The Property Management Show

Thank you for joining us for another episode of The Property Management Show. Today, we’re talking to Doug Brien, who is the co-founder and CEO of Mynd.co, a property management startup. Before we talk about his innovative new property management platform, there are a few other things you need to know about Doug. First, he’s a former NFL kicker who went to the Super Bowl with the San Francisco 49ers. He also co-founded and led Waypoint Homes, a company managing 17,000 single-family homes in 13 different markets around the U.S. He personally has investment properties, and his entry into the property management business began with his inability to find effective and exceptional management for his own rental investments. Today, we’re talking about Mynd.co and how he’s using the lessons he learned at Waypoint Homes to make the property management industry better. A Property Management Startup Raised $35.6 Million Mynd.co is a venture-backed property management company that raised $35.6 million and has 2,500 units under management. This is significant. There’s a lot of momentum behind Mynd. With more private equity and VC-backed money in the property management industry, acquisitions and consolidations are moving rapidly, changing the landscape of this business. Technology and systems can scale the potential of property management businesses. This is what’s behind Mynd, and it’s not new to Doug and his team. This is what they began at Waypoint. The goal is to create a property management company that can perform at a level high enough to attract institutional capital. There’s a tremendous opportunity to build a 21st century property management platform by using technology to systematize and measure tasks and outcomes. You can’t improve something if you don’t measure it.  Data is the new oil – have you heard this saying yet? People are beginning to realize that data is the most important resource in the real estate business, and especially in property management. The companies that know how to collect it and harness its power can create simpler and more profitable investments for people who want to own rental properties. Property Management Performance Gaps: Lessons Learned One of the major performance gaps in the property management industry is the visibility and use of data, metrics, and reporting. The things that an individual investor wants in a financial package are much different than the things an institutional investor wants. End-of-the month statements are great if you’re looking back at your performance. But, your new investor clients may want real time data. When you can create real time visibility, you can use what’s happening right now to make adjustments and corrections. You can focus on the right things.    Vacancy is a problem for investors of every size. Data has shown that self-showings can make a big difference in lowering your vacancy rate. With smart locks that generate codes for limited periods of time, prospective tenants can see a property immediately. There’s no time to waste with scheduling and coordination. One of the biggest conversion fails is scheduling appointments with agents. With self showing technology, people can be pre-screened and given a code to let themselves into the property. Things move faster this way. The philosophy of Mynd is to meet people where they are and create a seamless experience. A mobile-enabled experience allows people to find an ad, see the property, apply for the home, pay a deposit, and sign a lease. It’s seamless and it’s faster. You rent the property quicker and to a better quality of tenant. These are tenants who are willing to self-serve. That shows you something about a potential resident.  This is not forced. Mynd offers both self-showings and appointment settings with an agent. A competitor of theirs, Progress Residential, completed a helpful study that showed 90 percent of their prospects chose self-showings over personal showings, and those showings have a higher close rate. That data is hard to ignore.    The Depth of Opportunity for Professional Property Managers More data that’s hard to ignore is what the Iceberg Report has published. The report focused on single family properties and multi-family units up to fourplexes. The findings showed that there are about 22 million rentals in the U.S. Only 30 percent are professionally managed versus the 70 percent that are self-managed. In Australia, it’s the other way around. Why are U.S. real estate investors self-managing? Who would want to do that? This is the trend that Mynd is trying to reverse, and Doug has two suspicions on why landlords and investors are managing their own properties. First, finding good property management is difficult. That doesn’t mean good companies aren’t out there. They are. But, there are also a lot of mediocre companies, and there are some that just aren’t good. If an investor has one bad experience with a property manager, trust is lost. That investor concludes that the asset is too important, and will manage it all alone.  Second, there’s been a culture of DIY in America. That’s changing because it’s generational. Real estate has never been a market that was focused on customer experience. When service providers can do better and help people to feel comfortable trusting their most prized asset to a company that can provide value, those statistics may change. Another thing to consider is that Australia is more tenant-friendly. There are rules and laws that are far more complex and prohibitive than the regulations we have in the U.S. So, it’s difficult for an individual owner to navigate those successfully. They need the help of a professional.  Ideas to Improve the Property Management Industry Mynd wants to make it easier to invest in small residential rentals of 50 units or less. That covers 84 percent of all rentals. This is a financial investment. If you invest in stocks or bonds, you can get real data on your phone, and you can find high caliber professionals who will manage those investments for you. Why can’t that be possible for the property management industry, too? Mynd is trying to make it feasible and simple. They want to create a more compelling investment platform. A majority of real estate investors own rental homes within a 60 mile radius of their own residence. But, the chances that these are the best places to invest are pretty low. If you live in Oakland or Hayward, you might be better off investing in Kansas City or Dallas or somewhere in Florida. With innovative management technologies and their own software, Mynd can gather operating results and financial results in any market. They know where things are happening and where they’re not. That’s going to help them put together a portfolio of different properties in different markets.    Investors should be in the markets that make sense. They should have the choices to move assets around. Doug sees a point when fractional ownership is possible, and investors can sell half of a building in order to do something else.  Lessons Learned. How is Mynd Different from Castle? Doug and his team are successful raising capital and meeting expectations. He is aware, however, that nothing is ever guaranteed. It’s difficult not to think of Castle Property Management in Detroit, Michigan, which was also VC-backed and focused on technology and systems. Doug is working with Scott Lowe, who was part of the Castle team. There’s a lot to learn from the Castle experiment, and Doug said he had a lot of respect for what they did in Detroit, and how strongly they believed in what they were doing. What they got wrong, Doug believes, is that they didn’t bring in enough subject matter experts who know the property management industry. They lacked the experience in growing a company. There are always going to be mistakes. The difference that Mynd is making is that they are constantly measuring the levels of customer satisfaction. It’s their focus.  