Whether you’re currently considering a “Second Act” career transition or consider yourself ready to launch an entrepreneurial business venture of your own, there happens to be a low-key industry you should investigate that can be easy to overlook. While it’s all around you and you most likely come into contact with this particular marketplace several times a day, you might not have heard of it, much less viewed it as a promising business opportunity.
Meanwhile, many of the typical red-hot franchise opportunities continue to enjoy their high-profile run of dominance, including booming sectors such as home improvement, commercial cleaning, and health and wellness. But in contrast, this particular industry seems rather content to fly under the radar, a quiet and steady player in the franchise marketplace that continues to benefit a small but definitely growing number of franchisees capitalizing on its scalability and success. And while it may not be the most glamorous concept ever to come down the pike, it’s built on a rock-solid business model predicated on generating steady, reliable, and recurring income, making revenue forecasting a highly predictable exercise.
Welcome to the understated, yet highly promising, world of… residential property management.
What follows is a market overview of the residential property management sector, the expectations and responsibilities of franchise owners who operate in this space, and how brands are benefiting from a confluence of factors, driven primarily by robust market demand. In this submission, we go behind the scenes to reveal what really goes into building and maintaining a successful property management business, and why now is the perfect time to consider this option for establishing a promising entrepreneurial future of your own.
Market Demand Unseen…is Untapped Market Demand
There’s no denying we’re currently experiencing a severe housing shortage here in the U.S., often labeled a “crisis” in many industry reports. According to the best available estimates, there are approximately 86 million single-family homes in the U.S., of which between 20-25 million are single-family rental (SFRs) units, including detached homes, condos, and flex units. Of these SFRs, somewhere between 50-75% (approximately 17 million units) are still being managed by the current homeowners themselves, who typically don’t understand – and don’t like dealing with the complexities of professional property management.
That leaves only six million of these SFRs under professional property management in a highly fragmented marketplace comprised of some 300,000 assorted operators. But many of these “mom-and-pop” operators have long been plagued by lackluster customer service and lengthy response times, resulting in a poor reputation for the industry in general. Yet by most estimates, the property management industry is worth $125 billion annually and is expected to reach $184 billion in 2030, thanks to a whopping compound annual growth rate (CAGR) of 5%. One final note to consider – the sheer number of single-family rental homes are currently at a seven-year high. But before you fall for the misperception of private equity investor wealth dominating the SFR marketplace, think again; to date, almost 90% of SFRs are owned by landlords who only hold between one and five properties in all. With an opportunity as obvious and attractive as this, it’s easy to understand the overarching need for property management done right.
Add it all up and it’s a golden opportunity for franchisors looking to bring professionalism to the residential property management space, backed by the highly refined systems, networks, and operations that make up their proven business models.
What Property Management Professionals Do
In addition to maintaining a current real estate license, the primary role and responsibilities of a property management executive are to act as a de facto landlord, handling all aspects of maintaining single-family rental units for paying tenants. This includes, but is not limited to:
- Maintenance and Repair Work – daily upkeep of property and handling service requests for the amenities therein
- Manage Finances – collection of monthly rent payments, maintaining security deposits, coordination of utilities and tax payments, and reporting
- Tenant Management – filling vacancies with qualified renters, running credit and background checks, leasing agreements, and – if and when necessary – eviction proceedings
- Compliance – ensuring the property complies with all local tenant-landlord laws, building and safety codes, and risk management assessments
What makes an ideal candidate for property management franchise ownership? Most agree that it includes individuals who are entrepreneurial, motivated, good at networking, have excellent problem solving skills, and a willingness to maintain strict adherence to the franchisor’s proven business model.
Why The Timing has Never Been Better
Robust market demand is one of the leading factors making property management an attractive proposition, but there are many others including:
- Mortgage Rates – inexorably tied to interest rates set by the Fed, stubbornly high mortgage rates have stifled lending and real estate activity in general. There is little interest in selling a home when the buyer will almost certainly be saddled with a higher mortgage rate. This has led to some market paralysis, meaning more renters entering the marketplace
- Higher Home Prices – home prices spiked during Covid and have yet to retreat from their inflated values. This puts home buying out of reach for many in the younger generation, which increases the number of renters nationwide. Compounding the problem, new construction starts – hobbled by costly tariffs on building materials and a severe labor shortage of skilled and unskilled workers – haven’t been able to outpace demand
- Unintentional Landlords – many property managers are there not by choice, but by circumstance. Unable to sell their previous homes in a highly competitive marketplace, many inexperienced property owners are forced to assume landlord duties they never wanted, nor needed before
- Highly Fragmented Industry – as we covered previously, the marketplace is flooded with over 300,000 “Mom & Pop” style landlords, most of whom only own between one and five properties. This environment lends itself to professional property management operations who can do the job better and much more efficiently
As home ownership becomes a less accessible proposition, many are left with no other choice but to rent a single-family home. And with more renters comes the obvious need for more landlords and property management groups. As an industry, residential property management is quickly becoming more professionalized to meet higher expectations from renters.
AI and Automation Driving Exponential Change
The influx of AI-related technology is also making life simpler for property management companies, with many franchises rolling out new platforms capable of screening high-quality tenants for optimal renters. They also offer secure online portals that provide tenants with convenient options to pay rent, upload repair tickets, and track progress of maintenance requests. This reduces the number of employees needed, driving down labor costs while enhancing the opportunity to scale the operation efficiently.
For entrepreneurial-minded individuals, property management remains a largely untapped market, bursting with opportunity at nearly every turn. The built-in security of having stable, recurring monthly revenue allows for predictable income forecasting – the essential building block for steady, long-term growth.
In summation, it remains true that property management doesn’t grab the majority of headlines in a franchise industry that boasts thousands of different concepts and a diverse set of business models. But if you’re looking for a dynamic opportunity in a fast-growing sector of the economy that promises stability and scalability at a minimum, you’ve found the place. If you can handle running a day-to-day operation that primarily focuses on balancing the needs of “tenants, toilets, and troubles,” the property management sector could be your ticket to fast-tracked entrepreneurial success.
