Calendar icon June 28, 2023

Property Management Fees: Opportunities for Growth

Photo of Andrew Smallwood

Andrew Smallwood

Chief Customer Officer - Second Nature

What we'll cover

What Property Management Fees Are Standard?

What Are the Factors that Influence Property Management Fees?

How Should Property Managers Structure Fees? 

What Are the Benefits and Challenges of Charging Property Management Fees?

How Do Fees Help Property Managers Add Value and Create a Positive Resident Experience?

How Can I Use Fees to Generate Ancillary Income?

Fee FAQs

If you’re familiar with Second Nature, you know that supporting SFR property managers in building triple win experiences is our focus. So today, we’re taking on the thorny topic of property management fees within SFR property management companies. And we’re turning to one of the leading industry educators on the subject: Todd Ortscheid, owner of PM Assist. 

Here’s what we’ll cover in this article.

Key Learning Objectives:

  • How to structure your property management fees for growth
  • The benefits and challenges of charging property management fees
  • How you can use fees to add value for yourself, your clients, and your residents
  • How to introduce fees without turning clients off
  • Examples of property management fees you might not be employing (yet)

Meet the Expert: Todd Ortscheid

Todd spent 14 years as an airline pilot – an industry known for capitalizing on fee structures as a growth strategy. He took over his father’s property management company after the 2008 real estate crash and eventually tripled the company’s number of doors. As the co-owner of PM Assist, he offers training and counsel on finding new ways to increase company revenue, process automation, and profit per unit.

Todd is a true entrepreneur and creative thinker, with ideas that challenge the status quo and may even ruffle some feathers. But Todd’s strategies have proven to help grow property management companies, and we’re thrilled to share his insights.

Related: State of Resident Experience Study

  RBP Demo Video  

What Property Management Fees Are Standard?

You should be seeing income on anything you’re spending money on as well. Anything you want to do to create more value for residents or investors? You should charge a fee for that so your company can stay competitive and your employees can get paid. 

Here are a few examples to get you started.

Inspection & Maintenance Fees

How much time are you spending on periodic property inspections? How much money are you spending on maintenance costs? How valuable is your staff's time? 

Todd says, “You have to be charging for this. Don't just include maintenance requests and inspections as part of your monthly management fee.”

Marketing Fees

Todd says, “I'm sure a lot of you are probably in markets where Zillow started charging you to put your listings on their website. And I've heard a lot of property managers say it's just a cost we're absorbing. Don't do that. Pass on that cost. Call it a marketing fee or the Zillow fee or whatever you want to make sure you're making money on that. Never pay for your own property management costs – come up with some way to cover all of these costs that you have for your business.”

Insurance Risk Mitigation Fees

If your investor doesn’t have insurance, you are often the one who will suffer. 

Todd advises charging a fee if your investor doesn’t send a policy within 30 days. 

“Tell them, ‘This new fee will be charged as a mitigation fee for the additional risk we have.’ You will not believe how quickly people will send you their insurance policies if you do this. We only charged a nominal fee. But a flood of emails came in after I sent out that notice to owners. So this isn't about making more money. For the most part, it's about influencing behavior and ensuring you get the insurance policies you need.”

Account Creation Fees 

As a property manager, you can charge a set fee to investors to create an account with your company. This fee may or may not cover various other costs such as any related property inspection requirements or tenant communications. 

Recurring Management Fees

Recurring (typically monthly) property management fees are extremely common in the industry, and will be built into the initial contract signed between the investor and the property management company. The amount can be based on a flat fee structure, or tied to a percentage of the monthly rent collected.

Vendor Screening Fees

It’s a hassle to use vendors outside your usual network.

“If you have property owners who want to use their vendor instead of your preferred vendors, that creates more work for you.”

If you charge a flat fee, they’ll likely drop it, and you’ve saved yourself that extra work. If they want to keep their vendors and pay the fee, at least you’re getting paid for that extra work.”

Rent Protection Fees or Eviction Fee

A huge area of value for investors is protecting them from unwanted risk. Investors have to deal with concerns about evictions, lost rental income, and more. Property management companies can take on that risk for a fee. You can say you’ll cover missed rent if the investor pays a monthly fee. 

The win for PMCs is that the risk is often low, and you can often control it (controlling for on-time rent due by charging late rent fees, for example). You get the fee, and you will rarely have to take the hit on the month’s rent.