Growth Through Acquisitions: How to Buy and How to Sell Mynd is growing through acquisitions, but they don’t think of it as buying companies. They think of it as partnering with companies. The strategy is called Land and Expand. They land by finding the right entrepreneur with a portfolio that’s a good fit. They pay for the value that has been created, and they partner together to move forward. The owner or the team members might stay with the company, and they become a part of Mynd. These are local market experts who know the area and the properties. They are invited to share their goals and to build the portfolio. That’s the land piece. The expand piece is the large digital footprint that Mynd leaves. It’s the online presence combined with the offline channels that create indirect and direct growth. If you’re thinking you might want to sell your company in the next 12 months to a platform like Mynd, you should begin to identify its value right now. Everyone has a different way to value companies. One thing that’s consistent, however, is that a potential buyer will want to see your revenue. Your recurring revenue from leasing and management fees will matter. So, if you want to grow the value of your company, you need to grow your revenue. Next, consider what your contracts are worth. Management agreements that are a month or two old will not be as valuable as that contract that’s been in place for two or five years. Be careful about exceptions. If you’ve got side deals with some of your owners that are outside of your normal operating procedures, it’s going to be difficult for the company that’s acquiring you to meet those existing obligations. Audit all of your leases and property management agreements. Clean up your accounting. It’s a good idea to hire a consultant to help you through this process. It will make your business clear, and you’ll find it’s a positive ROI experience for you. Buyers like Mynd will want to see clean, consistent, transparent businesses. Get your consultant on board three to six months before you want to sell.  Look for a person who is involved with institutional property management. For example, maybe you can reach out to someone who works in the business and would be willing to give you 10 or 15 hours of their personal time. You could pay them around $75 per hour, and at the end of the project, you have properly audited your business, and you spent very little money. You can also send some sample contracts to a potential buyer. They won’t go through every lease, but they might tell you what kinds of trends they see, and what might be a problem for you.  Pricing your Property Management Services Pricing always depends on the market. Mynd is creating software that makes pricing part of task management. Property management is a series of tasks created by owners, tenants, and the property itself. Your job is to resolve those tasks. To properly price your services, you need to know what things actually cost. What does it cost to lease a unit? What does it cost to collect rent? To manage residents? In the future, Doug expects to be able to price in a way that offers investors more flexibility and more ease. Data, again, will lead to a meaningful strategy. Mynd is excited to do things differently. They’re starting a model for short term rentals. In the Bay area, you can earn twice as much revenue with short term rentals. Because they’re more operationally complex, new software is needed to handle the shift in services that are provided. Property managers can change 15 or 20 percent, and the investor will be on board.    Marketing and Technology for Property Management Entrepreneurs Maybe you’re the owner of a management company, and you’re in high growth mode and you’re managing between 600 and 800 homes. Mynd cannot take all the business that’s out there, so what is your biggest opportunity? Doug thinks that opportunity lays in word of mouth from customers who have received excellent service from you. Property management is a trust and credibility business. If someone finds a good property manager, they are willing to tell everyone. Your sales cycle on one referral is fast and easy when you do a great job. There’s also a technological revolution happening right now that can help you. Property management companies who can ride that wave and leverage the opportunities it provides can earn more money. Figure out how to use the technology to drive customer service and earn referrals. You’ll thrive in the next five to 10 years. Be obsessed with customer experience. Property managers are always finding themselves between owners and tenants, so you’ll get negative comments from someone. When that happens, get to the bottom of the situation, resolve it, and make it right. Admit when you’re wrong, and respond online proactively. Invest in the systems and the technologies that allow you to monitor your reputation and your ability to provide great customer experiences. Marketing and brand management brings more lifetime value out of a new customer. Every referral is valuable, and it’s how a growth-minded property management company can strive and survive. Property Management (and the NFL) Requires a Thick Skin Property management is not unlike being a professional athlete. No matter how many good things you do in your career – it’s the thing you missed that will always be remembered. Maybe you saved someone tons of money on repairs or leased a property for the highest possible rent. The only thing that person might remember is the eviction you screwed up. Have a thick skin, and focus on what you can control. PM Grow summit is coming! It’s going to be April 17 to April 19 this year, and we want to know who you want to hear from at this summit. Contact us at Fourandhalf today.  Thanks for joining us. The post Doug’s Property Management Startup Raises $35.6 Million; Do You Mynd? appeared first on Fourandhalf Marketing Agency for Property Managers.

Today on The Property Management Show, Robert Locke is joining us to talk about how to structure your business without growing pains. This probably sounds impossible, but Robert is going to help us elevate the conversation and explain some BIG IDEAS. Why We Should Learn from Robert Locke Robert started his property management company 35 years ago with 50 units. He is candid about having made all the mistakes possible in the first few years. But, he sold his large, very successful and immensely profitable property management company to a Fortune 500 enterprise. That sale came with a nondisclosure agreement. He couldn’t speak or teach for a while after the acquisition. Today, he’s finally able to deliver his knowledge to the world, and we’re humbled that he chose to make his debut on The Property Management Show. The Things You Think are Critical May Actually be a Hindrance Robert started with five rental houses in 1980. He began selling properties to investors who said they would buy the homes if Robert promised to manage them. So, Crown Realty and Management was born. After 10 years of steadily growing his business, it became clear that at every level of growth, it was necessary to let go of some of the things that had seemed so sacred and necessary and important to running a business. When you go from 200 properties to 300 properties, you learn some lessons. When you go from 500 to 600 properties, you learn some more lessons. Most property managers build a system that works for where they are today. Whether that’s 50 properties or 500; there’s a tendency to design a structure that works for what you have right now. But then, if you double in size, it’s easy to crash and burn. A critical mistake that will hinder your growth is holding onto the things that you think are essential to your management model. What works for you at 200 properties will not work for you at 400 properties. Many of the systems that were working perfectly will hold you back. When Systems Hinder Growth: Some Examples One property manager had a sales model where he gave every owner and every tenant his personal cell phone number. His pitch was that if people didn’t like the answer his staff gave them, they should call him directly. This works when you manage 50 or even 100 properties. But, it won’t scale. It would be impossible to get bigger than 200 properties because you cannot have 400 owners with your cell phone number. Beware of building things into your model that will prevent you from going to the next level. Another property manager in Savannah was managing 200 units. His model was to send the full rent to the owners every month and then invoice those owners for the management fee. That’s $60,000 of accounts receivable every month, and an accounting firm had to be hired to handle the invoicing and collecting. Obviously, that’s not scalable. You cannot go from 200 to 500 properties by invoicing your owners every month. It became a hindrance, and the owner of the property management company had to give that up and begin taking the management fee from the rent that was collected. It required some conversations and some strategizing, but changing the system was absolutely necessary to grow. Now, that company has doubled in size and the wheels haven’t come off the business.  