoods average rental rate. This number can help you conduct a financial analysis to determine whether owning a rental property in the area would be feasible. Be sure to factor in costs such as property taxes, maintenance, repairs, and mortgage payments.

Vacancy rates: If you notice that the neighborhood has an abnormally high number of listings, it could signal that demand is low and vacancy rates are up. You may not want to invest in an area that is on the decline.

How To Determine Rent

Rent can typically be determined by analyzing other properties in the area. Start by reviewing the average rental rates, and then look at similar units to see what they go for. Pay attention to properties with the same number of bedrooms, bathrooms, and amenities. This will give the best idea of what you can charge.

Another approach is to take your monthly loan repayment as a baseline, and raise the rate to cover maintenance and repairs. Maintenance costs can vary significantly, so again pay attention to the typical market. If your rental property is in a college town, you may want extra room for maintenance. However, if you already know you are renting to a tenant you know you may be able to leave less room for repairs.

The final number should stay in the range of other properties in the area. However, they may be some wiggle room to decide exactly where to land for your own property. Just remember: charge too much and you risk vacancies, charge too little and you lose out on valuable income. If you want to learn more about determining rent , be sure to read our guide.

business plan for rental properties

Confidence isn’t simply a positive mood based on affirmations and “feel-good” mantras. Confidence, according to Webster’s Dictionary, is the “state of feeling certain about something.” As you learn how to start a rental property business , there may be no greater confidence-booster than a business plan that comes to fruition. By mapping out your precise goals—and the systems you’ll employ to achieve them—you’ll find wealth-building objectives more attainable than you ever thought possible.

Click the banner below to take a 90-minute online training class and get started learning how to invest in today’s real estate market!

best business plan for rental property

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Rental Properties Business Plan Template

Written by Dave Lavinsky

Rental Properties Business Plan

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

We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their rental property business.

Rental Property Business Plan Example

Below is a template to help you create each section of your rental property business plan.

Executive Summary

Business overview.

Noble Properties is a rental property agency in Seattle, Washington, that specializes in managing, renting, and leasing properties. Our mission is to provide luxury rentals that tenants can call home for years to come. Noble Properties rents out hundreds of homes across the Seattle area, including apartments, single-family homes, and trailers. To help prospective tenants find the perfect home, the company has created an online platform that allows them to search by their specific criteria (number of bedrooms, amenities, rent, etc.). We aim to be one of the most popular rental agencies in the area that customers can depend on again and again for their housing needs.

Noble Properties is founded and run by Joseph Pierce. He has worked in the industry for decades and has extensive knowledge of all aspects of the business. He will be in charge of most of the operations but will hire other staff to help with marketing, accounting, and managing the rentals.

Product Offering

Noble Properties offers a variety of properties for prospective tenants to choose from. Some of the options we provide include:

  • 1-3 bedroom apartments
  • Single-family homes
  • Multi-unit buildings
  • Short-term rentals
  • Mobile homes or trailers

Customer Focus

Noble Properties will target renters located throughout the Seattle area. Most renters are under the age of 40 and earn about the median income. This means that we will primarily market to younger demographics and those who earn around the local median income or more.

Management Team

Noble Properties is led by Joseph Pierce, who has been in the rental property industry for 20 years. Throughout that time, he worked in various positions in local rental property agencies but is now eager to start a rental property business of his own. During his extensive experience in the rental property industry, he acquired an in-depth knowledge of the local area, local regulations, facilities, and the characteristics of different neighborhoods. He also has extensive experience in handling business management activities.

Karen Miller has been Joseph Pierce’s loyal administrative assistant for over ten years at his former rental agency. Joseph relies strongly on Karen’s diligence, attention to detail, and focus when organizing his clients, schedule, and files. Karen has worked in the rental agency industry for so long that she has a thorough knowledge of all aspects required to run a successful rental agency. She will help out with administrative tasks and some of the initial marketing efforts.

Success Factors

Noble Properties will be able to achieve success by offering the following competitive advantages:

  • The founder, Joseph Pierce, has decades of extensive experience and knowledge of the industry that will prove invaluable for the company.
  • The company will purchase rentals in popular areas around the city, putting our rentals in high demand.
  • Noble Properties offers reasonable and affordable rates for all our rentals. Our pricing will be far more cost-effective than the competition.

Financial Highlights

Noble Properties is seeking $1,100,000 in debt financing to launch its rental property agency. The funding will be dedicated to securing initial rental spaces, securing an office space, and purchasing office equipment and supplies. Funding will also be dedicated toward six months of overhead costs, including payroll, rent, and marketing costs. The breakdown of the funding is below:

  • Purchasing initial rentals: $600,000
  • Office space build-out: $20,000
  • Office equipment, supplies, and materials: $20,000
  • Six months of overhead expenses (payroll, rent, utilities): $350,000
  • Marketing costs: $50,000
  • Working capital: $60,000

best business plan for rental property

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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Rental Properties Business Plan Template

Written by Dave Lavinsky

Rental Properties Business Plan

Rental Property Business Plan

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

Download our Ultimate Business Plan Template here >

What Is a 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.

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

Your business plan should include 10 sections as follows:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of rental property you are operating and the status; for example, are you a startup, or do you have a portfolio of existing rental properties that you would like to add to?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the rental properties industry. Discuss the type of rental property you are offering. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.  

Company Analysis

In your company analysis, you will detail the type of rental properties you are offering.

For example, you might offer the following options:

  • Single family homes – This type of rental property is often owned by a single individual, rather than a company, who acts as both landlord and property manager.
  • Multi-family properties – These types of properties can be subcategorized by the number of units per site. Buildings with 2 – 4 units are the most common (17.5%), while multistory apartment complexes with more than 50 units represent the next-largest, at 12.6% of the industry.
  • Short-Term Rental properties – These are fully furnished properties that are rented for a short period of time – usually on a weekly basis for vacation purposes.

In addition to explaining the type of rental property you operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

  • When and why did you start the business?
  • What milestones have you achieved to date? Milestones could include occupancy goals you’ve reached, number of property acquisitions, etc.
  • Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the rental properties industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the rental property industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your rental property business plan:

  • How big is the rental properties industry (in dollars)?
  • Is the market declining or increasing?
  • Who are the key competitors in the market?
  • Who are the key suppliers in the market?
  • What trends are affecting the industry?
  • What is the industry’s growth forecast over the next 5 – 10 years?
  • What is the relevant market size? That is, how big is the potential market for your rental property. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population or tourist arrivals.

Customer Analysis

The customer analysis section of your rental property business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: households, tourists, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of rental property you offer. Clearly, vacationers would want different amenities and services, and would respond to different marketing promotions than long-term tenants.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.  

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other rental property companies.

Indirect competitors are other options customers may use that aren’t direct competitors. This includes the housing market, or hotels. You need to mention such competition to show you understand that not everyone who needs housing or accommodation will seek out a rental property.

With regards to direct competition, you want to detail the other rental properties with which you compete. Most likely, your direct competitors will be rental properties in the vicinity.

rental property competition

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

  • What types of customers do they serve?
  • What lease lengths or amenities do they offer?
  • What is their pricing (premium, low, etc.)?
  • What are they good at?
  • What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

  • Will you provide superior properties?
  • Will you provide services that your competitors don’t offer?
  • Will you make it easier or faster for customers to book the property or submit a lease application?
  • Will you provide better customer service?
  • Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a rental property business plan, your marketing plan should include the following:

Product : in the product section you should reiterate the type of rental property business that you documented in your Company Analysis. Then, detail the specific options you will be offering. For example, in addition to long-term tenancy, are you offering month-to-month, or short-term rental?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the properties and term options you offer and their prices.

Place : Place refers to the location of your rental property. Document your location and mention how the location will impact your success. For example, is your rental property located in a tourist destination, or in an urban area, etc. Discuss how your location might draw customer interest.

Promotions : the final part of your rental property marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

  • Advertising in local papers and magazines
  • Reaching out to local websites
  • Social media marketing
  • Local radio advertising

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your rental property business, such as customer service, maintenance, processing applications, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect 100% occupancy, or when you hope to reach $X in sales. It could also be when you expect to acquire a new property.  

Management Team

To demonstrate your rental property business’ ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in rental property management. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in real estate, and/or successfully running small businesses.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

sales growth

In developing your income statement, you need to devise assumptions. For example, will you have 1 rental unit or 10? And will revenue grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $200,000 on purchasing and renovating your rental property, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $200,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

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

business costs

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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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.  

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

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how to start a rental property business

How to Start a Rental Property Business

How to Start a Rental Property Business

Rental property investing can be a great strategy for building wealth and ensuring a brighter financial future. Across the country, landlords earn about $35,000 more than the median household each year [1], so with the right strategy, you can earn a very comfortable income with rental properties.

However, starting a rental property business is not an easy gig. There is a lot of work to do before you even collect your first rent check, and there are also some significant risks involved.

In this guide, we'll show you how to start a rental property business and cover all the steps, from finding to financing, marketing, and maintaining a property. Let's get started.

Join an REI Club

A real estate investor club is a common concept where local investors meet to network and share ideas. As you start building your rental property portfolio, this resource could be a valuable learning method, providing many important benefits related to real estate investing. Some of the benefits include:

  • Increasing the size of your network
  • Learning about the local market and its opportunities
  • Connecting with potential partners
  • Discovering financing options
  • Gaining helpful insights about investing strategies
  • Seeing what other rental property investors have done to become successful 

Decide on the Type of Rental Property

Real estate investing provides diverse opportunities for property owners to make money. The type of property you choose to own will determine the amount of work you must put into it, the cost, the potential profits, and the structure of your business. You could invest in a few property types to build a rental property business.

  • Single-family homes- Single-family residential properties are defined as having 1–4 units. 
  • Multi-family homes- This residential property type has five or more units, so you receive payments from more than one tenant.
  • Vacation rentals- Short-term rentals for travelers have high earning potential and can include Airbnb properties.
  • Apartment complexes- A multi-unit building can house more tenants with long-term leases.
  • Commercial buildings - Owning real estate of a commercial nature allows you to lease the units to business tenants
  • Distressed properties -Buying a property to fix it up can be a great way to prepare for paying tenants.

Write a Rental Property Business Plan

A rental property business plan is a formal document that provides many details about how your company is structured, its business goals, and how it will operate. Writing a rental property business plan can help you secure additional investors and keep owners on the same page about the company's direction. It can also be useful when hiring employees for your rental property business. A strong business plan includes the following sections:

  • Executive summary – A brief company description, including a mission statement, leadership structure, and location.
  • Company description – More details about how the company helps customers with its offerings and any competitive advantages it has.
  • Market analysis – Information about the industry, including competitors, the target market, and how your business will address these factors.
  • Service details – Describe exactly what you offer and what it should provide to tenants.
  • Marketing – The company's plan to market the service to customers and why it will work.
  • Financial projections – Describe the numbers behind your business plan and its records if the company has existed for a while. 
  • Extra documents – Fact sheets, income statements, copies of the budget, and all other relevant documents can support the information in the business plan.

Decide on the Business Structure

When choosing a structure for your rental property business, you determine the decision-making and profit-sharing rules. There are several options for organizing your real estate business into a legal business entity.

  • Sole proprietorship – One person is considered the rental property business owner and is personally liable.
  • Partnership – An agreement between two or more people who share responsibilities and profits for the business.
  • Limited liability company – Forming an LLC isolates personal assets from business expenses and protects the members while avoiding double taxation.
  • S corporation – One person is the owner, and they earn a salary while only 100 members can be shareholders.

Choose a Business Name

A rental property business needs a name, even if this seems like an unimportant step. It is crucial for official documents, a business license, and other logistical purposes. Choosing the right name can be critical in your rental property business plan. Here are a few factors to consider when choosing a name to ensure that it benefits your business now and in the future :

  • Choose the right number of words offers –Check your state's naming regulations. Don't include too many words; your business name will be hard to remember.
  • Restricted words – Avoid words that are restricted in states you may do business in. These words are usually restricted for being misleading about the nature of the business.  from a cash-out delay finance loan can also serve as an emergency fund for tenant repairs.
  • Keep it short and simple – Make the name memorable, simple, and short. Many companies choose names between 10 and 15 characters long.
  • Include the address – Using the rental property address in the name makes it recognizable to tenants.
  • Use keywords –. Include words that would appear in a web search to attract prospective tenants.
  • Think of the long-term – When choosing a name, consider how your business might develop so you do not have to change it in the future.
  • Reverse the name – If it's not in use in your state, consider reserving it to secure the name you want.

Determine Your Ideal Client

Whatever property you own will impact the people who can become clients, whether they are families, young professionals, travelers, or businesses. Here are some aspects you must consider when determining who the ideal client is for your rental property business.

  • Do you want long or short-term clients?  – Rental income from long-term tenants may be more consistent, while short-term rentals can have a higher income.
  • Who can afford your prices? –  Once you have a rental price, certain types of clients may or may not be able to afford it.
  • Why are they renting this property? –. Renters have different needs, such as raising a family, enjoying a vacation, or needing a place to stay temporarily for a work assignment.
  • What amenities do they need? – The amenities your investment property offers, including community amenities, will impact the kind of tenants you attract.
  • How will they treat the property? – No one wants troublesome tenants, as they can end up costing you money if they treat the property poorly.
  • Do you need business or residential tenants? - Marketing to commercial and residential clients is vastly different.

Establish Your Niche, Unique Value Proposition, and Branding

Building a rental property business into a successful brand requires hard work. You need a solid plan, an effective structure, and clients to bring in. Deciding on the niche, unique value proposition, and branding for your rental property business will set the tone for achieving long-term success and a profitable company.

