Should I do an 75/25 Split on a Property Management Business?

[Michael Sears]

Hi BP Community,

A colleague of mine has owned a property management business for 10 years. He has been wanting to expand into the area in which I live, and I have been wanting to start my own property management company. He says he will teach me everything I need to know and that I can utilize his software and system and that he will split any business I bring in 75/25 (I get 75). 

I think it would be great to NOT have to build my business from scratch; however, I wonder if I will be kicking myself a year from now, wishing I didn't have to give away 25%. And I am wondering if the margins are already too thin in property management and if giving up 25% would make the whole business not even worth it.

I was the in-house property manager at a few different multi-unit buildings for several years, so property management is not foreign to me. I am pretty resourceful, too, and I have started a few small businesses in the past, so I am not intimidated by the thought of doing it myself. It would be really nice, though, to join forces with a company who already has brand recognition in the area and also has its infrastructure in place.

I am wondering if anyone has any advice or creative input as to how I should structure this new business arrangement. Perhaps I should give him 25% at first, but then decrease that amount over time? My other thought is - what if he wants to sell the company at some point? Or what if I do?

Any advice would so greatly appreciated.

Thanks,

Mike