How to start a property management company in South Dakota

Disclaimer: This post is meant to give general information and does not constitute legal advice. Speak to a legal professional for specific details before making any decisions regarding legal compliance.

South Dakota’s rental market is growing, and property owners increasingly need professional help managing their investments. If you’re thinking about how to start a property management company in South Dakota, the process is more straightforward than you might expect.

This guide walks you through everything you need to launch and grow a property management business in South Dakota, from licensing to your first clients.

What we’ll cover:

• South Dakota’s property management licensing requirements and how to get licensed
• Setting up your business structure, insurance, and financial systems
• Marketing your company and landing your first clients
• Choosing software that helps you scale efficiently

South Dakota Property Management Licensing Requirements

South Dakota requires property managers to hold a specific license before they can manage properties for others. It’s called a “property manager” license, which is a restricted broker’s license issued under SDCL 36-21A. This is not a full real estate broker’s license. It’s a separate category designed specifically for property management.

The South Dakota Real Estate Commission oversees this license. To qualify, you need to be at least 18 years old, a U.S. citizen or legal resident, and of “reputable character,” as defined by the commission.

That last part sounds vague, but it typically means you’ll need a clean background and professional references.

Pre-Licensing Education Options

Before you can sit for the exam, you’ll need to complete a 40-hour pre-licensing course. The cost runs about $690, depending on the provider.

South Dakota has several approved education providers, including Black Hills School of Real Estate, Carol’s Classes, Pedigree Management, PRO-ED, and Cooke Real Estate School. Some offer online courses, while others are in-person. Pick whichever format fits your schedule.

If you’re already working full-time, an online option gives you the flexibility to study at your own pace. Just make sure whatever provider you choose is approved by the South Dakota Real Estate Commission.

Passing the South Dakota Real Estate Exam

Once you finish your coursework, you’ll take the South Dakota real estate exam. It’s 91 multiple-choice questions, and you need a score of 75% or higher to pass.

That means you can miss about 22 questions and still pass. But don’t let that make you complacent.

Here’s how to set yourself up for a strong result:

• Review your course materials thoroughly, especially the sections on South Dakota-specific laws and regulations.
• Take practice exams to get comfortable with the question format.
• Study in short, focused sessions rather than marathon cram sessions.
• Pay extra attention to trust account rules and fiduciary duties. These tend to show up frequently.

Continuing Education and License Renewal

Your property manager license renews every two years. During each renewal cycle, you’ll need to complete 24 hours of continuing education.

If you were licensed after January 1, 2019, there’s an additional requirement. New property managers must complete 30 postlicense hours in specific required subjects. These cover topics the state considers foundational for newer licensees.

Plan ahead for these hours. Spreading them out over the two-year cycle is far easier than scrambling at the last minute.

Writing a Property Management Business Plan

A business plan forces you to think through the details before you spend money. It doesn’t need to be a 50-page document. A clear, focused plan that covers your services, your market, and your numbers will do.

Defining Your Services and Target Market

Start by deciding what types of properties you want to manage. Residential rentals (single-family homes, apartments)? Commercial properties? HOA and community associations? Each comes with different responsibilities, client expectations, and revenue potential.

Your revenue model will likely center on management fees, which typically range from 8% to 12% of collected rent. You can also charge leasing fees for placing tenants and mark up maintenance work coordinated through your company.

Think about your local market. What types of properties are common in your area of South Dakota? Where is the demand? Matching your services to what property owners actually need gives you a real advantage when you start pitching your business.

Estimating Startup Costs

Here’s a rough breakdown of what you’ll spend to get started:

• LLC filing: $150 online or $165 by paper through the South Dakota Secretary of State
• Pre-licensing course: About $690
• Insurance: Varies, but expect a few hundred dollars per year for basic coverage (more on this below)
• Property management software: Do some up-front research as different platforms can vary in price depending on your portfolio size and feature needs. Many platforms offer free trials so you can test functionality before committing. Here’s a guide to help you get started
• Marketing and website: Budget for a basic professional website and initial marketing materials

All told, expect to invest roughly $2,000 to $5,000 to get your property management company off the ground. Your actual number will depend on how many of these costs you can keep lean early on.