The win for investors is they don’t have to worry about it at all.

Contract resiliation fees

For investors that terminate the property management contract prematurely, you can charge an early termination fee, the amount of which will vary depending on the contract's terms. The fee may cover a month or more of management fees.

Resident Fees

Todd emphasizes that the real moneymaker is resident fees. Plus, charging fees for unwanted behaviors – like late rent, paper leases, failure to change HVAC filters, etc. – can help drive better behavior. 

Todd uses examples like

  • Security deposit processing fee
  • Leasing fee or a lease amendment fee
  • Paper lease setup fee
  • Lease renewal fee
  • Late fee
  • Special programs fee

“Of course, the resident benefit package is the big one. This is a way for you to provide additional services to your residents and make some money off of it.”

What Are the Factors that Influence Property Management Fees?

Ultimately, the fees you charge should reflect your operational reality, and can vary depending on a range of factors:

  • Property location: Properties located in areas with higher operational expenses may incur higher management fees compared to those in other regions.
  • Property condition: The condition of the property, and whether it is new or renovated, affects maintenance requirements and thus can influence management costs.
  • Property size: The size of the rental property directly influences the workload of the property manager, with larger properties typically incurring higher fees.

Scope of services: The range of services provided by the property management company significantly impacts the fees charged. Basic services like rent collection command lower fees, while comprehensive management services covering rent collection, vacancy filling, repairs, evictions, and financial record-keeping for taxes entail higher costs.

How Should Property Managers Structure Fees? 

Real estate investors often focus on determining what fair or typical property management pricing should be. A general rental property management fee includes collecting the month’s rent, following up on arrears, organizing property maintenance and repairs, and keeping abreast of legal requirements. 

That’s the baseline. But the growth is in what you do on top of that baseline. 

Todd breaks down pricing like this:

“Only 40% of your revenue should come from your property management fee. 60% of our revenue is not management-fee related. If most of your money comes from your management fee, you're doing it wrong. That's not going to last very long.”

And here’s the difference those added fees can make to your bottom line:

“According to recent numbers from Profit Coach, the average PM company gets about $170 a month in revenue. $170 per door per month. I just looked at the profit coach dashboard for my company, and over the last 12 months, we have averaged $320 per unit per month.”

The nugget in there is that the market should determine your base property management fee. But that often cheats PMCs, giving property managers extra work without fairly compensating them for the additional time, effort and cost. You can – and, according to Todd, you should – be charging for that extra work and extra value that you provide as a professional.

Note: Todd emphasizes that ALL fees should be communicated upfront during the onboarding process and lease agreement. Fees aren’t about tricky pricing or hidden markups. They’re about charging for value and driving behavior.

What Are the Benefits and Challenges of Charging Property Management Fees? 

Let’s look at some of the pros and cons of charging additional fees for your additional property management services. 

Benefit 1: More Revenue = Better Service

Todd points out that you can't really provide the level of service that you want if you don't have enough revenue coming in. 

“We've got to be able to provide fantastic service, and the only way you can do that is with revenue. You have to start looking at this as something that you have to do. Your clients and your residents are suffering if you don't.”

It’s a fantasy to think we can offer premium service without paying for the resources they cost us. 

Benefit 2: More Revenue = Happier Employees

Your team deserves to be paid for their work, especially if it’s extra work caused by a difficult resident or investor. Fees help reduce workload because they discourage behaviors that add to busy work. But more on that in the next section.

Todd says:

“Property management company owners talk to me all the time about how they can't afford to pay higher wages in the current market. The reason you can't take better care of your employees is that you're struggling to get by just on a basic management fee. Charging fees for what your services are worth is the only way you’re going to be able to provide competitive wages and benefits.”

Benefit 3: Charging for Service Drives Better Habits

According to Todd, fees drive behavior. Your investors and residents will respond to fees in a way they may not respond to anything else. 

For example, home warranties are a huge hassle for everyone. If you want to discourage investors from using a warranty company, simply charge a fee for anyone that does.

On the resident side, an example is late payment fees. If you communicate from the start that late payments will draw a fee – you’ll notice how payments come in on time much more often. 