Establish a Niche

A business niche refers to the market segment with the most demand for your product. For rental property businesses, that means the type of tenants who are most likely to rent a unit that you own. Figuring out this niche will help you prepare the property for the right tenants and market it effectively. Niches can include the following:

Choose a Unique Value Proposition

What makes your property the best option for tenants in your target market? Once you have a unique value proposition sorted, you can use it in your marketing pieces to convince tenants to choose your property. Standing out from the competition is key when you own rental properties, especially if your market has a high volume of similar properties available to tenants. Here are some examples of things you can focus on:

  • The layout of the property
  • The amenities in the building

Figure Out Branding

Branding is important because it focuses on consistency within a company. When people see your business name, colors, or logo, they will recognize it. A solid branding package will unify all your marketing collateral and increase brand recognition. Brand elements include:

  • Business Name

Define the Services You'll Provide

Services can set your rental property apart from others in the area. Whether you own vacation rental properties or long-term housing units, your services can be the difference between filling your vacant units and struggling to attract tenants. Some examples of services include the following:

  • Free Wi-fi included with rent
  • Utilities included in the rent, such as electricity, heating, or water usage
  • Garbage removal
  • Shoveling/plowing during snowfall
  • Parking availability/assigned spots
  • Outdoor space usage
  • Upgraded appliances
  • Community gatherings with other tenants
  • Referral program for new tenants
  • Laundry services
  • Cleaning services
  • Smart security systems
  • Proximity to community amenities
  • Near public transportation hubs 

Buying a property without a plan is not a wise strategy for building an investment property business. You need to be strategic when selecting properties to attract tenants and generate passive income. A huge part of that strategy depends on the location of the property. Here are a few factors to consider.

  • Local real estate market – The condition of the real estate market the property resides in will impact prices, desirability, and competition with other buyers.
  • Availability of community amenities – Tenants will be attracted to properties that put them close to useful amenities in the community, such as schools, attractions, stores, restaurants, or transportation services.
  • Neighborhood value – The condition of the neighborhood your property is in will directly impact property value and tenant acquisition. A real estate agent can help with this research.
  • Available lenders – The location of your property can determine what mortgage lenders you can work with to secure financing.
  • Local contractors – Owning a rental property business means taking care of the premises, and you will need access to reliable contractors for these services.

Look for Properties for Sale

It is time to start looking for rental properties to buy. Whether you're in the market for residential or commercial properties, finding the right one to build your business with is crucial. As you search for real estate to buy, consider the following factors:

  • Business location – As mentioned before, location affects price, tenant acquisition, and access to lending options.
  • Real estate agent – Working with real estate agents can help you find properties that fit your preferences and get offers more quickly.
  • Compare properties – Finding a good deal is the key to turning a profit, so ask your real estate agent to compare prices of similar properties to ensure you're paying a fair price.
  • Consult inspection reports – When buying a rental property, the inspection report can reveal the value of your purchase and be used to negotiate for a better price.
  • Analyze market trends – Understanding the real estate market trends in the area will ensure you find rental property that's reasonably priced and attractive to tenants.

Consider Equipment

Rental properties need to be taken care of to attract tenants. That may mean additional investments upfront to ensure it has everything needed to convince tenants to move in or rent the space temporarily. Some equipment considerations to remember may include:

  • New fixtures – Some elements, such as faucets or lighting features, may need updating, or you need to add them for the first time.
  • Appliances – Old appliances may turn away potential tenants, while an upgraded kitchen or laundry room could attract more clients.
  • Maintenance tools – You or the property manager are responsible for taking care of the property, which might require purchasing lawnmowers, shovels, plows, hand tools, and more.

Determine Pricing

Choosing the right price to charge for rent is the key to making a profit from your rental properties. There are many factors to consider when determining price, and you need to find the right balance that will attract tenants while still paying the bills and generating profit.

  • Net operating income – The total amount of income generated by the property before expenses.
  • Capitalization rate – The expected rate of return on a rental property (NOI divided by asset value).
  • Appreciation – The slow increase in property value over time. Learn more about investing for property appreciation .
  • Market rental rates – Rates should be comparable to similar properties in the market.
  • Amenities – If your property offers something others do not, it can fetch a higher rental price.
  • Cost of the rental property – Your mortgage rate should be the primary factor in calculating rent.
  • Utilities/property taxes/insurance – Along with the mortgage, the rental payments should cover all ongoing costs of owning the property.

Get Financing

Most people do not have enough assets to buy a rental property outright, so they need to borrow money to start. You must consider other expenses as you budget for a property purchase, such as insurance, property taxes, maintenance, etc. There are several options for borrowing money to invest in a rental property.

  • DSCR loan – A loan that is given based on projected rental income rather than the borrower's personal finances.
  • Rental loan – A mortgage specifically for single-family homes that the borrower will not occupy themself and instead collect rent from tenants.
  • Commercial loans – As a rental property business, you can secure commercial loans to help finance properties or equipment, including small business loans, conventional commercial loans, small-balance commercial loans, and hard money loans.
  • HELOC – A home equity line of credit on your current home is cash taken out of the property's equity that can help finance a rental property and get you started as a real estate investor.
  • Conventional home loan – You can also take out a conventional mortgage to finance a new investment for your rental property business.

As a business owner, insurance is a necessity. You need to protect your assets in the event of unforeseen circumstances, and the right business insurance policy can secure a future for the company. The type of policy you need will depend on the structure of the business, but here are some factors that need to be part of your insurance plan.

  • Workers' compensation – Any business with one or more employees must pay for workers' compensation if an employee becomes sick or injured.
  • Property insurance – Since your rental property business depends on the condition of real estate, this insurance will protect your investment in the event of property damage.
  • Loss of income insurance – If the property becomes uninhabitable due to a covered event, this policy can protect you when rental income is unavailable.
  • General liability protection – If you're ever sued for property damage or injury, this insurance will protect your business from significant losses.
  • Umbrella insurance – If your base liability protections are not enough, an umbrella policy can increase the protection layer for your business.

Sort the Administrative Work

Rental property investors' work does not end once they own a property. There are a lot of logistics to navigate to ensure your business is operating legally and correctly. Here are a few administrative considerations to sort out before you start collecting income:

  • Employer identification number – For tax purposes, you must register with the IRS and obtain a tax identification number, or EIN.
  • Business bank account – Keeping real estate business finances and personal finances separate is crucial to protect yourself, so you'll need a separate bank account and a business credit card.
  • Business license – Some states will require you to have a business license for each property you own. Either way, research your state's guidelines for business license requirements.
  • Business name registration – You can file your real estate business name with the US Small Business Administration.
  • Permits – Operating rental properties may require permits depending on the location of the assets.

Hire Employees

The more your rental property business grows, the greater your need for hiring employees. Tasks like maintenance, lease agreements, property management, and more may be too much for you to handle as the owner. There are multiple options for hiring employees that will depend on what work they will be doing and the extent of that work.

  • Part-time – Employees who are only needed for a specific number of hours per week, which could be anywhere from 5 to 30 hours.
  • Full-time – Any workers needed for more than 30 hours are considered full-time.
  • Contract work – A contractor is a worker who has the right to control only the result of work, not how it's done, which is a useful distinction for small businesses that cannot hire permanent employees.

Establish a Marketing Strategy 

Your top priority as a rental property business owner is to fill your units with tenants. Otherwise, you will be paying the mortgage and other upkeep expenses without bringing in any income, which can quickly bankrupt you.

To bring in new tenants when you have vacancies, you will need a strong marketing plan. Property management companies could help with this aspect of the business as well. Here are a few channels you could leverage to advertise your property to prospective tenants:

  • Social media – Platforms like Facebook, Instagram, and LinkedIn are great for sharing images and videos that display your property's amenities on high-traffic social media sites.
  • Email marketing – Emails with catchy subject lines improve your outreach initiatives and follow up with potential tenants who have expressed interest in your property.
  • Rental listing sites – Listing your property vacancies on large platforms like Airbnb, Zillow, or Apartments.com can vastly increase your reach and lead to more online organic traffic.
  • Flyers – Print campaigns can be very effective for a rental property owner, and handing out flyers is a great tool to detail the property's amenities while sharing images of the interior/exterior.
  • Content marketing – Content is king in marketing circles, and if you can create content that communicates value to potential tenants, they will be more likely to check out your offering.
  • Website SEO – Setting up a website for your properties lets potential tenants view your listings and unique services, and optimizing the site for search engines can increase the amount of traffic to your website.

Manage and Maintain Your Rental Properties Business

Now, the real work begins. It takes a lot of work to get set up as a business, buy property, prepare it for renters, and acquire tenants. From that point forward, your main objective is to successfully manage and maintain the properties so tenants are happy and vacancies are filled quickly. Property management may include the following tasks:

  • Tenant acquisition – Onboarding new tenants for the property and working out lease agreements.
  • Collecting rent – Accepting rental payments and following up with tenants who have not paid ensures consistent income.
  • Property marketing – Consistently advertising your property so that vacancies are filled quickly.
  • Maintenance requests – You need a proper response system for when tenants have maintenance issues on the property.
  • Unit preparation – Before tenants move in, the unit must be cleaned and potentially upgraded.
  • Property upgrades – Preserving the value of the property as a whole may involve upgrades like a new roof, new siding, new paint, and structural improvements.
  • Hiring a property manager – A property management company allows owners to take a more hands-off approach while the property managers handle day-to-day tasks.
  • Using property management software – If owners choose to manage the property themselves, they can use software to make their jobs easier.

Now that you know how to start a rental property business, you can work toward your dreams of generating greater income and having a brighter financial future. 

Resources: [1] Brookings

Topics: Real Estate Investing

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best business plan for rental property

A man doing work at a desk in front of his laptop.

How to Write a Business Plan as a Landlord

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

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

What is a rental property business plan?

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

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

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

Why should you develop a rental business plan?

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

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

First things first — set your business plan objectives.

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

The acronym SMART stands for:

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

BLOG_Rental_Property_Business_Plan_Infographic_1_SMART

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

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

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

Strategies and tactics for your SMART objectives

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

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

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

Study local housing markets to find undervalued neighborhoods:

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

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

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

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

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

How to write a rental property business plan

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

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

Property Management

  • Financial Projections

Risk Management

  • Exit Strategy

Let's go through each of them separately.

Executive summary

The executive summary of a rental property business plan provides an overview of the key points of the plan, highlighting the most critical aspects. Here's an example of an executive summary:

[Your Business Name] is a real estate investment firm focused on acquiring and managing rental properties in [location]. The business aims to provide tenants high-quality rental properties while generating a steady income stream for investors. The rental property portfolio comprises [number] properties, including [type of properties]. These properties are located in [location], a growing market with a high demand for rental properties. The market analysis shows that rental rates in the area are stable, and the demand for rental properties is expected to increase in the coming years. The business's marketing and advertising strategies include online advertising, signage, and word-of-mouth referrals. The tenant screening process is thorough and includes income verification, credit checks, and rental history verification. The property management structure is designed to provide tenants with excellent service and to maintain the properties in excellent condition. The business works with a team of experienced property managers, maintenance staff, and contractors to ensure that the properties are well-maintained and repairs are made promptly. The financial projections for the rental property portfolio are promising, with projected revenue of [revenue] and net income of [net income] over the next [timeframe]. The risks associated with owning and managing rental properties are mitigated through careful screening of tenants, regular maintenance, and appropriate insurance coverage. Overall, [Your Business Name] is well-positioned to succeed in the rental property market in [location], thanks to its experienced team, careful management, and commitment to providing high-quality rental properties to tenants while generating a steady stream of income for investors.

Your executive summary is the Cliff Notes version of the complete business plan. Someone should be able to understand the full scope of the project just by reading this section. When writing your executive summary, assume it is the only part of your plan that someone reads. Aim for a half-page to full-page in length.

Business description

The business description section of a rental property business plan provides an overview of the company, including its mission, history, ownership structure, and management team. Here's an example of a company description section:

[Your Company Name] is a real estate investment company focused on acquiring and managing rental properties in [location]. The company was founded in [year] by [founder's name], who has [number] years of experience in the real estate industry.

Mission: Our mission is to provide high-quality rental properties to tenants while generating a steady income stream for our investors. We aim to be a trusted and reliable partner for tenants, investors, and stakeholders in our communities.

Ownership structure: [Your Company Name] is a privately held company with [number] of shareholders. The majority shareholder is [majority shareholder name], who holds [percentage] of the company's shares.

Management team: The management team of [Your Company Name] includes experienced professionals with a proven track record of success in the real estate industry. The team is led by [CEO/Managing Director's name], who has [number] years of experience in real estate investment and management. The other members of the management team include:

[Name and position]: [Brief description of their experience and role in the company] [Name and position]: [Brief description of their experience and role in the company]

Market analysis

Researching neighborhood trends can help you identify areas poised for long-term growth. This can enable you to make strategic investments that will appreciate over time, providing a stable source of income for years to come. The Market Analysis section of a rental property business plan for landlords should provide a comprehensive overview of the local rental market. Below are some key elements you should include in the Market Analysis section of your rental property business plan.

BLOG_Rental_Property_Business_Plan_Infographic_2_Market_Analysis

  • Property Value: The value of a rental property is highly dependent on its location. By researching neighborhood trends, landlords can stay updated on changes in property values, both positive and negative. They can make informed decisions about whether to purchase, hold or sell their properties based on changes in the area.
  • Rental Rates: Knowing the rental rates in a neighborhood can help landlords determine how much to charge for rent. Understanding how much other landlords charge for similar properties in the area can help a landlord price their property competitively and attract quality tenants.
  • Tenant Preferences: Different neighborhoods appeal to different types of tenants. For example, families with children may prefer neighborhoods with good schools and parks, while young professionals may prefer areas with trendy restaurants and nightlife. By understanding neighborhood trends, landlords can cater to the preferences of their target tenants.
  • Neighborhood Safety: Safety is a significant concern for tenants, and landlords can be held liable for any harm that befalls their tenants due to unsafe conditions on the property. Competitive landscape: There are several steps that landlords can take to research the competitive landscape of a rental market. These include identifying competitors, analyzing rental rates, researching amenities offered by competitors, and checking their online reviews.
  • Growth potential: Consider external factors that may affect the rental market, such as population growth, job growth, or changes in zoning laws. This can help landlords identify potential growth opportunities in the market.