It’s worth noting that 75% of property management companies plan to expand their portfolios, according to the 2026 Property Management Industry Report. That tells you there’s real momentum in this industry, and getting your foundation right now pays off later.

Choosing a Business Structure in South Dakota

Your business structure affects your taxes, your personal liability, and how your company operates day to day. Getting this right from the start saves you headaches down the road.

Registering Your LLC With the South Dakota Secretary of State

Many property management companies choose to form a limited liability company (LLC). An LLC separates your personal assets from your business liabilities, which matters when you’re managing other people’s property and money.

To form an LLC in South Dakota, you’ll file articles of organization with the Secretary of State here. The filing fee is $150 online or $165 if you submit a paper form. After that, you’ll owe a $50 annual report fee ($65 for paper filings) each year to keep your LLC in good standing.

Before you file, run a name availability search on the Secretary of State’s website. You want to make sure no other South Dakota business is already using the name you have in mind.

Getting an EIN and Opening a Business Bank Account

Once your LLC is registered, head to IRS.gov and apply for an Employer Identification Number (EIN). It’s free, and if you apply online, you’ll get it instantly. Think of it as a Social Security number for your business.

With your EIN in hand, open a dedicated business bank account. This is not optional if you want to run a professional operation. Separate accounts keep your personal and business finances clean, which becomes especially important when you’re handling trust accounts for security deposits and owner funds.

Insurance and Bonding Requirements

Insurance protects your business when things go wrong. And in property management, things will go wrong eventually. A slip-and-fall at a rental property, a missed lease clause, a vendor dispute. You need coverage before any of that happens.

Types of Insurance Property Managers Need

At minimum, you’ll want these policies:

• General liability insurance covers third-party claims for bodily injury or property damage. If a tenant’s guest trips on a walkway at a property you manage, this policy responds.
• Professional liability insurance (errors and omissions, or E&O) protects you against claims that you made a mistake in your professional duties. Maybe you missed a lease renewal deadline or gave incorrect advice to an owner.
• Workers’ compensation insurance is required if you hire employees. Even if it’s just one part-time admin, South Dakota law may require you to carry this coverage.

Talk to an insurance agent who understands property management. They’ll help you right-size your coverage for where your business is now, not where it might be in five years.

Surety Bond Requirements in South Dakota

South Dakota requires property managers to maintain a surety bond. This bond protects your clients if you fail to handle their funds properly. It’s a financial guarantee, not an insurance policy.

To obtain a surety bond, you’ll work with a surety company or insurance broker. The cost depends on the bond amount and your personal credit history, but it’s typically a small percentage of the total bond value. Your license application with the South Dakota Real Estate Commission will specify the bond amount required.

Setting Up Trust Accounts and Financial Systems

Handling other people’s money is one of the biggest responsibilities in property management. South Dakota has clear rules about how you do it, and following them is required by law.

South Dakota Trust Account Rules

You are required to maintain separate trust accounts for security deposits and rental proceeds. These accounts must be held at federally insured financial institutions, as outlined in South Dakota administrative rule 20:69:14.

The rules are straightforward but strict:

• Never mix (commingle) trust funds with your business operating funds.
• Deposit security deposits and rental income into the appropriate trust accounts promptly.
• Maintain detailed records of all deposits, withdrawals, and balances for each property and owner.
• Be prepared for audits. The South Dakota Real Estate Commission can review your trust account records.

Getting this wrong can cost you your license. Set up your accounts correctly from day one and keep meticulous records.

Choosing Accounting Software for Your Property Management Business

Managing trust accounts with spreadsheets gets messy fast, especially as your portfolio grows. That’s where purpose-built property management software comes in.

Half of all property management companies say adopting new tools is their top cost-cutting tactic, according to the 2026 Property Management Industry Report. And accounting is where the right software makes the biggest difference.

Buildium handles trust accounting, owner statements, and 1099 filing within the same platform you use for everything else. That means your financial records stay connected to your leases, maintenance work, and tenant communications.