Benefit 4: Greater Profits

This one speaks for itself. But here’s what Todd says:

“Never pay for your own cost of running your business. This isn't a charity. Every single expense in your company should be tied to some income you're going to make.”

Happier residents

Challenge 1: Will Investors Be Turned Off by Fees?

In the long run, if you’re charging fees for premium services, you can provide a better outcome for investors. But how can you get them on board with this concept? 

Todd says it’s all in the language we use. 

“People don't understand that the management fee is really a rent collection fee. We shouldn't call it a management fee because it makes it sound like everything we do is included, which is of course, crazy. There's so much that can't be looped into that one thing. We should call it a rent collection fee because that's really what it is. You've got to get your mindset right on this stuff. Don't be afraid of it.”

Challenge 2: Regulations (AKA: Always Talk to Your Attorney First)

Regulations vary across regions, so rental property managers must be familiar with local laws. You may not be allowed to charge fees for certain types of services. But you can almost always categorize a service within an administrative fee. 

But discussing any fees and contracts with your attorney before implementing them in the real world is key. Oh, and you should charge for your legal fees!

How Do Fees Help Property Managers Add Value and Create a Positive Resident Experience?

The additional fees generated by delivering new and higher service levels are a reflection of a positive, resident-focused experience. 

In fact, such additional services are exactly what can set professionals apart from amateurs. Instead of letting increasing competition cut your legs from under you, Todd advises finding ways to generate value that the amateur property managers or real estate agents-turned-property-managers can’t compete with.

And, of course, charge for that value.

“I always tell people that I don't like to say no to clients or residents,” Todd says. “Instead, I like to say, ‘Sure, we're happy to do that. And this is how much that costs.’ You just want to be careful and ensure you’re actually doing things that the owners will find valuable.

Charging fees allows a property management company to offer premium services and benefits they couldn’t if they didn’t have that extra revenue. It’s a perspective shift, but Todd believes we need to start viewing fees as a generative, value-driving approach to property management. 

How Can I Use Fees to Generate Ancillary Income?

In the end, you might think of fees as a burden that will drive away investors, but the truth is the exact opposite. Fees help you drive more premium value for both your investors and your residents – and support your business and employees at the same time. 

At Second Nature, that’s what we call a Triple Win. We aim to help property management companies drive Triple Wins like this all the time. We do it through the value proposition of a Resident Benefits Package. An RBP offers value to investors by delivering a full-service resident experience. And, yes, that’s something property managers charge a fee for!

Since it’s fully managed by our team, you can basically plug it in and let it drive value for you, your investors, and your residents.

Fee FAQs

Q:  What is included in the property management fee?

Property management fees typically cover a range of services, which vary from company to company. Sample inclusions:

  • inspection & maintenance fees
  • marketing fees
  • insurance risk mitigation fees
  • account creation fees 
  • recurring management fees
  • vendor screening fees
  • rent protection fees or eviction fee
  • contract resiliation fees
  • security deposit processing fee
  • leasing fee or a lease amendment fee
  • paper lease setup fee
  • lease renewal fee
  • late fee
  • special programs fee

Q: What is the average property management fee?

The average property management fee varies according to region and state, as well as from company to company. In addition, these fees are largely dependent on the value, responsibilities, and services the property manager brings to the table. Generally, they amount to a fixed percentage of collected rent, as opposed to a flat fee.

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How to Value, Buy, or Sell a Property Management Company