Marketing strategy

The marketing strategy section of your rental property business plan outlines how you will promote and advertise your rental properties to potential tenants. Below are some key elements to include in this section.

BLOG_Rental_Property_Business_Plan_Infographic_3_Marketing_Strategy

  • Target Market: Identify the target market for rental properties, such as young professionals, families, or retirees. Describe their demographics, interests, and needs, and explain how the rental properties cater to these groups.
  • Unique Selling Proposition: Identify the unique selling proposition of the rental properties, such as location, amenities, or affordability. Explain how these factors differentiate the properties from competitors in the market.
  • Advertising Channels: Describe the advertising channels you'll use to promote the rental properties, such as online rental listings, social media, or local newspapers. Explain how you'll use these channels to reach the target market.
  • Promotion Strategy: Describe the promotion strategy to attract tenants to the rental properties, such as discounts, referral bonuses, or move-in incentives. Explain how you'll communicate promotions to potential tenants and how they will be tracked and measured for effectiveness.
  • Branding: Develop a branding strategy for the rental properties, including a logo, website, and promotional materials. Explain how the branding will reflect the unique selling proposition of the properties and how it will be used consistently across all marketing channels.
  • Budget: Develop a marketing budget outlining each advertising channel's expected costs and promotion strategy. Explain how you'll track and adjust the budget as needed to ensure maximum return on investment.

Tenant screening

This section should outline the steps you or your property manager will take to evaluate potential tenants and ensure they fit your rental property well. This can ensure that your company has a thorough and fair process for evaluating potential tenants and selecting the best fit for their rental property. B elow are some critical components to include in this section.

BLOG_Rental_Property_Business_Plan_Infographic_4_Tenant_Screening

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

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

BLOG_Rental_Property_Business_Plan_Infographic_5_Property_Management

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

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

BLOG_Rental_Property_Business_Plan_Infographic_6_Financials

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

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

BLOG_Rental_Property_Business_Plan_Infographic_7_Risk_Management

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

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

Exit strategy

An exit strategy is integral to any rental property business plan as it helps you plan for the future and maximize your ROI. You most likely plan on renting out your property for a long or indefinite time. If you have a shorter or more definite timeline, like renting it out for ten years and then selling it, mention it here. Should your property go vacant for a long time, or economic circumstances, cause rent prices to fall dramatically, maintaining your property may no longer be sustainable. You should have a plan, or at least a framework, to decide what to do if this happens. Otherwise, your exit strategy should be your backup plan if things don't go as planned.

Final thoughts

Creating a comprehensive rental property business plan provides you with a clear direction for your business, helps secure financing, identifies potential risks, enhances property management, and enables monitoring and evaluation of performance. A business plan is valuable for landlords who want to run a successful rental property business.

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The above is provided as a convenience and for informational purposes only; it does not constitute an endorsement or an approval by Kiavi of any of the products, services or opinions of the corporation or organization or individual. The information provided does not, and is not intended to, constitute legal, tax, or investment advice. Kiavi bears no responsibility for the accuracy, legality, or content of any external content sources.

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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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BUSINESS STRATEGIES

How to create a rental property business plan

  • Annabelle Amery

How to create a rental property business plan

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.

steps to developing a business plan

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.

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Rental Property Business Plan

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A rental property business is a great way of earning a passive income. It can help you have great finances if you go about it in the right way.

The rental property market stood at a size of 174.2 bn dollars in the US in 2021. And with the subsiding pandemic isn’t about to shrink any time soon.

Now, if you are planning to become a landlord, you might need just one thing before you start your business. A business plan.

A business plan would become a guide in your business journey. It would also make your journey a less difficult and more successful one. So, if you are ready to start your rental property business , read on to find out all about a rental property business plan.

How can a rental property business plan help you?

A rental property business plan can help you have a clear goal, a well-defined business model, and strategies that work. It can also help you navigate smoothly through roadblocks in your journey and steer clear of costly business mistakes.

Also, putting your idea on paper makes it look more real and clear. Moreover, a business plan also comes in handy while you explain your ideas to your collaborators and investors.

All in all a business plan will help you figure out your way around obstacles through rigorous analysis and strategic planning. This brings us to our next section, how to write a business plan.

Rental Property Business Plan Outline

This is the standard rental property business plan outline which will cover all important sections that you should include in your business plan.

  • Business Objectives
  • Mission Statement
  • Guiding Principles
  • Keys to Success
  • Start-Up Summary
  • Location and Facilities
  • Products/Services Descriptions
  • Competitive Comparison
  • Market Size
  • Industry Participants
  • Main Competitors
  • Market Segments
  • Market Tests
  • Market Needs
  • Market Trends
  • Market Growth
  • Positioning
  • SWOT Analysis
  • Strategy Pyramid
  • Unique Selling Proposition (USP)
  • Competitive Edge
  • Positioning Statement
  • Pricing Strategy
  • Promotion and Advertising Strategy
  • Marketing Programs
  • Sales Forecast
  • Sales Programs
  • Exit Strategy
  • Organizational Structure
  • Steve Rogers
  • Linda Rogers
  • Management Team Gaps
  • Personnel Plan
  • Important Assumptions
  • Start-Up Costs
  • Source and Use of Funds
  • Projected Profit and Loss
  • Projected Cash Flow
  • Projected Balance Sheet

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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

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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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10 things to know before starting a rental property business

Jeff Rohde

Investing in rental property is a strategy many people use to generate rental income and build wealth. However, while owning real estate can potentially be profitable, it’s important to do things correctly right from that start.

Here are 10 things that every beginning real estate investor needs to know before starting a rental property business.

Key takeaways

  • Learning the real estate business and choosing an investing strategy are the first steps to starting a rental property business.
  • Active real estate investors work full-time in the business, while passive investors focus on recurring income and long-term appreciation.
  • Many investors choose single-family rental homes because rents are growing and property prices are soaring.

10 important things to know before starting a rental property business

Some investors may already have the experience or connections to skip one or two of the following steps. 

For example, people who work in the lending business often become real estate investors because they understand how financing works. Other investors may be lucky enough to have a mentor who shows them the ropes. 

With that in mind, here’s a list of 10 key things to do and know before starting a rental property business. 

1. Invest in education

In most instances, it’s not necessary to have a real estate license to start a rental property business unless an investor plans on buying, selling, or managing properties for other people. 

Instead, many investors add an investor-friendly real estate agent to their team to bird dog for off-market real estate deals. 

There’s plenty of free information available to start learning about the rental property business, including real estate blogs and local investment groups. 

Investors who are ready to take their game to the next levels invest in training programs like the Roofstock Academy to learn how to build  income with rental property. 

By understanding how to analyze deals based on facts instead of emotion, and how to find investment properties with strong yield where prices are more affordable, an investor starting a rental property business can gain a competitive edge.

2. Choose an investing strategy

There are two main types of rental property investing strategies: a ctive and passive .

Active real estate investing means working hands-on in the business, such as fixing-and-flipping homes or wholesaling real estate. 

Although it requires a real estate license in many states, one of the advantages of wholesaling real estate is that it doesn’t require a lot of money. In fact, the most successful wholesalers put a property under contract with just a small earnest money deposit, then assign the purchase contract to another investor to close on the deal in exchange for a wholesaling fee. 

An active investing strategy may be a good match for people who want to work in real estate full time, and for those who are willing to accept a higher level of risk by wholesaling or flipping homes. 

There’s also a more passive approach to real estate investing that buy-and-hold investors follow. After doing initial leg work, such as researching markets for rental property and negotiating a deal, they turn the day-to-day details over to a local property manager. 

Passive real estate investors purchase rental property to build a rental income stream, profit from the potential appreciation in property values over the long-term, and enjoy the tax benefits that come with owning a rental property.

3. Pick a rental property type

Two of the most common residential real estate niches are single-family rental (SFR) homes and small multifamily buildings with two to four rental units.

Both types of rental property are relatively easy to find in every real estate market, financing is usually readily available, and the demand for good residential rental property is generally strong. 

Currently, the demand for single-family rental homes from both tenants and investors is strong. 

As the Q2 Single-Family Rental Investment Trends Report from Arbor Realty Trustreveals, record demand for SFRs is sending rents and home values soaring. So far this year, occupancy rates are over 95% (the highest they’ve been since 1994), pushing vacant-to-occupied rent growth to a record high of 12.7%.

4. Develop a business plan

After getting educated, and choosing an investing strategy and property type, the next thing to do before starting a rental property business is to develop a business plan. The basic steps to create a rental property business plan are:

  • Put into writing the primary goals of the rental property business, such as the number of properties that will be purchased in each of the next five to ten years, and how much income will be generated at both the property and portfolio level.
  • Develop a strategic plan with small, specific, actionable steps such as analyzing five potential investments each week, purchasing one SFR per year, and interviewing the top property managers in rental markets across the country.
  • Create a financial plan that includes funding sources for a down payment (such money saved or a self-directed IRA), accounting for operating expenses such as property taxes, maintenance and repairs, and owner expenses such as travel expenses and continuing education.

5. Create a business entity

Many rental property investors own property under their own name as a sole proprietor. While owning a rental property as an individual may be the path of least resistance, an investor’s business and personal assets may be at risk if things don’t go according to plan or someone decides to sue.

That’s why many investors create an S-Corporation or limited liability company (LLC) as a business entity for a rental property business. 

Both types of companies are known as “pass-through” entities, which means that income or losses from the rental property flow through to each member of the S-Corp or LLC. 

Holding rental property under a business entity may also provide an additional layer of legal protection, because generally the only assets at risk are those owned under the business.

6. Learn what makes a rental property profitable

There’s a big difference between buying a home to live in and selecting a good rental property. By putting personal preferences aside – such as liking lush landscaping or a brightly colored kitchen – it’s easier to find a good rental property that appeals to a wide range of prospective tenants and is simpler and less expensive to maintain.

Some of the factors and features that can help make a rental property a profitable investment include:

  • Being located in an area with strong population growth.
  • A steady or growing job market.
  • Low property taxes.
  • A high renter occupied household percentage, which is an indicator of the demand for good rental housing. For example,renter-occupied households in cities like Orlando and Austin account for 56% or more of the housing units ( Census Reporter ).
  • Available homes for rent is another supply and demand indicator real estate investors monitor.
  • Rent growth trends. In some real estate markets, like Las Vegas and Phoenix, rents are up by 20% or more year-over-year (according to Zumper ).
  • Location and the environment around the home such as future development, amenities like shopping, and where the home is located in the subdivision all have an impact on how good a rental property is.
  • Neighborhood rankings, based on location-specific variables such as school district quality and employment rates, can give investors a better understanding of the potential risks and rewards in different neighborhoods.
  • Hiring a skilled property management company to handle day-to-day details such as marketing and leasing, rent collection and tenant communication, and repairs can help investors to maintain property value and increase cash flow and gross yield.

7. Understand how financing works

Real estate investors use leverage (or other people’s money) by making a down payment of about 25% to control 100% of the rental property. 

Rent payment from the tenant is used to pay for the mortgage and property operating expenses, while an investor profits from any remaining cash flow and appreciation in property value over the long term.

Common options for financing a rental property include:

  • Conventional loans
  • Conforming loans backed by Fannie Mae and Freddie Mac
  • Federal Housing Administration (FHA) loans
  • VA Home Loans for servicemembers and surviving spouses
  • 203K loans for repairs and rehab
  • Hard money loans or private financing
  • Portfolio loans and blanket mortgages for investors with multiple rental properties

Interest rates on a rental property loan usually are between ½ percent and one percent higher than the mortgage rate for a primary residence. 

There are several things real estate investors can do to help get better rates and terms on a loan for an investment property, including maintaining a good credit score, making a large down payment, and having a personal debt-to-income (DTI) ratio of no more than 43%.

8. Know how to run the numbers

Investing in rental property is all about the numbers. Key metrics that investors use to analyze and monitor the financial performance of rental property include:

Gross rent multiplier (GRM)

GRM is calculated by dividing the property price by the gross rental income and is used by investors to help determine the worth of one property versus another. Generally speaking, the lower the gross rent multiplier is the better the opportunity, although GRM does not factor in operating expenses or vacancy rates.

Net operating income (NOI)

NOI is the money made from a rental property and is calculated by subtracting income from operating expenses, excluding items like the mortgage payment and capital repairs. 

Capitalization rate

Capitalization or cap rate is calculated by dividing NOI by the property price or market value and is a measure of return on investment. In general, the higher the cap rate is the more attractive the investment may be. Because different markets have different average cap rates, capitalization rate is only used to compare similar properties in the same real estate market.

Cash flow is the amount of money remaining at the end of each month after all of the rent has been collected and all of the bills have been paid, including the mortgage and contributions to a CapEx (capital expense) account.

Cash-on-cash return

Also known simply as cash-on-cash or CoC, cash-on-cash return measures the amount of pre-tax cash flow received compared to the amount of cash invested. For example, if an investor makes a $25,000 down payment on a rental property and the annual before-tax cash flow is $3,000 the cash-on-cash return is 12%.

Debt service coverage ratio (DSCR)

DSCR is used by lenders and real estate investors to assess if a rental property is generating enough income to pay for the mortgage after the property’s operating expenses have been paid. To calculate the debt service coverage ratio, simply divide the NOI by the annual mortgage payment. Lenders generally look for a DSCR of 1.25 or more when underwriting a rental property loan.

Loan to value (LTV) ratio

LTV measures the amount of leverage on a property and is calculated by dividing the loan amount by the property value. For example, if an investor makes a 25% down payment on a $100,000 property, the loan to value ratio is 75% ($75,000 mortgage amount / $100,000 property value). Lenders typically want an LTV of 75% or less before approving a loan, to make sure that there is enough equity in the property.

9. Research different real estate markets

There’s no rule that says someone has to buy a rental property in the same city where they live. In fact, sometimes attractive returns can be found in smaller cities where the population is growing and housing prices are still relatively affordable.

