1.0 Executive Summary
The purpose of this business plan is to secure a $75,000 revolving line of credit for the development of a residential and commercial property management firm based in Tampa, Florida. Deutsch Tampa Management Group LLC (“the Company”) was founded by Matthew Deutsch with the intention providing a wide range of comprehensive management services on behalf of property owners. The business will commence revenue generating operations in the third quarter of this year.
Operations
The primary revenue center for the business will come from the ongoing management of residential properties throughout the greater Tampa metropolitan area. As this is a population dense market, there are numerous real estate investors that own single-family homes, multifamily properties, and condominiums that are in ongoing need of management. The scope of these services will include tenant relations, managing vacancies, and completing small repairs of properties when needed.
To complement the Company’s primary operations in the field of residential real estate, the business will also provide a wide range of services specific for the needs of commercial property owners. This will include thorough vetting of potential retail businesses that will be within their facilities, rent collection, eviction management, and related services.
The third section of this property management business plan will further document the operations of the Company.
The Financing
As noted above, the Company is currently seeking a $75,000 revolving line of credit in order to establish its property management operations. These funds will primarily be used for working capital purposes so the business can onboard its initial clients and reach profitability. Matthew Deutsch will contribute $25,000 towards the development of the business.
Moving forward, the Company could easily expand its operations through the acquisition of additional financing. This document assumes that the Company will use its retained earnings to further promote and expand its property management operations.
The Future
Through extensive marketing, the Company will continue to expand the scope of the number of clients that has in the coming years. If it is economically feasible to do so, the Company may also establish satellite offices in other markets in Florida.
Market Overview
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The revolving credit facility and equity investment will be used as follows:
2.2 Management and Investor Equity
Matthew Deutsch is the 100% owner of Deutsch Tampa Management Group LLC.
2.3 Exit Strategies
As property management for generate recurring revenue from their operations, there would be immense demand among competing businesses to acquire the operations of the business. In the event that the business is to be sold, Matthew Deutsch will work with a qualified business valuation expert to determine a fair price for the business. A qualified business broker will then be hired that has a specialty in marketing real estate businesses for sale.
3.0 Operations
As discussed in the executive summary, the Company will be actively engaged with providing a wide range of property management services for both commercial properties and residential properties. In exchange for these services, the Company will receive a fee equal to 10% of the aggregate rental roll. The business will also generate more modest income when fixing issues with a client’s property.
The scope of the Company services will include tenant placement, tenant relations, eviction management, property tax management, utility bill remittance, rent collection, minor repairs, and addressing emergency matters. The Company will have numerous contractors retained so that in the event of emergency, they will immediately address the issue.
The Company will directly employed staff of property management agents so that full control of their work can be achieved. The Company will continue to expand its personnel in the coming years.
4.0 Overview of the Organization
4.1 Registered Name
Deutsch Tampa Management Group LLC. The Company is registered as a limited liability Company in the state of Florida.
4.2 Commencement of Operations
The business will commence property management operations in the third quarter of this year.
4.3 Mission Statement
The Company’s mission is to provide exceptional property management services on a cost-effective basis.
4.4 Vision Statement
To become the pre-eminent property management firm within the Tampa metropolitan area.
4.5 Organizational Objectives
• Implement numerous marketing campaigns that will onboard real estate investors that are seeking comprehensive property management solutions.
• Adhere to all laws and regulatory frameworks regarding rendering property management services.
• Established ongoing relationships of real estate brokers that will outsource the services to the Company.
• Continued to expand the types of property management services offered in order to increase revenue organically.
• Potentially enter the field of industrial property management as this is a lucrative segment of the industry.
• Provide gainful employment opportunities for the Company staff.
• Become a member of numerous real estate associations within the Tampa and Central Florida area.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of the property management business plan will focus on the current economic climate, the property management industry, the demographics, and the ongoing competition at the business will face.
Inflation has caused significant concern among real estate investors throughout the United States. This can ultimately lead to higher financing costs while reducing the value of a client’s property. The government is taking appropriate measures to address this matter.
However, the Company is operating within the Tampa metropolitan area. This is a highly population dense market that has numerous properties that are available for rent. As such, the Company will find a significant audience of real estate investors that are seeking comprehensive solutions for their real estate management needs.
5.2 Industry Analysis
As of this year, there are 350,000 enterprises that are actively involved in providing residential and commercial property management services. These businesses generate $140 billion a year while providing employment for nearly one million people.
This is a mature industry, and its future growth rate will be similar to that the economy is a whole. There are no major trends within this industry with the exception of integrating technology into all assets of the property management process.
