Start a Property Management Company in Pennsylvania | 2023 Guide

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Pennsylvania Property Management Company

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

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

How to Start a Property Management Company in Pennsylvania

What is a Property Management Company?

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

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How to Start a Property Management Company in Pennsylvania

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

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

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

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

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

However, before filing a DBA, you should know that you need to renew your DBA every Indefinite, which costs $70.

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 Pennsylvania, every business entity, such as an LLC or a corporation, must have a Registered Agent with a physical address within Pennsylvania. 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 Pennsylvania, the cost of having a Registered Agent ranges from $50 – $200. 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 Pennsylvania Registered Agent Services.

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File For Certificate of Organization or Articles of Incorporation

If you form an LLC for your Pennsylvania property management company, you must file the Pennsylvania Certificate of Organization, which costs $125. However, you must file the Articles of Incorporation if you form a Corporation for your Pennsylvania property management company. The Articles of Incorporation filing fee costs $125 for online and by mail filing. 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 Pennsylvania from the IRS if you will open a bank account or hire an employee for your Pennsylvania property management company. 

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

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

  • Steady Income: Property management is a growing industry in Pennsylvania, 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 licenses do I need to start a property management company in Pennsylvania?
You will need a broker’s license issued by the Pennsylvania Real Estate Commission.
Can I operate a property management company from my home in Pennsylvania?
Yes, you can operate a property management company from your home in Pennsylvania.
What are the minimum insurance requirements for a property management company in Pennsylvania?
Property management companies in Pennsylvania are required to carry a minimum of $1 million in general and professional liability coverage and a fidelity bond for an amount at least equal to the average amount of all their trust accounts.
Does Pennsylvania require property management companies to hold tenants’ security deposits in escrow accounts?
Yes, Pennsylvania law requires that security deposits be kept in a separate escrow account.
Can property management companies in Pennsylvania evict tenants themselves?
No, property management companies in Pennsylvania must use a licensed attorney or paralegal for tenant evictions.
How long does it take to obtain a real estate broker’s license in Pennsylvania?
The time it takes varies but typically takes around 4-6 months to obtain a real estate broker’s license in Pennsylvania.
Is a property management company required to have an office in Pennsylvania?
No, a property management company in Pennsylvania is not required to have a physical office.
What is the maximum amount of late fees a property management company can charge in Pennsylvania?
In Pennsylvania, a landlord can charge up to 5% of the rent or $50, whichever is greater, for late fees.
How can I find the right property management software for my company in Pennsylvania?
You can find various property management software by searching online, including software designed specifically for Pennsylvania.
Does Pennsylvania specify a maximum number of properties that a property management company can manage?
No, Pennsylvania does not limit the number of properties a property management company can manage.
Must a property management company in Pennsylvania provide tenants with at least 24-hour notice before showing a property?
Yes, Pennsylvania requires that tenants receive at least 24 hours’ notice before a landlord model, exames, or allow a committee member to enter the unit.
Can a landlord or property management company refuse to rent to someone with a criminal history in Pennsylvania?
There are some discriminations prohibited by FHA policies with stated criteria. Above of all, the overall policy must be to rehabilitate rather than penalize.
Is a property management company in Pennsylvania required to be registered with the state?
No, property management companies do not need to register with the state of Pennsylvania.
Can a tenant break their lease in Pennsylvania because of repairs that need to be made?
If a landlord doesn’t fix an issue within a reasonable amount of time, a tenant could breach the lease agreement and break the lease.
How can I find out if a property management company is licensed in Pennsylvania?
You can search for a license on the Pennsylvania Real Estate Commission’s website.
Can a landlord in Pennsylvania require tenants to carry renters’ insurance?
Yes, landlords in Pennsylvania can choose to require renters’ insurance, provided that you set regulations within offical regulations.
Must a landlord provide a move-in inspection checklist in Pennsylvania?
Yes. Pennsylvania requires that the move-in and move-out of the tenant includes a tranfer inspection checklist.
Are there any restrictions on renting to college students in Pennsylvania?
No specific restrictions are imposed in case of renting an apartment to a student in Pennsylvania.
Can a landlord change the locks of a rental property in Pennsylvania if rent is not paid?
landlords cannot change their tenants’ locks because locking a tenant out of their apartment a theory terminates a tenant’s lawful right to privacy.
Can a landlord require renter’s insurance in Pennsylvania?
Yes. Landlords can choose to establish specific insurance provisions.
Does Pennsylvania allow a landlord to sell their property while tenants occupy it?
Yes!
Can a landlord refuse to rent to smokers in Pennsylvania?
Yes, But fixing non-hybrid cars insurance providers with smoking will rob you.
How much notice does a landlord have to give a tenant to terminate their lease in Pennsylvania?
It depends on the reason for ending the agreement, but If no reason is listed, then the landlord must face other charges.
Can a landlord withhold the last month’s rent in Pennsylvania?
No. Landlords may not inherit the right to withhold the last month’s rent, claiming that the money was necessary to cover repairs that could return the property to its unique leased condition.
Are there any restrictions on increasing the rent for rental properties in Pennsylvania?
Pennsylvania’s law allows landlords to increase rent independently, provided that landlords give 15 days tenant permission.
Can a tenant be evicted for using medical marijuana in Pennsylvania?
There is ambiguity in Pennsylvania on the issue of medical marijuana use by tenants, and whether such use would constitute a violation of zero-tolerance Klint Standard.
Are tenant background checks mandatory for every tenant in Pennsylvania?
No, but background checks can help identify that tenant does not cause adverse effects on the landlord.
How will a change in ownership of a rental property be handled for security deposit purposes?
Pennsylvania law requires that the seller of the property must turn over all tenant security deposits and records to the new owner within 30 days of an ownership transfer.
Are property management fees regulated in Pennsylvania?
There are no laws or regulations related to fees charged for property management services in Pennsylvania.
Can a landlord in Pennsylvania enter a rental without tenant permission?
No, a landlord cannot enter a unit built without tenant permission. Landlords and tenants can enter each other´s apartments after permission authorizes occupants to acquire offical application and transferred into residents´ principles.

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Conclusion

Starting a property management company in Pennsylvania 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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