Although the local MLS and a real estate agent might be good for people buying a home to live in, the Roofstock Marketplace is a go-to source for investors looking for a good turnkey rental property. 

At any one time, there are hundreds of single-family homes and small multifamily properties listed for sale, oftentimes already rented to a tenant. Each listing  includes valuable information such as photos, financial projections, and due diligence items such as a tenant ledger and a title report.

The entire sales process can be done online, including negotiating with the seller, making an offer, applying for a mortgage, closing escrow, and hiring a preferred local property management company, if desired.

10. Select accounting software

Even with a property manager taking care of the daily property details, real estate investors still monitor the performance of each rental property and the entire rental property portfolio.

Stessa is a free asset management software system designed to help real estate investors automate income and expense tracking, and maximize profits through real-time insights and smart money management. 

After signing up for a free Stessa account and entering some basic information, landlords can run informative reports including income statements, net cash flow, and capital expense reports. Important documents, such as lease agreements and vendor receipts, can be organized and stored securely in the cloud, and the Stessa Tax Center helps make tax season a breeze.

Closing thoughts

Many people start a rental property business to generate rental income and long-term wealth, but it’s important to do things correctly right from the beginning. Although starting a new business is never easy, investing in real estate is something that everyone can do. After spending time learning the business, select an investing strategy, begin researching rental property in some of the best markets from coast to coast.

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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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Rental Property Business Plan Template & Guidebook

If you're looking to get into the rental property market, you need a plan that is comprehensive and easy to follow. This is where The #1 Rental Property Business Plan Template & Guidebook comes in: an invaluable resource that provides you with everything you need to launch a successful rental business venture. The guidebook will give you step-by-step instructions on the basics of creating a business plan, as well as additional resources to help you make your plan a success. Whether it's providing financial projections or outlining the goals for your business, this guidebook will ensure that your rental property business is on the right path.

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Get worry-free services and support to launch your business starting at $0 plus state fees.

  • How to Start a Profitable Rental Property Business [11 Steps]
  • 25 Catchy Rental Property Business Names:
  • List of the Best Marketing Ideas For Your Rental Property Business:

How to Write a Rental Property Business Plan in 7 Steps:

1. describe the purpose of your rental property business..

The first step to writing your business plan is to describe the purpose of your rental property business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.

It also helps to include a vision statement so that readers can understand what type of company you want to build.

Here is an example of a purpose mission statement for a rental property business:

Our purpose is to provide quality rental properties to the defined target market in the desired areas, at competitive prices that maintain a fair return on investment. We strive to build a positive relationship with tenants and owners, providing superior service and developing trust in our brand. We are committed to providing excellent customer service, ethical business practices and growing our business through innovative solutions and personalized attention.

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2. Products & Services Offered by Your Rental Property Business.

The next step is to outline your products and services for your rental property business. 

When you think about the products and services that you offer, it's helpful to ask yourself the following questions:

  • What is my business?
  • What are the products and/or services that I offer?
  • Why am I offering these particular products and/or services?
  • How do I differentiate myself from competitors with similar offerings?
  • How will I market my products and services?

You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.

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3. Build a Creative Marketing Stratgey.

If you don't have a marketing plan for your rental property business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals. 

A good marketing plan for your rental property business includes the following elements:

Target market

  • Who is your target market?
  • What do these customers have in common?
  • How many of them are there?
  • How can you best reach them with your message or product?

Customer base 

  • Who are your current customers? 
  • Where did they come from (i.e., referrals)?
  • How can their experience with your rental property business help make them repeat customers, consumers, visitors, subscribers, or advocates for other people in their network or industry who might also benefit from using this service, product, or brand?

Product or service description

  • How does it work, what features does it have, and what are its benefits?
  • Can anyone use this product or service regardless of age or gender?
  • Can anyone visually see themselves using this product or service?
  • How will they feel when they do so? If so, how long will the feeling last after purchasing (or trying) the product/service for the first time?

Competitive analysis

  • Which companies are competing with yours today (and why)? 
  • Which ones may enter into competition with yours tomorrow if they find out about it now through word-of-mouth advertising; social media networks; friends' recommendations; etc.)
  • What specific advantages does each competitor offer over yours currently?

Marketing channels

  • Which marketing channel do you intend to leverage to attract new customers?
  • What is your estimated marketing budget needed?
  • What is the projected cost to acquire a new customer?
  • How many of your customers do you instead will return?

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best business plan for rental property

4. Write Your Operational Plan.

Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations. 

In it, you should list:

  • The equipment and facilities needed
  • Who will be involved in the business (employees, contractors)
  • Financial requirements for each step
  • Milestones & KPIs
  • Location of your business
  • Zoning & permits required for the business

What equipment, supplies, or permits are needed to run a rental property business?

  • Rental Property Licenses/Permits
  • Real Estate Listing Services
  • Property Management Software or Systems
  • Lease or Rental Agreements
  • Maintenance Tools and Supplies
  • Advertising Materials and Services
  • Security Deposits and Insurance Coverage

5. Management & Organization of Your Rental Property Business.

The second part of your rental property business plan is to develop a management and organization section.

This section will cover all of the following:

  • How many employees you need in order to run your rental property business. This should include the roles they will play (for example, one person may be responsible for managing administrative duties while another might be in charge of customer service).
  • The structure of your management team. The higher-ups like yourself should be able to delegate tasks through lower-level managers who are directly responsible for their given department (inventory and sales, etc.).
  • How you’re going to make sure that everyone on board is doing their job well. You’ll want check-ins with employees regularly so they have time to ask questions or voice concerns if needed; this also gives you time to offer support where necessary while staying informed on how things are going within individual departments too!

6. Rental Property Business Startup Expenses & Captial Needed.

This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.

Typically, expenses for your business can be broken into a few basic categories:

Startup Costs

Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a rental property business varies based on many different variables, but below are a few different types of startup costs for a rental property business.

Running & Operating Costs

Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.

Marketing & Sales Expenses

You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your rental property business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.

7. Financial Plan & Projections

A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your rental property business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses. 

Here are some steps you can follow to devise a financial plan for your rental property business plan:

  • Determine your start-up costs: This will include the cost of purchasing or leasing the space where you will operate your business, as well as the cost of buying or leasing any equipment or supplies that you need to start the business.
  • Estimate your operating costs: Operating costs will include utilities, such as electricity, gas, and water, as well as labor costs for employees, if any, and the cost of purchasing any materials or supplies that you will need to run your business.
  • Project your revenue: To project your revenue, you will need to consider the number of customers you expect to have and the average amount they will spend on each visit. You can use this information to estimate how much money you will make from selling your products or services.
  • Estimate your expenses: In addition to your operating costs, you will need to consider other expenses, such as insurance, marketing, and maintenance. You will also need to set aside money for taxes and other fees.
  • Create a budget: Once you have estimated your start-up costs, operating costs, revenue, and expenses, you can use this information to create a budget for your business. This will help you to see how much money you will need to start the business, and how much profit you can expect to make.
  • Develop a plan for using your profit: Finally, you will need to decide how you will use your profit to grow and sustain your business. This might include investing in new equipment, expanding the business, or saving for a rainy day.

best business plan for rental property

Frequently Asked Questions About Rental Property Business Plans:

Why do you need a business plan for a rental property business.

A business plan for a rental property business is important because it provides an overall strategy for the business. It outlines the goals and objectives of the business and serves as a roadmap to guide the business owners in achieving them. It also provides guidance on topics such as market analysis, competitive analysis, financing, funding, operations and more. Ultimately, a well-crafted plan can help entrepreneurs reduce risk, increase their success rate and better manage their investments.

Who should you ask for help with your rental property business plan?

You should ask a professional business plan consultant or advisor for help with your rental property business plan. You should also contact your local Small Business Administration or Chamber of Commerce for resources and assistance. Additionally, you may want to consult a financial advisor who specializes in rental property investments.

Can you write a rental property business plan yourself?

Yes, you can write a rental property business plan yourself. Writing a business plan is an important step in planning and presenting your rental property business ideas. It should include details like market analysis, financial projections, competitive landscape, and strategies for success. Your plan should also identify the key goals you have for your rental property business and the milestones you will use to measure progress. Additionally, it should outline how you will source and manage properties, how you will generate revenue, how you will attract tenants, and what marketing strategies and tactics you will use to promote your business. Finally, it should also address any legal or regulatory considerations that may be relevant to your specific type of rental property.

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I'm Nick, co-founder of newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality.

Through meticulous research and firsthand experience, I uncover the essential steps, software, tools, and costs associated with launching and maintaining a successful business. By demystifying the complexities of entrepreneurship, I provide the guidance and support needed for others to embark on their journey with confidence.

From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.

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Rental Properties Business Plan Template [Updated 2024]

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Rental Properties Business Plan Template

If you want to start a Rental Property business or expand your current Rental Property business, you need a business plan.

The following Rental Property business plan template gives you the key elements to include in a winning Rental Properties business plan.

You can download our Business Plan Template (including a full, customizable financial model) to your computer here.

Rental Property Business Plan Example

Below are the key sections of a successful rental property business plan. Once you create your plan, download it to PDF to show banks and investors.

I. Executive Summary

Business overview.

[Company Name] is a rental property agency in [location name] that specializes in managing, renting and leasing properties. [Company Name] rents homes in dozens of markets across the country and has an online platform that allows customers to search by their specific criteria (number of bedrooms, region, amenities, etc.) to find a property that’s right for them in their preferred location.

Products Served/Service offering

The Company offers a variety of rental properties, listed below:

  • 1-3 bedroom apartments
  • Single family homes
  • Multi-unit buildings
  • Short-term rentals
  • Rental of mobile homes or trailers

Customer Focus

[Company Name] will primarily provide its offerings to local renters, students and local professionals. The demographics of the customers are given as below:

  • First time renters-29%
  • Young adults-21%
  • Perma – renters-16%
  • Middle income boomers-11%
  • Families-14%

Management Team

[Company Name] is led by [Founder’s name], who has been in the rental property industry for [x] years. During his extensive experience in the rental property industry, he [founder] acquired an in-depth knowledge of the local area, local regulations, facilities, and the characteristics of different neighborhoods. He also holds rich experience in handling business management activities (i.e., staffing, marketing, etc.).

Success Factors

[Company Name] is qualified to succeed due to the following reasons:

  • There is currently a high demand for rental property services in the community. In addition, the company surveyed the local population and received highly positive feedback pointing towards an explicit demand for the products, supporting the business after launch.
  • The Company’s online marketplace offers a high-volume traffic area and will thus be highly convenient to a significant number of residents living anywhere.
  • The management team has a track record of success in the rental property business.
  • The rental property business has proven to be a successful industry in the United States.

Financial Highlights

[Company Name] is currently seeking $370,000 to launch its rental property business. Specifically, these funds will be used as follows:

  • Website design/build and startup business expenses: $120,000
  • Working capital: $250,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even

II. Company Overview

Who is [company name].

[Company Name], located in [insert location here], is a rental property agency focusing on providing short-term and long-term rentals, as well as leased properties to the local community. [Company Name’s] rental properties have a clean and modern appearance that appeals to the current renter’s market. The [Company]’s properties will be fully furnished and include high-end technology and modern accessories.

[Company Name] is owned by [Founder’s Name]. While [Founder’s Name] has been in the rental property industry for some time, it was in [month, date] that he decided to launch [Company Name]. He evaluates that the growing number of students, working professionals, and overseas relocations create a need and expects growth in the country’s rental property market.

[Company Name]’s History

Upon surveying the local customer base and finding the potential retail location, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].

[Founder’s Name] has selected an initial office location and is currently undergoing due diligence on each property and the local market to assess the most desirable location for additional offices.

[Company’s Name] operations are currently being run out of [Founder’s Name] home office.

Since incorporation, the company has achieved the following milestones:

  • Developed the company’s name, logo, and website
  • Determined rent/leasing and financing requirements
  • Began recruiting key employees with experience in the rental homes/apartment industry

[Company Name]’s Products

Iii. industry analysis.

You can download our Rental Property Business Plan Template (including a full, customizable financial model) to your computer here. The market size of the rental property industry in the US increased immensely, and the market size, measured by revenue, of the rental property industry, is $174.2 billion. Rental income units are an increasingly important part of the US housing market. The return on expenditure in the property market is much better than in many economic sectors.

With tenant demand in the US increasing last year, this is thought to be related to tenants looking to downsize or move further out to save money. Most rental housing in the US is developed, financed, and owned by a diverse group of private, for-profit companies.

As the economy of the US began to grow and demand for rental apartments rose, industry revenue grew at a rapid pace, hence opening vast opportunities for rental property companies.

Another obvious trend that is common with rental property companies in the US is that most of them are improvising on more means of making money in the apartment rental industry; they are also acting as property developers and home staging agents, amongst other things.

IV. Customer Analysis

Demographic profile of target market.

[Company Name’s] target market include people of all demographics. The market [Company Name] serves is value-conscious and desires high comfort and basic amenities geared towards families, students, and the working population.

Customer Segmentation

The Company will primarily target the following three customer segments:

  • High-Income Individuals: The Company will attract individuals with higher incomes who are looking for a rental property with modern furnishings and technology.
  • Families: The Company will attract families looking for turn-key properties that are furnished and offer an array of amenities to suit their busy family life.
  • Working Professionals: [Company name] is located along a well-traveled commute route, by offering a smart property to working professionals with walking distance (not more than 10 minutes) to a means of transport.

V. Competitive Analysis

Direct & indirect competitors.

Leasing Inc Leasing Inc is a marketplace to find rental homes in the country. It originally started more than a century ago as a networking tool for real estate agents, but today it is a fully searchable online database of homes for both sale and rent. Leasing Inc offers an ideal rental property with different amenities that can best suit the customer’s requirements. Leasing Inc’s properties are well furnished with all modern accessories.

Rental Barn Rental Barn is the most visited real estate website in the United States. Rental Barn and its affiliates offer customers an on-demand experience for selling, buying, renting, and financing with transparency and nearly seamless end-to-end service. The Company provides multiple rental apartments according to the customer’s needs and requirements.

