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How to start an apartment rental business on the cheap

Apartment rental businesses are very lucrative and are easy to start up.

You don't need a lot of money, or experience in property management or the real estate industry to make some serious cash in the rental property business. Rental properties are always in demand which is why this is a sustainable business. One of the best features of starting a rental property business is that your business will be cash flow positive very quickly; in some cases, as soon as your client signs the lease agreement for the apartment.

I have been involved with apartment rentals for over 15 years and can tell you from my own personal experience, I've never had a problem getting tenants. In the past few years alone, I have more than tripled my income from the demand for rental properties.

Very low start up costs

Starting a rental property business does not require much money because it does not require owning any rental properties, you are simply renting real estate rental property owned by others such as real estate investment companies, real estate investors, urban families, a rental property business owner or a real estate investment club.

Running successful rental businesses requires hustle so if you have the drive and the energy you will be successful. Initial investment is you!

Real Estate Licenses

If you already have an apartment leasing license or a real estate brokers license, you can start an apartment rental business within the brokerage firm that holds your license.

Getting an apartment rental license is just a matter of taking a course and passing an exam administered by the State where you will be renting apartments.

Licensed Business Partner Route

You don't necessarily have to be a licensed broker to get involved in apartment leasing. In fact, it is very easy these days to team up with other agents who are already established and work as a team for your mutual benefit. In Chicago for example, there are owners of apartment rental businesses who are not licensed Managing Brokers but their business partner is so their rental property business is legit.

Real Estate Teams

Or if you are already licensed as a broker or leasing agent but not as a Managing Broker, you could start an apartment rental business within the brokerage, it might make sense to team up with another agent who works for the same brokerage firm where you already have your license.

The other agent could bring along his or her own existing customer base and you would both share in the profits of the rental business and may also decide splitting some costs. You don't necessarily need to team up with a real estate broker but it might be nice if they work out of the same office and share the same available office space and time and other resources.

Agreements with large real estate management companies

The fastest way to start an apartment rental business is by teaming up with a large property management company that has thousands rental apartments all over the city.

The best features of a rental property business that works with larger real estate management companies are:

Their leasing office is on site at the property and the on site leasing agent will conduct the tour of the property, complete the rental agreement and other business paperwork related to the apartment rental. Your rental property business still gets the commission since commission is paid to the rental property business that procures the tenant!

Rental properties always come available within a large building.

You will gain valuable knowledge whilst touring multiple properties and by becoming expert on their one property or their many properties, you will be more adept at pitching the property to your target market

Access to multiple property listings

Successful apartment rental businesses will have access to many rental properties. By forming business relationships with large multi family (apartments) real estate developers (owners) and real estate property managers (also known as real estate operators) or rental investment property owners you will get access to property listings which include price and availability.

Typically, the real estate property manager will send weekly lists of apartments available at the property and the commissions offered.

Real Estate Rental Commissions

Big City

Just about every city such as Chicago, has large real estate owners and/or real estate operators that pay a broker or leasing agent the equivalent of one month's rental income on a 12 month lease. Just about every big city uses this formula and the property manager will be able to fill you in on their specific operations and commission agreements.

The average rental market for a one bedroom apartment is $1200. In some cities, such as Chicago it runs from $1800 and up.

In most cases, the owner/operator company will pay a commission equivalent to one month's rent of the first 12 months of a new tenants lease.

College Towns

College towns and small cities may be a little different since much of the real estate is owned by individual real estate investors and private investors who rent out the investment property themselves or have a real estate manager handle their rental property business.

In many cases, a Property Management Company will have both a resident manager and leasing agent on staff. In smaller cities or where there is not a lot of competition for tenants, a property management company may only have one leasing agent who doubles as a resident manager.

You can always offer to split the commission with them 50/50. The more listings you have the more prospective renters you will attract. Because real estate is a numbers game you need a continual flow of inventory and prospective renters.

Student Housing

Student Housing has become a very attractive real estate investment space for real estate investors looking for continual cash flow. A large real estate investor will usually build a new property or multiple new properties in college towns.