Property Management Growth with DoorGrow DGS 102: The Key to Debunking the Rent Roll Paradox with Tony LeBlanc
Usually, paying attention to your body, mind, and health is the last thing you do when it comes to your business. It’s time to focus on yourself first!
Today, I am talking to Tony LeBlanc, second-generation property manager and author of The Doorpreneur: Property Management Beyond the Rent Roll. Tony shares the keys to debunking the rent roll paradox when chasing doors to grow.
You’ll Learn...[03:00] Software Engineer Stint: Tech geek at heart that brings love of technology into property management space.
[04:30] What is rent roll paradox? Property management companies that constantly rely on getting new doors to grow their business.
[05:42] Chasing doors creates havoc and stress due to inefficiencies.
[08:45] Expanding Territories/Locations: The bigger and more geographically dispersed a business gets, the more opportunities arise that aren’t taken advantage of.
[10:56] Would you want two doors making the same amount, or one door making same amount as two? One door, if the goal is revenue/profit, it's not just about adding doors.
[12:30] Premature Expansion: Go-to once a company reaches a certain size; anything premature is generally not a good thing.
[14:13] Entrepreneur’s Journey: Everyone hits stagnation or desire for more. They get distracted by opportunity.
[15:11] Opportunities vs. Expansion: Think it through, be disciplined, and follow good habits before making the jump and knowing where you’re going.
[17:40] Cycle of Suck: Bad owners, properties, reputation, and false scarcity.
[18:15] Property management is changing. It’s future is a foundation full of opportunities.
[21:50] Dinosaur Dictators vs. Millennials Seeking Meaning and Purpose: Good property management can change the world.
[22:45] Tony’s Aha Moment: We matter and play an important role in thousands of people’s day-to-day life.
[28:30] Target on Back: How to deal with being overwhelmed as a property manager.
[32:14] When we create and have constraints, when we're limited in our time and attention, we innovate.
TweetablesGrowth doesn't happen by accident. Personal growth is gateway to business growth.
Chasing Doors: Is all you care about being introduced to new people, close deals, and get more doors?
Property management’s growth is defined by doors that it turns down, not doors it gets.
Focus is power. Cut something out in your life to achieve something.
ResourcesThe Doorpreneur by Tony LeBlanc
Ground Floor Property Management
National Association of Residential Property Managers (NARPM)
TranscriptJason: Welcome, DoorGrow hackers to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow hacker.
DoorGrow hackers are those that love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not, because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income.
At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show.
My guest today is Tony LeBlanc from Canada. Welcome Tony, how are you doing?
Tony: Hey man, I'm doing great, Jason. Thanks for having me.
Jason: I'm really excited to have you on the show. You've been on before a long time ago and I was telling you in the green room before the show, but I think we resonate with a lot of similar values. I think we're both growth-minded people. I read your Doorpreneur book, which everybody should take a look at. And I think we have a similar mindset that growth doesn't happen by accident and personal growth is the gateway to business growth. I think we probably would both agree.
Tony: Absolutely.
Jason: I posted about this just the other day. I think it's the last thing that everybody wants to pay attention to in their business, is themselves. They’ll focus on everything external. “I need more leads. I need this. I need this.” Ironically, if I could change the person or get them clear on themselves, then all of those things end up changing by default, everything. Website marketing, everything into changing by default if you focus on yourself first.
Tony give people a little bit of background. Maybe those that had heard you before, bring them up-to-date. Tell us a little bit about who Tony is.
Tony: Sure, thanks Jason. I said my name's Tony LeBlanc from eastern Canada. Born and raised out here. I am a second generation property manager. It wasn't my first career of choice. I actually got into it as my second career. My first career was a 15-year stint as a software engineer with IBM which provided me an amazing experience visiting the world and working with a lot of great people in that domain.
I'm a tech geek at heart. I love technology and I don't think that'll ever go away. It’s been interesting to bring that into the property management world, because as everybody knows, technology in the property management space is still not, in my opinion, where it should be. I still think we’re 5-10 years behind some of the stuff that we should have out there available to us. I still find it very difficult to run my business with the standard property management software that they have out there.