Homewood Properties Homewood Properties is a leading digital marketing solutions company that empowers millions nationwide to find apartments and houses for rent. Customers can click on the items that are important to them, from hardwood floors to walk-in closets, and select the property which they are looking for according to their needs.

Competitive Advantage

[Company Name] enjoys several advantages over its competitors. These advantages include:

  • Client-oriented service: [Company Name] will have a full-time sales manager to stay in contact with clients and answer their everyday questions. [Founder’s Name] realizes the importance of accessibility to his clients and will further keep in touch with his clients through newsletters.
  • Robust clientele base: Another possible competitive strategy for winning the competitors in this particular industry is to build a robust clientele base and ensure that the company’s properties are top-notch and trendy. The Company is well-positioned, key members of its team are highly competent, and can favorably compete with some of the best players in the industry.
  • Management: The Company’s management team has X years of business and marketing experience that allows them to market and serve customers in an improved and sophisticated manner than the competitors.
  • Relationships: Having lived in the community for xx years, [Founder’s Name] knows all leaders, newspapers, and other influencers, including the local leaders who fought the [Competitor] opening xx years ago. It will be relatively easy for the company to build branding and awareness of the rental property industry.

VI. Marketing Plan

The [company name] brand.

The [Company Name] brand will focus on the company’s unique value proposition:

  • Offering homes/apartments for rent suited for families, students, working professionals, landowners, foreign investors, and international migrants.
  • Offering a diverse range of rental homes in a prime location.
  • Providing excellent customer service.

Promotions Strategy

[Company Name] expects its target market to be students, international migrants, the working population, families mainly from surrounding locations in the [Location]. The Company’s promotions strategy to reach these individuals includes:

Phone Prospecting [Company Name] will assign salespeople to contact and work with clients to help them buy, sell or rent real estate properties. Salespeople will use their in-depth knowledge of the real estate market to help clients find rental properties and execute all the required formalities.

Advertisement Advertisements in print publications like newspapers, magazines, etc., are an excellent way for businesses to connect with their audience. The Company will advertise its offerings in popular magazines and news dailies. Obtaining relevant placements in industry magazines and journals will also help in increasing brand visibility.

Public Relations [Company Name] will hire an experienced PR agency/professional(s) to formulate a compelling PR campaign to boost its brand visibility among the target audience. It will look to garner stories about the company and its offerings in various media outlets like newspapers, podcasts, television stations, radio shows, etc.

Referrals [Company name] understands that the best promotion comes from satisfied customers. The Company will encourage its clients to refer other businesses by providing economic or financial incentives for every new client produced. This strategy will increase effectiveness after the business has already been established. Additionally, [company name] will aggressively network with useful sources such as home contractors, real estate development companies, and businesses. This network will generate qualified referral leads.

Social Media Marketing Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The Company will use social media to develop engaging content that will increase audience awareness and loyalty. Engaging with prospective clients and business partners on social media platforms like Facebook, Instagram, Twitter, and LinkedIn will also help understand the changing customer needs.

Pricing Strategy

Part of the [Company Name’s] business strategy is to ensure that it will work within the budget of its clients to deliver excellent properties. The real estate industry fluctuates and therefore, rental prices, for the most part, are usually out of a company’s control. However, the company will market their properties at a competitive rate to ensure they do no have vacant properties. They will also keep a tight control on costs in order to maximize profits.

VII. Operations Plan

Functional roles.

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

Administrative Functions

  • General & administrative functions including legal, marketing, bookkeeping, etc.
  • Hiring and training staff

Service and Operations Functions

  • Rental property maintenance
  • Website maintenance, updates, and bug-fixing
  • Ongoing search engine optimization

VIII. Management Team

Management team members.

[Company Name] is led by [Founder’s Name], who has been in the rental property business for xx years. He has worked in the industry most recently as a [Position Name] and has held various different positions in the management chain over the last xx years. As such, [Founder] has an in-depth knowledge of the rental property business, including operations and business management.

[Founder] has also worked as a real estate consultant on a part-time basis over the past xx years.

[Founder] graduated from the University of ABC and has done Master of Professional Studies in Real Estate.

Hiring Plan

[Founder] will serve as the [Position Name]. In order to introduce the rental property business, the company needs to hire the following personnel:

  • Real estate agent (should have real estate sales experience in residential and commercial property)
  • Property Manager
  • Marketing and Sales Executive
  • Part-Time Bookkeeper (will manage accounts payable, create statements, and execute other administrative functions)
  • Customer Service Manager

IX. Financial Plan

Revenue and cost drivers.

[Company Name]’s revenue will come from the renting properties. The major costs for the company will be staff salaries and property maintenance. In the initial years, the company’s marketing spend will be high to establish itself in the market.

Capital Requirements and Use of Funds

[Company Name] is currently seeking $370,000 to launch its rental property business. The capital will be used for funding capital expenditures, workforce costs, marketing expenses, and working capital. Specifically, these funds will be used as follows:

Key Assumptions

  5 Year Annual Income Statement

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How to Write a Rental Property Business Plan (Sample Template)

Are you about starting a rental property business? If YES, here is a complete sample rental property business plan template & feasibility report you can use for FREE . The Apartment Rental industry is a very vast industry and there are loads of businesses opening up in the industry. There are several business opportunities an aspiring entrepreneur who has good capital base can start and one of such opportunities is a rental property business.

If you want to start a rental property business, then you need to write your own business plan. The essence of writing a business plan before starting any business is for you to have a blueprint of how you want to setup, manage and expand your business. Below is a sample rental property company business plan template that will help you to successfully write yours with little or no stress.

A Sample Rental Property Business Plan Template 

1. industry overview.

Rental property business is grouped under the Apartment Rental industry and this industry is made up of companies that rent one-unit structures, two- to four-unit structures, five- to nine-unit structures, 10- to 19-unit structures, 20- to 49-unit structures and 50- or more unit structures.

In the united states, states such as Texas, New York, and Colorado, make it mandatory for rental property companies to be licensed real estate brokers if they are going to be involved in collecting rent, listing properties for rent, helping to negotiate leases and doing inspections as required by their business.

Although a property manager may be a licensed real estate salesperson but generally, they must be working under a licensed real estate broker. A few states such as Idaho, Maine, and Vermont do not require property managers to have real estate licenses.

Other states such as Montana, Oregon, and South Carolina, allow property managers to work under a property management license rather than a broker’s license. Washington State requires property rental companies to have a State Real Estate License if they do not own the property.

Landlords who manage their own property are not required by the law to have a real estate license in many states; however, they must at least have a business license to rent out their own home. It’s only landlords who do not live close to the rental property that may be required, by local government, to hire the services of a property management company.

Statistics has it that in the United States of America alone, there are about 518,271 licensed and registered apartment rental companies scattered all across the country and they are responsible for employing about 769,588 employees.

The industry rakes in a whooping sum of $154 billion annually with an annual growth rate projected at 2.4 percent within 2013 and 2018. Please note that the Apartment Rental industry has no companies with major market shares in the United States of America.

A recent research conducted by IBISWorld shows that operators in the Apartment Rental industry have performed strongly over the five years to 2018; however, industry performance softened in 2017 and 2018 as vacancy increased in those years.

Since the subprime mortgage crisis, the industry has undergone structural change. Leading up to the crisis, most investment in real estate was carried out by institutional investors (those who own 10 properties or more), whereas today, most properties for rent are single-investor owned and nonowner occupied.

Historic lows in homeownership, decreasing rental vacancy rates and surging demand for rental units have enabled landlords to increase rents, aiding revenue growth. Therefore, IBISWorld expects industry revenue to climb at an annualized 2.4 percent to $153.9 billion. In the same timeframe, the number of businesses has grown by 0.5% and the number of employees has grown by 0.4 percent.

No doubt, if an entrepreneur who intends starting his or her own property rental business has the right connections, networks, managerial skills, and takes delight in managing real estate for clients, then he or she is going to find property rental business very rewarding and lucrative.

2. Executive Summary

John Johnson & Co® Property Rental Agency, LLP is a real estate agency that will operate in all the West Coast of the United States of America but will be headquartered in San Diego – California. We intend to become specialists in owning, developing, acquiring, managing, selling and renting/leasing and disposing student accommodation, residential apartments, office apartments and hall facilities et al.

This can generally be summed up as clean, safe accommodation at an affordable price, and in our experience, the most consistent demand is for newly-built and pre-owned one and two-bedroom sectional title apartments with high tech security, parking and good access to shops and other amenities.

Part of our goal as a rental property company is to grow to become one of the top 5 largest real estate companies in the whole of West Coast in the United States of America and to rent/lease and manage properties across major cities in this region.

John Johnson & Co® Property Rental Agency, LLP will be committed when it comes to maintaining a diverse portfolio of quality apartments, office structures and hall facilities. We will also focus on providing a dynamic, proactive and vibrant work environment for all our employees such as mouthwatering bonus (commission) for every deal that comes through any of the staff member.

John Johnson & Co® Property Rental Agency, LLP is going to be a self-administered and a self-managed real estate investment trust (REIT). We will work towards becoming one of the largest rental property companies in The United States of America with active presence in major cities all across the West Coast in the United States of America.

As part of our plans to make our customers our number one priority and to become one of the leading rental property companies in the United States of America, we have perfected plans to adopt international best practices that can favorable compete with the best in the industry. John Johnson & Co® Property Rental Agency, LLP have overtime perfected plans that will help us to become a specialist in our area of business.

John Johnson & Co® Property Rental Agency, LLP will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible. We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.

John Johnson & Co® Property Rental Agency, LLP is founded by John Johnson, Carson Reeves and Lance Taylor. John Johnson is the company’s president and CEO. John Johnson has over 15 years’ real estate experience in significant senior management positions in the areas of sales, marketing and new technologies in the United States of America.

3. Our Products and Services

John Johnson & Co® Property Rental Agency, LLP is going to offer varieties of services within the scope of the Apartment Rental industry. We are prepared to make profits from the industry and we will do all that is permitted by the law in The United States of America to achieve our business goals, aim and ambition.

Our business offerings are listed below;

  • Rental of one-unit accommodation structures
  • Rental of two- to four-unit accommodation structures
  • Rental of five- to nine-unit accommodation structures
  • Rental of 10- to 19-unit accommodation structures
  • Rental of 20- to 49-unit accommodation structures
  • Rental of 50- or more unit accommodation structures
  • Rental of manufactured homes, mobile homes or trailers
  • Real estate consultancy and advisory services

4. Our Mission and Vision Statement

  • Our vision is to become one of the top 5 rental property companies in the West Coast of the United States within the first 10 years of starting John Johnson & Co® Property Rental Agency, LLP.
  • Our mission of starting a rental property business is to grow the business beyond the city where we are going to be operating from to become a national and international brand by opening offices all across key cities in West Coast of the United States of America.

Our Business Structure

Our company’s structure is not entirely different from what is obtainable in the Apartment Rental industry. We have decided to create a structure that will allow for easy growth for all our employees and also, we have created platforms that will enable us attract some of the best hands in the industry.

We will ensure that we only hire people that are qualified, honest, hardworking, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders. As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more depending how fast we meet our set target.

John Johnson & Co® Property Rental Agency, LLP is fully aware of the modus operandi in the rental property business, hence adequate provision and competitive packages has been prepared for independent real estate agents. Our marketing department will be responsible for managing this aspect of our business structure.

Below is the business structure we will build John Johnson & Co® Property Rental Agency, LLP on;

  • Chief Executive Officer
  • Company’s Lawyer/Secretary

Admin and HR Manager

Real Estate Agents

  • Business Developer/Sales and Marketing
  • Customer Service Executive/Front Desk Officer

5. Job Roles and Responsibilities

Chief Executive Officer – CEO (President):

  • Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results
  • Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
  • Accountable for fixing prices and signing business deals
  • Responsible for providing direction for the business
  • Accountable for signing checks and documents on behalf of the company
  • Evaluates the success of the organization

Company’s Lawyer/Secretary/Legal Counsel

  • Responsible for drawing up contracts and other legal documents for the company
  • Consults and handles all corporate legal processes (e.g. intellectual property, mergers & acquisitions, financial / securities offerings, compliance issues, transactions, agreements, lawsuits and patents et al)
  • Develops company policy and position on legal issues
  • Researches, anticipates and guards company against legal risks
  • Represents company in legal proceedings (administrative boards, court trials et al)
  • Plays a part in business deals negotiation and takes minutes of meetings
  • Responsible for analyzing legal documents on behalf of the company
  • Prepares annual reports for the company
  • Responsible for overseeing the smooth running of HR and administrative tasks for the organization
  • Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
  • Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
  • Defines job positions for recruitment and managing interviewing process
  • Carries out induction for new team members
  • Responsible for training, evaluation and assessment of employees
  • Responsible for arranging travel, meetings and appointments
  • Oversees the smooth running of the daily office activities.
  • In charge of leasing and renting out accommodations and other properties under our to-let list
  • In charge of inspecting and reporting on the structural attributes of a building
  • Assesses compliance with building, electrical, plumbing and fire codes
  • Evaluates building plans and permits
  • Keeps daily logs, including photographs taken during inspection
  • Handles real estate consultancy and advisory services

Marketing and Sales Executive/Business Developer

  • Identifies, prioritized, and reach out to new partners, and business opportunities et al
  • Identifies development opportunities; follows up on development leads and contacts
  • Responsible for supervising implementation, advocate for the customer’s need , and communicate with clients
  • Documents all customer contact and information
  • Represents the company in strategic meetings
  • Helps to increase sales and growth for the company
  • Responsible for preparing financial reports, budgets, and financial statements for the organization
  • Provides managers with financial analyses, development budgets, and accounting reports
  • Responsible for financial forecasting and risks analysis.
  • Performs cash management, general ledger accounting, and financial reporting for one or more properties.
  • Responsible for developing and managing financial systems and policies
  • Responsible for administering payrolls
  • Ensures compliance with taxation legislation
  • Handles all financial transactions for the company
  • Serves as internal auditor for the company

Front Desk/Customer’s Service Officer

  • Receives Visitors/clients on behalf of the organization
  • Receives parcels/documents for the company
  • Handles enquiries via e-mail and phone calls for the organization
  • Distributes mails in the organization
  • Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
  • Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
  • Manages administrative duties assigned by the line manager in an effective and timely manner
  • Consistently stays abreast of any new information on the company’s properties that are put up for sale, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients when they make enquiries

6. SWOT Analysis

Starting a rental property business in the United States of America comes with its own fair share of challenges, you would have to abide by the law and also compete with other entrepreneurs in the business value chain who also are interested in making a living and building a business in San Diego, California.

