Property Management Growth with DoorGrow DGS 315: The Myth of Needing More Property Management Leads
When trying to grow your property management business, have you ever thought to yourself, "Man, it would be great if I just had more leads?"
In this episode of the #DoorGrowShow, property management growth experts Jason and Sarah Hull discuss the Leads Myth and how "just having more leads" will not actually help you grow your business.
You'll Learn
[02:06] The Myth of Needing More Leads
[11:39] Leaks in Your Sales Pipeline
[22:41] The Future of SEO with AI
Quotables"Why do we call it the leads myth? Well, the myth is this lie that we believe that you just need more leads. And the assumption in that is that all leads are the same."
"The more clarity you have, the less wrong stuff you're going to be doing."
"Not all clients are equal, right? Which means not all leads you get are equal. You need to qualify them."
Resources TranscriptJason Hull (00:00)
Most of the industry is trapped in a cycle of suck. This is why most property managers suck in most markets. Maybe even you that's listening.
We are Jason and Sarah Hull, the owners of DoorGrow, the world's leading and most comprehensive coaching and consulting firm for long-term residential property management entrepreneurs. For over a decade and a half, we have brought innovative strategies and optimization to the property management industry. We help people grow their property management businesses quickly.
And our mission is to transform property management business owners and their businesses. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. Now let's get into the show.
All right. So today we're going to be chatting a little bit about the leads myth that a lot of people believe. So if you have ever thought to yourself, I just need more leads.
If I just had more leads, everything else would be great in my business. What do you have to say about that? Well, I think that is not the case. Okay. It's definitely not the case. And I also think almost kind of be careful what you ask for a little bit. getting a whole bunch of leads was never really the best.
strategy anyway, unless you have people who are just picking up the phone and calling you and saying hey, I Would love for you to just manage my property. I don't have any questions. Here's my money. I just had a contract Those are leads I want but cold leads that are Not ready to go that need to be warmed up that have a bajillion questions That might not even understand why they want to work with you
Specifically, yeah, I'm just not interested in those leads. And the other thing I think we need to discuss on this episode specifically is the changes that we're seeing because of AI. So AI is really great and also it's changing things very rapidly and leads and SEO that's very effective by this too. Okay. So.
Let's get into this. So a lot of people believe they just need more leads. And the danger in that is if you really just think you need more leads, you're going to go out to the marketplace and talk to marketers and they're going to go, cool, I'll give you leads. And they will sell you leads basically. So why do we call it the leads myth? Well, the myth is this lie that we believe that you just need more leads. And the assumption in that is that all leads are the same.
And they're not, they're not even remotely the same. So there's a couple of different frameworks that we usually talk about to kind of destroy the leads myth. One is the four Ds to revenue. Another is the cycle of suck we talk about and how people get stuck in growth. We talk sometimes about the pipeline leaks that you have in your pipeline. And we talk about the myth
of SEO or internet marketing. And then we often talk about any others warm versus cold leads and then David versus Goliath.
Okay.
So we can tackle these all really quickly and go through each of these and maybe some other things will pop up as we go. Cool. Let's talk about all of that and then we'll talk about why AI has changed all of, really all of those things. Okay. That'll be in conjunction with SEO.
All right, so let's go through these. And so for those following along, if you stack all these concepts, each one compounds your speed of growth. They're all related.
And so these are frameworks that I love to share with clients to help them understand so that they don't make the mistake of doing the wrong stuff. The more clarity you have, the less wrong stuff you're going to be doing. The less you're going to be experimenting, the less you're going to be wasting time. And if you really wanna collapse time, the easiest hack is reach out to us and we can help you with all of this. We've been doing this for over a decade and a half. We have had hundreds of guinea pigs to figure this all out and we have over 100.
case studies and testimonials more than anyone else in the industry. All right.
