The property management industry is at a good place right now, so it is a good time to be a fee manager. The macro-economic climate benefits property management businesses and here’s why:
The American Dream has shifted from owning a house with a white fence in the suburbs to more of a millennial-style American Dream where people rent to remain free to take opportunities to live in different cities and rent exciting apartments. People want to be a part of the community but they also want to keep moving to enjoy new experiences.
Demand for Property Managers
There are thousands of rental units added to the country’s inventory each month. Investors are looking to acquire new housing units, so your prospects for new business are excellent.
Let’s talk about your actual cost to acquire a new client because that’s really what makes or breaks your business:
Client Acquisition Costs
The average cost to acquire a new client in most U.S. cities and towns is between $300 and $500. If you wanted to turn around and sell your portfolio at some point, there will be a line of people bidding to buy your company at two to six times your customer acquisition rates. So if you buy a customer for $500, you can turn around and sell it to another property management company or whoever is acquiring you for $2,000, $4,000, etc. Inventory is high, managers are needed and your customer acquisition cost is low.
A couple more details as to why property management is a thriving industry for you:
Technology Just For Property Managers
Companies like Fourandhalf.com, LeadSimple.com and Appfolio are available to build and leverage technology just for you – property managers. There are services in the tech industry that specialize in helping fee-based property managers grow their companies. We’ve come a looong way; five years ago, there were hardly any services like this. But now, you can be super-efficient and hire great marketing talent so you can maximize the results you get from your website, software and accounting. There is a lot of support for your business.
Reliable Recurring Revenue
You also have the benefit of recurring revenue. Most business owners only dream about the retention rates that property managers get. You keep your client for three, five or seven years on average. To calculate your lifetime customer value, take your annual value of the client and multiply it by the number of years you keep that client. Once you do these figures they are usually $7,000, $10,000 or even $15,000.
What if you build complementary business units? You could have a maintenance unit where you remodel to get the units ready for rent. You could develop a real estate sales office so you can buy and sell properties for your investors. Your lifetime customer value multiplies under these circumstances. Again – it’s a really good time to be a property manager right now.
This is where you pat yourself on the back – for making an awesome career and business choice! If you’re not managing property yet, I’d recommend you get started. Contact us at Fourandhalf if you need any help or have any questions.