Putting a precise figure on the value of a property management company can be challenging, given the changeable nature of the market. That’s why understanding what goes into the value calculation is crucial for both investors and business owners. Today, we’ll be discussing how property management company value is calculated, with an assist from Jock McNeill, VP of Acquisitions at PURE Property Management. Jock has completed over 70 property management acquisitions and has tons of insight into valuation models for property management companies. How to Value a Property Management Company: Contributing Factors Several factors help determine the value of a property management company, including revenue, profit margins, average rents, portfolio diversity, growth potential, and more. You can think of these as success metrics in determining “What is my company valuation?” Here are the most important factors to consider. 1. Profitability Before valuing a property management company, you need to determine profitability. Evaluate financial metrics like gross revenue, profit margins, cash flow or EBITDA, and debt-to-income ratios. McNeill explains how they evaluate this at PURE: “We evaluate pro forma financial statements and arrive at a percent profitability based on adjustments we can make by removing ‘seller benefits’ such as vehicle leases, personal expenses, etc.” Two of the biggest red flags in terms of a property management company's valuation, says McNeill, are “low revenue per door managed and low-profit margins. [These] can keep a business on the lower end of the valuation scale. These are often driven by low average rents and high labor costs.” 2. Consistency Consistency is key in valuing a property management company. A company with "lumpy" financial growth is risky. Steady growth in profitability, on the other hand, shows reliability and may provide a reliable basis for projecting potential returns on investment. The same goes for employee turnover: a revolving door of staff suggests instability. Similarly, consistent and well-organized records make a company more attractive to buyers (it facilitates due diligence processes and generally reduces the headache of taking over operations). In sum, consistency across finances, personnel, and records paints a picture of a well-run, predictable business, and that translates into higher value. 3. Portfolio churn Portfolio churn tells a story about the company's ability to keep clients happy, which directly affects its future revenue stream and overall value. High churn (i.e., with rental properties frequently leaving the portfolio) suggests difficulty retaining clients. This could be due to poor service, pricing issues, or a weak rental market. Low churn, with properties staying on board for extended periods, is an indicator of strong client relationships and high satisfaction – which reduces uncertainty for potential buyers. 4. Overhead costs Overhead costs refer to indirect expenses required to keep the business running smoothly, but that are not directly related to managing specific properties. Examples include rent and salaries (excluding those assigned to specific properties), office supplies, marketing, and software subscriptions. Expressed as a percentage of revenue, these overhead costs play an important role in a company's valuation. A lower overhead percentage of total revenue indicates a more efficient company that can generate profit without excessive spending. In turn, this can translate to higher potential returns for investors. 5. Debt-to-income ratio Debt-to-income ratio (DTI) is a key metric of a property management company's value. It shows the balance between a company's debt (loans and outstanding payments) and its ability to generate income (revenue). Lower DTI is better, as this indicates the company relies less on debt to operate. This suggests financial stability and a lower risk of defaulting on loans. A higher DTI, on the other hand, raises concerns about a company's ability to manage its debt burden. This can make it vulnerable to factors such as economic downturns, and cause investor hesitancy. 6. Customer concentration Customer concentration, or how reliant a property management business is on a single large client, can significantly impact its valuation. If a large portion of the portfolio belongs to a single owner, the company's income virtually depends on keeping that client happy – and if the owner decides to switch property managers, this could represent a severe financial blow. Property management companies with diversified portfolios are essentially spreading this risk thin, which is a plus for potential investors. 7. Transferability Business transferability, or the ease with which a property management company can be sold to a new owner, is a crucial factor in its valuation. A company that has well-documented processes, a strong team, and a healthy client base is easier to transfer to new ownership than a company lacking clear documentation, or that relies heavily on a single key employee. 8. Specialization Companies specializing in a specific type of property (e.g., single-family homes) develop deep expertise in that market. This expertise translates to better service for clients with that portfolio profile, potentially leading to higher client retention and satisfaction. Loyal clients are a valuable asset and boost a company's worth. 9. Contract terms The contract terms of properties under management are another important consideration. Management contracts with longer terms and automatic renewals create a more predictable stream of recurring revenue for the company over a period of time. Property management fees are another important consideration. Stability is attractive to investors, as it makes future income streams steadier and more predictable. Conversely, short-term contracts with frequent renegotiations introduce uncertainty about future rental income, potentially lowering valuation. 