Property Management - Is the market saturated?

[Amiee_J]

Hi All

I am new so apologies if this is in the wrong place , please feel free to move.

A little history I suppose would put my question into context.. after an unexpected change in circumstances it has left me re-evaluating my next career move, and whilst I have always worked within the Accounting profession I have experience working for a national commercial property management company as well as construction I have always been drawn back to property.

Which has me thinking about branching out into the PM market, now this is a very initial thought without any research but a friend had me thinking.

Is the market saturated and is it possible to make a dent?

What are your thoughts? Is there still room for improvement?

Thanks

Amiee

[AndrewDod]

There are the small matters of

a) price
b) not acting like common crooks and rip off artists - which sadly most "property managers" have as part and parcel of their business model

So, no, it is not saturated. I would use professionals for many purposes. At the moment I choose not to, for the reasons above. I also choose not to use lawyers for most purposes -- for the same reasons.

[ram]

Have you identified your customer base ?

Either, you have to steal customers from existing agents, of find new ones.
If you cant find new customers, because they already have property managed by agents, then you will have a hard time tempting them to use your services.

So you get an office, have no customers on day one ( no one likes to have a property manager working from home ) and your income from your first customer of say 5 flats will input £83 per month.
To make it work, you want £ 3000 minimum per month. Thats 36 properties with 5 flats in each you need on day one !

That's why property management is usually run by estate agents who already have a business and offices, and add property management as a nice little earner, but don't employ professionals as the cost is prohibitive.

Or do you mean you want to be a letting agent as well ?

[Goobs27]

Unless you happen to be "gifted" a large number of let properties then it is a really slow business to build up. Most letting agencies do management as well so what would differentiate your business model and make a landlord choose you? We had a discussion on here a few weeks ago about some property management companies charging really low fees so it would seem pointless trying to compete with a company who are probably running their management business at a loss in order to attract clients.

Management isn't hugely profitable but we do it because it keeps landlords with us. We do a fair amount of canvassing and although we do pick up new properties all the time, over the last 10 years, I can count on one hand how many landlords have come to us mid-tenancy and asked us to begin managing their property.

I suspect the old farming joke could well be applied to property management -"how do you make a small fortune in property management? start with a large one..."

[HantsAgent]

Is the market saturated and is it possible to make a dent?

Probably [is saturated], depends on location. It's possible to make a dent but it depends on how much business you want/need to thrive/survive.

Most of the corporate or large independent agencies are making acquisitions of smaller firms for their lettings portfolios because they realise that natural growth is too slow (for them).

Again, there are loads of variables but if you wanted to build a portfolio of, say, 100 properties, it can probably be done in 1-3 years*

Is there still room for improvement?

Always, what are you going to do differently/better?


*I would add a caveat to all of this; if you aren't going to be a front end letting agency as well (advertising and finding the tenants) then this stands little chance of being a success.

[loanarranger]

I think the proposed changes in the law affecting the apparent abolition of fees being levied against tenants will have a marked effect on the viability of running a Lettings Agency; according to a report this afternoon ARLA predict this could result in a loss of at least 4000 jobs , unless their office costs can be recouped from charging Landlords more than is levied at present I just wonder if the number of agencies will reduce.

I would welcome views from other forum members since this potentially is going to have an impact on all property investors who don't directly manage their own properties.