Peter Lohmann's Newsletter - Issue #80

What’s your PM Market Penetration?

At the end of last year, I watched an interesting video from Marc Cunningham where he explained that he does not plan to enter any new markets with his property management business(!)

He went on to describe how some property managers move into a new market before they've even figured out how to be successful in their own market.

The question is, how does one define "success" in a particular market? Marc suggests considering expansion when you have "captured a significant percentage of your current market.... 5%".

I'm fascinated by this idea of market penetration, ie what percentage of all rental units in your market do you currently manage? How might we calculate that?

I spent weeks looking for a source of data that would provide the total number of rental units in a given MSA (metropolitan statistical area); it was surprisingly hard to pin this down but I finally found one here.

If you go that site, select your state and then find your MSA (city), scroll the right and look at the column labeled "Rent Occ Units 2019." That is the total number of rental units in your market!

Then simply take your total units under management and divide by the total units. Eg, we manage about 670 rental units and there are 319,126 total in the Columbus MSA, putting our market penetration at 670/319,126 = 0.21%. (Don’t forget to move the decimal over 2 places to convert into a percentage). We’re nowhere near the 5% that Marc recommends!

What's your market penetration? How big do you think it should be before you consider expanding into a new market?

This week’s issue is sponsored by: Second Nature’s Triple Win Live!

Join industry leaders Ray Hespen of Property Meld, Andrew Smallwood of Second Nature, and PM professionals from across the nation for Triple Win LIVE: Differentiate Your Property Management Company in 2024. 

And guess what? It’s on us – no charge. We're all about sharing the knowledge that makes our community stronger.

🗓️ Date: February 22

⏰ Time: 2-3 PM ET

📍Location: Right where you are (It's virtual!)

My Interview with Todd Ortscheid

I got the chance to sit down with Todd O and ask him a bunch of question that I had been really curious about. Here are a few of the topics we covered:

• Organizing a Property Management Company

• Thoughts on management fees and PM pricing

• Mergers and acquisitions in the industry

• Todd’s experience building PM Assist and keys to client success

• What is it like to be both a vendor and operator in the industry?

• Selling your time vs. having automated company

• PM Assist’s new equity share offering

• Automating management agreements

• Under what scenario would you sell your management company?

Check out the full podcast interview below, now on YouTube for the first time:

PM Acquisition / M&A Financing: Poll

I’m interested in learning about the dynamics of M&A activity within our industry. Specifically, how does one finance the purchase or sale of the property management company, and is it ever a roadblock for the deal.

Would you help out by clicking 1 answer below?

Industry News and Events

• Here is a STR Management Company for sale in Colorado (asking 700k).

• Here is a PM company for sale in California (879k gross revenue).

• Grab your tickets for the NARPM Broker/Owner Conference coming up in April. Crane members can look forward to joining Wolf and I on a dinner cruise around Amelia Island on Tuesday evening.

• If you haven’t been to an IMN Conference yet, they’re worth checking out. I suggest the upcoming SFR Forum (East) (May 20-22) taking place in Miami.

• Here at RL Property Management, we’re hiring for 2 leadership positions: Director of Maintenance (local), and Marketing Specialist (remote). Know anyone looking for new opportunities?

Closing Thought

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That’s all for this week! Have a great weekend. -Peter

P.S. Looking to reach 5,100+ property management company owners?

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