Let's get into this. let's talk about the four D's to revenue. So these are four numbers when multiplied equal the gross revenue in your business. And I sometimes call them the four doors to revenue. And I showed four doors with a little multiplication X next to each of them equals your money. Right? So not all leads are equal. So the, these D's are, if you want to write them down, they each start with a D. It is
Deals, doors, duration, and dollars. Okay? So the first is like how many deals is this client going to bring you? Not all clients are equal, right? Which means not all leads you get are equal. You need to qualify them. And how many doors are they bringing to the table? Or how many doors per deal are they bringing? And then the third D is duration. How long are they going to stick around or be involved in property management?
is are they an accidental investor that's going to stick around for maybe a year, or are they in the buy and hold game and they'll be around for 10? And then the last D is revenue or is dollars. And so are they a cheapo? Are they a premium buyer? Where do they kind of fit? Or are they somewhere in the middle, like the normals as I call them? So we've got these four Ds. So let's play a quick example. Let's take the accidental investor. They couldn't sell their property. They wanna get it rented out.
How does this play out in the 4Ds?
done one deal.
They didn't mean to do a deal, but they did. And it's usually just one door. Maybe sometimes they have two, but very often we just see one door and they're not looking to...
to do more deals because as soon as the market spikes and the market is hot, they're going to bail. They're going to sell, which means the duration is questionable. Let's say it's like one year, like if they can just get it rented. but it might be a few months because if the market spikes three months from now, they're probably going to dump that property pretty quick. And then.
than the dollars, they're not your premium buyers. They're not looking to do a lot of improvements. They're not looking to spend a lot of money. They're the people who, they have this property, they aren't quite sure what to do with it. They figure, let's just see if I can get it rented. They want it well taken care of, but they're not generally looking to spend a lot of money or invest a lot of money in either the property or maintenance or repairs or improvements or a property manager. So they're just trying to...
Do what they need to do. It's like the bare minimum in order to get a tenant. All right, so one, one, one, right? Like one deal, one door, one year duration, for example, if this is worst case scenario and you sign a one year agreement with them and they're a cheapo, right? Now let's take a really great scenario. What would be maybe an opposite scenario or a really great opportunity? Like my, I will say my second largest client.
He had 42 doors I think was the right answer but I was looking to buy more. So when I took him on he had 42 by the time I sold the business he had 60 something. So he was always doing multiple deals. Yeah. The doors that he had came out of multiple deals. So since he did multiple deals he also had multiple doors. was consistently looking to grow.
He didn't want to just stop, you know, at a certain point he was always looking. He also was a buy and hold investor. He wasn't trying to buy these things and then wait, you know, until the market spiked and then try to sell them and make a profit. He wasn't up for the long term. And he was not a cheapo. He wasn't trying to cut corners. He wasn't trying to cut costs. You he wanted to work with.
a property manager, wanted to take care of the properties and make sure that they were being maintained properly. Yeah. Okay. So that's a great example that previous client that you had. So let's just say like on each of these fees, we use tens instead of ones, right? Like let's say they do 10 deals over the life of being with you. They've got 10 doors. Maybe sometimes it's 10 doors per deal if they're doing small multis or something like this, right? And then
you've got a 10 year buy and hold duration. In this hypothetical example that I just threw out, it would be 10 times 10 times 10. This would be over a thousand times greater lifetime value than that accidental investor in our previous hypothetical. Does that make sense? So are these even remotely equal? No, not even remotely equal. Should you then spend the same amount of time trying to cultivate both of those type of leads? Probably not.
Would you spend the same amount of time following up or giving them attention? Probably not. And the great investor clients probably are easier to deal with, less emotional, have a much higher margin and operational cost is lower, right? And so there's a lot of benefits. so this is, we're just talking about the revenue piece, but when we look at the cost side of things as well, everybody knows having a really bad owner that's really needy and difficult and emotional about the property.
can be a big headache and a big challenge and you may be losing money on some of those doors. So, four D's to revenue, that's one concept. One quick thing I wanna add to that is where do you think these owners hang out? So, if you've got an accidental landlord and they are looking for a property manager, where might that lead come from? Versus where might the lead of a client that has 42 doors come from? There's a lot higher probability
that an online lead is going to be an accidental landlord. It's not impossible to get an online lead that has 42 doors. It's just probably not your norm because the ones that have 42 doors, they aren't really dabbling. They aren't going, oh, geez, I wonder if I should get a property manager to maybe help me with these. They are just a little bit more savvy.