10. Future Growth Potential And, of course, signs of growth potential are critical to a property management company's valuation. Many buyers are thinking about company value related to size. According to McNeill, “Growth potential can influence how we approach a deal. If we can grow organically and quickly in a market, that can be very attractive. What a seller may perceive to be a problem in their business can be the acquirer’s opportunity. Maybe the issue is as simple as better systems, we can help with that.” Growth potential can be in the form of the real estate market in the area, but also opportunities to grow the business with existing residential properties. It’s also key to see a demonstrated network within those key markets. Property management is still largely driven by personal contacts and business relationships. Having strong contacts and connections in key markets is an important sign of growth potential. How to Calculate the Value of a Property Management Company: Valuation Multiples Valuation multiples are a key tool for determining the fair market value of a property management firm because they leverage comparable market data to establish a standard for pricing. We’ll cover the basics and provide some examples. Property Management Company valuation multiples to consider Property management company valuation multiples compare key financial metrics such as earnings or revenue, to the market value of similar companies that have recently been sold. When using valuation multiples, the caveat is that it's important to compare companies that are truly similar in terms of size, clientele, and service offerings. Three common types used for property management companies are SDE (seller’s discretionary earnings) multiples, EBITDA (earnings before interest, taxes, depreciation, and amortization) multiples, and revenue multiples. SDE multiples for a property management company The SDE (Seller's Discretionary Earnings) multiple focuses on the cash flow available to the business owner after accounting for all business expenses and taxes (excluding owner salaries and perks). The SDE times its multiple is one way of representing the value of a business. A higher SDE indicates a more profitable company, and the SDE multiple applied will reflect that. In the property management industry, a company with a strong track record of SDE might command a higher SDE multiple (say, 2.5-3 times SDE) compared to a less profitable company (say, 1.5-2 times SDE). An established company with steady profitability might be valued at 2.5 times its SDE. If its SDE is calculated at $1 million, this would result in an SDE x 2.5 = $2.5 million business valuation. EBITDA multiples for a property management company The EBITDA multiple is similar to the SDE multiple but excludes non-cash expenses like depreciation and amortization, and also ignores owner compensation. A growth-oriented company might be valued at 6 times its EBITDA. If its EBITDA is calculated at $700,000, this would result in an EBITDA x 6 = $4.2 million valuation. Revenue multiples for a property management company Revenue multiples simply take a company's total revenue and multiply it by a factor to arrive at a valuation. For example, a rapidly growing company with a revenue of $2 million might be valued at 2 times its annual revenue, resulting in a $4 million valuation. What multiple should you consider when valuing a property management company? No one multiple tells the full story. It is, after all, just an indicator, and cannot predict the future. That said, revenue multiples are a less common metric for property management companies compared to SDE or EBITDA multiples, given that revenue alone doesn't reflect profitability. Indeed, this multiple is often used in conjunction with other multiples for a more accurate picture. Valuators of property management companies are more likely to use EBITDA multiples alongside SDE multiples to get a more comprehensive view. Factors That Affect the Value of a Property Management Company A property management company's value is typically influenced by a variety of factors reflecting its operational structure, market position, and potential for future growth. These elements can provide insight into the overall stability and attractiveness of the business. Below is an overview of some key factors that can significantly impact a company's valuation. Owner involvement The role the owner plays in the day-to-day operations is crucial. A business that's heavily reliant on its owner may be less appealing to potential buyers because of the challenges involved in transitioning leadership. If the owner is deeply involved in tasks like managing client relationships or handling property issues, the company may struggle to maintain operations after a sale. Conversely, businesses where the owner plays a more passive role and has a solid management team in place are easier to transfer, which makes them more attractive and valuable. Number of units The number of units under management is one of the most straightforward indicators of a property management company's scale. Larger portfolios generally signal greater revenue potential. However, it’s not just about numbers; the quality of management across these units also matters. Naturally, a company that's managing a significant number of units efficiently, with minimal client turnover and satisfied property owners, is seen as more valuable than one managing the same number with