Start a Property Management Company in Arizona | 2024 Guide

by
Arizona Property Management Company

Are you considering starting a property management company in Arizona? Property management is an excellent business opportunity for individuals with a passion for real estate who are detail-oriented and can effectively manage multiple tasks simultaneously. The demand for property managers continues to grow, making it an attractive and lucrative Limited Liability Company in Arizona.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before Starting a Property Management Company in Arizona, all the steps in this article must guide you.

How to Start a Property Management Company in Arizona

What is a Property Management Company?

A property management company in Arizona is a professional firm that handles the administration of residential, commercial, or industrial real estate. Such companies deal with all aspects of managing a property, from finding and vetting tenants to repairing and maintaining the property, collecting rent, and handling tenant issues. These companies are an asset for property owners who may not have the time or expertise to manage their properties effectively and efficiently.

Forming a Limited Liability Company (LLC) can be a strategic decision for those considering starting a property management company in Arizona. Starting an LLC provides several benefits, including the protection of personal assets. In an LLC, the owner’s assets are protected in case of any litigation or debt incurred by the company. It also offers greater credibility and potential tax advantages and allows for an easy ownership transfer. Starting an LLC involves filing the necessary paperwork with the Arizona Secretary of State and paying an initial filing fee.

If you plan to start an LLC for your property management company, we provide the Best LLC Services to check out. This includes the top features and prices that will benefit your business.

LLC Service

Rating & Pricing

Top Features

Learn More

#1 Recommendation

$0 + State fee

  • Free LLC Formation

  • Legal Support

  • Highly Reputed Company

Learn More

$299 + State fee

  • Single LLC formation package

  • Flat price for all services

  • Legal consultation

Learn More

How to Start a Property Management Company in Arizona

Starting a property management company in Arizona can be a lucrative and rewarding business venture especially if you are in Phoenix. With the right planning, resources, and dedication, you can create a successful company that caters to the needs of property owners and investors in your area. Here is the step-by-step guide to launching a property management company in Arizona.

Step 1: Understand Property Management

Property management oversees and operates real estate properties, including residential, commercial, and industrial properties. The role of a property manager is to manage the day-to-day activities of properties, ensuring that they are well-maintained and that rent is collected on time. Property managers also deal with tenant issues, repairs and maintenance, and marketing vacant properties.

Step 2: Evaluate The Market

Before starting a property management company in Arizona, you need to evaluate the local market to determine if there is a demand for your services. Here are some factors to consider:

  • Type of Properties: Determine the properties in Arizona, such as single-family homes, multi-family buildings, commercial properties, or vacation rentals.
  • Competition: Identify other property management companies and analyze their services, pricing structures, and market share.
  • Market Trends: Research the local real estate market trends, including rental rates, vacancy rates, and property values.
  • Potential Clientele: Determine the number of property owners and investors in your target area who may require property management services.

Step 3: Create a Business Plan

A solid business plan is crucial for the success of your property management company. Your business plan should include the following elements:

  • Executive Summary: A brief overview of your Arizona property management company, including its mission statement, goals, and objectives.
  • Market Analysis: A detailed analysis of the local real estate market, competition, and potential clients.
  • Services: Describe the property management services you plan to offer, such as tenant screening, rent collection, property maintenance, and marketing.
  • Marketing Strategy: Outline your marketing plan, including your target audience, marketing channels, and budget.
  • Financial Projections: Provide financial projections for your property management company, including revenue, expenses, and projected profits.

Step 4: Register Your Business and Obtain Licenses

To start a property management company in Arizona, you must register your business and obtain the necessary licenses and permits. Here are the steps to follow:

Choose a Business Structure

For starting a property management company, several business structures are available in Arizona. Each structure has its benefits and drawbacks, depending on your business goals, financial situation, and personal preferences. The common business structures you can choose from are:

  • Sole Proprietorship: This is the simplest business structure, which involves a single individual owning and operating the property management company. The owner has complete control over the business and is personally responsible for all debts and liabilities. There is no formal registration process for a sole proprietorship, but you may still need to obtain licenses and permits specific to property management.
  • Partnership: A partnership is a business structure where two or more people share ownership of the property management company. Partnerships can be general, limited, or Arizona Limited Liability Partnerships (LLP). Each partner contributes to the business and shares in profits and losses. Partnerships must file a partnership agreement with the Arizona Secretary of State and obtain necessary licenses and permits.
  • Limited Liability Company (LLC): An LLC is a hybrid entity that combines a partnership’s flexibility with a corporation’s limited liability protection. Owners, known as members, are not personally responsible for the company’s debts and liabilities. To form an LLC in Arizona, you must file the Articles of Organization with the Arizona Secretary of State and comply with any licensing and permitting requirements.
  • Corporation: A corporation is a separate legal entity from its owners, known as shareholders. Corporations offer limited liability protection and can issue stock to raise capital. There are two types of corporations: C Corporations and S Corporations. Forming a corporation in Arizona requires filing the Articles of Incorporation with the Arizona Secretary of State.
  • Professional Corporation (PC): This type of corporation is designed specifically for licensed professionals, such as real estate brokers, who wish to form a corporation for their property management company. Professional Corporation offers limited liability protection and must comply with all state regulations for the specific profession. To form a Professional Corporation in Arizona, you must file the Articles of Incorporation with the Arizona Secretary of State and adhere to any licensing and permitting requirements.

Before choosing a business structure for your property management company in Arizona, consult with a Business Attorney in Arizona to discuss the best option for your situation. Remember that each structure has its tax implications and requirements, so it is essential to understand your choice’s financial and legal ramifications.

Choose a Business Name

Choosing a business name for your Arizona property management company is important to establish your brand identity and attract potential clients. Here are a few suggestions to consider:

  1. Arizona Premier Property Management
  2. Arizona HomeGuard Property Services
  3. Arizona Nexus Property Management
  4. Arizona BlueSky Property Solutions
  5. Arizona KeyPoint Property Management

Remember to check the availability of your chosen business name with the Arizona Corporation Commission eCorp and ensure it’s not already in use by another company. There is a complete guide on Arizona Business Name Search for you to have a property management company name. You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for Arizona DBA (doing business as). 

However, before filing a DBA, you should know that you need to renew your DBA every five years, which costs $10 for filing and $3 for each duplicate copy..

Once you’ve settled on a unique name, you can hire a Statutory Agent and obtain the required licenses and permits.

Recommended: Embark on your entrepreneurial journey confidently and affordably with LegalZoom’s DBA service, the beacon that guides businesses to credible branding and comprehensive compliance. Discover how effortless success can truly be!

– LegalZoom – ($99 + Filling Fees)

Hire a Statutory Agent

A Statutory Agent is a person or entity designated to receive important legal documents and correspondence for your business. In Arizona, every business entity, such as an LLC or a corporation, must have a Statutory Agent with a physical address within Arizona. The Statutory Agent’s primary role is to ensure that your business complies with state regulations and be available to receive any legal notices or official government correspondence.

In Arizona, the cost of having a Statutory Agent ranges from $50 – $150. However, suppose you are still wondering how to hire a Statutory Agent. In that case, you can also serve as your Statutory Agent, appoint a friend or family member, or hire the Best Arizona Statutory Agent Services.

Recommended: Professional services will ensure your business gets legal notices and critical mail. With LegalZoom’s Registered Agent Services, they offer peace of mind and expert support for businesses, ensuring compliance and seamless communication with state authorities. That’s why we recommend using –

LegalZoom – $249/year

File For Articles of Organization or Articles of Incorporation

If you form an LLC for your Arizona property management company, you must file the Arizona Articles of Organization, which costs $50. However, you must file the Articles of Incorporation if you form a Corporation for your Arizona property management company. The Articles of Incorporation filing fee costs $60 for filing in-person and by mail. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

Recommended: Filing the Articles of Organization and the Articles of Incorporation is easy and hassle-free if you hire a professional service. We recommend using –

LegalZoom – ($0 + State Fee)

Obtain an Employer Identification Number

You must first obtain an Employer identification number (EIN) in Arizona from the IRS if you will open a bank account or hire an employee for your Arizona property management company. 

