Originally published: 26/12/2022 12:18
Last version published: 08/01/2024 08:51
Publication number: ELQ-95466-2
View all versions & Certificate
Last version published: 08/01/2024 08:51
Publication number: ELQ-95466-2
View all versions & Certificate
Property Management Business: Forecasting Template
This template was designed for new or existing property management businesses to create 5 year financial forecasts for revenues, cash flow, and IRR.
property management businessproperty management softwaresaasdcf analysisfinancial modelfinancial templateproperty managementirrcash flow analysisvisualizations
Description
As a dynamic 5-year financial model, this template was built with great care and covers nearly all financial basis of starting, operating, and potentially exiting a property management software business. It is actually quite similar to an enterprise SaaS operation except the revenues are driven off of rent values and not just customer contract values.
The unique characteristics of a property management business presented some challenges in the best way to structure revenue assumptions, but the result was a really flexible and dynamic tool that anyone can use.
Main Templates Features:
- Up to 5 Year Forecast
- Output Monthly and Annual Financial Statements
- DCF Analysis / IRR / NPV / Equity Multiple / Option for joint venture / cap table with outside investors
- Stunning visualizations
- Annual Executive Summary
You can drive revenue through the use of two customer configurations. Each works the same way and allows the entry of new customers onboarded (property owners are your customers in this case) per month, the average units per customer, and the average monthly rent per customer. All of these things will drive rent / units under management and used to calculate revenues over time.
This accounts for rent growth as well if the primary property management fee is to be based on monthly rents. There is also an option to charge this fee as a flat fee per customer or a flat fee per unit.
Like a SaaS business, these customers will often be using the property management company's software and there is likely going to be contract terms that may be some number of months long. This is an input for each customer configuration as well as the average retention rate at the end of each contract term.
Other revenue channels include application fees, repair and maintenance fees, and one-time onboarding fees. These have their related variable costs as well, which are driven on a per unit basis.
A separate fixed costs schedule exists to allow for easy accounting of operationg overheads like managers, sales staff, office rent, legal fees, and other fixed ongoing costs that don't scale with revenues directly.
Everything comes together in monthly and annual detail tabs that show revenues, gross profits, EBITDA, and cash flow as well as everything inbetween.
There are some other things to consider when starting a property management company.
Several risks are involved in running a property management business, including:
Legal risks: Property management involves dealing with a variety of legal issues, such as landlord-tenant law, fair housing laws, and health and safety regulations. It is important to be familiar with these laws and to follow them closely to avoid legal problems.
Financial risks: Property management businesses often handle large sums of money, and there is a risk of financial loss if the business is not properly managed. This can include losses due to unpaid rent, damage to the property, or financial mismanagement.
Liability risks: Property management businesses may be held liable for injuries or damage that occurs on the property, even if the incident was not their fault. It is important to have adequate insurance coverage to protect against potential liabilities.
Reputation risks: Property management businesses rely on their reputation to attract and retain clients. A negative reputation can lead to a loss of business and damage to the company's bottom line.
Employee risks: Property management businesses often have a large number of employees, and there is a risk of employee injuries or accidents on the job. It is important to have proper safety measures in place and to follow labor laws to minimize this risk.
This template is also included in three bundles:
- All Models Bundle: https://www.eloquens.com/tool/P8Y4TX4v/finance/financial-forecasting-models/financial-models-120-useful-and-usable-logic
- Real Estate: https://www.eloquens.com/tool/vJdYH9R7/finance/real-estate/the-complete-real-estate-bundle
- Business Sector Specific Startups: https://www.eloquens.com/tool/lrNGt2jL/strategy/business-plans/business-sector-bundle-35-bottom-up-financial-models
- SaaS / Subscription Models: https://www.eloquens.com/tool/wmyQI0eE/finance/venture-capital/the-complete-venture-capital-bundle
As a dynamic 5-year financial model, this template was built with great care and covers nearly all financial basis of starting, operating, and potentially exiting a property management software business. It is actually quite similar to an enterprise SaaS operation except the revenues are driven off of rent values and not just customer contract values.
The unique characteristics of a property management business presented some challenges in the best way to structure revenue assumptions, but the result was a really flexible and dynamic tool that anyone can use.
Main Templates Features:
- Up to 5 Year Forecast
- Output Monthly and Annual Financial Statements
- DCF Analysis / IRR / NPV / Equity Multiple / Option for joint venture / cap table with outside investors
- Stunning visualizations
- Annual Executive Summary
You can drive revenue through the use of two customer configurations. Each works the same way and allows the entry of new customers onboarded (property owners are your customers in this case) per month, the average units per customer, and the average monthly rent per customer. All of these things will drive rent / units under management and used to calculate revenues over time.
This accounts for rent growth as well if the primary property management fee is to be based on monthly rents. There is also an option to charge this fee as a flat fee per customer or a flat fee per unit.
Like a SaaS business, these customers will often be using the property management company's software and there is likely going to be contract terms that may be some number of months long. This is an input for each customer configuration as well as the average retention rate at the end of each contract term.
Other revenue channels include application fees, repair and maintenance fees, and one-time onboarding fees. These have their related variable costs as well, which are driven on a per unit basis.
A separate fixed costs schedule exists to allow for easy accounting of operationg overheads like managers, sales staff, office rent, legal fees, and other fixed ongoing costs that don't scale with revenues directly.
Everything comes together in monthly and annual detail tabs that show revenues, gross profits, EBITDA, and cash flow as well as everything inbetween.
There are some other things to consider when starting a property management company.
Several risks are involved in running a property management business, including:
Legal risks: Property management involves dealing with a variety of legal issues, such as landlord-tenant law, fair housing laws, and health and safety regulations. It is important to be familiar with these laws and to follow them closely to avoid legal problems.
Financial risks: Property management businesses often handle large sums of money, and there is a risk of financial loss if the business is not properly managed. This can include losses due to unpaid rent, damage to the property, or financial mismanagement.
Liability risks: Property management businesses may be held liable for injuries or damage that occurs on the property, even if the incident was not their fault. It is important to have adequate insurance coverage to protect against potential liabilities.
Reputation risks: Property management businesses rely on their reputation to attract and retain clients. A negative reputation can lead to a loss of business and damage to the company's bottom line.
Employee risks: Property management businesses often have a large number of employees, and there is a risk of employee injuries or accidents on the job. It is important to have proper safety measures in place and to follow labor laws to minimize this risk.
This template is also included in three bundles:
- All Models Bundle: https://www.eloquens.com/tool/P8Y4TX4v/finance/financial-forecasting-models/financial-models-120-useful-and-usable-logic
- Real Estate: https://www.eloquens.com/tool/vJdYH9R7/finance/real-estate/the-complete-real-estate-bundle
- Business Sector Specific Startups: https://www.eloquens.com/tool/lrNGt2jL/strategy/business-plans/business-sector-bundle-35-bottom-up-financial-models
- SaaS / Subscription Models: https://www.eloquens.com/tool/wmyQI0eE/finance/venture-capital/the-complete-venture-capital-bundle
This Best Practice includes
1 Excel model and 1 Tutorial Video
Further information
Create up to a 5-year financial forecast and produce financial statements.
A property management company.
