Property management is big business. In 2021, the property management industry generated over 88 billion dollars in the United States. Real estate comprised 16% of the national gross domestic product (GDP).
However, property management is also small business; more than 300,000 property management companies are registered in the United States, and the national industry employs over 367,000 workers and tens of thousands of self-employed managers.
You might be one of them.
And you might be looking for an exit strategy. Property management is rewarding, but it is also hard work. Dealing with prospects, tenants, employees, contractors, maintenance, repairs, weather, and Acts of God can be exhausting. Many property managers are putting in lots of hours and fantasizing every day about moving on. But they don’t have the experience or expertise to know how to sell their company.
Property management is a unique business. In almost every other industry, a company has to have volume before the owners can consider a sale. Most buyers want to see established procedures, professional management, well-maintained assets, and a certain level of revenue. The market for a business without those qualities is very small.
Unlike other kinds of companies, a property management company doesn’t need to hit a certain size or revenue milestone to be attractive to a buyer. There are buyers for almost any size portfolio, even ones with just a handful of properties under management. The price buyers are willing to pay is based on a multiple of the annual revenue performance of the properties. They base their offer on the quality of the property, location, and leases. I can help you understand and improve the quality of your offering to attract a larger pool of qualified buyers.
Even if your portfolio is distressed, there may be buyers who are looking for a fixer-upper opportunity. My first acquisition was a portfolio that was poorly managed by an exhausted manager who was in over her head. I was able to find efficiencies to save money, renegotiate contracts, and bring the rents up to market value, and the portfolio eventually became profitable. I have the contacts in the industry to find other investors who are willing to take on and turn around a portfolio that needs work to achieve its full potential.
You may also consider partnering with other property managers to increase the size and quality of your portfolio. Together, you might present a package that can appeal to buyers. The larger the portfolio, the more desirable the locations and quality of the units, and the more likely you are to attract motivated buyers.
Not many business brokers understand or specialize in property management, something I believe is essential to recognize the potential in your business and understand how to unlock it. Whether you’re looking for properties to increase your own portfolio or offload the properties you have, I can help you understand your options and connect you with the right buyer.
