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If you’re looking to buy a franchise, you may have considered property management.
Then again, maybe you haven’t. Restaurants are probably the first go-to thought when you’re considering franchising, and then maybe you start thinking about owning a franchised fitness center, or a hair salon, or a car repair business. Property management is admittedly one of those under-the-radar career paths.
But at some point it’s possible you’ll land there, simply because it’s a booming business — a $75 billion industry, according to IBISWorld, and one that’s been growing steadily (if slowly) over the last several years. After all, people always need a place to live, and while owning a home may be the dream, plenty of people need to rent in the meantime or later downsize and come to enjoy renting rather than having to mow their own lawns. Meanwhile, plenty of landlords find that they simply aren’t equipped, from a time perspective, to manage their own properties, and they call in professionals to help them. Property management may not be the sexiest topic you can come up with, but it’s profitable.
So if you’re wondering how the cost of property management franchises compares to competing industries, I can tell you, as the CEO of a national property management company, that the membership fee into this world is a lot more accessible from a financial standpoint than, say, owning a restaurant.
But I’m not trying to sell anyone on owning a property management franchise. As with any franchise, it’s a great fit for some people and a not-so-great fit for others. But for those considering a property management opportunity, how does the cost stack up? Let’s count the ways.
The Cost Of Entry
For McDonald’s, since that seems to be the golden-arches standard that everybody thinks of when they consider franchising, you need at least half a million dollars of nonborrowed personal assets to be considered as a prospective franchise owner.
In general, if you’re going to open a fast-food restaurant, you’ll need a decent amount of the green stuff. For instance, the total investment for an Arby’s varies, according to Arby’s, from $314,550 to $1.8 million.
And just to pick something else at random, if you were to become a Car-X franchise owner, you’d need perhaps a bit less. You need to have a range of liquid funds, from $62,000 to $153,500, and plan to invest $262,000 to $413,500.
In other words, with many of the biggest brands, you can expect to pay big bucks to become a franchise owner — as well you should. We’re talking brick-and-mortar buildings with parking lots, lots of employees and inventory. These aren’t lemonade stands.
With property management, however, you’re visiting and managing other people’s properties. You should have an office, but you don’t need to invest in a building where throngs of customers will be descending. When you’re considering the total investment for a property management franchise, you tend to be looking in the neighborhood of somewhere between $50,000 to $125,000.
Of course, you might be thinking, “But why? You’re managing other people’s properties. You’re screening tenants, collecting rent, posting property ads and coordinating maintenance workers. What costs go into buying a property management franchise?”
More than you might think. The initial franchise fee is often going to be around $15,000 to $30,000, although maybe a little more or less depending on which franchise you’re working with. After that, you would be right. There aren’t many expenses, but you’ll have some. You’ll probably rent an office, unless your home is zoned to have clients, contractors, possibly tenants and who knows who else showing up in your driveway. You’ll need office equipment and insurance. You’re going to need to put up a professional-looking sign. (Another reason you really don’t want a property management franchise located in your home.)
One place you won’t want to skimp for your new business is marketing. That’s one of the main investments I tell franchisees to make. You can’t build your business if you’re not signing new clients. Especially in the first 12 months of a new business, owners need to invest in their company’s marketing efforts.
In other words, it is a business, and you need to have some working capital to jump-start it. But certainly, a property management franchise is on the lower side of how much it costs to buy a franchise.
How To Pick The Right Property Management Franchise
In the end, a property management opportunity is like any other prospect. You want to immerse yourself in research to make sure you’re making the right decision.
You may come to realize that you wouldn’t like managing a business that manages properties. Or you might love the idea of property management but find that some franchises are better than others. Or you may just come to realize that owning a Supercuts salon or a UPS Store is more your thing.
But you can’t know if property management is the right or wrong move for you without looking into it. So, I’d encourage anybody thinking about it to look at all the property management franchises out there — and to talk to property management franchise owners to see how they feel about their career path.
In other words, becoming a property management franchise owner is a little like choosing a home. You want to inspect the place, talk to your neighbors and crunch the numbers before you get a sense of whether you’ll feel comfortable moving in.