The application of an EIN in Arizona can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

LegalZoom – ($0 + State Fee for LLC formation)

Get the Necessary License and Permits

When starting a property management company in Arizona, you must obtain legal licenses and permits. Here are some common licenses and permits you may need:

  • Business License: Arizona requires businesses to obtain a Business License to operate legally. The business license fee in Arizona ranges from $50 – $300.
  • Real Estate Broker License: In many states, property management companies must have a licensed real estate broker or designate a licensed broker to oversee the business operations. Check with your Arizona Real Estate Commission or similar governing body for the requirements and application process.
  • Salesperson License (if applicable): If your Arizona property management company also engages in leasing or renting properties, you may need to have a licensed salesperson working under the supervision of a licensed broker.
  • State Tax Registration: Register with the Arizona Department of Revenue to collect and remit sales and use taxes and other applicable state taxes.
  • Local Zoning and Land Use Permits: Depending on the nature of your Arizona property management services and the location of your office, you may need to obtain zoning and land use permits. 
  • Workers’ Compensation Insurance: If you have employees, you’ll likely need to obtain workers’ compensation insurance by Arizona’s laws.
  • Professional Liability Insurance: Arizona property management companies should consider obtaining professional liability insurance (errors and omissions insurance) to protect against potential legal claims related to business operations.

Before starting your property management company, consult a Business Attorney in Arizona to ensure you obtain all the necessary legal permits and licenses. Failing to do so can result in fines, penalties, and even the closure of your Arizona business.

Step 5: Set Up Your Office

While starting a property management company without a physical office is possible, having a dedicated workspace can help establish your credibility and professionalism. Select a location that is convenient for both you and your clients. This may be a home office, a co-working space, or a commercial office space. Also, you will need basic office equipment such as a computer, printer, phone, and filing system.

Step 6: Market Your Property Management Company

Effective marketing is crucial for attracting clients and growing your Arizona property management business. Usually, the best way to market your property management company is to advertise in local newspapers, real estate magazines, and direct mail campaigns.

Step 7: Build a Team

As your property management company grows in Arizona, you may need additional staff to help manage your workload. Consider hiring property managers, administrative assistants, maintenance technicians, and marketing professionals. Ensure your team is knowledgeable, professional, and committed to providing excellent customer service. However, before hiring an employee for your Arizona property management company, you should obtain an EIN and open a bank account.

Benefits of Starting a Property Management Company

There are several benefits of starting a property management company in Arizona:

  • Steady Income: Property management is a growing industry in Arizona, and there is always a demand for qualified professionals to manage properties. This means starting an LLC property management company can provide a steady income stream.
  • Low Startup Costs: Starting a property management company requires minimal investment, as you do not need to purchase any property. You can start with just a few clients and gradually increase your portfolio.
  • Flexible Work Schedule: Property management companies offer flexible work schedules, allowing you to work around other commitments such as family and other business ventures.
  • Growth Opportunities: With the right marketing strategies, you can rapidly grow your property management company and increase your client base.
  • Diverse Client Base: Property management companies cater to a diverse range of clients, including landlords, tenants, and property owners. This means that there is always a demand for your services.