5.3 Customer Profile
Any individual or company that owns residential or commercial real estate is a potential client of Deutsch Tampa Management Group. Generally, these entities will typically have 5 to 10 properties within their portfolio and produce an annual rent role of $100,000 to $750,000. The business will use this profile during the course of its marketing operations.
5.4 Competitive Analysis
As property management firms produce highly recurring revenue, there is a significant amount of competition among entities that provide the service. The Company will maintain a major differentiating factor as the business will provide both residential and commercial property management services. The business’ ability to provide minor repairs will also provide a competitive advantage.
6.0 Key Strategic Issues
6.1 Sustainable Operations
Deutsch Tampa Management Group will have sustainable operations as a result of the following:
• Recurring fees of revenue will ensure the financial stability of the business in the coming years.
• An owner that has more than fifteen years of experience with residential and commercial property management.
• Significant demand in the Tampa metropolitan area.
• The Company can easily scale operations to include other markets in Florida given that this is a state that has a significant number of rental properties.
6.2 Basis of Growth
The Company will expand via the following methods:
• Continued to expansion the Company’s marketing campaigns with a focus on targeting real estate investors.
• Establish ongoing relationships with real estate brokers that will provide ongoing referrals.
• Expansion of operations to include the management of industrial properties and mixed-use properties.
7.0 Marketing Plan
7.1 Marketing Objectives
• Conducting extensive direct outreach with real estate investors within the Tampa area.
• Frequently attend real estate focused trade shows within the target market.
• Maintain an expansive online presence, so the business can be quickly found through search engines.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• Property management operations will commence in the third quarter.
• First year revenue will reach $372,000.
Year 2
• The business will onboard additional real estate investors this year.
• Revenue will reach $465,000.
Years 3-5
• By year five, the Company will manage 120 properties.
• Revenue will reach $764,000.
7.4 Marketing Strategies
The scope of the Company’s marketing will be highly targeted towards real estate investors that are based in the greater Tampa metropolitan area. The Owner has extensive experience within this industry as well as this specific regional market, and he will conduct extensive direct outreach with his current contacts in order to onboard them as clients. Throughout the life of the business, the Company will continue to engage direct outreach initiatives with both real estate investors, as well as real estate brokerages that will provide referrals. This will be the principal way that the Company acquires its client base
The Company will also maintain an expansive online presence that showcases the end-to-end property management solutions. This website will feature numerous videos that highlight the comprehensive capabilities of the Company. The website will undergo a substantial degree of search engine optimization specific for the Tampa market area.
The Company will also take out advertisements in real estate circulars and real estate journals within the Tampa area. The business will use half page and full-page advertisements that showcase its property management capabilities.
As it relates to social media, the Company will maintain pages on Facebook and Instagram, but it will focus heavily on LinkedIn. The pages on Facebook and Instagram will be primarily used to boost online visibility. On LinkedIn, the Company will use targeted advertisements among people that indicate they invest in real estate within the Tampa area.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• The Company will acquire a $75,000 revolving credit facility.
• The owner will contribute $25,000 as equity.
• Deutsch Tampa Management Group will have a compounded annual growth rate of 22%.
9.2 Financial Highlights
• The Company will produce highly recurring revenue from its operations
• Payroll will not exceed more than 50% of aggregate revenue.
9.3 Sensitivity Analysis
The Company’s revenues are moderately sensitive to changes in the economy. During economic recession, property owners may take on the role of managing their own properties in order to save costs. However, for entities and operate numerous properties within the Tampa area – it is far more cost-effective to outsource management to an enterprise like Deutsch Tampa Management Group. The highly recurring streams of revenue produced from ongoing property management will support the operations of the business.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
SWOT Analysis
Strengths
• Limited competition among companies that can provide residential and commercial property management services.
• The business will be able to easily scale operations through increased marketing and additional hiring of personnel.
• Relatively low costs will ensure that the business is able to remain profitable at all times.
• The Company is operating in a highly population dense market that has numerous rental properties.
Weaknesses
• Substantial competition from established property management firms in the target market area.
• Moderately high cost relating to onboarding new clients.
Opportunities
• Expansion of operations through increased marketing and by integrating industrial property management.
• Potential acquisition of property management firms that are already in operation.
• Expansion of operations to include real estate brokerage services.
Threats
• Ongoing issues with inflation may be the demand for comprehensive property management services.
Risk Analysis
Development Risk – Low
The service architecture that will be employed by Deutsch Tampa Management Group has already been developed. The primary matter that needs to be addressed to securing the revolving credit facility discussed in this document.
Financing Risk – Low/Moderate
The risk related to the financing saw in this document are ameliorated by the recurring nature of revenue produced. Once the business onboards its initial clients, Deutsch Tampa Management Group will be able to reach profitability quickly.
