6 Tips You Should Follow While Expanding Your Property Management Business into Multiple Locations
Every Successful Property Management Business needs to expand after some time. Expanding your Property management business into new areas will help you acquire more tenants and gain more profits. According to an industry report, 77 percent of surveyed property managers anticipated portfolio growth in the next two years. If you want to expand your property management business but don't know where to start, you came to the right place. In this blog, we will discuss few steps that you can follow while expanding your business to multiple locations.
- Strategizing a perfect Expansion Plan:
If you want to grow your property management business at a huge level then you need to create a perfect expansion plan. There are different ways you can strategize an expansion plan two of the common plans are provided below:
Creating a Franchise Model: The franchise model is one of the best strategies you can follow while expanding your company in multiple locations. If you don't know what is a franchise model, It is basically a business model through which a business permits a third party or the franchisee to operate a business and distribute goods and services using their business's name and systems in return for a fee. A franchise model helps your business to expand without any constraints. But you need to remember that this is a business model and while implementing you need to rearrange your old business strategy.
Acquisition of Another Property Management Company Acquiring another property management company is also the best expansion plan. Through this strategy, you can easily access the markets where your business has no reach or it is completely new. Through the acquisition, you can easily absorb the companies' assets and its clients. Therefore during acquisition, you need to keep few things in mind.
- The company should have a good client database and it shouldn't have any ongoing legal cases
- The company should have good credit records.
- The company should be producing a positive cash- flow or if it is making a loss then make sure that the assets of the company should be able to cover up the losses.
- The company complies with the rules set up by the Department of Real Estate.
- Performing market research on Your Target Areas
When you want to expand your property management business into new areas then you should start by creating a list of the target areas where you want to expand. After creating the list you should perform thorough market research on the area to narrow it down to the most suitable and profit-making area. Performing market research will help you to gain more knowledge about the living pattern of the tenants, their lifestyle and what is the income pattern of the tenants living in the area.
- Analyzing the Local and State Regulations
If you are planning to expand your business into other states then researching target areas is not enough. You also need to research the laws and regulations at the local and state level. While researching about laws and regulations you should keep few things in mind
- Property or any hidden taxes charged
- Zoning issues
- Trash and recycling removal
- Housing guidelines
- Property maintenance and safety issues
- Contracts and notices
- Lease renewal process
- Delinquency and tenant eviction
- Tenant screening procedure
- Rental registrations
- Occupancy laws
- Utility operations
- Legal process
- Expanding the business from within
While Expanding your property management business into a new area. You should also be sure if you have adequate resources. Because if there is a shortage in the resources of your company then after expansion managing the properties will become quite tough and it may also incur unnecessary expenses. The most common resources that you need to check while expanding your business are:
Hiring more Staff Hiring more staff is one of the most common ways to expand your business internally. This should be done by understanding your current staff load and how many properties you own so that you can get an idea of how many staffs are required for hire. You can hire staff either on the contract or on a permanent basis.
Improving the Infrastructure Infrastructure is also a reason when your company needs to expands. There are several reasons but one of the most common reasons is the problem in the storage of the tenant's files and records. Physical storage of files and records takes a lot of places and also incurs huge maintenance costs. Therefore you can avoid it by using property management software to digitize your files into the centralized system.
- Calculating Your Budget
Calculating your budget is one of the most essential steps you need to follow while expanding your property management business. While expansion you should keep in mind that your expansion expenditure should be lower than the overall profits that you gain from your old properties because when you expand your business, it may take some time to start earning profits from that area, and at the start, you may also incur some extra expenses while setting up your business.
- Checking up with your old properties
Once you have put your strategies in motion. Then you have to continuously check if it is following according to your future plans or not. While expanding your business you should also remember to look after your old properties and be in contact with your tenants and vendors so that they are not felt neglected.
- Knowing When to Stop
One of the most important issues while expanding your property management business into multiple locations is to know when to stop. While expanding your business you should keep an eye on the profit margins and current business revenue so that the expansion cost doesn't eat away all the profits from your old properties. While you wish to expand your business, evaluating suitable property management technology is very crucial as your customer ( owners/tenants ) also look to have services at the tip of their fingers. Property360Degree enables you to grow across different geographies that be enable distributed growth but managed centrally for the holistic business analysis