Your Property Management Company Market Penetration

At the end of last year, I watched an interesting video from Marc Cunningham where he explained why he does not plan to enter any new markets with his property management business.

He went on to describe how some property managers move into a new market before they've even figured out how to be successful in their own market. 

The question is, how does one define "success" in a particular market?

Marc says to consider expansion when you have "captured a significant percentage of your current market.... 5%".

I'm fascinated by this idea of market penetration, ie what percentage of all rental units in your market do you currently manage? How can we calculate that?

I spent weeks looking for a source of data that would provide the total number of rental units in a given MSA (metropolitan statistical area); it was surprisingly hard to pin this down but I finally found one here.

If you go that site, select your state and then find your MSA (city), scroll the right and look at the column labeled "Rent Occ Units 2019." That is the total number of rental units in your market!

Then simply take your total units under management and divide by the total units. Eg, we manage about 670 rental units and there are 319,126 total in the Columbus MSA, putting our market penetration at 670/319,126 = 0.21%. Nowhere near the 5% that Marc recommends!

What's your market penetration? How big do you think it should be before you consider expanding into a new market?