operational inefficiencies. Types and quality of properties The types of properties under management can directly impact revenue and client retention. For example, a company managing high-end, well-maintained properties will typically have more stable clients and higher margins. On the other hand, a focus on lower-quality properties, especially those in difficult-to-manage areas, can reduce profitability due to increased maintenance demands and tenant turnover. Diversifying the types of properties under management can also reduce risk, contributing positively to valuation. Contracts The structure and length of management contracts are another clear indicator of future revenue stability. Companies with long-term contracts in place, especially those with automatic renewal clauses, can offer a more predictable and consistent revenue stream. This makes the business more appealing to buyers who value income security. Short-term contracts or those frequently renegotiated, on the other hand, introduce uncertainty, which can detract from the overall value. Expansion opportunities Any company’s potential for future growth is always a key consideration for buyers. A business located in a growing real estate market, or one with untapped opportunities to expand its portfolio, can be significantly more attractive. Expansion can come in the form of geographic growth into new markets or by adding additional services to existing clients, such as maintenance or leasing services. The ability to grow without significant capital investment inevitably increases the company's appeal and overall value. Location The location of the company can affect its valuation in different ways. Businesses in high-demand real estate markets or rapidly growing areas often see higher valuations, as market conditions are favorable for both current operations and future growth. On the other hand, property management companies in regions with stagnant or declining real estate markets may face a tougher path to maintaining value or increasing it. Business tenure The length of time a company has been in operation is often an indicator of its stability and credibility in the market. A property management company with a long track record is usually viewed as more reliable, especially if it has built a strong reputation for service and client satisfaction. Newer companies may struggle to command the same valuation, as they lack the historical data that provides insight into their ability to weather market fluctuations. Increasing the value of a property management company before the sale For owners of a PMC looking to sell, your first goal is obviously to increase the value of your business as much as possible before the sale, in order to increase the eventual purchase price. Keep in mind, though, that increasing your company value doesn’t need to become a barrier to selling. In fact, McNeill warns not to be too perfectionistic on that front. “One of the biggest misconceptions is that valuation is only based on revenue, and you have to have your business in perfect condition to sell,” McNeill says. “There are many factors that influence valuation, but for PURE, revenue and profit margins are most important. We’ve also seen a lot of potential sellers stall in early discussions because they want to wait to get their shop in order, implement new initiatives, or clean up their books. It isn’t always necessary, and trust me, we’ve seen it all.” Here are some industry tips for increasing your PMC’s value to buyers or property owner investors. Invest in your business infrastructure By this, we mean that you should invest in technology and people. Reinvesting in your business will make it healthier and more valuable to potential investors. On the tech side, you could adopt new property management software, update your current tech infrastructure, or integrate the newest AI-enabled tools. On the people side, you don’t necessarily need to hire more employees. Rather, ensure that the people on your team are as equipped as possible. Invest in excellent recruiting and onboarding processes, ensure you have robust training programs, etc. Integrate ancillary services We’ve talked a lot on our blog about how to develop ancillary programs to drive income. Ancillary fees aren’t just a cash grab – they’re a way to add needed value for residents and investors while driving profit for your PMC. Ancillary property management services can include things like: Renter’s insurance programs Credit-building Supportive services like air filter delivery Resident rewards And more! One of the best value-added services is to integrate a resident benefits package into your program. Develop marketing strategies You should be able to show potential investors that you have a strong marketing plan that has proven to grow your business over time. Your marketing strategy should include a content plan, distribution, social media strategies, networking events, and more. Pay attention to things like your reviews and online reputation as well. Marketing your property management company well will pay off in dividends when you are ready to sell. How to sell a property management company Completing a thorough valuation is just the first step in selling a property management company. If you’ve done the work to value your PMC, the next steps will be much easier. Whether you're looking to retire or simply move on to a new business venture, selling your property management company requires careful planning and execution – with the following steps. Identify potential buyers The next step after valuing your PMC is to identify potential buyers. The field of possible buyers may include other property management firms in your area, real