Everyone builds things into their systems that impede growth, and those of you who have gone to the next level can spot them. You know what you had to give up once you move from 300 properties to 500 properties. But, at 300 properties, you don’t necessarily see it so clearly.  The Mac Daddy of Slow Growth: Are you an agent or an Agent? A lot of people who move into property management come from real estate sales, where you’re an agent (small a). They do what the owner asks them to do. The owner is in charge, and the agent executes on the owner’s directive. It makes sense in sales, but it doesn’t translate with property management. In property management, agents think that they have to confer with an owner before approving an application. They think they need to call the owner before handling maintenance or dealing with an eviction. They think that because it’s what you do in sales. You are facilitators and scribes. You don’t make decisions and you collaborate on everything. You have to change your thinking and become an Agent (big A). The number one hurdle preventing property management companies from getting to the next level is the idea that you have to collaborate with your owners on every decision. You don’t. An Agent gets authority through the management agreement to approve and deny applicants, to handle maintenance under $500, and to file an eviction when it’s time. You can handle the wobbly deck and deal with the deadbolt that’s not working. You can replace a dead shrub, and you can do all these things without calling the owner first. Get a spending limit and stop collaborating with owners all the time. It’s stagnating you and preventing you from going to the next level. It’s consuming your staff’s time.    Part of the problem is that property managers often teach owners to behave this way. You have to educate your owners and earn their trust. If you’re not familiar with Steve Crossland, listen to his podcast with Jordan Muela on The Profitable Property Manager. He is extreme about being a Big-A Agent. He insists that owners trust him to make strong decisions and to enforce them. His maintenance limit is $500, but he is very clear with his owners. If the air conditioning fails, he is going to send his tech to replace it. There’s no collecting bids and there’s no making phone calls. The tenant will not be left suffering in 105 degree heat. Not everyone is okay with that, but Steve will only work with owners who accept it.    Owners who want to be more hands-on may not want to work with you. But, if you want to grow, you cannot co-manage. You cannot be micromanaged. You are the expert. You are the authority. Don’t waste your time collaborating with owners who don’t have the same skill and training as you. Too many property managers are worried about losing an owner. This hinders them from raising fees or offering extra services or doing other things that will make them money. One property manager had 400 owners and he introduced a new fee that was a couple of hundred dollars per year. He lost five owners, but he made $75,000 extra that year on his remaining owners. Don’t structure your business based on the fear that you might lose an owner. Adopting a Formula for a Nickel-and-Dime Business There’s an important formula that you need. Here’s the truth: Property management is a nickel-and-dime business. You’re not chasing $5,000 checks. You’re chasing $80 dollars a month from your clients. All nickel-and-dime businesses require volume. To create volume, you need speed. What does speed look like? It’s approving applications without calling the owner. It’s handling maintenance under $500 without collaborating with the owner. Those things create speed. Processing an application and signing the lease without the owner and moving the tenant in on your own creates speed, which creates volume. You need speed for scalability. If you have to collaborate with your owners, you defeat speed and you can’t scale. When you’re collaborating with owners, you’re driving a motor home that’s clunky, slow, and guzzling gas. When you let that go, you can drive a Ferrari, which is fast, racy, and efficient. If your owners hate it, they can let you go. And that will be okay. Educating Your Owners Starts with the Management Agreement If you’re constantly blogging and communicating with your owners through newsletters and other methods of communication, you’re going to be able to set the expectations and earn the trust you need to follow this formula and claim your authority as the property management professional. The process of owner education starts with the management agreement. Build a management agreement that isn’t sluggish and slow. Have the right language that tells owners they can trust you to make good judgments. Owners don’t know what’s going to be in a management agreement. They do not spread out three different management agreements and see how others do it. If your contract sounds logical and intelligent, they will sign it. Growth Strategies: Remote Lockboxes and Outsourcing If you want to grow, you need to stop meeting your tenants at the property to move them in. Once you get to a certain level, it becomes chaos and takes up too much time. Remote move-ins are easy and efficient. Let go of the personal move-in process and set up a system where you can send the lease via DocuSign and tenants can go onto their portal to pay the rent and the security deposit. You cannot scan them a key, but you can create a lockbox mechanism that’s controlled remotely. If you think you have to be there when they move in, you’re not thinking about speed, and you won’t be able to grow. Remote showings are also essential. You don’t actually need to have an agent there to show prospective tenants which room is the living room and which room is the kitchen. They can take a look around themselves and contact you with any questions. Society today is becoming less personal. There’s a tension there, and it’s easy to worry about losing the personal relationship with prospective tenants. But, there are benefits. Think about fair housing. Remote showings will do a better job of keeping you compliant. The personal relationship is important in the sales process. You’re showing off the home. It’s a big ticket item. With rentals, tenants don’t need you there to help them make their decision. Some property managers really want to keep their process personal. They want to shake hands and fawn over the kids and pet the dog. This is fine if you want to stay small and have relationships. It’s just not scalable, and you won’t be able to grow past a certain point. Outsourcing is the current catnip in the NARPM world. If you want to grow, embrace outsourcing. Virtual assistants cost less and they get a lot of your administrative work done. They can handle phone calls and answer questions. This is critical not because it makes you more money but because it holds your costs down. It’s a critical element to becoming scalable and profitable. Property Management Assets: Employees and Tenants Virtual assistants allow your staff to play a more strategic role in servicing your owners and your clients. This is important because turnover – whether it’s employees or tenants – will kill your ability to grow. You’ll make a lot more money from a tenant who is in the property for five or 10 or even 20 years. You’ll hear a lot of property managers say we work for the owner. But, if the tenant is happy, the owner is happy.  The longer you keep tenants, the longer you keep owners. Make sure your tenants are feeling valued, and make sure your management agreement doesn’t renew with the lease, but with the tenant’s departure. There’s much more in Robert’s course that can help property management companies grow without growing pains. If you want to dig in deeper, check out his online workshop at: https://www.trainingpropertymanagers.com/online-courses There is a button with courses that are both on-site and online. There’s even a series you can subscribe to that’s completely free and available to everyone. Thanks to Robert for joining us, and thanks to all of you for listening. It’s the time of year where we start thinking about PM Grow Summit. Our speaker lineup this year is going to include public sourcing. We want to know who you want to hear. So, if you want to hear more from Robert and you’d like to hear him speak at PM Grow 2019, contact us and let us know. The post How to Structure Your Business to Grow Without Growing Pains appeared first on Fourandhalf Marketing Agency for Property Managers.