Marketing Risk – Low
The Company will continue to use and expand upon the marketing strategies discussed earlier in order on board real estate investors. The business will use extensive direct outreach to reduce marketing risks.
Management Risk – Low
The owner is a highly experienced property management professional, who understands the complexities of managing these businesses on a day-to-day basis.
Valuation Risk – Low
The valuation risk is offset by:
• Recurring revenue will ensure economic stability and a significant valuation.
• Strong and continued demand for property management services within the target market area.
• The business could easily be sold to a third-party.
Exit Risk – Low
As noted earlier, in the event that it is economically viable to do so the business could be sold for a significant premium to a third-party property mansion firm. This event is not expected to occur for a minimum of ten years.
The Property Management Firm Business Planning Process
Property management firms are extremely popular among real estate investors that are seeking to maximize the return on their property investments while also taking a hands-off approach to the day-to-day issues that occur. One of the most important aspects of a property management firm is that it is able to produce highly recurring income from rendering a wide spectrum of services including tenant management, tenant placement, eviction management, and ongoing repairs to client properties. Generally, these businesses receive a fee equal to 10% of the total rent roll, although this may vary depending on the complexity of the management services that are offered. These businesses are highly stable, even during challenging economic climates, especially once a large client based at real estate investors has been secured.
Through the course of the property management business plan development, we focus very heavily on the number of rental units that are within any given regional market. Generally, most property management firms that operate outside of major cities typically will provide their services to residential and commercial units that are located within a 25-mile radius of their headquarters. As part of our analysis, we did not only take a look at the number of rental properties that are available, but we also examine the total size of the area in regards to population as well as median household income. In wealthier areas, there tends to be much higher prevalence of property management firms. Once we determine the number of available rental properties, we then focus on the number of real estate investors that are actively in engaged in the regional market. This allows us to form the service obtainable market, which is imperative for the development of the financial model.
As it relates to the property management firm financial plan, we always conducted this analysis over a five-year timeframe. Using the information that we received during the course of the market research, we then develop the revenue profile based on whether or not the business is going through providing services to residential properties, commercial properties, or a mixture of both. The scope of the financial model includes a profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, as well as all applicable business ratios for the property management industry. A significant focus is shown within the financial model on how revenue will scale over the five-year timeframe as new clients are onboarded and as a greater number of properties come under management.
We then move on to developing the property management marketing plan. Very importantly, we focus on establishing ongoing relationships with realtors that do not directly render property management services as part of their operations. This presents a unique opportunity to receive ongoing referrals, especially among realtors that specialize in finding viable properties on behalf of their clients. As this is not a consumer facing business, we take a highly focused to approach to the marketing plan in order to ensure that the business can effectively reach a number of real estate investors within the regional market. We also discuss the use of online marketing strategies with a focus on pay per click marketing and the long-term use of regional search engine optimization. One of the other components of the marketing plan is to join numerous real estate focused associations in order to further brand visibility among real estate investors that are seeking to have their properties managed by a third-party firm.
The fourth phase of the development is the discussion regarding the operations of the business. Throughout this chapter, we focus on the wide range of services that will be offered by the property management firm as noted above. We also discuss partnering with general contractors as well as subcontractors in the event that the property owner requires significant improvements, which can be managed by the company. One of the other things that we indicate is human resources regarding the number of property managers that will be hired based on the number of residential and commercial units that are under management. Regulatory matters are also addressed in this chapter as well.
Now that the foundation of the property management business plan is complete, we now focus our efforts towards the risk analysis, SWOT analysis, as well as the initial launch of the business. As it relates to establishment and launch, we typically will include a Gantt chart that showcases on a month-to-month basis have the business will roll out its marketing strategies to onboard clients. This is complimented by a Gantt chart second table that showcases how the working capital will be allocated during the early months of the business in order to ensure that it can reach profitability.
As it relates to the SWOT analysis, we focus very heavily on the strength of the business given that these companies are able to produce highly recurring income from property management services. As relates to weaknesses, this is a highly competitive industry given its lucrative nature. For opportunities, a significant focus is placed on the establishment of additional offices once the business has reached its maximum capacity in its initial market. As relates to threats, outside of competitive issues this is typically a business at tends to remain stable at all times.
We then move into developing the property management executive summary, which focuses not only on providing an overview of the operations of the business, but also how the company intends to expand its operations over the five-year timeframe. A snapshot regarding the anticipated financial results, including a quick overview of the underlying assumptions is included in this chapter as well. In most instances, if available, we will also include a biography of the founder in the executive summary.