estate investors, or even individual buyers looking to enter the industry. Determine how you want to sell In his article on valuing your PMC, Lohmann outlines the two different transaction types in how a property management company can be purchased: A stock sale. In a stock sale, the buyer will purchase shares of your business. They take on all past liabilities of your company but also get to hold onto your brand, contracts, and vendor relationships. The depreciation of long-lived assets is not reset. Asset sale, also known as Goodwill. In this case, the buyer buys your “book of business.” They’re paying for the property management agreements or contracts your PMC holds. If any of your contracts aren’t assignable, you’ll need to get an individual agreement from those investors. Prepare your PMC for a sale Next, you'll want to prepare your property management company for sale. This may include making necessary upgrades to your facilities, improving your management processes, and ensuring that all financial records are up-to-date and accurate. According to McNeill, the question you should ask yourself is: “How can I best tell the story of my company to a potential buyer? Are my financials detailed, and can I show a buyer I have great margins (or how they can achieve them)?” Work with a qualified broker or attorney Finally, when it comes time to negotiate a sale, it's important to work with a qualified business broker or attorney who can help you navigate the complex legal and financial aspects of the sale. With their guidance, you can ensure that you get the best possible price for your property management company while also protecting your interests and ensuring a smooth transition of ownership for your employees and clients. How to buy a property management company But what if you’re on the buying side? Buying a property management company can be a great investment opportunity, but you can’t sleep on due diligence. Before you start the process of purchasing a property management company, there are several key steps you should take to ensure that you make an informed and profitable decision. Research thoroughly & find a PMC that fits The first step in buying a property management company is–like with anything–to do your homework. Thorough research on PMCs involves identifying potential acquisition targets, analyzing their financial performance, and evaluating their market position. You'll want to look at factors such as revenue growth, profit margins, and client retention rates, as well as any potential growth opportunities that may make the company more valuable in the future. Basically, everything we covered in the sections above! If you already run a PMC, you want to make sure the business model can integrate with your structure. But again, McNeill cautions against being too rigid on this one. “We have yet to see a company that does everything the PURE way after over 60 acquisitions. Our partner integration team jumps in quickly and has a plan in place before we close a deal. If a seller has already implemented similar ancillary revenue models, such as a resident benefit package, etc., it means we can optimize that faster than rolling it out from scratch. Our proven platform includes the people, processes, relationships, and technology to consolidate, tech-enable, and optimize the companies we acquire carefully and thoughtfully. We have an all-star team of industry insiders, innovators, and leaders already in place, so when we bring on new teams, the integration is pretty smooth.” Conduct due diligence and identify liabilities Okay, so let’s say you’ve identified a potential PMC you’d like to buy. Now it’s time for due diligence. This involves reviewing financial records, contracts, and legal documents to ensure that there are no hidden liabilities or risks associated with the company. Additionally, you'll want to evaluate the quality of the company's management team, as well as its operational processes and systems. Determine fair market value After completing the due diligence process, you'll need to determine the fair market value of the property management company. This involves taking into account a range of factors, including its current and projected financial performance, market position, and growth potential. Once you have a clear understanding of the company's value, you can begin the negotiation process with the seller. Work toward a smooth transition Finally, once the sale is complete, it's important to take steps to ensure a smooth transition of ownership. This may involve working with the existing management team to establish clear roles and responsibilities, as well as communicating with clients and stakeholders to ensure that they are aware of the change in ownership. According to McNeill: “A buyer should make sure they have the foundation in place to integrate an acquisition into their existing operation. Look for opportunities to add value for the clients and residents, and that will turn into value for you as a buyer. Anything you can do to create a simple and satisfying experience for clients and residents will help with the anxiety that can come with a sale.” Conclusion Ultimately, the value of a property management company will depend on a range of factors, and there is no one-size-fits-all approach to valuation. But the bottom line is that by following a structured and analytical approach, you can feel confident in your valuation, which will help you make informed decisions about buying or selling the business. Whether you're a business owner looking to sell your property management company or an investor looking to make an acquisition, a proper valuation is essential to ensuring a successful transaction.

