Prop Management:Build from scratch OR purchase existing business?

[P.J. Bremner]

Hey BP'ers,

I have spoken to a lot of investors out there over the last several years and I have heard on more than one occasion (from people who are significantly wealthy, not just a couple rentals here and there) that property management is the best long-term real estate business to be in.  The profits aren't significant, but they are STEADY and RECESSION PROOF.  I see this as taking a position similar to Warren Buffett, who touts long term wealth over short term, high volatility growth.

To that point, I would like to hear from anyone who has, or is currently, building a property management business from scratch.  I would also like to hear from someone if they have purchased an already, pre-existing property management company.  If you have, I would love to get your take on "From Scratch vs. Purchasing Existing".

On a side note, I remember listening to Buffett speak on YouTube and he mentioned that he looks for businesses with solid management, good client base but suffers from POOR CUSTOMER SERVICE.  From what I hear about property management companies, this seems to be the common theme among them.  If you have purchased a property management business, would you recommend going after a business with poor customer service but a good client base?  Thank you for your insight in advance!!

[Phil Earley]

Building a property management business worked for me.  The day I learned that not every landlord was meant to be my client was the day we were able to go from good to great.   Working with all my clients instead of that one squeaky wheel is still key to this day.   

Buying a business is a faster way for income but you'll need to factor in a bigger churn rate and be ready for some baggage.   Companies over 400 clients(clients not doors) seems to be the magic number for a company to start self sustaining itself.   

Over 400 clients gets you the steady stream of income to implement the systems and staff to achieve great customer service all of the time.