Start a Property Management Company in Minnesota | 2023 Guide

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Minnesota Property Management Company

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

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

How to Start a Property Management Company in Minnesota

What is a Property Management Company?

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

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How to Start a Property Management Company in Minnesota

Starting a property management company in Minnesota can be a lucrative and rewarding business venture especially if you are in Saint Paul. 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 Minnesota.

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

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

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

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

However, before filing a DBA, you should know that you need to renew your DBA every one year, which costs $50 for online filing and $30 for offline filing.

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

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Hire a Registered Agent

A Registered Agent is a person or entity designated to receive important legal documents and correspondence for your business. In Minnesota, every business entity, such as an LLC or a corporation, must have a Registered Agent with a physical address within Minnesota. The Registered 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 Minnesota, the cost of having a Registered Agent ranges from $50 – $150. However, suppose you are still wondering how to hire a Registered Agent. In that case, you can also serve as your Registered Agent, appoint a friend or family member, or hire the Best Minnesota Registered Agent Services.

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File For Articles of Organization or Articles of Incorporation

If you form an LLC for your Minnesota property management company, you must file the Minnesota Articles of Organization, which costs $135. However, you must file the Articles of Incorporation if you form a Corporation for your Minnesota property management company. The Articles of Incorporation filing fee costs $155 for filing online and in-person, and $135 for filing 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 Minnesota from the IRS if you will open a bank account or hire an employee for your Minnesota property management company. 

The application of an EIN in Minnesota 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 Minnesota, you must obtain legal licenses and permits. Here are some common licenses and permits you may need:

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

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

What are the requirements for starting a property management company in Minnesota?
To start a property management company in Minnesota, you need a Minnesota real estate broker’s license.
Do I need to have prior property management experience to start a company in Minnesota?
Having property management experience is not mandatory but a plus.
What is the procedure for obtaining a Minnesota real estate broker’s license?
To obtain a Minnesota real estate broker’s license, you need to complete 180 classroom hours of approved pre-license education and pass the Minnesota Salesperson/Broker exam.
Can I start a property management company as a corporation in Minnesota?
Yes, you can form a corporation in Minnesota to start a property management company.
How long will it take to set up a property management company in Minnesota?
The duration of the set-up depends on how quickly you can complete the pre-license education, pass the exam and form a corporation
Is it possible to start a property management company in Minnesota with a partner?
Yes, you can start a property management company in Minnesota with a business partner.
What are the costs associated with starting a property management company in Minnesota?
The costs associated with starting a property management company in Minnesota vary, depending on your business plan, licensing fees, office rent, and software cost.
Do property management companies need to be licensed in Minnesota?
Yes, property management companies have to hold a broker license similar to real estate brokerages in Minnesota.
Does Minnesota have any specific property management laws that companies must follow?
Yes, Minnesota has property management laws that companies must follow.
What accounting systems should property management companies use in Minnesota?
Most property management companies in Minnesota use cloud-based accounting systems, which offer more flexible, easy-to-access records.
Are there maintenance regulations surrounding Minnesota rental property management?
Yes, property management companies in Minnesota are responsible for providing repair and maintenance on Minnesota rentals.
Are property management companies in Minnesota required to carry insurance?
It’s always a good idea to carry liability insurance and property loss insurance to protect your Minnesota rental properties, tenants, investors, and employees.
Can property management companies in Minnesota collect security deposits?
Yes, property management companies in Minnesota can collect a security deposit from tenants.
Can a property management company evict a tenant in Minnesota?
Yes, when the property managers are authorized, Minnesota property management companies can evict tenants.
Are there rent control laws in Minnesota for property management companies to follow?
The main issue for property management companies in Minnesota is Minnesota Good Cause Eviction Act, which is underway after being passed recently.
What is Minnesota Good Cause Eviction Act?
Minnesota passed a Good Cause eviction measure as part of its COVID-19 relief package, establishing eviction requirements for over five unprotected resolutions.
Are there any specific requirements for obtaining a business license to start a property management company in Minnesota?
To operate a property management business in Minnesota, you’ll want to fulfil state-specific requirements and get a certified Property Manager in Minnesota license.
Can out-of-country investors start property manager company in Minnesota?
Yes, anyone can logistically start owning and operating business from afar entering with the legislative framework.
Does a Multilingual service boost the property manager company business in Minnesota?
Yes, from convenience to strict language preferences, conversations between an expat landlord and their tenant regarding repairs or services contribute to the betterment and expedite resolution of outstanding issues or misunderstandings.
Should property management companies seek legal help in Minnesota?
Yeah, Minnesota property management companies may require Litigation lawyers regarding specific procedures and understating legal bindings of the deal.
Can property management company provide COVID concomitant hot-desking service under Minnesota?
Yes, after the required analysis and clearing process under Executive Order 21-25 (02/08/2021)
What should be included in Minnesota lease/rental agreements offered by property management companies?
Minnesota lease/rental agreement forms should include lease terms, rent amount, and time-frames.
What are the top profitable areas to purchase property/property management in Minnesota?
Duluth, St. Louis Park, Elk River, Osseo, Plymouth, Austin, Forest Lake, Plymouth are areas holding good development potential.
Do Minnesota property management company tenants face credit card fees?
Some regions in Minnesota allow property management companies to pass the fee onto tenants, while several parts do not.
What was the Minnesota Renter Bill Of Rights in 2019?
The government mulled over having conformity to a Minnesota renters’ bill of rights, which will bring in various protections to renting tenants such as withholding bonuses within a stipulated timeline.
Can property management companies in Minnesota put renters on collection agencies without prior notice?
Legal proceedings under the Minnesota statute suggest giving notice of references, under payments and who can be counted for them first to the tenant and failing this yielding caution/penalty actions.
Can injured tenants of a Minnesota property bring forward personal injury entitle lease termination from property management company officials?
If the lease agreement comprises sufficient enforceable provisions (like a mandatory term to eradicate handicap risks) dwelling management companies can then plead risk offsets in attempting termination under irregular decision consequences.
How to handle tenant complaints about habitability issues in Minnesota property management?
Tenant complaints about habitability issues will need attention by Minnesota property management agents. However, property managers aren’t always 100 % accountable. They should undertake identifying the cause origin and consequences, finding a logical response then consulting with the landlords before resolving to habitability options
Can Ruko (right to use) commercial programs assist in boosting the sales of small real estate management schemes in Minnesota?
Yes, as traditional commercial renting often comprises complexities dominated devoid of government protection tenants look for hassle-free condition-based Leasing rather than traditional offers have discernibly elevated returns and agility, especially the Right-to-use leasing in Minnesota.
Can a non-resident from ‘No Reciprocal State’ in Minnesota get a broker license?
Exam applications from license-test exempt states do not require background checks by the Department of Commerce and are predetermined on a case-by-case basis being distributed only to states whose sure licensing variety policies confers merit on a portion or grand recompense to this present exemption lease law.

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Conclusion

Starting a property management company in Minnesota 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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