Calendar icon October 31, 2023

10 Strategies to Become a Successful Single-Family Property Management Business

Photo of Andrew Smallwood

Andrew Smallwood

Chief Customer Officer - Second Nature

Property manager meeting with future tenants

What we'll cover

Keep up with the trends in Single-Family Property Management

Understand your ideal investors in single-family property management

Make sure your rental application requirements are clear

Simplify rent collection and accounting processes

Prevent vacancies with effective resident communication and engagement activities

Automate single-family property management workflows

Invest in regular rental inspections

Create a referral program to increase your portfolio

Find new investment properties and pitch them to your current clients

Invest in marketing activities for short vacancy cycles

Increase revenue from your SFR property management business with Second Nature

Navigating the world of Single-Family Property Management requires a blend of industry know-how, proactive strategies, and a keen understanding of both investors and residents. 

What is a single-family property management business? At its core, the business revolves around managing standalone properties for individual property investors, ensuring the rental property is maintained, tenanted, and profitable. 

But how do you optimize for success in this space? In this post, we'll uncover 10 pivotal strategies to elevate your single-family property management business, from staying updated on industry trends to streamlining your operations for maximum efficiency.

Related: Best Property Management Podcasts

  RBP Demo Video  

1. Keep up with the trends in Single-Family Property Management

The dynamic landscape of single-family property management is constantly innovating and growing in response to various economic, technological, and societal factors. Property managers in the single-family space (vs. multifamily properties or even commercial real estate) also tend to be entrepreneurial, innovative, and adaptive. It’s what we love about this community! But some "trends" have staying power, and the key to long-term success is identifying those and adapting your services to the modern consumer.

Over the past decade or so, the way we do commerce and services has been upended by technology and the convenience economy. The same is true in property management.

In the words of Jonathan Cook at Revolution Rental Management: “I think ten years ago, property managers were only concerned with collecting rent and keeping tenants from doing damage to properties. It was a much more adversarial relationship than it is today. Today, the best PMs know that resident experience is vital to minimizing vacancy and creating a resident that strives to be a higher quality tenant.” 

So, let’s look at several trends that have emerged that are shaping the industry’s direction.

  • The Convenience Economy: Sometimes we call this "the Amazon effect." Consumers and residents alike are looking for the easy button. They're looking for everything from online rental listings they can scroll from their couch to online rent payment services that make paying as easy as the click of a button. 
  • Technological Advancements: Today, property managers are leveraging technology more than ever. From smart home systems that enhance resident experience to advanced, AI property management software that streamlines operations, staying abreast with technological trends is crucial.

The key to staying on top of these transformations is to ask the right questions. Pay attention to general business trends. What are consumers demanding? What is new in technology that you could adapt to your business strategy? Running a property management business is just that: a business endeavor. Keep your eyes sharp on trends in commerce and get involved in the conversation of how that affects good property management. 

2. Understand your ideal investors in single-family property management

When diving into professional property management, just like any other business, it's essential to identify your ideal customer profile (ICP) early on. You will get so much further by "niche-ing down" than spreading your company too thin.

What kind of property and client are you ideally set up for or prepared to work with? Once you define your target audience, you can then be ruthless in saying no to anyone who falls outside that definition.

Here are a few ways to explore the various dimensions of property investor clients: 

  • Level of Experience: Property investors are not all created equal. Individuals get into property ownership for different reasons. You can see experiences ranging from an accidental landlord who never intended to be an investor all the way to a sophisticated or institutional investor, and every shade of the spectrum in between. It's very difficult to build a business that serves all customers across all levels of sophistication. They'll have different needs for how much education they need, how they want you to handle things, and how they want pricing to work. 
  • Property Types: You should also define what type of property you want to manage, which will help you assess if a new investor is a fit or not. We're assuming since you're reading this that you're interested in single-family rentals. But within that category, there is still so much variation. Are you looking to manage luxury homes with higher rent, lower demand, and longer vacancies? Are you more interested in workforce housing with more demand and lower rents? Or maybe you're a specialist in Section 8 housing. Whether Class A, B, or C housing, it's very hard to specialize in all property types. Sure, all SFR homes are unique, but it's key to identify the general characteristics of the homes you'd like to manage (or already excel in managing). Then, you and your team are dealing with more consistent situations. 
  • Compatibility Fit: You also need to make sure the investor as an investor fits with your approach. And we don't just mean personalities. Have a list of questions that help define what type of investor you can work with. In his podcast Owner Occupied, Peter Lohmann (co-founder & CEO of RL Property Management) talks to Marc Cunningham (President and Owner of Grace Property Management & Real Estate) about their lists, which include questions like: 1) Is the investor financially stable? 2) Is the investor emotionally stable? 3) Are they realistic in expectations? 4) Are they willing to trust us as the expert? Cunningham says his company can manage any property if the owner is right. Define what's important to you and stick to your guns.

