Blog Posts

Larger isn’t always better, even in property management. Sometimes, a slightly smaller, but higher quality portfolio will be more valuable and will probably be less trouble to manage.  Most educated buyers will look at this like “RPU” (Revenue Per Unit) as an initial assessment of a portfolio and this is impacted by your average rent rate and various revenue streams.  Do you know yours?  Is it in line with local and national averages, or is there work to be done?

The Pareto Principle, also known as the 80/20 rule, tells us that roughly 80% of outcomes come from 20% of causes, meaning that a small percentage of inputs often produce a disproportionately large number of results. That goes for good things (20% of your clients produce 80% of your revenues) and not so good things; 80% of your problems probably come from 20% of your portfolio properties or your tenants.

That’s why it’s always a good idea to regularly evaluate your portfolio to determine if it’s the right mix for you.  Maybe some properties simply aren’t producing the results you hope for. Maybe it’s location – the property eats up valuable staff time in travel. Or it’s too far from attractive amenities or too close to undesirable elements. Perhaps it’s the level of property or tenant, bringing your average monthly rent down, but taking up just as much time  – or more – to manage. 

Maybe it’s an owner (or several).  It’s not uncommon to have different perspectives and opinions than some owners, and you just don’t see eye to eye on how to handle issues or how and how much to invest in repairs and updates. Maybe the property is just on the edge of losing its appeal, built cheaply or so long ago that it’s no longer a draw for top-tier renters. Are they willing to invest to bring the property up to your standards and/or those of renters in the area?

Whatever the reason, there are options for you to consider. One is to give it a final shot to bring things up to your standards, investing the time and money to solve whatever the performance issue is. If you do this, have a deadline.  Don’t let this effort and expenditure of resources drag on.  It’s time to make it better, or make it go away.  Another possibility is to have a frank conversation with an owner and work toward an early termination.  Will you forgo some income?  Yes, but it will also free you up quickly so you can refocus time and energy in another direction to hopefully make it up and then some.  Lastly, you can let the contract expire and politely explain that it’s best to part ways. Though this is probably my last choice on the list, it is an option.  This kind of delays the inevitable and seems like a copout, but there are some owners or properties that just have no hope.  Sometimes, it’s the right call.

Those are the options within your portfolio, but sometimes outside the box is the best place to think.

What about finding someone to sell the contract(s) to? You know what they say about one man’s trash and another’s treasure. Use your contacts to find someone who’s a better fit for the properties. It may be someone who specializes in that kind of property or someone whose portfolio is closer geographically. There might be someone who’s just starting out as a property manager and who would appreciate acquiring a known entity with the benefit of your history and recommendations for it.  Even if there isn’t any actual money in this option, maybe you’re helping someone else get started or saving a good owner (with properties that don’t fit your profile) the trouble and risk of finding someone new.  Giving a hand could just be the right thing to do and boost your reputation.

I’ve written before about how micro acquisitions can help you grow your business. This is the same principle, but you’re on the opposite side of the transaction. You shrink your business (temporarily), but you are left with a higher-quality portfolio. That frees up your time and resources to find properties that are a better fit for your current business and your plans for future growth. 

If I can help you start planning to sell your property management company, a good first step it to find out what it’s worth.

About Patrick Hurley:

He’s a Tallahassee native with over 20 years of experience in property management, real estate, construction, and business brokerage. Having owned, operated, bought, and sold property management companies in the past, Hurley is uniquely positioned to help others in the industry find their exit.
He’s been described as dependable, highly efficient, effective, and hard-working with a no-nonsense attitude. He takes pride in his professionalism and attention to detail and focuses on his client’s desired outcome.

When I say ‘mind your own business,’ I mean it literally (no snark). It’s easy, especially in times of change and uncertainty, to focus on the national news, the pundits who tell you the sky is falling, and the scary economic predictions (tariffs, struggling stock market, “recession”)

The fact is that most of the news probably won’t affect your day-to-day business operations, and nothing good comes from worrying about what hasn’t yet happened. News, economics, and politics have always been cyclical, and what’s happening now will be old news in a year or less. Whether it’s good news or bad news, you can’t control what’s happening on a national level, but you can shape the direction of your company.

