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With a highly fragmented industry and more young people holding off on owning a home, metro Detroit entrepreneur Jeff Hurley sees room for considerable growth in the residential property management space.
Hurley — the owner of Troy-based Real Property Management Metro Detroit franchise operation — this week closed on the acquisition of 21 Property Management, also based in Troy, doubling the number of homes in his portfolio.
With now about 800 homes within his portfolio and plans to grow that further, Hurley and others say that demographics — both in terms of who owns and manages the homes, as well as who rents them — is driving the growth opportunities.
“We find, especially in metro Detroit, that there’s a lot of investors that have these second homes that they don’t want to unload,” Hurley said, pointing to low, locked-in interest rates as one reason for people holding on to the homes. “So they’ll keep the house (and) we’re in a great position to help them grow their assets.”
“21 Property Management represents my life’s work,” owner Mike Petrevski said in a statement. “I wanted to shift my focus to my other real estate ventures with the certainty that my property management company, its employees, and the valued property owners and tenants we serve would be in the best hands possible. I am confident that Jeff Hurley and his team at RPM Metro Detroit share my vision and commitment to customer service and are the right people to lead this company forward.”
Financial terms of the deal were not disclosed, nor was an annual revenue figure. Hurley said the valuation was calculated using earnings before interest, taxes, depreciation and amortization (EBITDA), but said some other deals are done simply using a per-door calculation.
A specific ranking of metro Detroit property managers by number of units was not available, but sources familiar with the space said that with about 800 units in his portfolio, Hurley’s company would rank among the largest independent operators in the region.
The residential property management space makes for a highly fragmented industry, with the 50 largest operators in the country having only about 20% of the total market share, according to figures from the National Apartment Association.
Such figures make the industry ripe for consolidation as other operators such as Petrevski seek to exit. Hurley said he expects to again more than double the number of units he manages in the coming few years.
Also helping drive growth for residential property management firms are challenging market conditions for buying a home, largely due to elevated mortgage interest rates and high home prices stemming from limited inventory.
Given that reality, Hurley said renting a home simply makes sense for a lot of younger people. He noted that the homes he manages are across the region and in some of the more expensive areas, such as Bloomfield Hills.
“I don’t know how kids today come out of college, or even in their 30s, buy a house in Livonia or Berkeley, because the cost is so high,” Hurley said. “So they almost have to rent, save their funds and buy at an older age.”
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