After I left IBM, I started my management company which had been running out for about 10 years, called Ground Floor Property Management. We have been very well-received in our community. We now have three locations and I am now an author. I've basically taken everything that I've learnt from IBM, from life, and from the last 10 years of growing my property management company as well as the spin offs that we've created over the years, and that's where I am today, introducing the doorpreneur way.
Jason: Perfect. The title of the show is the Keys to Debunking the Rent Roll Paradox. What is the rent roll paradox?
Tony: The rent roll paradox is the fact that most, if not all property management companies out there, are constantly relying on getting new doors to grow their business. I believe there's a different way. I believe there is a much better way than doing that. And I say that from experience. For the first five years of running Ground Floor, my property management company, I was nothing but a door chaser. I just wanted to grow, grow, grow, grow. That's all I cared about. I just wanted to be introduced to new people, close deals, and get more doors.
We got to the point to where we reached almost 2000 doors in five years. That’s across three locations. It was fast, it was intense, and it was incredibly painful. Incredibly painful. Now that I've gotten into the second five-year phase of the management journey, I've learned a lot looking back, and I realized that as I was going through that growth phase, I'm just adding more doors, and more doors, and more doors. I was causing a lot of havoc and stress on myself and my staff, but I was leaving an incredible amount of money on the table because of inefficiencies.
If anybody's growing a property management company, when you're getting doors pouring in—we do multi-rise mostly, not just single family—it's a lot of work. We've onboarded 50, 60, 124 unit buildings, and it consumes you for a period of time. If you don't give the proper amount of space in between those growth, it becomes rough, but you don't want to take your foot off the gas if you're like me.
Jason: Yeah, so let's touch on this real quick. I tell people this all the time. If somebody calls me and they say, “I am thinking of starting a property management business,” I say, “Do you want me to talk you into it or out of it?” because I get to see inside hundreds of companies. They usually laugh, but they usually stay into it. The thing is, this property management is easily death by a thousand cuts.
Tony: Absolutely.
Jason: If you have one little problem with one door and then you have a thousand doors, you have thousands of those problems over and over again. That's why it's so critical to shore up some of these leaks early on, because if you're having problems now and you feel like it's stressful now, just adding more doors is throwing gasoline on whatever fire you have. If that fire is a bad fire, then it's just going to explode. It’s going to be worse. Customer service goes down. You have more complaints and it compounds.
Usually, they have to make significant changes just to go from 50-60 units under management to break past that first sand trap—I call 50-60 door the solopreneur sand trap—to break 100 doors. Just to do that, they have to change everything. Ironically, I’ll real estate companies that are doing property management on the side, break past that barrier artificially without making the necessary changes. They don't get technology in place, they don’t get systems in place, and it will pass it.
One of my case studies was a client that had 600 units under management, single family, and was making $0 in this business. I said, “How are you doing that?” he’s like, “I've $3 million a month in real estate every month or whatever. I'm doing real estate.” Property management can be death by a thousand cuts.
You have this pain, but you have growth and I'm sure a lot of people are like, “I would love that problem. I would love the problem to deal with, to figure out how to get 2000 doors and quit crying,” so tell us a little bit about your experience after that.
Tony: One of the big things was expanding into different territories. Our headquarters, which is my main office, we’re doing extremely well. We then split off to another city within an hour-and-a-half away, and that ended up going well. The third location came in and that started off really well, but then about a year later, we started looking at all three locations individually, and we started seeing a lot of gaps, and a lot of issues that we're struggling with.
We made a conscious effort to obviously fix a lot of those things and it made us really pull the curtain back and look at the overall business as it sat. The bigger we got and the more geographically dispersed that we became, we started seeing a lot of opportunities that we were just not taking advantage of. When I started the management company 10 years ago, I had maintenance as part of the division. That's the way my mother did it and that's the way I wanted to do it.
I always wanted to have my own maintenance guys on my payroll so that I can control that and we still do that to this day. What really became evident as we're studying and looking at our rent rolls across all three locations, was the amount of money that was being spent outside in terms of different trades, different services that were required on all these properties. To be quite honest with you, I was getting tired of chasing doors. It wasn't as enticing anymore. Don't get me wrong, we still grow, we still love getting new doors, but something had changed in me.
