Family Management Company

[Mark Jackson]

Revamping a Family Legacy: Our Plan for a More Efficient, Profitable Portfolio

The puck is finally being passed, and we're stepping up to take the shot.

For over 30 years, our family's real estate portfolio of 350+ units, including two large complexes (~150 units each) and various offsite properties, has been managed in-house. While this approach has kept things running, it's become clear that a complete reorganization is necessary to improve efficiency, data tracking, and overall performance.

Our Mission: A Smarter, More Strategic Approach

A few family members have been tasked with creating a dedicated Management Company to oversee the portfolio while also providing advisory services. We've assembled a strong team and have a solid network of industry advisors.

But here's our biggest challenge: convincing an old-school, penny-pinching grandfather that investing in proper management, maintenance, and renovations will ultimately increase long-term profitability.

The Reality: Change is Necessary

Decades of deferred maintenance, below-market rents, and outdated/ under-supervised management systems mean one thing: expenses will rise before we see major returns. Payroll costs at our larger sites will increase, as more work needs to be done. To tackle this, we're structuring two core companies:

1. Management Company: Oversees operations, leasing, unit turns and on-site staff.

2. Renovation Company: Completes most extraordinary repairs/renovations 

Proposed Fee Structure

- 10% management fee

-  Owner covers payroll for four on-site staff (2 maintenance techs, 2 community managers) and maybe limited payroll for some of us who will be on-site full time as well? 

Renovation Company handles major work, with rates at roughly 70% of market for cost-effective improvements

This setup allows us to manage the portfolio efficiently while also earning fair compensation for the labor-intensive projects that have been neglected for years.

Seeking Feedback & Insights

Does this structure seem viable for a family-owned and operated portfolio? Are there industry best practices or resources we should explore as we refine our systems and contracts? It feels like we are in a unique position but surly there's people like us out there that have had to reorganize from scratch.. 

I'd love to hear from others who have navigated similar transitions.. thanks!