Start a Property Management Company in Massachusetts | 2024 Guide

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Massachusetts Property Management Company

Are you considering starting a property management company in Massachusetts? 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 Massachusetts.

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

How to Start a Property Management Company in Massachusetts

What is a Property Management Company?

A property management company in Massachusetts 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 Massachusetts. 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 Massachusetts Secretary of State and paying an initial filing fee.

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How to Start a Property Management Company in Massachusetts

Starting a property management company in Massachusetts can be a lucrative and rewarding business venture especially if you are in Boston. 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 Massachusetts.

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 Massachusetts, 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 Massachusetts, 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 Massachusetts 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 Massachusetts, 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 Massachusetts. 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 Massachusetts Limited Liability Partnerships (LLP). Each partner contributes to the business and shares in profits and losses. Partnerships must file a partnership agreement with the Massachusetts 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 Massachusetts, you must file the Certificate of Organization with the Massachusetts 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 Massachusetts requires filing the Articles of Incorporation with the Massachusetts 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 Massachusetts, you must file the Articles of Incorporation with the Massachusetts Secretary of State and adhere to any licensing and permitting requirements.

Before choosing a business structure for your property management company in Massachusetts, consult with a Business Attorney in Massachusetts 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 Massachusetts property management company is important to establish your brand identity and attract potential clients. Here are a few suggestions to consider:

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

Remember to check the availability of your chosen business name with the Massachusetts Secretary of the Commonwealth Corporations Division and ensure it’s not already in use by another company. There is a complete guide on Massachusetts 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 Massachusetts DBA (doing business as). 

However, before filing a DBA, you should know that you need to renew your DBA every four years, which costs $65 Filing fee and $35 Additional fee if a non-Massachusetts resident.

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

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Hire a Resident Agent

A Resident Agent is a person or entity designated to receive important legal documents and correspondence for your business. In Massachusetts, every business entity, such as an LLC or a corporation, must have a Resident Agent with a physical address within Massachusetts. The Resident 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 Massachusetts, the cost of having a Resident Agent ranges from $50 – $200. However, suppose you are still wondering how to hire a Resident Agent. In that case, you can also serve as your Resident Agent, appoint a friend or family member, or hire the Best Massachusetts Resident Agent Services.

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File For Certificate of Organization or Articles of Incorporation

If you form an LLC for your Massachusetts property management company, you must file the Massachusetts Certificate of Organization, which costs $500. However, you must file the Articles of Incorporation if you form a Corporation for your Massachusetts property management company. The Articles of Incorporation filing fee costs $275 for filing online, in-person, or 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.

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Obtain an Employer Identification Number

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

The application of an EIN in Massachusetts 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.

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Get the Necessary License and Permits

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

  • Business License: Massachusetts requires businesses to obtain a Business License to operate legally. The business license fee in Massachusetts 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 Massachusetts Real Estate Commission or similar governing body for the requirements and application process.
  • Salesperson License (if applicable): If your Massachusetts 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 Massachusetts 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 Massachusetts 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 Massachusetts’s laws.
  • Professional Liability Insurance: Massachusetts 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 Massachusetts 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 Massachusetts 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 Massachusetts 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 Massachusetts, 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 Massachusetts 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 Massachusetts:

  • Steady Income: Property management is a growing industry in Massachusetts, 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