In this episode of The Property Management Show, we’re talking about top-line growth versus bottom line performance in your property management company. There’s a belief that’s accepted among business owners that you suffocate without profit. However, it’s also possible that you can suffocate without healthy top-line growth. Profit may be achievable, but top-line growth is possibly more meaningful for a company, even though profit is what indicates what a company is worth and how much you’re taking home as its owner.  Two guests are exploring this idea with us today. Jordan Muela is the co-founder and CEO of LeadSimple. He’s also the co-founder of PM Grow Summit and the co-founder of The Profit Coach. With him is Danny Craig, who digs into numbers like nobody else. He partners with Jordan at The Profit Coach.  True or False: Growth Solves Nearly All Problems In the discussion of top-line growth versus profit, there’s an idea that growth solves nearly all problems. You could be operationally efficient and really good at what you do, but you have no clue how to grow your business or use sales and marketing to achieve bigger outcomes. Or, maybe you provide an average service but you’re great with sales and marketing. The company with the grasp on sales and marketing will probably out-perform that company with outstanding services but no way to sell them.    Also, there is no point in scaling something that doesn’t work. If a business is hemorrhaging cash and losing money or underperforming even without the sales and marketing budget factored in, nothing good will necessarily come from trying to grow.  Another thing to consider – what does your end state look like? In other words, why are you in the business? If you want to maximize your cash flow from month to month, that’s one outcome. If you want to accumulate a bunch of doors, scale up, and then sell, you have to measure whether you can feed the business enough cash to get the growth you want before you sell. That’s a different path. Depending on your end game, you’ll know how concerned to be with scaling and profitably. Growth won’t solve all issues if you can’t at some point optimize that growth. Growth is great. But, if you cannot get profitable, you’ve got an issue. Remember this: When you strip out the sales and marketing expenses of an organization and that company is still consistently losing money, it’s pointless to scale. That business needs a lot of help, and top-line growth isn’t necessarily the answer. Falling into the Black Hole: Where and How this Happens A business can grow to the point that nothing seems to work anymore. As the organization scales, it doesn’t matter how efficient you were before. You cannot continue to deliver the same output at the point where everything seems to be breaking because you’ve reached a new level. Even with the best processes and systems, it seems that nothing is in place to support the growing machine. This can happen to property management companies at two stages: First Black Hole: Between 200 and 300 doors are under management, and the owner wants to transition from being a property manager handling the day-to-day work to being a true owner who is spending time bringing in new business and strategizing for the future. Second Black Hole: Between 700 and 1,000 doors are under management, and processes suddenly aren’t sufficient to handle the growth. It feels like you have to rebuild everything. An owner is acting as a CFO, managing HR and leading the marketing charge. It’s too much. Moving Past the First Black Hole There are three major drivers when you encounter black hole number one, based on benchmarking and consulting done by Jordan and Danny. First, profitability. Cash and profitability are closely related in property management. With the recurring revenue model, if you don’t have cash, it’s because you’re not profitable. So, you have to understand your direct labor efficiency. For every dollar spent on direct labor, how many dollars do you get in revenue? Direct labor is where everyone in the company is spending 50 percent or more of their time delivering property management services to owners or tenants. You need to know how many dollars you’re generating in revenue for every dollar you’re spending on salaries and commissions.  Second, revenue per unit. There is so much focus on growth, but sometimes it’s easy to forget whether the revenue is there. Is the top-line revenue there per unit? You can grow top-line revenue not just through acquiring more doors, but by getting your profitability per door where it needs to be. Data shows that you cannot make a profit if you’re earning less than $150 dollars per unit, excluding maintenance. Third, controlling costs. This is an obvious requirement. You have to watch your facilities and operating expenses. What do you do as a business owner if you find yourself in this black hole? It starts with intention. If your intention is to be profitable, you’ll be committed to driving profit. Every small business needs that commitment. On the labor side, it’s critical to understand the tasks of your team and what it takes to achieve them. You may be in the weeds and you may assume you know what everyone is doing. But, in the first black hole, you’re coming out of the weeds. There’s a little less oversight into what your team is actually doing. If you’re losing efficiency, it could be because they are confused about their job. Maybe there is a lack of knowledge that’s driving the inefficiency. Or, without the oversight, they’re being less efficient just because they can. Hold people accountable to specifics, not general ideas. You probably hear people say to staff for growth. You have to know how much time it takes for your team to manage a process. You have to embrace constraints and use them to your benefit. For some companies, it’s a salary cap. This is a form of accountability. Knowing what the constituent tasks are of your team members is also a form of accountability. Salary caps and accountability provide visibility to management and owners. It gives you an opportunity to further investigate where you are having inefficiencies. Maybe a portion of your revenue is being driven by a particular set of people. Each team member needs a clear understanding of the tasks they absolutely have to execute. Regular accountability about these steps and processes is critical to both growth and profitability. For example, if you have an HOA department and the revenue that department drives is only half of what you’re spending to staff that department – a change is needed. If your idea is to triple the number of HOAs you’re serving in the next 12 months, how actionable is that? This is a situation where you need to adjust your labor. Move around who is doing what. Consolidate roles. Departmentalization is great, but if you cannot afford it, it’s just not practical for your company. If you find yourself in black hole One, buckle down. Check your labor. Be consistent and more managerial with what you expect from people. Find a constraint of choice to help you. Steve Crossland in Austin manages 100 units. His constraint of choice is doors. He won’t manage more than 100 doors, and he won’t spend more than half his time managing those doors. He has no employees. What does that mean?  It means he has to choose the best doors to manage in order to be profitable. And, he is profitable. You can be boutique and profitable. Or, you can spend a lot of time marketing your business hard because you want to get to 25,000 doors. The rules are different in each situation.  