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Let’s say you want to grow your property management company fast. To give your business the quick boost it needs, you have two options: You can either a) buy another property management company, which gives you a quick way to get a lot more properties into your existing portfolio; or b) you can do Pay-Per-Click advertising via Google AdWords.
buy portfolio or ppcPay-Per-Click vs. Acquisition Costs
In many cases it is almost three times less expensive to acquire units with Google AdWords as opposed to buying a property management company. Let’s get into the figures:
When you acquire a property management company, you can expect to pay from 12 to 20 times their monthly management fee. So if their management fee is an average of $100 per month, you are paying $1,200 to $2,000 for each account you acquire.
With Pay-Per-Click via Google AdWords, you can pay to get on the front page of Google for searches related to property management in your service area. To acquire a customer through this method, it will be around $300 to $750, depending on where in the country you are located.
The Advantage of Buying a Property Management Company
There is one advantage to buying a property management company that you won’t get with Pay-Per-Click, and that’s volume and momentum. When you buy, let’s say, a 120-unit portfolio, that will give you momentum in the form of referrals and additional revenue. This gives you the ability to grow in leaps rather than one client at a time.
The Pay-Per-Click Advantage
One advantage of getting a client through Pay-Per-Click as opposed to buying a company is that when the client starts a management contract with you, they’ll usually stay an average of three to five years. When you buy a company, you get a portfolio of clients who are at different stages in the lifecycle. They might be ready to exit or perhaps they’re just beginning – you don’t know.
Buying a company can take a lot of time and effort. There are additional hurdles like having to involve your lawyers, building relationships with existing clients, making sure there are no previous issues with the properties, etc.
If you don’t have several thousands of dollars available to spend on buying a company, try Pay-Per-Click.
If you have any questions about either of these options or you’d like to talk about growing your property management business, contact us at Fourandhalf.