Do I need a license to start a property management company in Massachusetts?
Yes, you need a real estate broker or salesperson license to start a property management company in Massachusetts.
How do I obtain a real estate broker or salesperson license in Massachusetts?
To obtain a real estate broker or salesperson license in Massachusetts, you need to take the necessary courses and pass the state licensure exam.
What are the requirements to take the real estate broker or salesperson license exam in Massachusetts?
The requirements to take the real estate broker or salesperson license exam in Massachusetts include completing the necessary coursework and submitting an application with the Board of Registration of Real Estate Brokers and Salespersons.
What are the responsibilities of a property management company in Massachusetts?
The responsibilities of a property management company in Massachusetts include marketing and advertising properties, screening and selecting tenants, collecting rent and security deposits, providing maintenance and repair services, managing tenant relations, and ensuring compliance with state laws and regulations.
How much does it cost to start a property management company in Massachusetts?
The cost of starting a property management company in Massachusetts varies greatly, depending on factors such as your business model, location, marketing expenses, and hiring costs.
Can I manage properties from out of state in Massachusetts?
Yes, you can manage properties from out of state in Massachusetts, but you may need to meet with clients and tenants in person if required by law.
Are there any legal considerations for starting a property management company in Massachusetts?
Yes, there are various legal considerations for starting a property management company in Massachusetts, such as complying with state laws and regulations, obtaining proper insurance coverage, and maintaining accurate accounting and financial records.
Do I need a dedicated office space to start a property management company in Massachusetts?
No, you do not necessarily need a dedicated office space to start a property management company in Massachusetts, but it can be helpful for meeting with clients and conducting business operations.
How do I attract clients to my property management company in Massachusetts?
You can attract clients to your property management company in Massachusetts through various marketing and advertising channels, such as social media, email marketing, direct mail, networking, and online directories.
Can I manage commercial properties in Massachusetts as well as residential properties?
Yes, you can manage commercial properties in Massachusetts as well as residential properties, but you may need a separate license or registration depending on your business model and the type of properties you manage.
What are some common challenges of starting a property management company in Massachusetts?
Common challenges of starting a property management company in Massachusetts may include competing with established firms, managing tenant relations, obtaining proper insurance coverage, and dealing with changing market conditions and regulations.
What kind of education or experience do I need to start a property management company in Massachusetts?
While there are no specific education or experience requirements for starting a property management company in Massachusetts, having experience in a related field such as real estate, business management, or construction can be helpful.
Can a property management company in Massachusetts advertise their services online?
Yes, a property management company in Massachusetts can advertise their services online, as long as they comply with state regulations regarding advertising and promotions.
Are there any special regulations for managing affordable housing properties in Massachusetts?
Yes, there are special regulations for managing affordable housing properties in Massachusetts, such as complying with income eligibility requirements and providing certain tenant services and amenities.
Can a property management company in Massachusetts help with property renovations and improvements?
Yes, a property management company in Massachusetts can help with property renovations and improvements, but they may need to have appropriate licenses and permits for certain activities.
How do I set rental prices for properties managed by my company in Massachusetts?
You can set rental prices for properties managed by your company in Massachusetts based on factors such as prevailing market conditions, property location and amenities, and tenant demand.
Can a property management company in Massachusetts perform background checks on tenants?
Yes, a property management company in Massachusetts can perform background checks on tenants, as long as they comply with state and federal laws regarding screening and selection.
What insurance coverage do I need to start a property management company in Massachusetts?
You will need various insurance coverage to start a property management company in Massachusetts, such as general liability, property, and professional liability insurance.
Can a property management company evict a tenant in Massachusetts?
Yes, a property management company in Massachusetts can evict a tenant, but they must follow strict legal procedures and obtain a court order.
Can a property management company in Massachusetts hold security deposits?
Yes, a property management company in Massachusetts can hold security deposits, but they must comply with state laws regarding security deposits and provide proper accounting and reporting.
How do I terminate a property management contract in Massachusetts?
You can terminate a property management contract in Massachusetts by following the terms of the agreement or by providing written notice according to state laws and regulations.
Can a property management company in Massachusetts manage vacation rental properties?
Yes, a property management company in Massachusetts can manage vacation rental properties, as long as they comply with state laws regarding short-term rentals and proper licensing and registration.
Do property management companies in Massachusetts need to be licensed as real estate brokers or salespersons?
Yes, property management companies in Massachusetts need to be licensed as real estate brokers or salespersons, or have a designated broker of record who holds a license.
Can a property management company in Massachusetts assist with buying or selling properties?
Yes, a property management company in Massachusetts can assist with buying or selling properties, but they must hold the necessary licenses and comply with state laws regarding real estate transactions.