So, I always recommend that you work on controlling what you can: your own business. Focusing on what’s in front of you will be the best way to build a strong, sellable company. Review and reduce expenses, update agreements to protect from sudden changes in revenue, and ensure your documentation and bookkeeping are current and in good order. Build stronger client, tenant, and vendor relationships to increase sustainability. Do research to make sure your pricing and rents are in line with your local market and identify opportunities. Develop a plan for growth—or for selling your portfolio.

Not only are all of these actions important, they’re also productive and time-consuming. You won’t have much time left over for doom scrolling, and might just find yourself in a much better place. 

You’ll also be focused on what matters in your property management career and why you got into this work in the first place. Entrepreneurs are naturally optimistic; they believe in their service and ability. They’re future-focused, and so are the people who want to buy their business. They see opportunity and aren’t afraid to take risks in times that can lead to rewards.

Elections always bring uncertainty, which can keep people from making decisions and moving quickly when a good deal presents itself. It’s possible that some federal policies will increase prices; it’s also likely that some deregulation will benefit small businesses like yours. Your job is to make your business as strong as possible and to be ready to recognize opportunities when they appear.

Many thought leaders and entrepreneurs follow the Stoic philosophers, and for good reason. They understood the importance of putting your thoughts and your energy only into what you can control. “You have power over your mind – not outside events. Realize this, and you will find strength.” (Marcus Aurelius)

Whether you’re growing your business or planning to sell in the next couple of years, I can help you understand your portfolio’s current market value. Click here for a confidential and complimentary opinion of value. 

About Patrick Hurley:

He’s a Tallahassee native with over 20 years of experience in property management, real estate, construction, and business brokerage. Having owned, operated, bought, and sold property management companies in the past, Hurley is uniquely positioned to help others in the industry find their exit. He’s been described as dependable, highly efficient, effective, and hard-working with a no-nonsense attitude. He takes pride in his professionalism and attention to detail and focuses on his client’s desired outcome.

From Government to Private Sector

Let me start by saying, this is NOT a political statement or article. Rather, it’s looking at our current environment to identify opportunities for my clients and our industry as a whole.

At last count, over 75,000 federal employees have been laid off or offered buyouts. Contrary to what many people assume, most federal employees are not based in Washington, DC.  Many of them work remotely and live in communities all over the country. They choose government jobs for a variety of reasons: the chance to serve, the benefits, and until recently, the job security. 

Now that their lives and livelihoods have changed overnight, they’ll be forced to evaluate options.  With small businesses being the backbone of our economy, my educated guess says that many will consider starting or buying businesses with their severance pay, and why not have a property management business at the top of their list? 

Of course, owning a property management company can be rewarding for people who are organized and have strong people and communication skills. It can offer flexible hours, independence, a low barrier to entry, and rewards hard work. It can be an entrée into real estate ownership, which is a time-proven way to build wealth, and property management companies often operate with healthy margins and endless opportunity. 

People will always need places to live, and, therefore, landlords will always need managers. In most rental markets, property management can provide a relatively stable career (similar to what they may have experienced with their previous job), and people who have had success in large organizations and who have strong problem-solving skills can thrive. That experience will prepare them to take on their new adventure and even their own portfolio of rental properties. 

Which brings us back to your property management business. If you’ve been thinking about selling your company or part of your portfolio, this is a good time. Don’t look at every significant event as a challenge… instead, see what opportunities it presents.  Every large corporate or government Reduction in Force sends experienced and qualified people into either the job market or the market for buying well-run companies. They may have buyouts or retirement savings that allow them to invest in an industry that will pay them commensurate with their effort, something even the best government jobs don’t always offer.

It’s never too early to schedule a discovery to talk about your business’s health. We’ll explore the strengths, weaknesses, and opportunities of your portfolio and operations, and how those relate to the market’s perception of value.