Creating Property Management Agreements

A solid property management agreement protects you and your clients. It spells out exactly what you’ll do, what you’ll charge, and what happens if either party wants to walk away.

One thing to keep in mind: Business formation rules differ by state. We recommend consulting a local attorney for guidance on your specific situation.

Key Clauses in a Property Management Contract

Every property management contract should cover these areas:

• Scope of services: Spell out exactly what you will and won’t do. Rent collection, maintenance coordination, tenant screening, financial reporting. Be specific.
• Fee structure: Define your management fee (percentage or flat rate), leasing fees, maintenance coordination fees, and any other charges.
• Term and termination: How long does the agreement last? What notice is required to cancel? Are there early termination penalties?
• Liability limitations: Clarify what you’re responsible for and what falls on the property owner.
• Dispute resolution: Specify how disagreements will be handled. Mediation, arbitration, or litigation.

Have an attorney review your template before you start using it. A few hundred dollars in legal fees now can save you thousands later.

Lease Agreement Fundamentals for South Dakota

Your lease agreements must comply with South Dakota landlord-tenant law. This isn’t the place to copy a generic template from the internet and hope for the best.

Key provisions to include:

• Rent amount, due date, and accepted payment methods
• Security deposit terms, including the timeline for return after move-out
• Maintenance responsibilities for both the tenant and the owner/manager
• Rules about occupancy, pets, alterations, and common areas
• Notice requirements for entry, lease renewal, and termination

South Dakota law has specific requirements around security deposit handling and notice periods. Make sure your leases reflect those requirements. Again, a local attorney who understands South Dakota real estate law is a worthwhile investment.

Marketing Your Property Management Company

You’ve got your license, your LLC, and your systems in place. Now you need clients. Marketing a property management company is different from marketing a consumer product. You’re selling a service to property owners who care deeply about trust, reliability, and results.

Building a Local Online Presence

Start with the basics:

• A professional website that clearly explains your services, your service area, and how to contact you. Include testimonials as you get them.
• A Google Business Profile so you show up when property owners search for management companies in your area. Keep your hours, phone number, and address up to date.
• Local directory listings on sites where property owners search for managers.

For property management SEO (search engine optimization, or how well your website ranks on Google), focus on location-specific pages and content. “Property management in Sioux Falls” or “Rapid City rental management” are the types of searches your future clients are running. Create pages that speak directly to those searches.

Networking With Property Owners and Investors

Online marketing takes time to build momentum. In the meantime, get out and meet people.

The South Dakota Association of REALTORS connects you with real estate professionals in your state. Local real estate investor meetups put you in rooms with property owners who may need management help right now.

Build referral relationships with real estate agents. When an agent sells an investment property, the buyer often needs a property manager. Being the person that agent recommends is one of the fastest ways to grow your client base.

Here’s what matters to the people you’re trying to win over: 74% of rental property owners say customer service is their top concern when hiring a property manager. Lead with how you’ll take care of their property and their tenants, not with your fee schedule.

Choosing Property Management Software

The right software handles the repetitive work so you can focus on growing your business and serving your clients. The wrong software (or no software at all) turns every day into a scramble of spreadsheets, phone calls, and paper files.

Features That Matter Most for New Property Management Companies

When you’re evaluating property management software, focus on the features that will save you the most time right away:

• Accounting and financial management to track income, expenses, and trust accounts
• Online rent collection so tenants can pay electronically and you’re not chasing checks
• Maintenance request tracking to manage work orders from submission to completion
• Tenant screening to make informed leasing decisions quickly
• Owner portals so property owners can view statements and reports on their own

Buildium covers all of these areas. Online rent payments, maintenance tracking, and tenant screening are built into the platform. Buildium also includes workflow automations that handle repetitive tasks on autopilot, plus AI-backed tools to help you work faster without any extra confusion or complexity.

That last point about AI isn’t just a nice-to-have. 58% of property management companies now use AI in their operations, up from 20% just a few years ago. The industry is moving quickly, and the companies that adopt these tools early have a real edge.

