Investing in Affluent Areas?

Question

I am in the process of researching the feasibility of investing in a property management franchise.  The territory I am looking at is primarily an affluent area in the North Atlanta suburbs.

Is this a smart move to secure such a location or does it make sense to focus in more distressed territories?  Of course would prefer to engage in higher end, just trying to gauge if the demand will be there.  Are single family homes a target investment to buy and rent?

Thanks for any feedback,

Travis Sperr · Answer

@Anthony Gioia I own and manage 10 properties in class c neighborhoods, I have found that it is all about picking the right tenant and has very little to do with the properties. I have had tenants I never hear from, pay on time and the place is spotless when I do inspections. Of course that doesn't mean it will be that way all the time, but at the same time I have witnessed high end rentals get trashed- and it is a lot of money to rehab a 4,000 sq ft house. You will pick your niche and have to build a business. No question that it is more likely that a higher priced rental should attract a tenant that can do some of the small repairs and not call you.

Two things that stand out to me:

You mentioned traffic - as a property manager your highest value is not driving to the properties. I very rarely get in my car after a lease up - I make phone calls and every person I use for repairs gives me a progress report.

If you already have property management experience, why buy the franchise? why not find and close the leads on your own?

Two things that stand out to me:

You mentioned traffic - as a property manager your highest value is not driving to the properties. I very rarely get in my car after a lease up - I make phone calls and every person I use for repairs gives me a progress report.

If you already have property management experience, why buy the franchise? why not find and close the leads on your own?

Anthony Gioia · Answer

@Rick Baggenstoss

Thanks for the feedback, I understand your point.

I Could not find an existing business for sale.  For me, the benefit of the franchise route are the tools, processes and business support it provides, it is still up to me to effectively build my network and customer base.

Rick Baggenstoss · Answer

@Anthony Gioia Another aspect of your question is about buying a franchise for property management.   I'd think twice before doing this.

Look hard at buying an existing property management company in the area where you want to set up before buying into a franchise.  A lot of the business setup for PM is readily available thru networking, online services, etc.  However, a growing, happy to refer you customer base, can be acquired or built but not franchised, IMO.

PS - I'd pick Northern Atlanta OTP.

Anthony Gioia · Answer

@Travis Sperr thanks for the feedback, very helpful.

I agree with your first point, makes sense.

The reason I am thinking franchise is because my experience actually managing properties is minimal, all done while working a high demanding full time corporate job.  I am currently being paid via severance and once this expires I can not afford a long and slow ramp up.  In addition to my ramp up timing concerns, my goal is to manage a high volume of properties in order to earn the income desired.  That being said I feel the franchise route will enable me to support such a growth model without compromising customer service and quality.

Anthony Gioia · Answer

Thanks for the replies @Travis Sperr and @Jeff  S.

The reason I am trying to focus on this area is two fold:

- Rather deal with higher rents and potentially less maintanece calls

- It is were I live and would rather not travel so much in the brutal Atlanta traffic

Am I setting myself up for failure?

Jeff S. · Answer

Property management in distressed areas is great for the owner and terrible for the manager. As a manager, if there is that much in the way of higher end rental then that would be my choice. In other words, unless you are a hardened property manager used to all that goes with low end stuff, I'd avoid that nightmare.

Travis Sperr · Answer

@Anthony Gioia as I am sure you are finding there are typically less rental or non-owner occupied homes in affluent areas. Immediately your potential client pool is smaller than a less attractive area. I think it is also misnomer that more affluent neighborhoods produce better tenants, that is not always the case. This is not to say that there is not money in this strategy, you will just have to find weather or not it is a good fit for your business plan.

Investing in Affluent Areas?

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