How to Set Up a Property Management Company in Virginia
Anyone wishing to engage in property management in Virginia must conform to all of the regulations governing standard business operations and real estate transactions, including possession of a real estate broker's license. You must meet several requirements to obtain this license and open your business, which may take some time and start-up capital to complete so it is best to begin the process as soon as possible.
Develop a solid business plan that addresses the structure of your business, what types of clients you wish to serve (such as individual homeowners, apartment complex owners and/or real estate investment owners), your accounting system and advertising methods. In addition, carefully consider the exact property management services you will offer. For instance, you may wish to provide full-service property management that includes collecting rent, managing lease agreements, and handling trash, water/sewage, landscaping and other maintenance issues; or limit your services to things such as finding and screening tenants, and drawing up leases.
Prepare to become licensed as a real estate broker through the Virginia Real Estate Board if you are not already. Real estate brokers are required to complete 180 course hours of board- approved education (at least one of your elective courses should be specifically related to property management) and pass an examination by the state in order to apply for a license. The board website maintains a list of approved courses and examination sites to assist you in choosing a school and/or test near you.
Alternatively, you may hire an already licensed broker to oversee your firm, but only the licensed broker or licensed real estate salespersons working under the supervision of the broker can perform real estate transactions. Unlicensed staff members may only assist with basic administrative tasks or coordinating trash pickup and maintenance schedules.
Locate a suitable office to run your property management business from and prepare for opening by obtaining the appropriate office equipment such as computers, printers and copiers, and ensuring you have working phone lines installed. While a home office may help you to cut costs, keep in mind that you want a professional atmosphere in which to welcome clients and meet with potential tenants. It can lower client confidence in you if your office is subject to frequent interruptions, noise and messes caused by children or pets.
File a trade name with the Clerk of the Court in the county where your property management business will operate. Additionally, you may need a general business license according to county or city laws. Ask the Clerk of the Court about any licenses/permits you may need when filing your trade name.
Obtain a Federal Employer Identification Number from the IRS and use this number to register your business with the Virginia Department of Taxation. You can register your business online or submit Form R-1 (Combined Registration Form). Either method will allow you to register for business income taxes, employer withholding or any other taxes your property management company may be subject to all at the same time. Note that real estate tax law can often be complex, so it may be beneficial to consult a licensed accountant during this process or when filing returns to ensure you are in compliance.
Apply for a "Principal Broker and Sole Proprietor" license from the Virginia Real Estate Board, or a "Firm" license if you have chosen to hire an already licensed broker to oversee your property management company. In either case, you must submit the appropriate licensing fees, copies of your trade name registration and local business licenses, tax information, and criminal background information about the principal broker along with your application. If you are applying as the principal broker, you will also be required to submit transcripts and test scores to verify your real estate education. Usually within four to six weeks, you will receive notification of whether your application has been approved and you will be issued a license. If your application is denied, you will be notified of the reasons why and given information about re-applying or filing an appeal.