A lot of times those aren't going to be the leads that you're getting if you're buying leads. Although those are the leads that you want, it's not going to be the norm that you get. All right, so we're 10 minutes into this. We're going to crank through some of the rest of these. So cycle of suck. Cycle of suck, real simple. If you take on any client, it leads to you having some bad clients. So if you take on bad clients, that leads to you having bad properties, which leads to having bad.
Residents or tenants which leads to having a bad reputation or reviews which leads to you attracting more bad clients. So not all leads are good. You don't want to take on every client and you definitely don't want to attract or get more bad leads. And so this is a framework that if you understand you can reverse it and focus on a cycle of success where you're picky about the owners you take on, you're picky about the properties you take on, you're picky about the tenants which everybody tries to do anyway.
but those first two steps are supremely important. And then you're going to have a methodology for getting more positive reviews. These are things we help our clients with. And so then you create a cycle of success. Most of the industry is trapped in a cycle of suck. This is why most property managers suck in most markets. Maybe even you that's listening. We want you to get out of the cycle of suck. All right, let's talk about the pipeline leaks. Okay.
So usually if I were drawing, I would draw a spigot or a faucet or whatever you attach a hose to, and then I would draw a hose, and then I would draw a little plant or tree that you're trying to grow at the end of the yard that this hose is trying to get water to. Most of you listening think, I just need more leads. This is where the lead Smith becomes really obvious, trying to turn on that faucet even more. I just need more water flowing through the hose.
That would make sense, that would be true unless there's a problem with the hose, right? Like the hose has some leaks. And if the hose has some major holes in it, there's not going to be a lot coming out the other end. Sometimes very little at all. And so it's not about how many leads you're getting, sometimes it's just how good is your pipeline? How tight is your product? And so we need to make sure that we get those leaks shored up. And we'll just mention what they are real quick, but.
One of the earliest ones that affects you is just awareness. It's going to be your perception and reputation online. It's going to be your website. It's going to be your branding. So they can tell that you are in this industry and that it's clear that that's your focus and it's not real estate or something else. And what else?
Your culture and purpose. This is the actual product that you sell. So that is another one. And there are two more. Pricing. Pricing, which everybody's trying to price the same way, 10 % or worse, pure percentage, or they're doing flat fee. We have a different innovative pricing model. If you're curious about that, set up a call with our team. We can tell you about it. That allows you to close more deals more easily at a higher price point. And the last is the pitch, right? Selling.
And so if you can dial in each of these leaks, what we've noticed over the years is we can double a company's close rate without changing the amount of leads or lead sources that they're getting currently if we can get those things dialed in. And that's significant. Maybe you don't need more leads. Maybe you just need less leakage in your pipeline. Cool. All right, the next one, you had mentioned warm versus cold leads. Do you wanna explain the difference?
Yeah, we can talk about warm versus cold. So when I had my property management business,
Yeah. what is a cold lead? So cold lead is someone who really has almost zero, very little familiarity with who you are in your company and your brand and what you do. They don't. they should work with you. That's the big thing is why they should work with you. So they don't know you, trust you or like you. That's a cold lead. And a warm lead. Warm lead would be something like a referral or some sort of recommendation.
hey, Sarah is the best, I work with her and you should too. Now they're coming in already feeling like, somebody that I know that I trust recommended this person, so therefore I should also trust this person. So those obviously have a much different close rate. And there are things that you can do to increase your close rate or to warm up deals, of course.
But if you're spending all of your time trying to close a bunch of cold leads, which generally is going to be what happens when you're purchasing leads, you really don't get to buy warm leads. Right. They're all cold. I mean, that would be great if you could, but when you're buying leads, you're usually buying a lead that is very cold. They don't know you at all. And oftentimes that same lead is being sold to multiple different companies.
