Has anyone looked at building/HOA management companies?

June 13, 2018

by a searcher from Bentley University in Boston, MA, USA

Has anyone looked at management companies? It's business to business with recurring revenue so they seem potentially attractive. With a strong urbanization trend and new buildings going up in every city I'd guess it is a growth market as well.

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Reply by a searcher
from University of Pennsylvania in Chicago, IL, USA

This is an interesting idea; a contact of mine was considering launching a property management company. I have some experience (I self-manage a 3-flat in Chicago) and my only reservation on this idea is that for it to scale you need to be able to hire good tradesmen/women or if you sub-contract then you need to find responsive contractors (unhappy tenants = bad for business). In Chicago at least, electricians, plumbers, etc. have more work than they can handle and the existing contractors are short-staffed and looking to hire. I am trying to have gutters cleaned at the moment and have to wait 45 days to get someone scheduled. The business model though is great. No assets, recurring revenue, ability to deploy technology to increase efficiency and differentiate the business from competitors. The hiring of high quality tradesmen is what might scare me though.

Reply by a searcher
from Bentley University in Boston, MA, USA

Thanks for the feedback Matthew. High quality tradesman seems to be an issue in a lot of business to business services. It is a concern but if most management companies are dealing with the same issue your service would be comparable in terms of quality. Not great, but a place to look at improving. If everyone has crap service because of the same issue isn't not a disadvantage. Anyone else look at these? I'm wondering about the margins. I read a short article that said they're not great.

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