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How to Choose Moving Concierge Services: Personal Touch vs. Automated

Moving is a complex process that can feel overwhelming, from organizing packing to coordinating utility setup. For many, moving concierge services offer a much-needed helping hand. But in a world leaning heavily toward automation, does the personal touch still hold value? In today’s post we’ll explore: What moving concierge services are How moving concierge services work Typical cost of moving concierge services Two approaches: personal touch vs. automation The verdict What Are Moving Concierge Services? Moving concierge services, or relocation concierge services, are designed to simplify the resident's experience of moving to a new location. Relocation services often cover everything related to setting up a new space, primarily focusing on utilities such as electricity, gas, water, high-speed internet, and home security systems. The idea is to provide a seamless and stress-free transition for residents, taking the worry out of the moving process. Imagine stepping into a new home with all utilities up and running, with none of the hassles of making multiple calls to various providers. That’s the promise of a moving concierge service. Some even extend to help with additional tasks like finding local service providers, scheduling movers, and more. These services can work in different ways. Some are complimentary offerings that come as part of a resident benefit package provided by property managers, while others might require a fee if handled separately. A complimentary resident move-in concierge service typically partners with utility providers to arrange everything on the resident's behalf. How moving concierge services work Different platforms offer varying methods for assisting residents with specific needs in their move to a new house. In many cases, the service involves scheduling a call or using an online portal to set up utilities. When included in a Resident Benefits Package, the property manager works directly with a concierge service provider to ensure utilities and essential services are ready by move-in day. (Note that Resident Benefits Packages typically include this service.) Residents are often sent a personalized link or receive a phone call, allowing them to schedule a session to handle their utility setup. This process may include collecting information from residents, like current utility account numbers, to streamline the transition to the new address. Cost of concierge moving services without a resident benefits package Without the project management support of a moving concierge service, residents may find themselves spending several hours managing utility setups on their own, across a number of days or weeks. The process can include contacting each provider individually, scheduling installation or activation times, and sometimes dealing with long-distance calls, as well as unexpected last-minute fees, even in cases of local moves. The cost can vary widely depending on location, the number of services needed, and the providers involved. For some, the time and stress alone can feel like a hefty price. Moving concierge srvices offered through Resident Benefits Packages are typically included as part of the package, saving residents both time and money. Two Approaches: Personal Touch vs. Automation When selecting a moving concierge service, there are two primary paths: a personal touch approach or a more automated process. Let’s take a closer look at two high-quality services in this field: Citizens Home Solutions (CHS) and Utility Profit. Citizens Home Solutions (CHS) Citizens Home Solutions (CHS) offers a personalized experience, aiming to make the moving process as smooth as possible. CHS originally started as a phone-assisted service, focusing on creating a higher level of personal interaction. Their survey data indicated that 59% of residents preferred phone calls over completing online forms, underscoring the desire for human interaction in the moving process. Through its partnerships with providers, CHS seamlessly handles the setup of utilities like electricity, gas, water, high-speed internet, and security systems—all free for the resident (as part of the Resident Benefits Package). Their approach involves reaching out to residents through calls or digital means, offering a choice between speaking with a representative or completing an assisted digital workflow. This flexibility ensures that residents who value a personal touch can have it, while those who prefer self-service still have that option. The process with CHS involves receiving move-out reports in advance, allowing them to research and prepare for the resident’s new utility setup. When it’s time to set up utilities, residents receive a personalized link through email or SMS to a mobile-friendly webpage. From there, they can choose to schedule a call or proceed with the digital workflow. CHS then guides them through the setup process, including account management, so everything is ready for move-in day. With over 200,000 residents served, CHS has proven expertise and positions itself as a one-stop solution for utility needs. Their experience shows in their seamless process and attention to the individual needs of each resident. You can call them or use this form to schedule an appointment. Utility Profit Utility Profit takes a different approach by automating most of the process. As a newer company, they offer a streamlined service that directs residents to set up utilities on their own through a dedicated webpage. This method is designed for those who prefer handling things directly, with less involvement from a third party. Residents can navigate the setup process using Utility Profit’s online platform, entering their information, selecting utilities, and submitting their account numbers. While this method can be efficient for tech-savvy individuals who want to manage things independently, it may lack the personal guidance some residents find comforting during a stressful move. The simplicity of Utility Profit’s system can be attractive to those who desire more control over the process. However, for individuals who are not as comfortable navigating these tasks solo, this option may seem daunting. The verdict Both personal touch and automated services have their merits. However, in the realm of moving, where stress and uncertainty often abound, the comfort of having a human on the other end of the line can make a significant difference. Citizens Home Solutions stands out because of its blend of personalized and digital options, offering residents the best of both worlds. With a track record of over 200,000 satisfied residents, CHS has honed its process to cater to individual preferences. Starting as a phone-based service, they recognized the need for a personal touch, particularly during such a life-changing event as moving. Over time, they've adapted by incorporating digital workflows for those who prefer a more hands-off approach, demonstrating a commitment to meeting diverse resident needs. In contrast, Utility Profit offers a viable solution for those who are comfortable with a more automated approach. While this might work for some, the value of CHS lies in its ability to offer guidance and support throughout the move, ensuring nothing falls through the cracks. For many, that extra level of care can transform the moving experience from a daunting task into a smooth transition. Final Thoughts Choosing the right moving concierge service depends on what you value most: personal guidance or streamlined automation. Services like Citizens Home Solutions combine the personal touch with modern digital conveniences, ensuring residents receive tailored support while also accommodating those who prefer to manage things independently. If you're looking for a service that prioritizes a seamless move with a blend of personal and automated options, CHS is worth considering. Their extensive experience and adaptable approach have helped countless residents settle into their new homes with ease. Learn more about what Citizens Home Solutions can offer for your move. For property managers interested in incorporating moving concierge services into their resident benefit package, explore Second Nature’s Resident Benefits Package benefits now.

Calendar icon October 10, 2024

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