There's a lot of blood in the water there. So warm leads versus cold leads, the close rate on warm leads will be really high, like 90 % or higher. Cold leads, like the opposite, 10 % or worse. And so I would rather a client get five warm leads and maybe close four of them than 10 cold leads and maybe get one. The hidden pain point or secret with warm versus cold lead generation.
or cold lead strategies is time. Cold leads take a massive amount of time because you have to nurture them and warm them up and build the trust and create the relationship. And even after all of that, and all of sudden done, the conversion rate's really low. So all of you know how high the close rate is if you get a really great word of mouth referral. We love those, right? That's a warm lead. So we have strategies and methods that we focus on with clients to increase the warm leads.
while avoiding and doing cold lead advertising and avoiding worrying about cold leads. Once you start getting some growth engines installed for your business that give you warm leads, you're not going to want the cold leads. They feel like garbage in comparison, and you're not going to have time for them. And you're not going to wanna waste time on those because those are often the worst owners. All right. What I would say is as far as getting leads in, if you give me three warm leads,
I will take three warm leads over even 100 cold leads. Sure. don't, I don't, I'm not really interested because even if I close, let's say two out of the three warm leads, that's great. What's the close rate on 100 cold leads? If it's about 10%, you might close 10. And some of you might be going, Sarah, 10 is better than two. Yeah, you're right. But how much work did it take for me to close the two versus how much work?
did it take for me to close the 10? I would rather close two very easy warmed up leads because I can do that again and again and again. So in the same amount of time, I can close way more warm leads than I can cold leads. So I would rather take three warm leads than a hundred cold leads any day of the week.
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has transformed their business, don't let maintenance drag you down. Step up your property management game with Vendoroo. Visit Vendoroo.ai slash door grow today and make this the last maintenance hire you'll ever need. All right. I thought it was a good time because it was a good time. Waste of time and I don't like to waste time and maintenance coordination can be a huge waste of time. Yes. All right. Let's talk about David versus Goliath. So I'll give you an example. We've got a client.
that has, so this is dumb David versus smart David, right? The story of David and Goliath, if you're not familiar with the Bible. David goes to fight Goliath. These two warring nations send out their best person and David decides he is not going to wear the armor, the sword, the shield, all the heavy stuff. He's just bringing out his slingshot. He's got his sling, he's got some rock and he goes out to fight Goliath and he's like, I don't need all that stuff.
What most property managers do is David basically brought a superior technology. He brought a gun to a sword fight and he was good at this. He trusted himself. He had skill. He had a better tech to beat this giant. He flung the rock right into the guy's head. I had knocked him unconscious or killed him, I don't know. And then he chopped the guy's head off with his own sword. Right. And so that's the story of David and Goliath. So let's talk about the dumb version of David. Like if David wasn't smart.
And he said, I'm going to do all the same stuff. I'm going to use the sword of SEO and the shield of pay per click and the helmet of content marketing and the breastplate of social media marketing. And I'm going to do all the same stuff, digital marketing that all the other big companies are doing that are spending two to $3,000 a month or greater. I'm going to go compete with them as a small startup or a small pro.
two to 400 unit property management business and try and compete with these big companies that have thousands of doors. One of our clients, as an example, came to us has 6,000 doors. They were spending $30,000 a month doing these strategies to try to grow and it wasn't even working for them. So why would you go and do what the big guys are doing and lose the battle with them and it's not even working for them, right? So that's the idea of David and Goliath. Don't go do
what the big guys are doing, find a better way to compete, especially if you're smaller than them. You don't wanna try to outspend them, because that's not going to be possible. right, myth of SEO. All right, and we'll talk a little bit about the future and AI, all right, to wrap things up. So, all of you can go check this out for yourself. This is not me making stuff up. You can go on trends.google.com. You can go look up property management.
date it, the time period, to the current time back to 2004, to the present. And you can filter by the US if you want to. What you'll see is that property management search volume, the amount of people searching for property management on Google has not increased since they started tracking data back in 2004. What has increased? The Goliaths, right? The companies spending a lot of money on digital marketing trying to do all this stuff.
And so it's created a lot more competition. So this is where we get into another framework that we share, which is the blue ocean versus the red ocean. There's this small little area of the ocean that's red bloody water where all the sharks are fighting over the worst fish, which are these terrible property management business owners that are at the end of the sales cycle. Basically the crappy scraps that fell off the word of mouth table that the warm lead stuff has captured. They're what's left over.
