Preparing Your Property Management Company for a Profitable Sale with Scott Duke of OpnRoad

Welcome back to The Property Management Show.

On today’s episode, we’re talking to an expert on mergers and acquisitions, who has specific experience in property management. We’re talking to Scott Duke, of OpnRoad. He’s talking about the things that make a difference in the sale of a property management company. Your buyer and your profit will depend a lot on your contracts, your efficiency, and your team.

Introducing Scott Duke

Scott and his wife bought and ran a property management company in Revenstoke, Canada. They grew their company for seven years and then sold it for 10 times the amount of what they bought it for. The company was sold to Western Trust, a private equity company out of Utah. Before that, he worked at a property management company in Ontario. He has experience working with three-person companies and those that have a staff of 25.

His story of buying and selling that Canadian property management company is a bit of a cautionary tale.

When they bought the company, there were 30 properties under management. Out of those 30 properties, only six had proper contracts with the owners. It wasn’t a sellable asset when they took it over. But, what they really wanted to buy were the brand and the website, and otherwise it felt like they were starting from scratch. It was not a massive acquisition.

Scott realized that he thought property management meant taking care of people’s properties, but really, he was managing finances. It’s a cash in – cash out business model, and he had to make sure his owners had the money they needed for their mortgage payments.

One specific event triggered his desire to sell that company.

It was Christmas Day in 2016 or 2017, and he was under a trailer, defrosting pipes so the family living there could have water on Christmas. That’s when he realized he didn’t want to own the company anymore.

When the owner is under a trailer with frozen pipes, you know that the company relies too heavily on that owner.

So, he spent three years making it an acquirable asset. Scott wanted the company to be something that someone would want to buy.

The starting point? Making the business less dependent on Scott.

Making a Property Management Company Less Owner-Dependent

Scott says it’s all mindset.

At OpnRoad, Scott and his team sell businesses. They work within all industries, but a lot of businesses they sell are property management companies. They all have to get to a certain size before they can be sold. So, he’s talking about owner dependency all the time.

How do you remove yourself from that dependency?

Scott says you will be trapped in your business until the business cracks through the million or two million revenue mark. Until that point, there’s just not enough cash in the business to pay to replace yourself. You are buying your time and you’re buying your freedom.

You want to focus on yourself as a business owner, not a business operator.

A lot of owners get hung up on the idea that no one can do what they do as well as they do it.

Scott tells entrepreneurs to embrace that. It’s true. But, it won’t be that way forever. The person you hire isn’t going to be as good as you on Day One. The training and the investment into that person makes them as good as you.

His slogan is this: Every Day a Step Away.

You’re getting a further step away from operating your business every single day.

How to Avoid Hiring Bad Apples

A lot of business owners worry about investing time and training into someone who may not work out. Having hired across 11 companies with a total of more than 200 staff, Scott understands that bad apples do get into the bunch once in a while. He has a specific model:

* Be a good leader: Make yourself better. The people you attract to your company will be 70 percent as good as you are.