How Property Management Software Helps You Scale

When you’re managing 10 or 20 properties, you can keep things running with manual effort. At 50 or 100, that stops working. Software that automates rent reminders, generates owner statements, and tracks maintenance requests lets you grow your portfolio without growing your workload at the same rate.

The right software handles operational work so you can focus on acquiring new clients and properties. Buildium is designed to support that kind of growth, with tools that automate routine tasks and keep your financial records, maintenance tracking, tenant communications, and more, all in one place.

Growing and Scaling Your Business

Starting a property management company is one thing. Growing it into a sustainable, profitable business is another. The good news: if you’ve followed the steps above, you already have a strong foundation.

Hiring Your First Team Members

At some point, you’ll hit a ceiling on what you can do alone. That’s the signal to hire.

Your first hire will likely be an administrative assistant or office coordinator who can handle tenant calls, schedule maintenance, and manage paperwork. A maintenance coordinator is often the second hire, especially if you’re managing older properties that need regular attention.

Consider virtual assistants for tasks that don’t require a physical presence. Bookkeeping, email management, and scheduling are all good candidates. Virtual assistants give you support without the overhead of a full-time employee.

Expanding Your Property Portfolio

Growth in property management comes from three main channels: networking, marketing, and referrals. The companies that grow the fastest usually invest in all three.

Keep building those relationships with real estate agents and investors. Stay active in local professional organizations. Keep your online presence strong with fresh content and updated listings.

And make sure your operational systems can handle growth before you need them to. Adding 20 new units to a business that’s already struggling to manage 30 is a recipe for bad service and unhappy clients.

Launch Your South Dakota Property Management Company With Confidence

Starting a property management company in South Dakota follows a clear path: get your license, set up your business, build your marketing, invest in the right software, and grow from there.

Here are a few key takeaways to keep in mind:

• You need a restricted broker’s license (not a full broker’s license) under SDCL 36-21A, which requires a 40-hour course and passing a 91-question exam.
• Budget $2,000 to $5,000 for startup costs, including licensing, LLC formation, insurance, and software.
• Set up trust accounts correctly from the start and never commingle funds.
• The right property management software handles the operational work so you can focus on growth and client service.

You’ve done the research. Now it’s time to take action. To get familiar with your options, you can start a 14-day free trial of Buildium to see how the right platform supports your new business, or schedule a demo to get a guided walkthrough.

Frequently Asked Questions

Do You Need a License to Be a Property Manager in South Dakota?

Yes. South Dakota requires a “property manager” license, which is a restricted broker’s license issued under SDCL 36-21A. You’ll need to complete a 40-hour pre-licensing course and pass a 91-question exam with a score of 75% or higher. The South Dakota Real Estate Commission oversees the licensing process.

How Much Does It Cost to Start a Property Management Company in South Dakota?

Expect to spend between $2,000 and $5,000 to get up and running. That includes roughly $690 for the pre-licensing course, $150 for LLC filing, plus insurance, software, and initial marketing costs. Your total will vary depending on your insurance needs and how much you invest in marketing early on.

What Insurance Do Property Management Companies Need?

At a minimum, you’ll want general liability insurance, professional liability (errors and omissions) insurance, and a surety bond. If you hire employees, South Dakota may require you to carry workers’ compensation coverage as well. Talk to a licensed insurance agent who understands property management to get the right policies in place.

How Do Property Managers Find Their First Clients?

Local networking is one of the fastest paths. Attend real estate investor meetups, connect with the South Dakota Association of REALTORS, and build referral relationships with real estate agents. A Google Business Profile helps property owners find you online. Direct outreach to owners of rental properties in your target market can also generate early clients.

What Is the Difference Between a Property Manager and a Real Estate Agent in South Dakota?

A property manager handles the day-to-day operations of rental properties: collecting rent, coordinating maintenance, screening tenants, and managing owner relationships. A real estate agent focuses on buying and selling properties or facilitating lease transactions. Both are licensed through the South Dakota Real Estate Commission, but they hold different license types with different scopes of practice.

Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Consult qualified professionals for advice specific to your situation. Read more on Growth