As Lohmann says in the podcast, "The easiest way to deal with a horrible owner client is to never onboard them in the first place." The goal is to filter out the people who are not a fit before you get into a contract with them. 

"When you're first starting out in this business, you chase everything," Cunningham says. "But as you grow and become successful, you need to slide that bar on your 'yes' and 'no' and start saying no."

In short, nailing the definition of what type of investor and property you want to work with will help you find the right clients and ultimately succeed with them. You're not saying yes to every person who is looking for property management; you're looking for a specific type of customer.

3. Make sure your rental application requirements are clear 

Are you getting applicants who don't end up being a fit for your properties? It's possible the requirements are not clear on the listing or application. Is your advertising penetrating where it's going to reach qualified residents? Do potential applicants know what credit score they need, income requirements, and more?

Of course, how you advertise and where varies widely by the market in your area. Some property managers say they would never use Craigslist, and others swear by it. Understand the market in your area and make it clear from your listings what is required to be accepted as a renter. You'll save everyone frustration with transparency and clarity. 

4. Simplify rent collection and accounting processes

You know the old saying, "Time is money.” It's particularly true in the rental property management game. Think about it: Every hour you spend chasing down a rent check or struggling with complex accounting software is an hour taken away from growing your business, networking, or improving other operational aspects.

Simplifying your rent collection means introducing online payments, setting up auto-pay options, and even mobile payment methods. Modern residents love the ease of digital transactions. Making their lives easier often equates to faster, on-time payments and a heightened sense of trust.

One way to simplify rent collection is to incentivize on-time rent payments. Second Nature’s Resident Benefits Package does just that by offering credit reporting and rental rewards to ensure that residents receive value for paying on time. As the property manager, it’s work off your plate!

It's also a good idea to standardize your rent collection and use tools to support your team. New tech services like Colleen.ai and EliseAI can fully automate your rent collection communications. 

As for accounting, streamlined property management software solutions can auto-generate reports, offer real-time financial insights, and make tax season a breeze. By embracing these upgrades, you’re not just benefiting internally by saving time and resources – you’re showing current and potential residents that you value efficiency and are in tune with modern conveniences. 

The result? Higher resident satisfaction, a more enticing pitch to potential property investors, and an overall smoother business operation poised for growth.

Happier residents

5. Prevent vacancies with effective resident communication and engagement activities

Remember when you first fell in love with your favorite coffee shop or that little bookstore around the corner? It wasn't just about the coffee or the books—it was the overall experience, the atmosphere, and the feeling of being recognized and valued. 

The same principle applies to a residential property management company.

Resident communication isn't just about sending rent reminders or maintenance updates. It's about cultivating a relationship. Providing resident benefits, gifts, support services, and timely communication go a long way to showing residents you care about their home. 

Engagement programs like loyalty rewards or recognizing special occasions can also be game-changers.

Looking for more inspiration on resident retention? Dive deeper into our resident retention ideas article to explore various strategies that will help keep your properties filled and your community thriving.

6. Automate single-family property management workflows

Ever find yourself drowning in spreadsheets, buried under a to-do list a mile long, or juggling multiple software platforms? Surely we all have!

The solution? Breathe easier with property management automation. The beauty of running a full-service property management firm in the 2020s is that there's likely a tool or system for nearly every task in property management, from rent collection to resident communication.

Our best single family property management software article is a treasure trove of tools and platforms designed specifically for property managers. By implementing these solutions, you can automate repetitive tasks, reduce human errors, and free up time to focus on more value-driven aspects of your business. 

Think about it: a streamlined application and screening process, automated rent reminders, and digital maintenance requests—all working like clockwork without your constant intervention.

Beyond the tools themselves, consider the integration possibilities. When your property management company software talks seamlessly with your accounting system or marketing platform, the result is a cohesive and efficient workflow. Need more insights into the power of automation? Dive into our in-depth automation-related articles to discover how you can revolutionize your day-to-day operations.

7. Invest in regular rental inspections

Investing in regular rental property inspections isn't just about ensuring your property is in good shape—it's also a strategic move to bolster the relationship with your residents and maintain the value of your client’s investment.

