Growth is the goal of almost every business owner. As property managers, we gain experience over the years, and this largely comes with gains in efficiency that allow us to increase volume and take more units under management. That’s the idea…more properties and, ultimately, more money. More money that hopefully leads to a more profitable business and a more valuable company. I’ve been in the property management industry for 20+ years, and I’ve learned a lot about smart ways to grow your portfolio, along with plenty of things to avoid.
There are two basic strategies that business owners employ to grow:
The most common approach is through Organic growth. This generally comes from doing a good job, being easy to find, and being pleasant to do business with. Once you have a few properties under management, you learn most of what it takes to solve problems and make the properties more valuable and more profitable for owners. Hopefully, the word of your success and business practices starts to get out.
You start looking for what I call “5-star moments.” to shine in your client’s eyes. When you solve a tough problem, find ways to save money, or finally achieve full occupancy for an owner, they appreciate it. When they let you know you’ve done a good job, or even better, you let THEM know that you did a good job, take the opportunity to ask for a Google review (5 stars, of course.) for your business. Between setting up Search Engine Optimization (helping potential clients find your site) and getting lots of positive reviews and testimonials, you’ll gain a reputation for doing a great job with the properties you manage, and owners (i.e., potential clients) will find you as you climb to the top of their search results.
You can also seek out property owners who have a problem you can solve. Low occupancy, issues with poor property maintenance, or lack of curb appeal. If you’re good at finding and implementing solutions, you’ll not only make a positive impression on the property owner, but you’re also likely to keep tenants happy and paying the rent on time. Obviously, owners love this, and you’ll be able to win business.
Though it’s popular and can be effective, the organic route can take lots of time and dedicated resources for results. There’s nothing in the world wrong with this approach, but it requires a consistent and focused effort to keep this train moving. It’s ongoing and active, but more times than not, it’s worth it.
Then, there’s an option to explore Growth through strategic acquisition as a means of expansion. This involves sourcing, vetting, and buying other property management companies in your market or another market you’ve identified as a good match for your business. This can be a faster way to grow, but it does require capital and a good bit of knowledge regarding the process. It also requires you to find the right company at the right time and at the right price to make sense.
This is where an experienced professional can play an important role in helping you achieve your goals. Finding someone who understands the industry and the market you’re targeting can make the process of acquisition much easier. Your broker can help you find a business that’s a good fit for your portfolio, help you analyze the financials to see if you can make the numbers work, and create a structure that gets you to closing. Usually, a good deal is one where the current operations make it possible for you to hit the break-even point 2-4 years after acquiring a company, and hopefully, you can bring some “value ads” to the table to increase revenue along the way
A dedicated business broker can also make the initial connection with the company’s owner, find out more about the owner’s goals and expectations for a sale, and protect your confidentiality until you’re ready to negotiate. They’ll walk you through the complex process of structuring a deal, keep communication flowing, and help you avoid costly pitfalls. Along with their network of professionals (lenders, attorneys, industry vendors, etc.), they should have a team who’s ready to help and who knows how to get deals done.
Everything I’ve learned about growth, both organic and strategic, I learned by trial and error, success and failure. I’ve personally acquired five companies and over 800 units in my career, and a lot of experience in what to do – and what not to do has come along with it.
If you think you’d benefit from the advice of an experienced business broker and want someone to look for opportunities for you, click here.
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.