FAQs

Is it necessary to obtain a license to start a property management company in Arizona?
Yes, it is required to obtain a license through the Arizona Department of Real Estate to operate as a property manager in Arizona.
Can I manage my own properties without a license in Arizona?
Yes, you can manage your own properties without a license in Arizona, but you cannot manage other people’s properties without a license.
What are the requirements for obtaining a property management license in Arizona?
The requirements include completing pre-licensing education requirements, passing the state exam, and fulfilling any additional requirements for experience, background checks, and continuing education.
Are property management firms required to maintain separate accounts for each property they manage in Arizona?
Yes, in Arizona, a licensed property management company must maintain a separate trust account for each property it manages.
Are there any specific insurance requirements for Arizona property management companies?
Yes, Arizona property management companies are required to maintain liability insurance, including errors and omissions coverage.
What are the fees associated with obtaining a property management license in Arizona?
The fees for obtaining a property management license in Arizona include application fees, education course fees, and exam fees.
Is it necessary to have a physical office to start a property management company in Arizona?
No, there is no requirement for property management firms to maintain a physical office in the state of Arizona.
Do I need to complete any continuing education requirements after obtaining a property management license in Arizona?
Yes, Arizona has continuing education requirements for real estate licensees, including those who operate as property managers.
What is the maximum fee that can be charged for late fees on rental payments in Arizona?
In Arizona, late fees for rental payments cannot exceed 10% of the rent.
Can a maintenance supervisor be classified as an independent contractor in Arizona?
Typically, no. Arizona law assumes that maintenance personnel will be classified as employees rather than independent contractors.
Are property management companies allowed to keep pet deposits in Arizona?
Pet deposits in Arizona must be refundable, and the landlord is required to return the deposit less any deductions necessary for cleaning or repairs after move-out.
How often are property management licenses renewed in Arizona?
Arizona property management licenses are renewed every two years.
How many hours of pre-licensing education are required to obtain a property management license in Arizona?
Arizona requires 90 hours of pre-licensing education for property management licensure.
Is it necessary to have a property management professional on staff at all times in Arizona?
While some states require that a licensed professional be designated as the primary property manager, Arizona does not have this requirement.
What is the maximum security deposit that can be requested in Arizona?
The maximum security deposit in Arizona is one and a half times the monthly rent.
Are property management employment agreements enforceable in Arizona?
Yes, property management employment agreements are enforceable in Arizona as long as they conform to Arizona state employment laws.
Can I operate a property management company in Arizona with an out-of-state license?
No, property management companies must obtain a license within the state in which they operate.
How soon after obtaining a property management license in Arizona can I begin practicing?
Once the licensing exam is passed, applications are approved within 30 to 45 days, depending upon the processing of background checks.
Can I accept cash payments for rent in Arizona?
Yes, landlords and property managers can accept cash payments in Arizona as long as they provide a receipt to tenants.
What is the maximum length of a notice to vacate that can be given to a tenant in Arizona?
In general, landlords must give 30 days’ notice to non-compliant or non-paying tenants, but some circumstances may allow shorter notice requirement.
Is a property management company required to be locally based in Arizona?
No, property management companies are not required to be locally based in Arizona.
What is considered a reasonable repair time in Arizona?
In general, landlords are allotted ten business days to make repairs in Arizona.
What is a fiduciary duty of care, and how does it apply to property managers in Arizona?
A fiduciary duty of care obliges property management professionals to act prudently in managing and preserving their clients’ assets while providing skilled advice.
How much notice must be given before entry for non-emergency repairs in Arizona?
Property managers or their authorized representatives are generally allowed entry immediately for emergencies, while for normal maintenance and scheduled appointments, they need to give at least 48 hours’ notice to tenants.
When is a written rental agreement required in Arizona?
There is no requirement to have a written agreement to have a legal rental agreement; however, it is highly recommended so that all parties are held accountable in the end.
Can a property management company charge a renewal fee in Arizona?
There is no specific prohibition against charging a renewal fee in Arizona. However, upfront agreements about such fees are required and are usually paid by the tenants.
Can rent be increased without the tenant’s consent in Arizona?
Generally, these kinds of matters are subject to particular conditions under which termination or extent is possible, depending on the area and lease type. The lease could contain a provision that restricts rent increases.
What is the maximum fee that can be charged for a background check in Arizona?
Arizona does not have a specific limit for fees charged for conducting a background check but fees must remain reasonable. If companies charge beyond market, they put themselves at the risk of being scrutinized by the investigators.
What are the requirements for starting a property management company in Arizona?
You need to be at least 18 years of age, have a business license, and comply with state laws and regulations regarding property management.