In order to compete favorably in the rental property line of business we hired the services of tested and trusted business and HR consultants to help us conduct critical SWOT analysis for us. Here is a summary from the result of the SWOT analysis that was conducted on behalf of John Johnson & Co® Property Rental Agency, LLP.

The strength that we will be bringing to the table in the Apartment Rental industry is our robust relations with accommodation owners and properties investment moguls. We have access to a pool of tenants and we equally have a team of experts who have cut their teeth in the Apartment Rental industry. Our commission structure and relationship with freelance real estate agents in San Diego, California will also count towards our advantage.

As a newbie in the Apartment Rental industry, we might have some challenges competing with big time realtors and other rental property companies that have been in the industry for many years; that perhaps is part of our weakness.

  • Opportunities:

As the economy of the United States of America began to grow and demand for rental apartments rose, industry revenue grew at a rapid pace hence opening vast opportunities for rental property companies. We are well – positioned to take advantage of any opportunity that comes our way.

Some of the threats that we are likely going to face as a rental property company in the United States of America are unfavorable government policies , global economic downturn and unreasonable tenants.

7. MARKET ANALYSIS

  • Market Trends

A close watch of happenings in the apartment rental industry shows that vacancy rates indicate the relationship between industry supply and demand. High rates represent an oversupply of residential rental property relative to demand.

These rates are also a good indicator of trends in industry revenue and profitability. Profit margins tend to shrink as vacancy rates grow because residential rentals are being underused. Rental vacancy rates are expected to increase in 2018, posing a potential threat to the industry.

As a matter of international best practices, the national unemployment rate is a benchmark for determining the overall health of the US economy and has had mixed effects on industry demand. As the unemployment rate falls, individuals tend to have more money to spend on living expenses and afford higher rent prices.

Simultaneously, with more money to spend, individuals may choose to purchase a home rather than rent, which can adversely affect industry demand. The national unemployment rate is expected to drop in 2018, representing a potential opportunity for the industry.

Another obvious trend that is common with rental property companies in the United States of America is that most of them are improvising on more means of making money in the Apartment Rental industry and as matter of fact they are also acting as property developers and home staging agents amongst many other functions that they are involved in.

One thing is certain for every rental property company; if they are hardworking, creative and proactive, they will always generate enough income to meet all their overhead and operational cost, keep their business going without struggle and make reasonable profits from all business deals that they are involved in.

8. Our Target Market

Our target market as a rental property company cuts across people of different class and people from all walks of life. Although finding tenants is relatively easy, but the truth is that finding qualified and law – abiding tenants can be somewhat challenging.

It is important to note that the target market for the rental property business goes beyond those who make use of the internet (Craigslist to search for properties; some of them only rely on the print media (local daily or weekly newspapers), some on word of mouth and others on street to street search. The bottom line is that the market trend for rental property business is indeed a dynamic one.

In other words, our target market is the whole of the United States of America and below is a list of the people and organizations that we have plans to do business with;

  • Families who are interested in renting/leasing or acquiring a property
  • Corporate organizations who are interested in renting/leasing or acquiring their own property/properties
  • Land Owners and landlords who are interested in renting/leasing out their properties
  • Corporate organizations (real estate agencies, property development companies et al) who are interested in renting/leasing out their properties
  • Foreign investors who are interested in owning properties or leasing properties in the United States of America
  • Managers of public facilities

Our competitive advantage

The availability of competent and reliable real estate agents under your payroll, our business process, the financial structure of the company, management of high-quality assets – portfolio, superior financial management and debt management and of course our pricing model et al are part of our competitive advantage.

Another possible competitive strategy for winning our competitors in this particular industry is to build a robust clientele base, and ensure that our properties cum apartments are top notch and trendy. Our organization is well positioned, key members of our team are highly competent and can favorably compete with the some of the best in the industry.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry. It will enable them to be more than willing to build the business with us and help deliver our set goals and objectives. We will also engage freelance marketing agents on a commission level to help us market our services.

9. SALES AND MARKETING STRATEGY

We quite mindful of the fact that there are stiff competitions in the rental property cum real estate market in The United States of America, hence we have been able to hire some of the best business developer to handle our sales and marketing.

Our sales and marketing team will be recruited based on their vast experience in the industry and they will be trained on a regular basis so as to meet their targets and the overall goal of the organization. The training is not restricted to only our full – time employees but will include our freelance brokers.

John Johnson & Co® Property Rental Agency, LLP is set to make use of the following marketing and sales strategies;

  • Introduce our rental property company by sending introductory letters alongside your brochure to tenants, corporate organizations and other key stake holders throughout the city where our company is located.
  • Print out fliers (list of accommodations for rent/lease) and business cards and strategically drop them in offices, car parks, libraries, public facilities and train stations et al.
  • Use friends and family to spread word about our business
  • Post information about our company and the services we offer on bulletin boards in places like car parks, schools, libraries, and local coffee shops et al
  • Place a small or classified advertisement in the newspaper, or local publication about our company and the services we offer
  • Leverage on referral networks such as agencies that will attract clients (tenants) who need our properties cum apartments
  • Advertise our rental property company in relevant real estate magazines, newspapers, TV and radio stations.
  • Attend relevant real estate expos, seminars, and business fairs et al to market our services
  • Engage in direct marketing approach
  • Encourage the use of Word of mouth marketing from loyal and satisfied clients
  • Join local chambers of commerce and industry to market our product and services.

Sources of Income

John Johnson & Co® Property Rental Agency, LLP is established with the aim of maximizing profits in the industry. We have successfully built a vibrant real estate network that covers the whole of the West Coast in the United States of America so as to help us build a profitable business.

Below are the sources we intend exploring to generate income for John Johnson & Co® Property Rental Agency, LLP;

10. Sales Forecast

It is a known fact that as long as there are tenants in the United States of America, there will always be need to for them to hire the services of rental property companies from time to time.

We are well positioned to take on the challenges in the industry, and we are quite optimistic that we will meet out set target of generating enough income / profits from our first month of operation and grow the business beyond San Diego, California to other Provinces in the United States of America within record time.

We have been able to examine the rental property business, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast.

Below are the sales projections (commissions generated) for John Johnson & Co® Property Rental Agency, LLP it is based on the location of our business and the rental property and related services within the Apartment Rental industry that we will be offering;

  • Rent / lease a minimum of 30 housing units to clients (flats, duplexes, studio apartment et al) within the first 6 months of operation
  • Rent / lease a minimum of 20 office facilities to clients within the first 6 months of operation

N.B: Please note that we cannot put a specific amount to the projection because the prices and commissions vary for different properties. Part of our business strategy is to work within the budget of our clients to deliver quality property / properties hence it will be difficult to project what we are likely going to make from such deals.

But the bottom line is that we are definitely going to make reasonable profits from any business deal that we execute since we work based on commissions.

11. Publicity and Advertising Strategy

We have been able to work with our consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market. We are set to take the Apartment Rental industry by storm which is why we have made provisions for effective publicity and advertisement of our company.

Below are the platforms we intend to leverage on to promote and advertise our rental property business;

  • Place adverts on both print and electronic media platforms
  • Sponsor relevant TV shows so as to communicate our brand and what we do
  • Maximize our company’s website to promote our business
  • Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, LinkedIn, Google+ and other platforms (real estate online forums) to promote our business and list our properties for sale and for lease.
  • Install our billboards in strategic locations in and around the university community/campus in San Diego, California
  • Distribute our fliers and handbills in targeted areas from time to time
  • Attend landlord association meetings with the aim of networking and introducing our business.
  • Ensure that all our workers wear our branded shirts and all our vehicles and ambulances are well branded with our company’s logo et al.

12. Our Pricing Strategy

Part of our business strategy is to ensure that we work within the budget of our clients to deliver excellent properties to them. The real estate industry is based on commissions and properties are valued by professionals based on the area the facility is located, the type of facility and other factors.

Since we are not directly in control of the pricing system in the real estate industry, we can only abide by what is obtainable when it comes to pricing structure. Part of what we intended doing that will help us cut cost is to reduce to barest minimum all maintenance cost by renting/leasing any property under our care to responsible tenants who won’t cause damage to our facility.

  • Payment Options

At John Johnson & Co® Property Rental Agency, LLP our payment policy is all inclusive because we are quite aware that different people prefer different payment options as it suits them but at the same time, we will not accept payment by cash because of the volume of cash that will be involved in most of our transactions.

Here are the payment options that John Johnson & Co® Property Rental Agency, LLP will make available to her clients;

  • Payment by via bank transfer
  • Payment via online bank transfer
  • Payment via check
  • Payment via bank draft

In view of the above, we have chosen banking platforms that will help us achieve our plans without any hitches and we will also pay our freelance sales agents (real estate brokers) with same platforms. Our bank account numbers will be made available on our website and promotional materials to clients who may want to deposit cash or make online transfer for our services.

13. Startup Expenditure (Budget)

From our market survey and feasibility studies, we have been able to come up with a detailed budget on achieving our aim of establishing a standard and highly competitive rental property company in San Diego, California and here are the key areas where we will spend our startup capital;

  • The total fee for registering the business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits – $1,500.
  • Marketing promotion expenses (8,000 flyers at $0.04 per copy) for the total amount of – $10,000.
  • The total cost for hiring Business Consultant – $5,000.
  • The amount needed for the purchase of insurance policy covers (general liability, workers’ compensation and property casualty) coverage at a total premium – $30,800.
  • The total cost for the purchase of accounting software, CRM software and Payroll Software – $3,000
  • The total cost for leasing facility for the business – $60,000.
  • The total cost for facility remodeling to fit into the type of jet ski rental business facility – $30,000
  • Other start-up expenses including stationery – $1000
  • Phone and utility deposits – $3,500
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $40,000
  • The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, tables and chairs et al) – $4,000.
  • The cost of launching a Website – $600
  • Miscellaneous – $5,000

Going by the report from the market research and feasibility studies conducted, we will need about two hundred and fifty thousand (250,000) U.S. dollars to successfully set up a medium scale but standard rental property business in the United States of America.

Generating Funds/Startup Capital for John Johnson & Co® Property Rental Agency, LLP

John Johnson & Co® Property Rental Agency, LLP is a business that will be owned and managed by John Johnson, Carson Reeves and Lance Taylor. They decided to restrict the sourcing of the startup capital for the business to just three major sources.

  • Generate part of the startup capital from personal savings and sale of stocks
  • Generate part of the startup capital from friends and other extended family members
  • Generate a larger chunk of the startup capital from the bank (loan facility).

N.B: We have been able to generate about $100,000 (Personal savings $80,000 and soft loan from family members $20,000) and we are at the final stages of obtaining a loan facility of $150,000 from our bank. All the papers and documents have been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.

14. Sustainability and Expansion Strategy

The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and the business structure. If all of these factors are missing from a business, then it won’t be too long before the business closes shop.

One of our major goals of starting John Johnson & Co® Property Rental Agency, LLP is to build a business that will survive off its own cash flow without injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to rent out properties a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.

John Johnson & Co® Property Rental Agency, LLP will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.

As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List/Milestone

  • Business Name Availability Check : Completed
  • Business Incorporation: Completed
  • Opening of Corporate Bank Accounts: Completed
  • Opening Online Payment Platforms: Completed
  • Application and Obtaining Tax Payer’s ID: In Progress
  • Application for business license and permit: Completed
  • Purchase of Insurance for the Business: Completed
  • Renting of Office Facility and remodeling the facility in San Diego, California: Completed
  • Conducting Feasibility Studies: Completed
  • Generating capital from the CEO / President and Business Partners: Completed
  • Applications for Loan from our Bankers: In Progress
  • Writing of Business Plan: Completed
  • Drafting of Employee’s Handbook: Completed
  • Drafting of Contract Documents and other relevant Legal Documents: In Progress
  • Design of The Company’s Logo: Completed
  • Printing of Promotional Materials: Completed
  • Recruitment of employees: In Progress
  • Purchase of furniture, office equipment, electronic appliances and facility facelift: In progress
  • Creating Official Website for the Company: In Progress
  • Creating Awareness for the business (Business PR): In Progress
  • Health and Safety and Fire Safety Arrangement: In Progress
  • Establishing business relationship with key players in the industry (networking and membership of relevant real estate bodies): In Progress

More on Real Estate

How to start a rental property business

Starting a rental property business can be confusing. Find out what is involved and what you should do to get started.

A family of three sit in a living room.

What is a rental property business?

A rental property business involves buying property and renting it out to earn money from it. This type of business provides real estate investors with rental income. A rental property business size can range from a single property to many. You’ll need to decide whether to manage the day-to-day running of the rental property yourself or to hire a property management company.

There are a variety of rental properties to consider when it comes to this kind of real estate investing. These can include:

  • single-family homes
  • multi-family homes
  • luxury residential properties
  • vacation homes for short-term rentals such as Airbnb and VRBO
  • commercial properties

Before you get started, think about the advantages and disadvantages of this type of real estate investing business. There are some strong benefits for entrepreneurs, including monthly cash flow and the likelihood of the property increasing over time. Since there’s currently a high demand for rental properties in the United States, these benefits may be more likely to come to fruition.