Here's the deal: Consistent inspections offer a proactive approach to property maintenance. They can catch small maintenance issues before they balloon into costly repairs. Got a minor leak? Catch it early, and you're saving both money and potential damage to a resident's belongings.

But it's not all about damage control. Regular check-ins also send a clear message to your residents: you care about their well-being and the condition of the property they call home. It's an opportunity to foster open communication, showing residents that their feedback is valued.

Moreover, well-maintained properties tend to attract and retain quality residents. Those who know their property manager is on top of things will likely stay longer and treat the property with respect. Plus, when it's time to find a new resident, you've got a spotless track record of upkeep to show off.

In short, consider inspections as a small investment now that can yield big returns in resident satisfaction, property value, and overall peace of mind. 

8. Create a referral program to increase your portfolio

Word of mouth? It's powerful. And in the property management game, it's gold. Imagine this: your current clients, satisfied with your stellar services, singing your praises to friends, family, and colleagues. Now, what if you could incentivize that process? Enter the referral program.

Happy real estate investors are your best brand ambassadors. They've experienced firsthand the quality of your management, and their endorsement carries weight. So, why not reward them for bringing in new business? A referral program can do just that.

Start by offering incentives. For your investor clients, perhaps it's a discounted management fee for a month. The point is to offer something tangible that'll get folks talking and referring.

But there's more to it than just the direct business benefits. A referral program demonstrates that you value the relationships you've built. It tells your clients that their trust and loyalty don't go unnoticed.

Lastly, an added bonus: with every successful referral, you not only grow your portfolio but also create a network of investors who are invested in your success. It's a win-win, driving growth for your business while strengthening the bond with your current clientele. 

9. Find new investment properties and pitch them to your current clients

You're already managing a portfolio of properties for your investors, ensuring they get solid returns and have few hassles. But here's the question: What if you could amplify those returns for them and simultaneously grow your business?

Actively seeking out new investment properties is more than just scouting real estate; it's an art of opportunity. By identifying lucrative properties that align with your investors' strategies, you're essentially providing them with golden opportunities on a platter. 

And guess who they'll want managing these new assets? That's right, you.

When you present these potential investments to your current clients, it accomplishes a few things. Firstly, it reinforces your role as a trusted partner in their financial journey, showing them that you're proactive and always on the lookout for ways to amplify their wealth and boost their cash flow. It's not just about maintaining what they have; it's about growing it.

Secondly, every new property they acquire based on your pitch naturally expands your management portfolio. This approach helps scale your business, fostering client trust and loyalty along the way.

Remember, in the property management world, being static isn't an option. By constantly seeking growth opportunities for your clients, you're also carving out a pathway for your own business's expansion.

10. Invest in marketing activities for short vacancy cycles

Imagine a prime property in a stellar location, decked out with all the bells and whistles...sitting vacant. The eerie silence echoing in those empty halls isn't just the sound of missed opportunities – it's also the sound of revenue trickling away.

Maybe that was a little dramatic. But the real estate game is as much about visibility and appeal as it is about bricks and mortar. The quicker you can get a property off the market and into the hands of a reliable resident, the better for everyone involved. This is where strategic marketing steps in.

Investing in a robust property management marketing strategy does more than just showcase a property; it strategically positions it in front of the right eyes. With targeted campaigns, engaging visuals, and compelling copy, you can ensure your property doesn’t get lost in the sea of listings. Use social media, virtual tours, and local advertising to create a buzz.

Moreover, effective marketing helps paint a lifestyle. When potential residents can visualize themselves in a space, they're more likely to take the leap. By consistently shortening vacancy cycles through effective marketing, you not only ensure a steady revenue stream but also enhance your reputation as a go-to property manager who gets results.

In essence, marketing isn't an expense; it's a pivotal investment. It's the bridge that connects empty properties with eager residents, ensuring your business always stays on the move.

Increase revenue from your SFR property management business with Second Nature

Optimizing your single-family property management business is not a one-size-fits-all solution. From engaging with the right investors to fine-tuning marketing endeavors, the path to success is paved with multifaceted, dynamic approaches. 

But the key to it all is creating a better experience: for residents, investors, and your property management team. That’s why, at Second Nature, we’ve built a Resident Benefits Package that supports SFR property management businesses. Each benefit is designed to meet resident needs and investor priorities while taking work off your team’s plate.

In the dynamic world of SFR property management, adaptability and efficiency are kings. With Second Nature by your side, you’re not just keeping pace with the industry; you’re setting the benchmark. So, as you work towards crafting a business that stands tall and resonates in the market, remember: Your success is our second nature.

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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.

Calendar icon October 18, 2024

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moving-concierge-services

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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