American’s are obsessed with being #1. The United States has a place in history as the world’s remaining “superpower”. And would we celebrate being #2 in economic output, military strength or technological innovation? Probably not.
But what about in our chosen business? Is being #2 considered failure? Let’s pick some businesses at random. How about owning the second-largest movie theater chain in America? Or being second is total sales of popcorn, or cars, or erasers? Are these business failures? On the contrary they are probably wildly successful. In the restaurant business, how many #2’s are there to the golden arches representing billion-dollar businesses?
In property management, you have a lot of numbers to count that can convey your standing in a market. For example, in market X there are 4,300 total rental units. Of these 1,500 are owned and operated by the ABC REIT with the remaining units making up the universe of rental property to manage. This could represent a single submarket within a larger market.
Having a market share equal to 50% of the remaining units is a great accomplishment with room for growth. And, REITs sell deals. Their 1,500 owned and operated units are in a constant state of flux. In fact, if their ownership drops below a certain number of units they may look to exit from management altogether. This means they will have a need for third-party property management. And guess who’s there to catch this business…the strongest #2 player in the market.
Size the numbers to the markets where you compete and realize that being #2 is not necessarily a bad thing. This position can attract offers to run large portfolios and catch sizable deal flow from owners that have decided to part ways with their current management. Many REITS only manage assets owned by the REIT. Thus, while they are competitors for Residents in the marketplace they are a non-factor for property management of other assets within the market.
- Is there a large owner in your market that exclusively self-manages? Are they a potential referral source?
- Do you know your standing in the markets where you compete? Are you #2?
- How many companies in your market are vying for the same exact business? Are these businesses for sale?
- Are you looking to purchase a property management company? Contact Ernest@powerhour.com