Then we were really started looking at what can we do beyond just getting more doors and that's really when the whole doorpreneur philosophy was born. Our first pivot into a new business that serviced our portfolios was landscaping [...] and that's where everything grew from there.
Jason: Here's an obvious question. Would you rather have two doors that are making the same amount or one door that's making the same amount as two?
Tony: Definitely one. Absolutely.
Jason: Absolutely. If the goal is revenue, the goal is profit, and it's not just about adding doors. Everyone focuses on that one multiplier, it is doors. Everyone's trying to get a deal and it's like one deal per door. What if you can get multiple doors per deal? What if you can get multiple years per door? What about duration? There's all these other factors they’re not paying attention to. There are some property managers out there that are replacing every door every year. They're usually about 50-60 units, they're getting on an accidental investor that leaves every year, they have to replace every damn door every year, and they're like, “We’re adding doors, why aren’t we growing?” It seems so obvious.
Tony: The major shift for us has been quality over quantity. I say no to more doors today than I ever have in my 10-year career running this company. It's really all about where can we take this? Where can we take that door and what can it do in the long term?
Jason: Yeah. I think a property management company’s growth will always be defined by the doors that they're willing to turn down, not the doors they're able to get on for sure. I think another thing going back to your rent roll paradox, you talked about expanding into locations. I think that's a go-to once a company hits a certain size, they're like, “We did it here, let's go here.” They just had me speak on this at the Ironman conference on a panel and I call that, premature expansion. Anything premature is generally not a good thing.
A lot of people think, “Well, we did this here, we're hitting a cap in our door account, so instead of expanding our revenue opportunities with those doors, or here, or figuring out other ways to hit different parts of the market here, let's just go find a new market. We’ll do it all over again,” they don't realize it's worse than being twice as hard in starting a new location.
Tony: 100%. The stories that I can tell you about the two locations that we can open. It all comes back to a fundamental need of chasing doors. It’s like that's all you're able to see. We got this tunnel vision. It's like, “Okay, I've grown here and I think I'm as big as I can get. Where else can I go and chase more doors?” It's fulfilling for the first little while. It's fun, it’s exciting, but there's an emptiness to it in the end.
I think I'm a little bit different than maybe probably a lot of traditional type property managers. I knew when I started Ground Floor that it was going to be something much bigger than just a property management company. I had that vision 10-15 years ago and just running after doors, it lasted for 3-4 years and then I was like, “Okay, what's next? Is this it? What else can I do in here?” That's when a lot of other things started coming along.
Jason: I think that's common for every entrepreneur in the entrepreneurial journey. If they really are an entrepreneurial-minded person, they're going to hit this stagnation or this desire for more. The desire to do more. Sometimes that goes south and they do it in negative or dysfunctional ways. I started out just doing websites. Then I go like, “Hey, I could make residual income if I'm doing the hosting for these websites. I could do this. They also need the service.”
I think as entrepreneurs, we also get distracted by opportunity. We see it everywhere and it keeps us sometimes from even achieving the goal we're working on right now. How do you find that balance between seeing all the opportunity and expanding into new areas, but making sure that you're actually getting stuff done?
Tony: I'll be honest with you. The first couple of years, I was so focused. I had my head down so bad in terms of just getting the doors and growing my local office, that it was so busy and it was all so fast that I didn't have time to look at anything else. It's when I get a little bit of breathing room that I started looking at the different locations. I don't necessarily regret it, but I probably would have thought about it a little bit longer before I need the jump.
If I look at myself now, it really comes down to being disciplined and a lot of good habits. Like I said, I say no to more business today than I ever have. I am 100% focused. Property management is my life. If it's not in property management or in my sphere, I'm not interested. I don't have time for it, I don't make time for it, and I'm very blunt with that. I have an extremely tough schedule that I follow. I do a lot of stuff for myself personally, and then that translates over to the business side. I know where I'm going.
It's kind of fun to where you'll have other guys or people that'll come in and say, “I got these cool opportunities, I got this, I got this,” I'm like, “Cool, good for you. I hope it works.” Me? I'm not interested. I got my path and I know what I'm doing.
