U.S.-based Real Property Management (RPM) has chosen Vancouver as the headquarters for Canada’s first property management franchise business and it plans to develop a tight team of franchisees to build its network.
Kap Hiroti, vice-president of operations, has already signed up three franchises in Metro Vancouver and Victoria since opening earlier this year.
RPM has set up on West Pender Street in Vancouver, but Hiroti said there is need for professional property management across the province.
RPM handles some small commercial properties, but its bread-and-butter is residential rentals, from detached houses and condominiums to small apartment complexes. It specializes in providing services to investors who own from one to four rental units.
“Many investors don’t want to deal with the management side,” Hiroti said, or the complications that can arise with government rental regulations, human rights issues, dealing with tenants, and maintenance. Also, he said, many rental investors don’t live near the property and need hands-on, local management.
In B.C. rental property managers are also required to have a broker’s license.
RPM works with landlords to maximize rental income, Hiroti added.
“When a property comes to us, we look at ways to make it a higher performer asset.” This can include finding extra revenue streams – such as renting parking or storage – but may also mean tapping into RPM’s network to streamline paperwork and maintenance and repair costs. “If a plumber is needed, we can probably get the work done cheaper because of the volume we do,” he explained.
RPM, which started in the U.S. 30 years ago, is North America’s largest residential property management company. It has more than 300 offices – 90% in the U.S. – and manages tens of thousands of rental properties for individuals, investors and institutions.
RPM is offering a relatively low-cost entry for franchisees as it ramps up. It starts with a “mobile franchise” that costs $18,000 and is often run from the franchisees’ home office. Once a franchisee establishes his or her client list, they can move up to a $36,000 franchise with an office branded and supported by RPM. This compares with RPM’s U.S. franchise fees that start at US$50,000.
“We plan to cap the number of B.C. franchises at 10 and then build them up,” Hiroti said. RPM’s goal is to have no more than 150 franchisees across the country.
While Canadian property management fees are suggested by RPM, individual franchisees have the freedom to decide what they charge their clients. Hiroti said these fees generally work out to approximately 10% of the rent collected.
RPM charges an average royalty fee of 8% of gross income. “For example, if a tenant pays $1,000 per month, the franchisee would make $100 and the royalty fee would be $8,” Hiroti explained. The company also charges a 2% fee for marketing and ongoing support.