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How to Buy a Property Management Company

Posted by Mitchell Vinnitsky on Oct 7, 2021 6:00:00 AM
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How to Buy a Property Management CompanyThere are a few different ways to get into the property management industry. You can start at an entry-level and work your way up. You can launch your own property management company from scratch. Or, you can purchase an existing property management company. If you’re interested in the latter, it’s important that you approach things with eyes wide open. Here are a few tips from our experts on how to get the best deal.

Decide on the type of company.

Ideally, you should look for a property management company that closely aligns with your current business model. For instance, if you primarily manage residential or multifamily properties, buying a company that does the same will make it an easier transition. If you decide you’d like to expand your portfolio and branch off into different property types, be aware that this will likely require the adoption of new business practices and/or new or different skill sets. As such, you’ll want to plan accordingly.

Assess your capacity.

If you’re looking to purchase your first property management company, this probably won’t be as much of an issue. If you’re adding a new company to an existing portfolio, on the other hand, it’s imperative that you determine your capacity to handle the additional work. Get a clear understanding of the kinds of services offered by each company you’re considering and whether you’ll be able to keep existing personnel on, if you’ll need to hire more staff or if your existing team will be absorbing the workload.

Conduct a thorough financial analysis.

Understand that certain types of debt, such as tax liens, are attached to the business itself and not necessarily the owner. This means there’s a chance you could end up incurring additional liabilities along with the business you purchase. Buying a property management company with existing debt isn’t always a deal breaker, but it’s important that you know upfront what you’ll be getting into. Otherwise, you could end up biting off more than you can comfortably and affordably chew.

Determine the best way to carry out the purchase.

Just as we mentioned in our piece about selling a property management business, on the flip side, there are a few different ways a purchase transaction can pan out. For instance, you may decide to buy the business outright and take over entirely. Or, you might make arrangements for the seller to stay on and assist with the transition. Lastly, you might decide to hire the seller on in an executive role. The option you choose will be based on your personal preference and your access to available funding.

Buying a business can be a complicated and downright daunting process. Taking the above tips into consideration and establishing a solid plan beforehand will make your eventual acquisition go much more smoothly.

Topics: Technology, Property Management, Tips, Business Growth, Advice, Sustainability, Organization, Real Estate, HOA management

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