Moving Past the Second Black Hole One of the biggest differences between successful companies and unsuccessful companies is embracing a culture of experimentation. This is a never-ending journey. You want to be able to try different things and remold your processes when you can. With all of this opportunity, you have a real chance to achieve your goals. How can that drive profitability? With the recurring revenue model inherent in property management, you’re not getting huge annual contracts with up-front payments, so you have a lot of money to play with. You’re getting paid monthly. You’re collecting a paycheck. In many cases, property management companies actually thrive on real estate sales and maintenance companies. Cash does give you flexibility, and so does clarity of mind and focus. These things come from a well-oiled machine. You cannot have freedom if you’re chasing your tail all the time. With the right efficiency on the operational side, you can step away from day to day tasks and embrace that culture of experimentation. Growth for the sake of growth is ridiculous. But, growth with purpose leads to success that cannot always be measured by profits. For example, look at Appfolio. Software companies are dramatically different from property management companies. But, Appfolio started by raising $18 million and then bringing in another $20 million. But, they started losing cash fast. Millions of dollars were lost in the first few years, and it seemed like the company wouldn’t survive those losses. Suddenly in 2017, in one year, Appfolio became immensely profitable – just like that. What happened? They market-sized their fees. They went from $1 a unit to $1.50 a unit, and nobody batted an eye. Now, this company has grown by leaps and bounds and out-innovated a lot of others. Instead of being concerned with profitability, they wanted to do something different. This is where you might find yourself in the second black hole. Your business might be at zero profit or even losing, but with access to capital, you can keep growing. That makes some business owners uncomfortable. If you’re wrong, and you’re scaling something that you cannot turn profitable, you have then spent the lifecycle of your business not taking owner distributions and grinding away. You’re just adding risk to your model. It worked for Appfolio, and yet many small businesses are not suited to follow that playbook. People start property management companies because they can choose a niche and get their own piece of the real estate pie. Big corporations aren’t price-gouging them yet and cutting them out of the market. There is something inherently decentralized about the industry. With innovations, it could be centralized. Companies like Mynd.com are coming up with new ideas. They believe they have a scalable product, and investors are behind them. Mynd.com is built by industry veterans, and time will tell where it takes the industry. The larger you scale, the more things will change for you, including your numbers. If your company is growing like crazy because of all your sales and marketing and you pull that back and your company is still profitable – you’re doing something right. But, if you pull back the profit you’re earning and your operation is still leaking cash, you’re not going to emerge from the second black hole with the revenue you need. The valuation mechanics change as you scale. Property management entrepreneurs have the opportunity to feed their portfolios with Connected Business Units (CBUs). When one company is bankrolled by real estate sales, or other endeavors that complement the property management business such as maintenance or construction, you shouldn’t lose money. Finding the right CBU for you could be a better way to grow than to try to add more doors and more doors and more doors… Revenue per unit is where the money is made when you’re climbing out of your second black hole. How can you get your revenue per unit up? Maybe it’s through ancillary fees. Maybe it’s providing maintenance or other services. You want to milk each door for what it’s worth, and you want to provide value for that extra revenue. Expand your scope of services and expand your value propositions. If you want to see what Jordan and Danny are doing, email jordan@pmprofitcoach.com and check out The Profitable Property Manager podcast. If you have any questions about growth through marketing, sales and better business, contact Fourandhalf. Thanks for joining us, and we’ll see you next time. The post Top-Line Growth and Profit in Your Property Management Business: How to Navigate the Black Holes appeared first on Fourandhalf Marketing Agency for Property Managers.

This week on The Property Management Show podcast, we’re treated to an amazing entrepreneur who has been doing property management for 36 years. We’re talking to Melissa Prandi, the owner of Prandi Property Management, and we’re picking her brain for some wisdom on running a property management business successfully.    Founding Story: Prandi Property Management in Marin County  Melissa started as a receptionist in the company she now owns when she was 19 years old. She got her real estate license and began doing property management. The company she worked for managed about 100 properties as a side business. The original owner was a CPA, and could see from his clients’ cash flow reports that better rental management was needed. Melissa bought the company at the age of 25, and it’s now the go-to property management company in Marin County. Prandi Property Management has over 600 doors.   Getting Started: Approaching the First Couple of Years in Business  Most 25-year-olds know hard work, and that’s about it. Melissa didn’t waste time getting the word out, and that’s the best way to get your new company growing.  Let everyone know what you’re doing. Reach out to family and friends who have rentals. In the beginning stages, you need to let everyone know that you’re available to manage rental properties.   While you’re talking about what you do, get educated. Take classes. Learn from people who have been doing this for a long time.   Melissa took a two-day residential property management class from the one person who was teaching residential property management 30 years ago. She took that class seven times.   Seven times.  Why? Because she found she was learning from other students in the room just as much as she was learning from the teacher.   NARPM is an excellent resource for classes. Get educated, and make it as much of a hustle as gathering new clients. If you want to start strong and grow your business, you have to be obsessed with educating yourself.    Integration into the Business Community: You Have to Participate   Join associations. Network with other business professionals. Volunteer your time.   You can put in hours and hours of volunteer work on something as simple as a town parade, for example. People will inevitably ask you what you do. When you say you manage properties, they will perhaps have a rental property, or they’ll know someone who owns rental property. When you participate in your local community, you get to know people and their needs. These are all potential clients.   Everyone will be sending you referrals.    Start in your local market. Teach a college class. Conduct an investor panel. Learn about leadership. All of these things will bring you new business.   Many people don’t realize that one of the advantages of public speaking at NARPM and elsewhere is that you get a lot of exposure in person and even online. It’s called “link juice.” So you may think that you aren’t actually gaining new business when you’re busy conducting presentations to your colleagues.   But, you are.   You’re promoting yourself, and Google will notice. When you’re listed in authoritative sites like NARPM, your local chamber, and business journals, your own website will begin to propagate in search results. Google gives a lot of value to these websites that include your name, bio and website.   This is an under-appreciated value.   Networking and presenting also establishes you as an expert in your own field. That’s going to generate referrals.   Some of the resources for education and networking that you may be missing through NARPM and other associations include:  Designation courses through NARPM.  Property Management 101 through NARPM.  Speaking and leadership courses through the National Speakers Association. Local colleges, chambers of commerce and other professional business groups.  How Growth Happens: Moving from 100 Units to 250  Prandi Property Management doubled in size over about two years. The referrals kept coming in, from Melissa’s personal connections and her work on nonprofit boards and in associations. Some of the other things she did included an ad in the yellow pages and marketing postcards. She still does the postcards today.  With the high number of referrals Melissa was receiving, you may wonder if she was paying a referral fee.   Gift cards and personal appreciation always seemed better. The top realtors she talked to didn’t care about the money as much as they cared about their clients being well-cared for.    Personal touches matter. Handwritten note cards and coffee dates nurtured current relationships and brought in new business.   Another idea; visiting realtors at their open houses. Melissa would stop by, especially if that realtor had referred a client. She would bring a flower or a plant, and the relationships and referrals would grow naturally.   