Want to sell your property management company? 3 consolidation models to consider

Mike Kalis
Mike Kalis | 5 min. read

Published on August 29, 2017

Property management is no walk in the park; and deciding whether or not to walk away from your business is no easy decision. In fact, it can be downright agonizing.

If you’re feeling overwhelmed by the responsibilities on your plate, we’d first recommend investing in property management software like Buildium. A property management solution for leasing, accounting, and business operations could enable you to finally take control of your business and your life.

However, if you’re looking for a fresh start, consolidating or selling your property management company may be worth considering. With the housing market bouncing back and looking strong, many large management companies may consider consolidating with your firm.

Depending on your personal goals and priorities, there are several ways that you could go about this. Here are 3 specific consolidation models you may want to consider in determining how to sell your property management company.

Consolidation Model #1: Cash for a Clean Break

If you’re exhausted, have lost your passion for real estate, and want to kick your feet up and retire, this is the route for you. Of the three options that you have as to how to sell your property management company, this one requires the least amount of effort and poses the lowest risk—but it also offers the smallest potential reward.

The money you get for your company will be based on an immediate snapshot of your business. There will be a period of due diligence when prospective buyers assess what you’re worth right this second. They will look at your revenue, your EBIDTA, your property portfolio, your internal processes, and how clean your books are; and they will make you an offer based on what they see. If you accept, they will cut you a check for the full amount right then and there, and you can head off on your merry way. (For more on improving your business’ curb appeal for prospective buyers, check out Part 2 of our series on selling your property management company!)

Again, this is the perfect option for someone who’s ready to retire, collect a nice chunk of cash, and hit the golf course.

Ideal situation: You’re handed a $250,000 check and live happily ever after. You never need to fix another leaky pipe or evict another combative tenant. 18 holes, anyone?

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Consolidation Model #2: Sell with Terms

With this option, you’re almost guaranteed to see more money—perhaps twice the amount in the long run. But that’s the catch: your payments will be spread out over anywhere from 12 to 60 months.

With terms, there will be some risk involved. If the company folds before it finishes paying you, you’re out of luck. Therefore, you need to be confident that you’re selling a profitable, sustainable, well-oiled machine to a capable party.

It’s in your best interest to have all of your ducks in a row before selling your property management company, ultimately setting the larger company up for success. The buyer may keep you on speed-dial for 3 to 5 months as it learns the lay of the land, but your involvement will pay off in the long run. Don’t forget: if the business stalls, your payments could be in jeopardy.

Ideal situation: You’re valued at $250,000, and because your business was in impeccable shape, you receive $10,000 each month for the next 50 months without needing to lift a finger. Compared to the cash option, you ultimately end up with double the amount of money.

Consolidation Model #3: Gain Stock & Shift Gears

This is the perfect option for people who still love real estate and want to remain involved, but who no longer want the financial burden of running an entire business. If you’re someone who is entrepreneurial and would rather be compensated in salaries, bonuses, and stock, this option will have you salivating.

Under this arrangement, the buyer would pay you in stock shares and hire you as a high-ranking employee. In the right scenario, after selling your property management company, you’d be able to pick your future role and negotiate a hearty salary. For example, if you love fundraising and schmoozing with investors, you could become a regional VP of business development. You’d be given the capital and resources to grow your department, and you’d finally be free of the stress and strain of overall management.

Ideal situation:
 You receive $1 million in stock and a six-figure salary to do what you love. Over time, your stock appreciates, your quality of life improves, and you can eventually retire with plenty of money in the bank.

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It doesn’t matter whether you’re looking to change careers or flat-out retire; if you’re considering selling your property management company, consolidation deals are ripe for the picking. You never know which future possibilities exist until you ask.

Liked this post on how to sell your property management company? Check out Part 2: How to Improve Your Property Management Company’s Curb Appeal.

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Mike Kalis

CEO Mike Kalis leads the team at MarketplaceHomes.com, a Detroit-based brokerage that specializes in new construction sales and property management. Marketplace is currently the third largest property management company in the United States. It has sold more than $3 billion in new-construction homes and gained a controlling interest in over 2500 single-family properties. He’s also a venture capitalist and investor for ZipTours, a startup that helps homebuyers and renters view homes with agents streaming live to their smartphones. Mike has been featured 4 times on the Inc. 5000 List; and outside of work, he loves wakeboarding, playing the guitar, and spending time with his family.

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