When buying or selling a property management business, you will be presented with different ways to structure a deal. It is important to understand the key differences of these deals.
Buying an entire property management business
This property management deal is as simple as the title. The sale involves the entire business and all of the assets that it includes. This type of deal is desirable because often times you receive a “turn-key” ready business that has employees and processes in place. All the Buyer has to do is jump in and continue the role of the past owner. Typically this type of deal includes branding, a website, a vehicle, employees, and relationships/subcontractors in place. Putting together a deal like this is usually simpler in terms of proving financial history and business performance. Tax returns and Profit & Loss statements are usually easy to come by in this deal. This type of deal is generally most desirable to Buyers who are looking at obtaining an E2 Visa.
This property management deal involves a new franchise. The franchise typically has a very large inventory of short term rentals under their umbrella. Typically these accounts are already being managed. This deal is typically attractive because of the experience and backbone that the franchise provides. Most often the franchise handles the brick and mortar storefront, has support programs and training in place for franchisees, and has a replacement guarantee on accounts. The replacement guarantee is not seen in either of the other deals. This type of deal is great for E2 Visa buyers because they can "piggyback" on the success of the overall franchise.
A "carve off" is a property management deal that includes a certain number of accounts that are carved off from another, larger, parent property management company. This type of property management deal is more complicated than the others. One advantage though is that generally the "carve offs" go at a lower price than the larger complete property management businesses which open it up to a larger Buyer pool. Typically in a carve off, you are buying only the management contracts. You usually do not receive a vehicle, branding, or employees in this type of deal.
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