Buying a property management company

[Al Phillips]

I own a property management company and manage about 115 properties.  A dear friend of mine has passed away and her heirs are now selling her property management company.  She has approximately 120 properties.  Does anyone have any idea what a company like that is worth?  They collect about $10,000/mo in management fees.    They would like to sell it and I would like to buy it but have no idea how much her company is worth.  

[Tracy Streich]

$800-$1200 per door is typical or 1 x gross.  This matches up with 120 properties at $1000 per door and $120,000 per year in revenue.   Keep in mind you are only buying contracts and you have no relationship with the person under contract.   PM contracts are very easy to walk away from.   I suggest Paying partial down say 50% and then paying out the additional on a payment scale over the next 36 months based on overall retention.   If some of the contracts leave you take that off the end payments.   Make sure you are ready to double the number of properties you are managing!