Realtors have team meetings or monthly and weekly meetings. If you can get yourself in front of those meetings – not necessarily to pitch your business, but to provide information and education – you’ll notice a lot of new business rolling in. Get to know the managers at those larger real estate companies.    This is a path for growth.  Growing a Property Management Business as an Introvert   This may sound easy to someone with an outgoing, Type A personality. Some people, however, are more introverted. It requires a little extra effort to feel comfortable in public settings. Leadership classes will help. Pushing yourself into situations that are outside your comfort zone will also help.   Start small.   You don’t have to start a public speaking career in front of thousands of people. Start just by introducing a colleague at an event. Practice by talking about something you love. Baby steps are important. It’s possible to teach yourself how to be more outgoing.   Because, if you truly believe in what you build and you know that you’re improving peoples’ lives, you’ll overcome that nervousness. You will always run into complainers and naysayers in this business, but if your service is good and you’re coming from the right place (your heart), you’ll find that you’re able to be a little less introverted when the need arises.    This is a useful skill to impart to your team, as well. Your team needs to be out there, talking to people. Your staff has to be comfortable talking about your business and what you do.   Give everyone personal notecards. Keep it simple and include your company logo. Handwritten notes are unusual in business today, and they will be noticed and appreciated. Thank someone for a referral this way. Old fashioned thank you notes go a long way, and it’s a perfect tool for introverts.   Managing Your Time and Your Team: Hiring for Growth  Hiring people complementary to your own skill set will help you grow your business even while you’re networking and attending events and doubling the size of your portfolio.  Melissa admits that she worked seven days a week, 10 hours a day. She also knows she’s a visionary who needs help filling in the gaps and managing the operations of her business.   Staffing is important. Know what you need.   When you put together a good team, you have to keep them. Turnover hurts, and having key positions filled is critical to smart growth and management. Take care of your staff.   Two things will help with staff retention:   Flexibility. Life happens. Many good employees will value flexibility over money. Give your employees the flexibility they need to have a life. Respect. If you respect your employees, they’ll respect you back. And, they’ll stay.  Be willing to hire all sorts of help. Virtual assistants can become indispensable. High school and college students in the summer can help with scanning and filing to keep you ahead of busy periods.   Intentional Growth versus Organic Growth  You can make a good living managing 250 properties. Why would you keep growing?  For Melissa, the growth of Prandi was organic, and happened because of her existing relationships. Another NARPM member was preparing to go on maternity leave and didn’t know what to do with her 85 property management clients. Melissa took them over for a year and collected the management fees. After that year, the original property manager sold her the business. So, suddenly she had 85 more doors to manage.   Responding to this type of growth and acquisition takes time and strategy. It’s not an easy process, and no one should tell you it is.   Training made a difference.    Melissa hired people, and the training process was to have them shadow her. They sat in her office and watched and listened. They learned quickly, especially since they could jump in and handle things as they happened.     The full-time staff at Prandi Property Management included Melissa, her assistant Dana and one bookkeeper. With the acquisition of new business, Dana got a license and became the lead property manager. They hired an assistant to support both Melissa and Dana. Four people managed 300 properties.   That’s pretty efficient, especially when you consider this was before the days of property management software and automation.   You have to know when to get out of the way. Business owners do not have to have their hands in everything. Most entrepreneurs are guilty of trying to touch everything in the business. But, you don’t have to. It’s your baby and it feels personal, but you have to let that baby go out into the world and make its own way.   Systems for Growth and Management that Have Been Retained  Everyone adapts to growth by changing and improving their systems.   But, if it’s not broken, don’t fix it.  Melissa has retained a lot of the tools and processes that have been working for her over the last 30-plus years.   Answering Phones Live Phones are answered by a live person, Monday through Friday. Even if it’s a virtual assistant, the call is transferred right away whenever necessary. It’s critical to capture new potential clients this way. Prospect Client Lead Sheet | Discovery  The discovery process is done by hand at Prandi, using a prospect client lead sheet which is green (to signify money), and it’s used to interview the client. This form tracks:  Why they’re calling. What they need help with. Who referred them. How they heard about Prandi Property Management. What kind of information they can provide about the property. The form has changed over the years, but it’s still used, and you need this type of discovery form. After it’s written up, staff members will load it into the property management software.   A prospect doesn’t want to hear you typing away on a keyboard. This makes it easy to gather information.   Discovery is your most important part of the process. No one listens anymore because no one cares. Everyone is so quick to give their sales pitch and move on. This is an amazing way to get to know someone and whether you want to manage their property. Visiting the Prospective Property The next form is a two sided form, and it’s yellow. This form goes out to the property.   Matt, Melissa’s son and business development manager, will go out to visit the property and talk to the owner. A second person goes along to take care of this form. There’s a lot of detail and it captures everything about the property, from whether there’s a gas stove in the kitchen to the garage space. It includes all the details you want. From this form, someone can write an ad and do the follow up. Then, it goes into the system.   Know Your Market and Your Properties  Not every property manager is willing to go to the property before signing a management contract. Some managers will sign a client with the property unseen.   This depends on your market. Marin County is unique. The rents are high, and so are the expectations.   High-end rents mean high-end owners and high-end tenants. When you’re in that market, those properties have a high demand and there are lots of expectations.   The rental average in Marin County is over $5,000 a month. Property managers there make a lot of money to do their job. Melissa never signs a client without seeing the property because every home is different. There are no tract homes or new developments in Marin County. Each home is unique.   So, it depends on your location. If most of the properties you manage are like thousands of other properties and you know the neighborhoods and the schools, maybe you don’t have to see the home before you sign the client. But, with high-end rentals, the personal touch seems to be everything.   Leave Yourself Open to Growth Opportunities    Don’t be afraid of not managing the property.   What does this mean? It means you can offer a lease-only service. Eventually, you can convert that client into full-service management. This is an opportunity a lot of managers don’t take advantage of, but it’s another example of organic growth.   When you have lease-only clients, track those lease expirations. Sixty days before the lease expires, you can reach out to the client. Ask if they’d like a renewal lease drawn up or if you can do a property evaluation for them. Stay in front of those clients.   If you have questions for the show or comments about it, please email hello@fourandhalf.com. Thanks for being with us.  The post Achieving Growth with Old-Fashioned Service: A Female Entrepreneurs Guide to Navigating the Property Management Industry appeared first on Fourandhalf Marketing Agency for Property Managers.