Jason: Yeah. I did hit up for opportunities all the time. Different property management there's like, “Hey, we could do this cool thing together.” I’m like, “No, we can't.” Focus is power like with anything. You could be a flood light or you could be a laser and actually cut something out in your life and achieve something.
All right. Can we touch on your book a little bit? I read through it. I think there's some interesting ideas in there. I don't know where we should start, but you've got this book, you call it The Doorpreneur: Property Management Beyond the Rent Roll. It's a quick read. I think it's a good read. You share a little bit of your journey and some of the things you've gone through. I think we've done some similar things. I'm going to quote a part of it. It says, “We are the problem and we are the solution.”
You were talking about how property management had a bad rep because we're allowing it to. I think that's the case. Everyone who’s heard of me, if they listen to my show at all, talk about the cycle of suck. If you haven't, just google “Property Management Cycle of Suck” and you'll find an old video I did on it. I think that the industry as a whole is that's where they are. It's caught in the cycle of suck. It has a bad reputation because everyone's taking on bad owners, and they're taking on bad properties, and they're not being picky, and they feel all the scarcity. Everybody's trying to do the same stuff that's not working which creates false scarcity in the industry and there's no scarcity in property management.
You said that you believe the industry's time has come. What do you see for this industry? You say it's on the brink of change. I feel that, too. I feel like there's a shift going on right now. I'm hoping that DoorGrow is helping to push that forward. What do you see for the future of property management?
Tony: Just over the last few years, I would say probably in the last 4-5 years, I will say that you’ve had a part in this in terms of, you're starting to see a lot more people get together and talk about property management, and not just NARPM. I know that’s a big organization in the States, but in order for an industry to really take over, I believe it's got to go beyond just the regulation of the groups that are that are like that.
It's exciting to see a lot of that happening, whether if it's groups online or different organizations, all sorts of cool stuff. But I'm also seeing that the opportunities that are becoming present in all these different places are becoming much more attractive to different people. It's like you're seeing the density being built in a lot of different cities—the rise of renting out in this whole generation of millennials—in terms of it being a renter's nation. That is providing a good foundation for a lot of required property managers to come out here and start managing these properties.
The tools are getting better. They're not amazing yet, and I'm speaking in terms of technology. Those things are getting better over time. But more and more, I'm seeing the property management is getting away from the old school that started in the business 30, 40, 50 years ago, and you're seeing a new breed of property management come into the picture, which is they’re a lot more professional, they're running real businesses, it's not just a side gig from a realtor, or it's not just this big owner that owns a big portfolio and he decided to manage a few places on the side so he can make a few bucks and pay for him running his own stuff.
They're seeing legitimate people, business people coming into the space and making a run at it, and that's what we need. We need professionals coming in and we need professionally-run businesses. More than ever today, I'm seeing and talking to a lot of people that are running greater businesses and it's exciting, because I think the opportunity is huge.
But it's also at the same time somewhat limited because I know I've done this long enough. I've been around it my entire life. This business is tough. It is not for everybody. We're going to have the turnover that's going to come through and hopefully the good will stick and make the business better for everybody. Better first impression of the business, better for us working in the industry, being able to grow together, and making it all better together.
Jason: Yeah. I think that the way to change the industry is obviously to have healthy businesses. Healthy business owners in this industry, leading the way, and they have to be profitable. I think also there's a huge opportunity right now in that, millennials are the workforce largely. I think a lot of people, they’ve gotten a bad rep. A lot of people think they're lazy, they’re unmotivated, and I find that to be patently false. I think millennials are our new generation of workers that don't want to do menial work.
They don't want to do something without meaning. I think this is a huge opportunity for business owners that are not acting like dinosaurs saying, “I'm paying you to do something so just freaking do it.” Those are the dinosaur dictators that think, “Well, I give them money. Why don't they just do everything amazingly?” Millennials want purpose and I think there's an opportunity now for business owners that believe they have a purpose, that there's a greater vision for what they do.