We’ll also talk about your personal goals. Why are you thinking about selling? When do you believe you’ll be ready to exit the business? What do you need to fund your retirement or the next phase of your life? Would you be willing to stay in the business if you had a partner who could infuse cash and help the business get healthier or bigger?

Knowing what you want and need from a sale is step one. Step two is knowing where you stand right now. How close are you to that goal? A broker’s opinion of value is an informal valuation based on high level financial analysis, market conditions, and looking at comparable companies that have sold within the last year. 

Knowing what you have, what you want, and what you need means that when an opportunity to sell, take on an investor or partner, or grow the business comes along, you’ll be ready.

To get a professional opinion of value, click here.  

Owning and operating any company is hard work, but if you’re reading this, chances are that you know property management companies can be especially challenging because you’re also in the people business. Some days, you might even wish you weren’t. In those moments, it can be hard to tell if your thoughts about selling are the beginning of a serious decision  – or just a reaction to a bad day.

There are plenty of reasons PM company owners don’t make a call to a business broker every time they think about selling. Here are my reactions to some of the remarks I hear most often.

I’m not ready to leave the business for good  – it’s too early to talk about selling. I just had a bad week, and next week will be better. I don’t want to waste a broker’s time if I’m not really ready to sell. This is very common thinking, but next week (or next month or next year), you may have the same thought, and you’ll be that much further down the road. It’s almost never too early to start planning to sell your business; in that way, it’s like estate or retirement planning. The sooner you start thinking about your goals and making a plan to achieve them, the better off you’ll be.  One of the best pieces of advice I ever received was, “build your business to sell, even if you don’t plan to do so”. 

Financial advisors often say, “The best time to start planning for your future was five years ago. The second best time is now.” Even if you’re three years out from selling, you’ll spend those years armed with information that will give you a greater chance of achieving your goals.

I’m worried that if I start discussing my plans, the word will get out and hurt my business. This is a valid and understandable concern. Confidentiality is critical when you’re discussing and planning a sale. You don’t want your clients or competitors to start doubting your commitment to the business. You don’t want your employees to worry about job security and look for other work. You don’t want to attract tire kickers before you’re ready to get serious about a deal.

Those are all important factors, and PM Broker Group understands that better than anyone. Confidentiality is job one for brokers; they couldn’t stay in business if they didn’t handle confidential data properly. You can be assured that your initial conversations won’t become common knowledge, and executing a  Non-disclosure Agreement is common practice to establish a level of comfort and assurance. 

What if my business isn’t as valuable or well-run as I think it is? Many owners worry that once they open up their books to someone else, some shortcomings could be exposed.  It could be a little bit of an ego check, but the worst case result will be identifying areas for improvement. It’s important to know that this first discovery call is very “high-level”, and  about your business in general. We won’t dive into your personal financial situation or how well-organized your filing system is. 

What we will talk about is how healthy your business is now: Are you growing (or planning to?) What are the strengths of your portfolio and your staff? If you could change anything about your business, what would it be?

We’ll also talk about your personal and professional goals. Why are you thinking about selling? When do you believe you’ll be ready to exit the business? What do you need to fund your retirement or the next phase of your life? Would you be willing to stay in the business if you had a partner who could infuse cash and help the business get healthier or bigger?

Knowing what you want and need from a sale is step one. Step two is knowing where you stand right now. How close are you to that goal? A broker’s opinion of value is an informal valuation based on high-level financial analysis and market conditions, as well as looking at comparable companies that have sold within the last year. 

The best part of starting the conversation early…..? If your company is probably not going to sell for what you’d hoped, you’ll still have time to invest resources to grow its value. An experienced broker can also set up consulting services and advise you on what potential buyers are looking for and ways to increase your profitability before you put your company on the market.

Even if you’re not sure this is your year to sell, you’ll come away from your discovery discussions clear on your goals and armed with data. That puts you in the driver’s seat when you do get ready to sell. 

If I can help, a good first step is to get a complimentary and confidential opinion of value.