Welcome to another episode of The Property Management Show. We’re glad you’re participating and providing us with feedback, because we see a need for quality information that will help you take a bite out of the huge opportunity that’s out there. As some of you know, 75 percent of the rental properties in the U.S. are self-managed. We want to help property managers tap into this large self-management market, which is absolutely ready to move into professional hands. As we’ve discussed in the past, tenants have a lot of protection, and it’s harder for landlords to self-manage. There’s also a generational shift. Many of the current landlords are getting a little older, and they don’t want to deal with the day-to-day management. We’re talking to Steve Rozenberg again. He’s a part-time pilot and a creative business owner. He does a radio show, videos, and a lot of things that no one else does. That’s what identifies his company as a success in the making, and we always get good information from Steve. Recently, he began talking about his Owner Education Series, which is really exciting. This may be your opportunity to go after that 75 percent of the self-management market. Starting an Owner Education Series for Current Clients Your current clients need to feel special. When you can give them something that your competitors can’t, you’re guaranteed to retain them and attract a lot of new business. People want to feel like they belong to a club. People won’t leave your company because of your prices. They leave when they feel like you don’t care. Statistics show that 68 percent of customers leave for that reason. They equate price with value, and if they cannot see the value you’re providing, you’ll lose them. So, give your current owners a way to feel special. Starting an owner education series is a great way to do that. Many of your owners have questions about their investments, and how to continue investing. You know there’s no rule book when it comes to owning a rental property. Your clients may be interested in buying additional properties (which is great for you), but the Ferris wheel is spinning, and they don’t know how to get on. Your owner education series will help them do more. Evaluating and Prioritizing Your Current Owners Steve started this series as a way to add value to his current clients. He also attaches a grade to each owner, from A to D. The client with a D grade is a bad owner of a bad property. These clients take too much time, and they will be dropped at some point. The client with a C grade is either a bad owner with a good property or a good owner who has a bad property. These are clients you might still be able to work with, as long as you’re trying to bring them up to the B or A level. It takes work from both you and your client. The client with a B grade is a good owner who has a good property. There are no problems or dramas with these clients. When you have an issue or their property needs maintenance, they let you get it done. The clients with an A grade are your B clients who refer people. A-level clients are your raving fans. As a property management company, you should always grade your clients. Once you have evaluated all the people you’re working with, you should commit to spending 80 percent of your time on those top 20 percent of clients. It’s the top tier that’s making you money. Invite your A and B clients to your owner education series. Tell them they are valued clients, and you’d like to invite them to this event. Then, ask them to bring a friend. Clients who bring a friend will be invited into the VIP section, which will include a front row seat and other perks. The friends they bring are potential clients, which is great for you. The existing client is getting something of value and VIP treatment, which is great for them. Owner Education Series Example: Find It, Fund It, Forget It One owner education series that Steve and his team found particularly successful was Find It, Fund It, Forget It. Why did this work so well? A wholesale company was present to talk about finding investment opportunities. They discussed where the good deals were uncovered, and how to quantify opportunities so investors aren’t just buying anything that’s on the market. They explained how it was done. Then, a lender joined the event and talked about how to fund the investment purchase. This was a hard money lender who discussed how he funds deals for investors. Finally, Steve talked about how investors could forget their rental home when a property management team like Empire Industries stepped in to leverage their property management services.  Creating Strategic Alliances with Property Management Partners How do you get started? To successfully run an owner education series, you need to create strategic alliances with like-minded partners. Make sure they’re worthy of your time and event. Here are some criteria: They must have a database of prospects because you want their people to come. They have to have a reach that matches yours – a sphere of people you can influence. This gives you the opportunity to get in front of people you wouldn’t normally get in front of. When you create alliances with people who compliment your industry but don’t compete directly with you, you’ll have sponsors for your events. Wholesalers, plumbers, electricians, lenders, real estate agents, title companies, and CPAs; developing relationships and creating strategic alliances with these professionals will easily grow your business and your potential.    Turning Strategic Allies into Event Sponsors You might start off holding one of these events in your own office, with 10 or 20 people present. Eventually, however, you’ll grow, and you’ll need someone who can pay for food and drinks. Those professionals in your sphere of influence will be happy to sponsor your events. Give them five minutes to speak to your audience. That’s a standard sponsor activity. Maybe they’ll have a booth or a table where they can collect contact information and hand out literature. However you set it up, the goal is to have your sponsors pay for food and drinks and if necessary, the venue. The cost to you is zero. Make sure everything aligns. You don’t want a speaker up there saying investors don’t need a management company! The people you invite and the people who sponsor must be a cohesive group. Something else that works well is sharing success stories. Get one of your best owners up there – an A client – who can talk about some of the struggles he or she faced early on, and how those struggles were managed. When other owners and prospective owners hear these stories, you’ll get a lot of credibility. It’s inspiring for someone who wants to be that owner sharing a great success story. Show your audience what can happen and how it can happen. When other owners speak, potential clients will see that they don’t have to be huge investors with 30 properties to be successful. Owning five or 10 properties while keeping a day job is completely possible. With these events, you’re creating buzz. You’re welcoming new people into an environment and a culture that’s appealing. And, this is at no cost to you. Put the event on Facebook so you can live stream it and promote your next one. This is an excellent way to start the conversation with new prospects and continue to strengthen the relationship you have with current clients.    Identify Your Target Client You need to know exactly who your target client is. It may be someone who doesn’t think property management is needed. At Empire, Steve looks for a male between the ages of 35 and 55. He earns over $175,000 per year, and has plenty of disposable income. He also understands leverage and the value of real estate. Once you understand who your target client is, figure out where that person hangs out. After you’ve done that research, conduct the marketing and advertising that’s necessary to reach him. Maybe he’s on LinkedIn. Maybe he works as a doctor or a dentist, and you need to advertise on the sites and in the things they read. Perhaps you’ll have a financial planner speak at your events. Why? Because those financial planners have a large database of people with disposable income. There are associations you can join as well, with access to your target clients. Then, you get in front of the friends of your target clients. Steve is not going to invite the guy with no job and no money who wants to flip houses. Instead, he’s going to focus on the engineer earning $300,000, who doesn’t know real estate but is interested in learning about it. If you don’t know who your target client is, that person is going to walk by you every day, and you won’t know it. Join forces with the companies who work with your target clients every day. Setting Yourself Apart from Other Property