However, a rental property business has its challenges. Purchasing a rental property typically involves a big initial investment to buy the property outright or to secure a down payment. Collecting rent and disputes with tenants can make this type of business difficult, and can complicate profitability if this isn’t factored into the cash flow of the investment. If renters need to be evicted, that adds another layer of problems. Another disadvantage of this real estate business is that property maintenance can be expensive.

Attributes of successful rental properties

When choosing a property for your rental business, there are some desirable features to consider to enable your business to be successful. These include:

  • Location: This is key to the success of your rental property company. It will often determine the type of clients you can target. Consider the neighborhood when choosing your property so that it matches your desired tenants.
  • Schools: When it comes to rentals attractive to families with young children, districts with good schools will always be desirable for the residential rental property market. Research district schools and their rating performances.
  • Local amenities: Quality of life and having a range of available amenities is essential, especially since Covid-19. Consider the availability of parks, public transportation, restaurants, shops, supermarkets, and entertainment facilities. As part of your market research, consider which amenities are important to your target market.
  • Vacancy rates in the area: Check out the vacancy rates of other properties for rent in the neighborhood you plan to invest in. High vacancy rates for rental units may mean a low demand in the housing market. That may mean that it may not be a good area to purchase a property if potential vacancies aren’t factored into your cash flow .
  • Rental rates: When doing your market research, check the current rental rates and recent trends in the neighborhood. It will help determine how feasible generating income on your property might be when you consider the rental rate on top of property taxes, maintenance fees, and mortgage repayments.
  • Age of property: Consider how old the property you want to purchase is and if there is likely to be much maintenance or repair work. Newer properties are likely to need less work done to them.
  • Safety: Research local crime numbers to see the types of crimes prevalent in the area. No one wants to live in an unsafe neighborhood, and a trend of increasing crime could be a warning to avoid the area.
  • Taxes: You can use Zillow or your county’s assessor website to find out the property taxes in the area. Consider these when working out the potential profitability of your rental property.
  • Economy: Make a note of local industries, businesses in the area, and any new local infrastructure projects. These can indicate how the local economy is doing.

How to acquire a rental property

Finding the right properties to rent is one of the biggest hurdles you will face. A suitable property will depend on your chosen niche and who your target market is.

Initially, a good option is to use a realtor to find a property. They will help you understand the local market and what types of properties are available. You could also join a real estate investor club if there is one in your area. These clubs can be helpful in gaining insights into local real estate.

Obtaining financing will most likely be your biggest hurdle when starting a rental property business. Some options could include:

  • Traditional lenders: Traditional lenders will look for a good credit score, funds for a down payment, and verifiable income. The interest rates for mortgage payments will depend on these things.
  • Private money loans: The source for private loans is usually family or friends, but can also be other investors. The terms for these types of loans can vary depending on the source of the loan.
  • Drawing on home equity: If you already own a home, it may be possible to tap into its equity by taking out a home equity loan, a home equity line of credit, or a cashout refinance, and use those funds to purchase your rental property. However, if you can’t keep up with the mortgage payments, you could lose your home.

Each of these forms of finance carries risk, and it’s advisable to speak to a financial advisor and your accountant so that you understand the risks to you and your business. Your financing costs will depend on your equity, credit score, and if you have funds for a down payment.

When looking for a suitable property, it is best to consider the type of client you’d like to find and the type of property that would be best for them. For example, if you’re hoping to attract wealthy clients, you’ll be targeting luxury properties with plenty of modern appliances and amenities.

Do your financial research

An important step to starting any business is to create a plan to establish your strategy and fully understand how you will finance your business. Your plan is your step-by-step map to follow.

It is important to make a basic business plan to understand your likely cash flow, startup costs, and expenses. A simple one-page plan will be enough for most rental property businesses. You can use this business plan template .

Here are some things to research and decide on when making your plan:

  • Executive summary: Provide an overall summary of what you want to do with your rental property. Discuss the features of your business opportunity.
  • Company overview: Briefly explain the structure of your business and what type of rental business you want to operate – commercial, residential or other.
  • Industry analysis: A brief overview of the rental property industry. Here you should do some market research and look at the trends of the industry and what is impacting it. This can include things like interest rates, regulations, the housing market, inflation, and potential risks. Do a SWOT analysis .
  • Customer analysis: Briefly describe your ideal target market for your rental properties. Consider their demographics, what they find important, and their likely professions.
  • Competitor analysis: Briefly describe who your competitors are, for example, Airbnb, short-term rentals, or vacation rentals. Consider how you compete against them and what you can do as a competitive edge.
  • Marketing plan: Consider your unique selling proposition (USP) and plan your marketing strategy. Aspects to think about include the rental property you are offering, prices, location, and what promotional methods you plan to use.
  • Operations plan: Briefly explain the processes for day-to-day operations. Aspects to include are logistics, procurement, office location (if there is one), and key assets. Include details about vendors such as a handyman, property manager, electrician, and plumber.
  • Management team: This should contain details about your rental property management team (if there is one) and their roles.
  • Financial plan: Ideally, this should be a three-year plan describing how you’ll finance your rental property. Include start-up costs, profit and loss estimates, expected cash flow, rent payment amounts, and break-even analysis.
  • Timeline: Set out your planned milestones and key targets for your rental property.
  • Insurance plan: Determine what insurance you will need.

Consider choosing a legal structure

You may want to consider your business legal structure before buying the property. You have several options, or you can just buy a property directly in your own name. How you structure your business may be determined by how you choose to finance purchasing the property.

Three common ownership structures for rental properties are to have a single owner, joint ownership without forming a separate legal entity, and limited liability companies (LLCs). Typically, rental properties are owned by one owner:

  • Single owner: This is when a property is owned by a single person. It’s the easiest structure, as it isn’t incorporated, and all the profits and losses are received by the owner and reported on their personal income tax return. This is the most common type of rental property ownership. However, single owners have no liability protection, and their personal assets may be at risk if they are sued or if anything goes wrong.
  • Joint ownership: This is very similar to having a single owner, with income and expenses reported directly on the owners’ tax returns, except there are two or more property owners. Like a single owner investment, they have no liability protection, and their personal assets are at risk.
  • Limited liability company (LLC): The LLC is often chosen because it provides limited liability protection. For a rental property, an LLC also provides flexibility in management which can be an advantage. An LLC may have one or more owners, and may need to file its own income tax return. It is important to note that the limited liability protection isn’t complete, and owners can still be held liable in some instances. The LLC structure is based on a state statute rather than a federal one. Check the requirements of your local government or state for further information.

Register your business

If you decide to create an entity to own your rental property, you may need to register your business with your state. Where you register will depend on your business structure.

Register for taxes

You may need to charge sales tax for your rental property, depending on your state, city, and type of rental. If so, you would need to register for taxes with your local authority. Consult with your accountant for up-to-date tax advice for your state. The Xero advisor directory can assist you in finding a new accountant if you need one.

Establish a business bank account

Opening a business bank account for your rental property business will keep your personal and business finances separate and make your taxes easier.

To open an account, you will need your EIN (or social security number for a single owner). Banks vary in their services, but it is handy to have a checking account. Take a look at your options and choose the best one for your needs.

Invest in landlord insurance

Insurance is an essential and strategic business expense and requirements vary in different jurisdictions. You’ll need landlord insurance if you are not staying at your property with tenants. This provides protection against property damage, liability, and income lost due to a property being unable to be rented.

Develop your website and marketing

It is important to optimize rental property listings. Consider getting professional photographs taken for each property rental unit. And spend some time writing a rental listing for your property, with the features and benefits of your property.

You can list your property on places like Facebook Marketplace or Zumper . If you are planning a short-term rental business, you’ll need to consider booking software like Guesty .

Marketing your business is an important part of running a successful business. Here are a few common ways to market your rental property business:

  • Social media: You can promote your rental property to friends and family on social media, and they can share with people they know.
  • Post a video about your rentals: You can use a video across platforms and highlight the best features of your property.
  • Reviews: Get clients to provide positive reviews of your property.
  • Advertising: You can post ads in local papers and websites.
  • Signs: Post “For rent” signs on the property window or lawn with contact information.

Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

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Property Rental Business Plan PDF Example

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  • February 21, 2024
  • Business Plan

the business plan template for a property rental business

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

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

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

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

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

the business plan template for a property rental business

Property Rental Business Plan (Airbnb / VRBO)

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

Property Rental Business Plan executive summary

Dive deeper into Executive Summary

Business Overview

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

Properties & Locations

Describe the range and types of properties within your portfolio, such as apartments, single-family homes, vacation rentals, or commercial spaces. Emphasize the diversity and quality of your properties, including any unique features or high-demand attributes they may have. Discuss the locations of your properties, stressing their accessibility and the convenience they offer to tenants. Highlight properties that are strategically located near key amenities, such as public transport, business districts, schools, or recreational areas. Explain why these locations are beneficial in attracting and retaining your target tenants.

Amenities & Services

Detail the amenities and features available with your properties, such as in-unit laundry, security systems, fitness centers, communal spaces, or eco-friendly installations. Highlight how these amenities meet the needs and preferences of your target tenant demographic. Outline your leasing terms and pricing strategy, ensuring they align with the value provided by your properties and the competitive market landscape. Discuss any flexible leasing options, promotional offers, or loyalty incentives you provide to enhance tenant retention and attract new tenants.

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

best business plan for rental property

Market Overview

Industry size & growth.

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

Key Market Trends

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

Key Competitors

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

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

Property Rental Business Plan market overview

Dive deeper into Key competitors

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

Marketing Plan

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

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

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

Property Rental Business Plan strategy

Dive deeper into SWOT

Dive deeper into Marketing Plan

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

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

Property Rental Business Plan management

Financial Plan

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

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

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

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

Property Rental Business Plan financial plan

Privacy Overview

  • 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

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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

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Rental Property Business

Back to All Business Ideas

How to Start a Rental Property Business

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on December 13, 2021 Updated on December 1, 2023

How to Start a Rental Property Business

Investment range

$28,650 - $114,100

Revenue potential

$36,000 - $72,000 p.a.

Time to build

1 – 3 Months

Profit potential

$32,000 - $65,000 p.a.

Industry trend

Since the start of the pandemic, the US real estate market has been setting regular sales records, riding its strongest period in nearly 15 years. If you’ve been looking to get in on the action, now is a good time to turn your interest in acquiring property into a successful business.

Once you buy, rent will provide you with significant and steady income, in addition to property appreciation and tax benefits. Whether you plan to invest in single-family homes or multi-unit buildings, a rental property business can be surprisingly lucrative.

Being a landlord comes with challenges, but with diligence and the insight provided in this step-by-step guide, you can be on your way to becoming a real estate mogul.

Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.

Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .

Step 1: Decide if the Business Is Right for You

Pros and cons.

Every business, including a rental property business, has pros and cons that you should consider before deciding if it’s right for you.

  • Passive income – Renting out properties gives you passive income. 
  • Rising value – The value of your property will appreciate over time. 
  • High demand – Many Americans opt to rent than buy homes.
  • Collecting rent – You might find it hard to collect rent from some tenants.
  • Dispute with tenants – Getting into a dispute with difficult tenants is possible.
  • High maintenance costs – The cost of construction materials and services are increasing.

Rental property industry trends

Some 35% of US households are rental properties, according to iProperty Management, an advisory website for landlords. 

Industry size and growth

  • Industry size and past growth – After a steady annual growth of 3% until 2020, the US apartment rental industry declined 11% to about $170 billion in 2022.(( https://www.ibisworld.com/industry-statistics/market-size/apartment-rental-united-states/ ))  
  • Growth forecast – The global real estate rental market is predicted to grow around 10% annually through 2026.(( https://www.thebusinessresearchcompany.com/report/real-estate-rental-global-market-report )) 
  • Number of businesses – There are more than 530,000 apartment rental businesses in the US.(( https://www.ibisworld.com/industry-statistics/number-of-businesses/apartment-rental-united-states/ ))
  • Number of people employed – The industry employs nearly 800,000 people.(( https://www.ibisworld.com/industry-statistics/employment/apartment-rental-united-states/ ))

rental property industry size and growth

Trends and challenges

Trends in the rental industry are:

  • Rising number of single-family home rentals points to a potentially larger long-term income stream 
  • Growing demand for green materials, energy-efficient appliances, programmable thermostats, and LED lighting
  • Amenities are highly sought after, so properties with add-ons like pools and gyms command a higher rent
  • More people prefer suburban areas as work-from-home arrangements continue(( https://www.realtor.com/news/trends/competition-fierce-for-2022-top-10-housing-markets/ ))
  • Home-stay rentals like Airbnb and VRBO are also booming

Challenges in the rental industry include:

  • Keeping up with government regulations
  • Rent collections and eviction moratoriums 
  • Resolving disputes with tenants

rental property industry Trends and Challenges

Consumer spending

  • Potential customer base – Around 43 million households, or 35% of US households, rent their homes.(( https://ipropertymanagement.com/research/renting-statistics ))
  • Average prices – The average monthly rent in the US passed $2,000 in May 2022.(( https://www.redfin.com/news/redfin-rental-report-may-2022/ ))

rental property industry consumer spending

Price differences across the country

  • More expensive – Rents are highest in New York and Nassau County (NY), New Brunswick (NJ), Boston (MA), and Oakland and San Francisco (CA), with rents between $3,700 and $4,000 in May 2022.
  • Less expensive – Rents are lowest in Kansas City (MO), San Antonio (TX), Indianapolis (IN), Cleveland (OH), and St. Louis (MO), with rents between $1,400 and $1,600.

rental property price differences

What kind of people work in rental?

  • Gender – 55% of rental agents in the US are female, while 45% are male.(( https://www.zippia.com/rental-agent-jobs/demographics/#gender-statistics ))
  • Average level of education – 37% of rental agents hold a bachelor’s degree and 26% have a high school diploma.(( https://www.zippia.com/rental-agent-jobs/demographics/#degree-level-types ))
  • Average age – The average age of a rental agent is 40 years old.(( https://www.zippia.com/rental-agent-jobs/demographics/#age-statistics ))

rental property industry demographics

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

Startup costs for a rental property business range from $25,000 to half a million or more. The main cost is obviously the property itself, so your initial investment will depend on the type of property you decide to buy. Lenders generally require a 20%-25% down payment.

