"HOW TO VALUE A PROPERTY MANAGEMENT COMPANY

Steve Murray, the president and co-founder of REAL Trends, the nation’s leading trends and research organization, was one of the speakers at this year's Pulling Back The Curtain property management conference. His company does 15 - 20 valuations/month so he went over some industry trends and walked us through how to valuations are determined.

The 3 main factors that drive your value higher are:

1.Profitability (pre-tax cash flow)

2.Consistency (in your growth, personnel, and records)

3.Portfolio Churn (the lengths of your contracts).

Your financial valuation is determined by your EBITDA (Earnings Before Interest, Taxes, Depreciation, & Amortization) multiplied by 2 - 5. Determining your multiplier depends on a multitude of other factors.

You can read full details in our article here."

I had two friends sell their Property Management Business. One turned 65 and the other turned 80.

The 65 year old provided the last 5 years worth of records showing:

1. Number of clients

2. Number of properties managed

3. Gross and Net Income -- the bottom line

4. A list of handymen/contractors.

5. Hours spent working..

This manager was terrific. She'd get a call from a tenant and then made phone calls to get things done! Only worked around 20 hours per week managing 72 homes and a few dozen apartments.

The negotiated amount was based on two factors. The monthly fee received per property and extra bonus for re-renting out vacant rentals.

Her goal was to get 2 times her annual profit, but those offers came with a 5 year payment plan. Instead she accepted 1-1/2 times her annual income, paid half up front and the balance over the next 6 months...