August 31, 2018
By Aaron McElhiney, PMI Director of Acquisitions
You will most likely come to a point where you’ll want to sell your property management business, you may be ready to pursue other business opportunities, or it might be the right time for you to retire. How can you make sure you will be able to sell the business for its full value? There are six aspects of your business you will need to have in order to attract the best possible buyer. Paying attention to these areas of your property management business today will not only help your business run more smoothly in the short term, but it will put your business in higher demand once the time to sell comes.
1. Professional Management Software
Having industry leading software in place will allow buyers to either continue with the platform or transition more easily to other software options.
2. Clean Books
Hire a CPA to get your property management business organized. Be able to show 3+ years of stable growth. Reconcile all accounts regularly. Isolate all personal expense and benefits taken from the company. Categorize all revenue streams: Management fees, commissions from home sales, referrals, maintenance, late fees, transaction fees, etc.
3. Current Management Contracts
You need up to date contracts for all clients. Can you have transferrable or assignable contracts in your state? If so, this will help you transition the assets of the business if purchased outside of the business entity.
4. Current Lease Agreements
Be sure any renewals or addendums are documented properly. Be able to show market rate rents with annual increases.
5. Written Operational Practices
Think of compiling an Employee handbook or Owner’s playbook. Not only will the exercise help you organize responsibilities for your business, but it will also give buyers valuable insight into the operation.
6. Continued Growth
Don’t stop growing your property management business. Property managers can get burned out and stop putting effort into marketing or networking, especially if they are already thinking about turning their business over to a new owner. Complacent owners may even turn away leads because they can’t handle the workload and are unwilling to hire help or outsource. Businesses that have continuous growth and clear models and methods for future growth are more enticing to buyers. Get better systems to handle growth and KEEP GROWING.