You touched on that in your book. I talked quite a bit about that as well. People have heard me say, “I believe good property management can change the world. It can have a significant impact. We’re affecting families. We’re affecting lives.” I could have that impact through my clients, which is what gets me excited about showing up helping property management business owners lead the way and do good work. They can't do that if they're struggling.
Tony: Yeah. The biggest aha moment I've had in my career with Ground Floor, my management company, was four years ago. We had an offsite meeting with all my staff. We’re about 50 people with all 3-4 different companies. I was looking at the rent roll, I showed it to everybody on the big screen, and I'm like, “We've got 2000 apartments,” roughly it was right around there, that we're almost full all the time, “and if I take an average, we’ll probably have around 3000-3500 people that live in properties that we take care of. Guys, we matter. You cannot not look at that and how important of a role we play in day-to-day life for close to 4000 people.” I'm like, “That's pretty special.”
Like I explained in the book, we’re a part of all sorts of experiences for these people. We've seen deaths, we've seen births, we've seen marriages, we've seen plenty of divorces, we've seen it all. It happens underneath our roofs. Again, I grew up in the business, I've seen it all from a personal standpoint, and now I've seen it all from running a business. There are no ifs or ands about it. It's a special business.
Jason: All of those different situations require some activity or involvement with the property manager. I mean, even if it's just maintaining the property and doing some maintenance, it's affecting these families lives, and it's affecting these sometimes challenging moments that they're going through. Those interactions can be positive, helpful interactions, or it can deepen their words, they can cause more pain, and the ripple effect property managers have is huge. Property management is death by a thousand cuts. It also can be a ripple effect of a thousand possible positive interactions on a regular basis.
I know property management can be tough. I hear about it all the time. I know how difficult it can be to run a business. I know that. Every entrepreneur knows that. It doesn't get easier the bigger you get, often. It can sometimes get more challenging. But it makes it worth it when you have somebody that comes to you and says, “Hey, you made my life better,” or, “You had an impact,” and those little moments we don't always hear about them, but when they do come through, they do. That’s why we do what we do.
Tony: Yeah. I think a lot of property managers will be able to agree with me, that there's an old saying that the phone never rings with good news in our business. If someone’s calling, it's usually something bad on the other line. It’s either a complaint, or an issue, or something. It’s almost like you have to come into the office each day knowing that you may not get a million praises from the outside, and that's why the office environment is sacred for you and your staff, for the people running the business.
I just hired a new girl a few weeks ago and I'm very honest and transparent during our interview. I was like, “You're new to this industry and you are going to struggle. It’s going to be really tough. It’s going to test you emotionally. It’s going to test your ability to deal with a million things going on at the same time, it's going to test you in every way possible.” I asked her the other day, she’s going on her third week and she's like, “I knew it was going to be tough, but I didn't think there would be so much that I had to learn,” but the office environment is such a way that we're very much a team, we help each other out, we have each other's backs. If there's a difficult situation, other people step in. You really have to have that environment because it can really help the overall business. If not, it can get in get a little lonely.
Jason: Yeah. The turnover in property management businesses regarding staff can be pretty high. I think one way to mitigate that is what you're talking about, it's creating a really positive culture, a safe place within the business, a place in which your team members are allowed to make mistakes, they're allowed to screw up, and they're allowed to figure things out. Otherwise, they start hiding stuff.
Tony: And start costing you money. Bad mistake.
Jason: I think it's important to realize, a lot of times in any business, the people that are really attacking or really causing you grief, are hurt people. They're hurting on the inside. It's not even really usually about you. We were talking about before the show how I've been really attacked lately in some forums and some groups. I have several people messaging me privately and lots of people that message me like, “Hey Jason, you don’t deserve this, you’ve done a lot for us,” and it's ironic because in property management, we deal with this.
Everybody gets these negative reviews. They feel unjust and unfair, they didn’t give the deposit back which rightly so probably, you're being attacked, and these people have nothing better to do than just try to destroy your business. That's just part of being in business, I think. In general, you're always going to have haters. The bigger you get, the bigger the target is on your back. You just have more people that you're dealing with.
I definitely got a target. You dealing with 4000 maybe potential constituents connected to your business that you're impacting, all the owners, all the renters, everything, you have a big target, Tony, on your back.