Do I need to have real estate experience to start a property management company in Arizona?
No, but it may be helpful to have some knowledge of real estate laws and transactions.
What are the advantages of owning a property management company in Arizona?
Arizona is known for its booming real estate market and a high demand for rental properties. Additionally, the low cost of living and the strategic location of Arizona make it an ideal state for property management.
What kind of properties can I manage in Arizona?
You can manage all types of properties in Arizona, including single-family homes, condos, apartments, commercial properties, and vacation rentals.
How much do property managers typically make in Arizona?
The average salary for a property manager in Arizona is around $51,000 per year.
Can I manage rental properties while living in another state?
Yes, but you need to have someone on the ground who can help you manage the day-to-day operations of your property management business.
What kind of insurance do property managers need in Arizona?
Property managers in Arizona are required to have general liability insurance to protect themselves from potential lawsuits.
How do I find clients for my property management company in Arizona?
You can find clients through word-of-mouth referrals, online advertising, networking events, and social media marketing.
How do I decide on a pricing strategy for my property management services in Arizona?
Do some research on the current market rates and compare your services to those of your competitors to determine a fair price.
Do I need a written agreement with my clients in Arizona?
Yes, it is essential to have a written agreement that outlines your services, fees, and responsibilities as a property manager.
Is it important to establish a marketing plan for my property management company in Arizona?
Yes, a marketing plan can help you attract new clients, build your brand awareness, and establish yourself as a reputable property management company in Arizona.
Which Arizona real estate laws and regulations do I need to be aware of as a property manager?
You need to be well-versed in landlord-tenant laws, fair housing laws, eviction procedures, and lease agreement regulations in Arizona.
Is it better to specialize in managing certain types of properties in Arizona?
It can be beneficial to specialize in certain types of properties to stand out in a crowded market. However, it may also limit your potential client base.
Do I need to take a course or class to become a property manager in Arizona?
No formal education is required to become a property manager in Arizona, but taking an accredited property management course may be beneficial.
How should I handle ethical dilemmas in my property management business in Arizona?
Always abide by the code of ethics for property managers in Arizona and consult a professional organization, such as the National Association of Residential Property Managers (NARPM), for guidance.
What should I include in my property management contract in Arizona?
Be sure to include the scope of your services, your fees, your responsibilities as a property manager, and a termination clause in your contract.
Can I manage properties as a sole proprietorship in Arizona?
Yes, but it is recommended to form a limited liability company (LLC) to protect your personal assets.
Do I need a real estate license to be a property manager in Arizona?
No, but property managers who are also involved in real estate transactions may need a real estate license in Arizona.
Can I manage properties for out-of-state landlords in Arizona?
Yes, but you need to comply with Arizona laws and regulations and have someone on the ground who can help you manage the properties.
Should I hire employees for my property management business in Arizona?
It depends on how large your client base is and how much workload you can handle on your own. If you need help, hire experienced and reliable employees.
What are my liabilities as a property manager in Arizona?
You can be held liable for any accidents or problems that occur on the properties you manage, as well as any financial losses incurred by your clients.
Can I charge late fees to tenants in Arizona?
Yes, but the late fees should be reasonable and outlined in the lease agreement.
What should I do if a tenant refuses to pay rent in Arizona?
Follow the legal eviction procedures outlined by the Arizona Residential Landlord and Tenant Act.
Is it necessary to set up an office for my property management business in Arizona?
No, but having an office can provide a more professional image and help you better manage your business operations.
How often should I inspect the properties I manage in Arizona?
The frequency of property inspections depends on the type of property and the tenancy length. However, it is recommended to carry out inspections at least every six months.
Can I use a property management software for my business in Arizona?
Yes, using a property management software can help streamline your business operations and improve your efficiency as a property manager.
What kind of maintenance and repairs am I responsible for as a property manager in Arizona?
You are responsible for routine maintenance and repairs, while major repairs that cost over $300 may need the approval of the landlord first.
How do I handle tenant complaints in Arizona?
Address the complaints in a timely and professional manner and try to reach a resolution that satisfies both parties.
Is it necessary to have emergency contacts for tenants in Arizona?
Yes, it is important to provide tenants with emergency contact information in case of an accident or emergency situation.

Also Read

Conclusion

Starting a property management company in Arizona can be rewarding and profitable. By following the steps outlined in this guide, you can launch a successful property management business that meets the needs of property owners and investors in your area. Remember to stay up-to-date on industry trends and continually refine your services, marketing strategies, and customer service to ensure the long-term success of your property management company.

Leave a Comment