And so there's these ugly gross fish and the sharks are all fighting over the worst stuff. And there's this huge ocean full of fish in the U.S. 60 % are self-managing. There's tons of business out there. And so the myth of SEO is basically this, that in order to win the game, you need to have the top spot on Google. Not true. You don't even have to show up on Google in order to go out and be able to create business. Because there aren't really people searching for property management. It's very small.
So you don't need to be found on Google. You need to go find owners because the best clients are offline and they're not looking for you and they don't like doing property management and they need you, but they're not looking for property management actively right now. And you can figure out how to go make that happen and we can teach you, right? So let's talk about the future of AI. What are we noticing? Well, I don't think it's any surprise.
messed up a lot of Yeah, it's changing everything. AI is going to change everything. And if you haven't noticed it yet, just hold on because you will. It's crazy if you haven't even seen it yet. But it's it's going to flip everything you know upside down, including SEO. Yeah, including SEO. So everyone that is like, no, I don't care. I'm still going to do SEO. That's the only way to go. Like we made a video about this.
specifically for this reason, but even the ones who are still clinging to SEO and you just can't let it go and you don't know that there's another way and maybe you don't believe it and you're like, no, I'm no, this is the only thing I'm going to do and I'm going to do this and that's the only way I can grow the business. That is all right and SEO is going to force you to look at that.
Okay, yeah, so what we're seeing is search volume on Google is going down. There's less people using Google. More people are now going to LLMs like ChatGPT, Clod, Perplexity, Google's Gemini. So people are using tools now, sometimes within software, and they're using these tools to ask questions, to figure things out, figure out who they should use or who they should choose or what they need. And so
Is it still relevant to have good reviews? Yes. Is it still relevant to maybe have some SEO stuff going? Probably, but it's certainly on the down slope and it's certainly decreasing. The game is changing. Even if you search on Google now, the AI at the top will respond to your search request anyway. And a lot of people are just reading that and not really looking at the results below. And so this is the new future. It's changing very quickly.
and some are calling it AEO, some are calling it LLM, SEO, there's all these different phrases that are coming out. If you want to do a quick experiment, open up one of these LLMs like ChatGBT. Don't be in your own. It's a large language model. It's basically all these different AI chat tools. So go into ChatGBT. Everybody should be familiar with that by now if you're not.
and go to ChatGPT open that up, but make sure you're not logged in or you use a different account and just, or say don't use any of my previous data or open a private window and say don't use any of my previous information or data and say who's the best property manager or what property manager should I choose in X market, right? And see if it comes up. See if your business comes up and see what shows up. And so this is...
how people are kind of doing some of their research, but all the stuff we just talked about still applies. Don't think your whole goal needs to be LLM SEO, where you need to start getting these chat tools to tell people. Why? Because most people are not looking for a property manager. They're not looking. They are not trying to find you. That's the mistake most people make. The majority of people that are self-managing, the potential business, are not looking for a property manager.
It's really rare that somebody has a property manager that they're looking actively for a new one unless they've really done a bad job or stolen money or done something really obvious. The people that need your services are not looking for you. You need to be looking for them. And so this is where you can skip all of the cold lead marketing. You don't need to spend money on SEO or AI SEO or Google Ads or pay-per-click or any of these
marketing agencies, you don't need to spend any money and you can actually grow faster if you use our strategies and it costs you nothing to do the strategies that we give you. It costs time and action, but it actually takes less time because warm leads and focusing on more effective strategies give you a much greater result in less time. So less time, less money, more results. And that's why we call it the Leadsmith. A lot of people think I just need leads. Cool.
there's better ways. Not all leads are equal and we can help you out. Cool. Anything else we should add in wrapping up? I don't think so. I think we covered everything. Okay. I think we got it. So cool. Well, if you are wanting to figure out how do I grow this business? How do I finally get out of the rut that I've been in? How do I scale this? Maybe adding more doors is creating you grief and pain and you want freedom from your business.
These are the things we help clients with. We'll help you figure out how to grow dramatically faster and we'll help you figure out how to make your business scalable while getting you out of the day to day and getting you to exit the business in various ways so that you get more freedom. So if you felt stuck or stagnant, you want to take it to the next level, reach out to us at doorgrow.com. Also join our free Facebook community just for property management business owners at
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