Preparing Your Property Management Business for an Additional Location: How to Grow without Acquisitions

How can you grow your property management business by opening new locations? A lot of listeners have called and written with this question, wanting to know how to be successful in a new market without having to acquire another property management company. Jason Rose was highly recommended when I asked for help with this topic. He’s from Brisbane, Australia, and he’s joining us today to talk about what your company needs in order to succeed and grow in a new location. Jason Rose and How to Grow Jason has been in the property management industry for 32 years. His career began as an auctioneer, and as he became more experienced with real estate auctions, he learned a lot about the industry. Eventually, he left the auction house and joined a real estate company. He did traditional real estate sales for more than 12 years, and then became a property manager. One investor wanted the company to manage an investment property, and that part of the business grew. In 2004, they began using business development managers (BDMs) to grow, and in 2006, the sales part of the business was sold. Rental Express was born, and property management was the company’s focus. Rental Express began with 350 doors in 2004, and Jason exited the business in 2015 with 5,102 doors. During his last year, the company brought on 945 new doors thanks to the work of six BDMs. When Jason and his partners were ready to exit, they were able to get a premium price for the company. Why? The business had been expertly developed. It was a lot more than a rent roll transition. Why You Should Expand Into a New Location – and Why You Shouldn’t Sometimes, business owners are driven by ego. That’s not a good reason to expand your business into a new location. The bragging rights that come with having multiple sites and locations may be attractive, but it’s not enough to sustain you and help you succeed. Think instead about the why – the real why. Do you want to earn high six figures? That’s a why. Do you want to start saying yes to clients who ask you to manage properties that are 100 miles away? That’s another why. Before you look at multiple locations, ask yourself these difficult questions: Are you a good business leader? Is your team prepared? Can you hand off some of your management duties? When you have multiple locations, you need high quality people running the business. So, if you’re struggling to share management and leadership with other people in your company, don’t think about a new location just yet. Your success depends on the quality of the people around you. There are only so many hours in a day, and you wear a lot of hats in your growth phase, but you cannot run all your company’s locations by yourself. You have to lead. Hand the management responsibilities off to other people so you have the capacity to go and look for other locations. And, don’t open up in a new market unless it fits into where you want to go. After people, you need systems. Good systems drive good people. Before your conversation about opening a new location even starts, make sure you have those two things in place. If your business is somewhat profitable but you’re still figuring things out systems-wise, opening a new location isn’t going to bring you the discipline you need. It’s going to bring disaster. Get your own house right first. Make sure your processes are scalable and reproducible. There’s nothing wrong with focusing on just one location. If you have market capacity and there’s still more growth to be found in the market where you currently are, stick to that one location and make it profitable. Financial Investments Required for a New Location Jason suggests having $200,000 to put aside for the opening of a new location. Look at your fixed costs, your budget, your cash flow, and your forecasting.