What are some important factors to consider when hiring employees for a property management company in Massachusetts?
Some important factors to consider when hiring employees for a property management company in Massachusetts include their qualifications, experience, work history, and background checks.
Can a property management company in Massachusetts help with property tax assessments and appeals?
Yes, a property management company in Massachusetts can help with property tax assessments and appeals, as long as they hold the necessary licenses and comply with state laws and regulations.
How do I set up a payment processing system for my property management company in Massachusetts?
You can set up a payment processing system for your property management company in Massachusetts through various providers, such as Stripe, PayPal, or Square.
Can a property management company in Massachusetts participate in affordable housing lottery programs?
Yes, a property management company in Massachusetts can participate in affordable housing lottery programs, as long as they comply with state requirements and regulations.
What kind of license do I need to start a property management company in Massachusetts?
You need to obtain a real estate broker’s license.
Can a property manager in Massachusetts hold tenant security deposits without any bond?
No, they need to hold the deposit in the Massachusetts banking system or a bond must be procured.
How much does it cost to obtain a real estate broker’s license in Massachusetts?
The fees vary depending on the type of license and the number of years it’s valid for, but it typically ranges between $239 and $816.
Can a property management company also act as a real estate broker in Massachusetts?
Yes, property management companies are often affiliated with real estate brokerages.
How do I register my property management company in Massachusetts?
You can register your company with the Massachusetts Secretary of State.
What kind of insurance is required for a property management company in Massachusetts?
Liability insurance is required, as well as worker’s compensation insurance if you have employees.
Can a property management company charge a fee for finding a tenant in Massachusetts?
Yes, the company can charge a fee equivalent to one month’s rent for their services.
How do I set rental rates for my property management company in Massachusetts?
You can research the local rental market and factor in things like location, amenities, and other market trends.
Are there any laws protecting tenants’ rights in Massachusetts that property managers need to be aware of?
Yes, Massachusetts has very tenant-friendly laws such as strict eviction procedures.
Do I need to have experience in property management before starting a company in Massachusetts?
Although it’s not a requirement, it’s beneficial to have some experience in order to better understand the industry.
Can I start a property management company in Massachusetts without any employees?
Yes, it’s possible to run a one-person property management operation in Massachusetts.
How do I create a lease agreement for my property management company in Massachusetts?
You can purchase lease agreements specific to Massachusetts from legal vendors or create one through a licensed attorney.
What kind of taxes do I need to pay as a property management company in Massachusetts?
Depending on how your company is structured, you may be required to pay personal income or corporate taxes on your profits.
Can I manage rental properties in any city or town in Massachusetts with a real estate broker’s license?
Yes, a broker’s license is valid throughout the state of Massachusetts.
What are the steps to becoming a licensed real estate broker in Massachusetts?
The requirements include taking a pre-licensing course, passing an exam, and completing a set number of hours of experience.
Are there any restrictions on the amount of rent a property management company in Massachusetts can charge?
No, there are no specific rent control laws in Massachusetts.
How many rental units can a property management company oversee in Massachusetts?
There are no limits set by state law, though individual cities may have their own restrictions.
Is it better to work with furnished or unfurnished rental properties in Massachusetts?
This depends on the specific preferences of the company and the local rental housing market demand.
Can I offer different pricing plans to my clients in Massachusetts depending on the management level they want?
Yes, many property management companies in Massachusetts offer different pricing structures based on their clients’ needs.
Can I maintain properties remotely if I have online property management software in Massachusetts?
Yes, that’s one of the benefits of using modern technology and software.
Do I need a lawyer to help start a property management company in Massachusetts?
It’s not a requirement, but it can be helpful to consult with legal professionals at some point.
Can I maintain inspection records online for properties managed in Massachusetts?
Yes, many property management companies use online platforms for their maintenance and inspection records.
Can landlords manage their own properties without a real estate broker’s license in Massachusetts?
Yes, the state allows the owner to represent themselves.
How can I advertise my property management services in Massachusetts?
You can use online marketing, join local business groups or associations, and advertise in circulars or other printed media.
Can I manage several properties out of state with a Massachusetts real estate broker’s license?
No, you would need locator licensing in each state you manage rental property in.
Is it challenging to find good tenants in Massachusetts for my rental properties?
As with anywhere else, finding good tenants takes some time and effort, but rental markets in the state tend to move quickly.
What are some common mistakes owners make when managing properties in Massachusetts?
Some of the most common issues include not performing proper screening on tenants, getting too personally connected with tenants, and ignoring local laws.
How do eviction proceedings work in Massachusetts?
Massachusetts is known for a complex eviction procedure, so it’s recommended to consult with professional legal guidance.
Is it necessary to get property owners to sign a management agreement in Massachusetts?
A management agreement defines the responsibilities of both parties and serves as the business contract between owner and manager, clearly outlining fees and obligations. So, it’s smart to do.

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Conclusion

Starting a property management company in Massachusetts 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.

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