How much can you earn from a rental property business?

Your income will of course depend on the rents you charge, minus your mortgage payment. A general rule for real estate investors is to make at least $150 per month per unit. Keep in mind that you will see more financial benefits at tax time and in the long run, as your properties appreciate and rents increase.

Subtracting the chunk of rent that will cover your mortgage payments, after expenses, such as maintenance, you should expect a profit margin of around 90%.

If you start with a 20-unit building and net $150 per month per unit, you’ll bring in $36,000 in annual revenue and around $32,000 in profit, assuming that 90% margin. If in a few years you’re able to add 20 more units, you’d have annual revenue of close to $72,000 and nearly  $65,000 in profit.

Rental Property business earnings forecast

What barriers to entry are there?

The biggest barrier to entry into the rental property market is the hefty investment cost. You’ll have to purchase and develop a property that you can rent out, whether an apartment building or single-family homes. 

Other barriers to entry are the government regulations that you have to comply with, tax payments, and legal requirements.

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Step 2: hone your idea.

Now that you know what’s involved in starting a rental property business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research rental properties in your area to examine their price points and customer reviews. You’re looking for a market gap to fill. 

You can capitalize on the rising demand for single-family home rentals and build a portfolio with long-term value while generating significant rental income.(( https://www.usnews.com/news/business/articles/2021-11-24/housing-market-trends-fuel-single-family-home-rental-growth )) In the third quarter of 2021, construction began on 16,000 build-to-rent homes, the highest number since 1990, according to the National Association of Home Builders. So, while larger residential buildings still do present an opportunity, the rising number of single-family home rentals points to another, potentially larger long-term income stream. 

What? Determine your products or services

You can invest in an apartment building, single-family rental units, vacation homes, serviced apartments, and more. The highest share of US renters (35%) live in buildings with more than 10 units, but the share of renters in single-family homes (26%) is on the rise. 

best business plan for rental property

You might also consider offering environment-friendly features. Rental properties with pools, gyms, and other amenities are also in demand.

Home-stay rentals like Airbnb and VRBO are also booming, so you may want to keep that in mind as an option, assuming your area allows it. You can learn more in the Step By Step article on How to Start an Airbnb Business .

How much should you charge for your rental property?

Rising house prices are also pushing rents up and pricing many US households out of the housing market. In May 2022, the national median monthly rent surpassed $2,000 for the first time. 

You’ll have to consider your maintenance costs, overhead expenses, and target profit margin in determining how much you’ll ask for rent. Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market depends on which properties you invest in. If you invest in urban apartments, your demographic will tend to be younger, so you can find them on sites like Instagram, rather than Facebook.

Where? Choose your business premises

You might consider investing in a rental property in either an urban or suburban area. Rentals are split almost evenly between these, but the latest shift is toward the latter. This is due in part to the greater number of people working from home post-pandemic, who no longer need to live in pricier urban areas to be close to the office.

As to your office, you may want to run your business from home in the early stages to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a commercial space. You can find commercial space to rent in your area on Craigslist , Crexi , and Commercial Cafe .

When choosing a commercial space, you may want to follow these rules of thumb:

  • Central location accessible via public transport
  • Ventilated and spacious, with good natural light
  • Flexible lease that can be extended as your business grows
  • Ready-to-use space with no major renovations or repairs needed

rental property business idea rating

Step 3: Brainstorm a Rental Property Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better
  • The name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “properties” or “rentals”, boosts SEO
  • Choose a name that allows for expansion: “Gateway Property Holdings” over “Corporate Housing Solutions” or “Student Housing Rentals”
  • Avoid location-based names that might hinder future expansion
  • Use online tools like the Step by Step business name generator . Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Rental Property Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

  • Executive Summary: Summarize the vision and strategy for your rental property business, including the types of properties you’ll rent and your growth goals.
  • Business Overview: Describe the rental property services you will offer, such as residential or commercial leasing and property management.
  • Product and Services: List the types of properties you plan to rent out, including single-family homes, apartments, or commercial spaces.
  • Market Analysis: Analyze the local real estate market to assess demand and identify your target tenant market.
  • Competitive Analysis: Compare your business to other rental property providers, noting how your properties or services will better meet tenant needs.
  • Sales and Marketing: Outline how you will market your properties and attract tenants, such as through online listings, open houses, or agency partnerships.
  • Management Team: Highlight the expertise and roles of your management team in real estate and business operations.
  • Operations Plan: Detail the day-to-day operations, including tenant acquisition, maintenance, and rent collection.
  • Financial Plan: Provide financial projections, including initial investment requirements, rental income, and long-term profitability estimates.
  • Appendix: Include additional documents like property photographs, market research data, or maintenance service agreements that support your business plan.

what to include in a business plan

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to rental properties.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your rental property business will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

types of business structures

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have. 

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2023

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

best business plan for rental property

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

  • Bank loans : This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans : The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
  • Government grants : A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and Family : Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Personal : Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a rental property business.

types of business funding

Step 8: Apply for Rental Property Business Licenses and Permits

Starting a rental property business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your rental property business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

types of business insurance

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You can use industry-specific software, such as TenantCloud , Buildium , and Propertyware , to manage your properties and tenants, oversee maintenance, set a schedule for rent payments, and more.

  • Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero .
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Starting a rental property business can be a lucrative venture, and successful marketing is key to attracting tenants and maximizing profits. Beyond creating a website and networking, here are practical strategies to enhance your rental property business:

  • Leverage Social Media Advertising: Utilize targeted social media ads to reach potential tenants based on demographics, interests, and location, ensuring your properties are visible to the right audience.
  • Optimize Property Listings: Craft compelling and detailed property listings with high-quality photos, emphasizing unique features and amenities, to make your rental properties stand out on online platforms.
  • Implement Referral Programs: Incentivize current tenants and contacts to refer prospective renters by offering discounts on rent or other perks, expanding your reach through word-of-mouth.
  • Host Virtual Tours: Embrace technology by providing virtual tours of your properties, allowing potential tenants to explore the space remotely, increasing engagement and saving time for both parties.
  • Offer Limited-Time Promotions: Create a sense of urgency by occasionally running limited-time promotions such as reduced security deposits or discounted rent for the first month, encouraging quicker tenant decisions.
  • Build Partnerships with Local Businesses: Forge partnerships with local businesses to cross-promote services and create mutually beneficial arrangements, increasing exposure within the community.
  • Collect and Showcase Tenant Testimonials: Request positive feedback from satisfied tenants and showcase their testimonials in marketing materials, boosting credibility and building trust with potential renters.
  • Attend Community Events: Participate in local events and sponsorships to increase your brand visibility within the community, fostering a positive reputation and attracting potential tenants.
  • Implement Tenant Loyalty Programs: Retain current tenants by implementing loyalty programs, offering rewards or discounts for lease renewals, creating a sense of value for long-term residents.
  • Utilize Email Marketing: Build an email list of potential tenants and send regular updates on available properties, promotions, and relevant local news, maintaining ongoing communication and engagement.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your rental property meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Global pizza chain Domino’s is renowned for its strong USP: “Fresh, hot pizza delivered in 30 minutes or less, guaranteed.” Signature USPs for your rental property business could be:

  • Affordable apartments in suburbia
  • Luxury executive home rentals
  • Updated urban rentals

unique selling proposition

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a rental property business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in rental properties for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in rental properties. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a rental property business would include:

  • Property Manager – Leases, maintenance requests, rent collection
  • Handyman – Basic maintenance
  • Marketing Lead – SEO strategies, social media, other property marketing

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Run a Rental Property Business – Start Making Money!

Most of us have been renters at some point in our lives, and wouldn’t it be better to be the landlord? You can provide safe housing for people and, at the same time, create a valuable real estate portfolio that can provide a steady source of income for a long time. 

About a third, or 35%, of households in the United States are renters, and you can capitalize on that market with your own rental property business. In 10 years, think of what it will be worth! Now that you’re armed with insights into the business, you’re now ready to start your journey into the entrepreneurial world of being a landlord.

  • Rental Property Business FAQs

Contrary to what some companies may try to tell you at their seminars, realistically you need a down payment of 20% – 25% to buy a property. You also need to pay for any licenses or permits that may be required, and insurance, at the very least. Your investment in a rental property business, however, will be well worth it in the long run.

You do not need an LLC, but an LLC provides many benefits, most importantly personal liability protection. If a tenant ever sues you, that liability protection will keep your personal assets safe.

Realistically, to make a good income you need to have multiple units. A rule of thumb is to net at least $100 per month per unit. The real value you get from a rental property business comes from tax advantages and the long-term appreciation of your properties. In 10 years, you could build something that’s worth into the 7 figures!

You should look at what you can buy it for, how much your mortgage will be, and what rent you can get for it based on market rates. Generally, you should aim to net at least $100 per month per unit. You should also look at the location to see if properties in the area are appreciating since the property value is what you will really benefit from in the long run.

The rental property that makes the most money can vary depending on factors such as location, market demand, property size, and rental rates. Generally, properties with high rental yields and potential for appreciation tend to generate higher profits. This can include properties in desirable locations with strong rental demand, such as apartments or homes in popular urban areas or vacation destinations. 

The most common type of rental property is residential rentals, such as apartments, houses, and condominiums. Residential rentals cater to individuals and families seeking long-term accommodation. 

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  • Decide if the Business Is Right for You
  • Hone Your Idea
  • Brainstorm a Rental Property Business Name
  • Create a Rental Property Business Plan
  • Register Your Business
  • Register for Taxes
  • Fund your Business
  • Apply for Rental Property Business Licenses and Permits
  • Open a Business Bank Account
  • Get Business Insurance
  • Prepare to Launch
  • Build Your Team
  • Run a Rental Property Business - Start Making Money!

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COMMENTS

  1. How To Start A Rental Property Business

    0:00 1:03:40 What Is A Rental Property Business? A rental property business is a venture through which an investor will purchase and manage one or more income-producing properties. These properties can have one or more units leased out to tenants in exchange for monthly rental fees.

  2. How To Start A Rental Property Business: A Step-By-Step Guide

    real estate investing strategies Nov 02, 2023 Few investment strategies can generate generational wealth on the same level as a quality, cash-flowing rental property portfolio. To that end, establishing a rental property business can pave the way for a steady stream of income and long-term financial freedom.

  3. Rental Properties Business Plan Template (2024)

    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.

  4. How to Start a Profitable Rental Property Business [11 Steps]

    1. Perform market analysis. 2. Draft a rental property business plan. 3. Develop a rental property brand. 4. Formalize your business registration. 5. Acquire necessary licenses and permits for rental property. 6. Open a business bank account and secure funding as needed. 7. Set pricing for rental property services. 8.

  5. Rental Properties Business Plan Template [Updated 2024]

    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.

  6. How to Start a Rental Property Business in 2024 [Detailed Guide]

    A strong business plan includes the following sections: Executive summary - A brief company description, including a mission statement, leadership structure, and location. Company description - More details about how the company helps customers with its offerings and any competitive advantages it has.

  7. How to Write a Rental Property Business Plan

    Becoming a landlord is achievable with the right rental property business plan in place. Here's how to create a business plan for your rental property investment in five steps. 1. Identify the Main Goal of Your Rental Business

  8. How to Write a Business Plan as a Landlord

    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.

  9. How to start a rental property business in 14 steps

    1) Business plan Now that you know you're 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.

  10. How to create a rental property business plan

    Annabelle Amery Jan 30 9 min read 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.

  11. Rental Property Business Plan: Guide & Template (2024)

    Download Template Create a Business Plan A rental property business is a great way of earning a passive income. It can help you have great finances if you go about it in the right way. The rental property market stood at a size of 174.2 bn dollars in the US in 2021. And with the subsiding pandemic isn't about to shrink any time soon.

  12. How to start a rental property business in 6 steps

    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.

  13. How To Start A Rental Property Business in 2024

    The average rental for a 2 bedroom home in the US costs $1,100 monthly. The demand for rent is higher than ever - residential vacancy rates have decreased to 25% in 2019. In commercial real estate, the biggest emerging market is the industrial sector growing by 13.4% since 2020.

  14. Rental Property Business Plan

    Industry Analysis An industry analysis in your rental property business plan can help you create a more refined strategy to help your business succeed. Your research lets you learn the market trends that can attract more customers. Customer Analysis Profile of Target Market

  15. 10 things to know before starting a rental property business

    5. Create a business entity. Many rental property investors own property under their own name as a sole proprietor. While owning a rental property as an individual may be the path of least resistance, an investor's business and personal assets may be at risk if things don't go according to plan or someone decides to sue.

  16. Rental Property Business Plan Template & Guidebook

    How to Write a Rental Property Business Plan in 7 Steps: 1. Describe the Purpose of Your Rental Property Business. The first step to writing your business plan is to describe the purpose of your rental property business. This includes describing why you are starting this type of business, and what problems it will solve for customers.

  17. Rental Properties Business Plan Template [Updated 2024]

    If you want to start a Rental Property business or expand your current Rental Property business, you need a business plan. The following Rental Property business plan template gives you the key elements to include in a winning Rental Properties business plan.

  18. Rental Property Business Plan (Sample Template for 2022)

    Industry Overview Rental property business is grouped under the Apartment Rental industry and this industry is made up of companies that rent one-unit structures, two- to four-unit structures, five- to nine-unit structures, 10- to 19-unit structures, 20- to 49-unit structures and 50- or more unit structures.

  19. How to start a rental property business

    Opening a business bank account for your rental property business will keep your personal and business finances separate and make your taxes easier. To open an account, you will need your EIN (or social security number for a single owner). Banks vary in their services, but it is handy to have a checking account.

  20. Property Rental Business Plan PDF Example

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    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.

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    The plan has download speeds of 264Mbps and costs £36 a month across an 18-month contract. It's one of the cheapest deals offered by Virgin Media (their lowest is £29) It's not clear how long ...