Tony: Yeah. It's overwhelming in the best of days. That’s probably one of the, I would say, either the first or the second biggest problem overall arching in this industry is how do you deal with the overwhelm of dealing with so many different things. If we were to count all the different balls that we’re juggling in the area at any given time as an owner even as a property manager, it's a lot. That's why I've gone to the depths that I did with the book in terms of putting the importance on lifestyle, in terms of installing good habits, in terms of being healthy, working out, just simple things because if you're going to go in this industry and you're going to make a run at it, you got to be firing on all cylinders.
A big part of that is your body, your relationships at home, your relationships with your kids. You got to go into the office with a clear mindset. If not, it's going to be rough. I've walked in the holes in my office on many days after either having an argument with one of my kids or having an argument with my queen and that's like, “I can't do anything in here. I have zero patience and I just want everybody to stay away from me.” That's not a way to run a business.
Jason: That's how I would feel if I'm hungry. That's how I would feel if I didn't get enough sleep the night before. We tend to start externalizing these challenges. That's why even people coming to my program they're like, “Well, I wanted to grow my business, why are you having me focus on some of the silly stuff like drinking water?” I get picked on about some of those things but I know the impact that it's had on my own life to get the basics in place and have that foundation so that you can tackle the world. We have one vehicle in which we approach everything in life and that's our body.
Tony: Yeah, absolutely.
Jason: Our current ability distinct cognitively, to function, to be able to deal with stress, be able to see objectively, to be able to handle all the stuff that gets thrown out as a business, to be able to see alternatives and ideas, all of it has to do with our brain and being able to function on all four cylinders or however many you might have.
Tony: Absolutely. I'm a true believer. I've always been an athletic guy. 2019, I've taken it up a notch and done some other things.
Jason: I've noticed.
Tony: Yeah. It's funny because 8½ months getting ready for an Ironman, I made more money in that eight months than I probably did in the last two years by just condensing the amount of time that I had and the focus that was required to do it, and to pull it off. I still look back at it and like, “How did I do that?” and I'm still digesting it all because it’s still fairly new, but it's taught me so many lessons that I'm going to be able to take forth with the new stuff that I'm doing.
The very first video that I made to get ready for my Ironman training and it was January or February, it's like I'm doing this because I need to become somebody different in order to launch this book, to write this book, to finish this book, and to grow beyond the book. It was amazing. It was a journey like I can't explain
Jason: I’ll point out one thing that's very obvious to me because I've seen it in you, I've seen it in a hundreds of entrepreneurs. When we create constraints, when we have constraints, when we're limited in our time or limited in our attention, we innovate. That's when our brain starts to really fire and we get really, really creative.
It's the same thing with our team members. If you give them unlimited time to do something and unlimited resources and money to do something, they're going to do it in the most costly, time-sucky way possible. But when you create constraints and having a goal of doing something big like an Ironman, where you're going to put your body to some massive stress, you have to be prepared for that, and you know what it's actually going to take, then it gets really difficult and it creates constraint.
I'll point out to everybody. I've seen this in lots and lots of businesses and I've seen in my own life when we have constraints. You don’t notice, you come up with ideas when money get scarce. When you have a team member leave, all of a sudden, you're changing things that they've been doing a status quo forever. A lot of these challenges that we perceive as challenges really are opportunities for us to innovate and to grow and to change.
I'm not sure if Tony will make it back here, but I'm sure Tony would love for you guys to reach out. Tony, I'm going to plug you. He's got his book, Doorpreneur, and I recommend you check that out. You can go to doorpreneur.com You can preorder it now. Make sure you get his book. Check it out. I think there's some really great value. It's a quick read, it’s only 125 pages, and I think you'll really enjoy it. He's got some previews of the first four chapters on his site doorpreneur.com and it looks like you'll be able to get it on Amazon and in some other places.
We'll go ahead and wrap this up. So if you are property management entrepreneur, and you are wanting to add doors, and you are wanting to get your business in alignment, and you are wanting to create that space for yourself, you feel like you're the hamster on the treadmill, then reach out. You can check us out at doorgrow.com.