Management Companies With your event, you’re creating something. How can you get more clients? By providing a lot of value for current owners. You’re reinforcing to them that you’re the company they want to do business with. You’re showing a point of difference from anyone else out there. Talk to other property management companies and find out what they do for owner education. They probably don’t know what that is, and they don’t do it. Decide whether you want to be transactional or have a relationship with your clients. You can help them make smart decisions or just ring the cash register. This can be a huge and important way to set yourself apart. Be the company that helps investors make smart decisions. Many smart people are self-educating today. But, you can speed up their learning curve with something like an owner education series. Open your owners up to vendors, and have people talk about smart investments. Sponsors will Add Depth to Your Roster of Speakers Does having a sponsor make you uncomfortable? It shouldn’t. It actually adds value and depth. Maybe you have a plumber sponsoring your event. You give the plumber five minutes to speak, and that plumber is getting a lot of value. He’s in front of people he wouldn’t normally be in front of. So, if he spends $250 sponsoring your event, it will be money well-spent. He can market to the people attending. You’re also giving value to the people there. If you’re a property investor who needs a plumber – there’s a referral. Finding a construction contractor or a quality tradesperson in today’s market is hard. Investors and property owners will appreciate the introduction. The sponsors show you have validity. It’s more professional and provides more depth when you have vendors, financial planners, and other professionals who directly impact the people you’ve invited. Change up your topics and sponsors so people will keep attending. Ask what topics your guests want to hear about. Current Clients Can Add to Your Portfolio What you may not understand is that the cheapest client acquisition is your current clients. When you can get your current clients to purchase more properties, you’re increasing your business without any acquisition costs. Questions to ask your clients might be: Are you happy in your investing career? Are you where you hoped you’d be with your properties? Would you like to purchase more property without doing any extra work? Open the conversation about additional investing. Don’t be so focused on getting new clients that you forget to maximize the potential in your current clients. You should always be re-engaging. Most investors know they won’t achieve their financial dreams with just one door. Maybe their initial goal was to buy 20 properties, but they got lost after buying their first three properties. Your job is to find out what went wrong. Life happens, kids grow up, and circumstances change. But, if your owner still has the money and the desire, you may need to be the one who moves that client in the direction of buying additional properties. Introducing Prospects into Your Sales Funnel While you’re focused on getting more out of your current clients, remember that you’re also having those A and B clients bring a friend to your event. That’s an easy consultation; a quick chat. Talk about that prospect’s concerns and goals: what has stopped him or her from investing to this point? Talk about goals and where the prospect plans to be in 20 years. What does life look like, and what’s the strategy for getting there? Map it out. When you come up with a strategy that makes sense, you’re already providing value to someone who isn’t even a client yet. No one else is providing this value or this education to that prospect. So, you keep them in your funnel and you re-engage after a year or two. Have the conversation whenever you can. It’s a long game. Ongoing Success: How to Evaluate Your Owner Education Events You’re going to come away from each event with leads and contacts. You’re also branding yourself and your company. You’re creating a sphere of influence and an environment that tells your market that you’re the company to go to. It won’t be a one-time-only event, and then you’re done. This is the first phase of a relationship that could be a six-month courting process. You need a continual presence. You need to show up everywhere. Repetition and reputation are the keys. Remember that everything goes back to making people feel special; to creating exclusive groups. You can have a client-only investor group on Facebook. There, they might find out about great investment opportunities before anyone else does. Give out incentives. When you post something, you can tell your clients that the first person to share that post gets a free paint job in one of their rental properties. When you create a tribe or club mentality, you build loyalty and you separate yourself from your pack of competitors. People feel like they’re part of something, and soon your A and B clients are bragging about you. Providing more value than anyone else is what will earn you more business. For any questions about how Steve has successfully run these owner education events, contact him on his website empireindustriesllc.com or on Facebook. He loves providing tips and advice because he remembers how many people helped him when Empire Industries was first starting out. If you have any questions about educating prospects and marketing your management company, contact us at Fourandhalf. The post How Owner Education Events Will Grow Your Portfolio appeared first on Fourandhalf Marketing Agency for Property Managers.

The Property Management Show’s audience has grown to about 8,000 downloads a month, with thousands of views on YouTube. So, the intricacies of property management and how to do it right are interesting topics for everyone, especially new entrepreneurs going into the business. The guest we have today has been described as a hardworking hustler. The topic is how to expand into new markets without having to acquire a new property management company. There are multiple episodes on acquisitions that you can go back to. Check out Michael Catalano and Andrew Propst if you want to access their methods for acquiring a management company and expanding into new markets. Today, Brock Forkey is going to talk about a different way to expand into new markets. Brock Forkey Bio Brock has been a lifelong entrepreneur. In grade school, he sold a skateboard in third grade for $80 and offered pet sitting services. When he graduated high school, he went into construction, where he learned about real estate. In 1999, he purchased his first investment property, and by 2001, he owned 80 properties. Now, his property management company is based in Albany and Troy, and they are expanding into Rochester and Buffalo over the next few months.  Managing Owners Rather Than Doors Currently, Brock is managing about $30 million in real estate, which breaks out to 400 doors. Over the next 12 months, he hopes to get to 600 units, and over the next 24 months, 1,000 units. Brock believes it’s better to look at the numbers in terms of owners rather than doors. If you have an owner with 74 properties under management with you, losing that owner is going to hurt a lot more than losing one unit. So, the goal for Brock’s company is to gain 180 owners over the next year, which will hopefully bring in 300 to 400 additional units. This type of strategy allows you to diversify your management portfolio in terms of owners rather than properties.    Shifting Strategies from Sales to Property Management There are a lot of moving parts in property management; more so than in other businesses. Add to that the fact that people have their safety and well-being wrapped up in their properties, and it’s a pretty critical business. Brock began buying and selling real estate, and eventually found himself flipping houses by 2006. Then, the financial landscape changed. People with credit scores in the 500s could get 100 percent financing. Selling homes was profitable. Homes were sold to investors and homeowners. By 2007, it was getting harder to sell anything. Not everyone saw the warning signs – but Brock did, and he made the necessary adjustments to his business model. Knowing when to pivot is an important part of achieving success in real estate and in any entrepreneurial business. It’s like Madonna. Madonna has been relevant for 30 years because she knows how and when to change. You have to be willing to change. Sometimes, you’ll get hit with a brick and that’s how you’ll know it’s time to change. Other times, you’ll see it before the rest of the industry sees it. People might resist where you’re going and what you’re thinking. It’s not because you’re wrong or they’re wrong – they just haven’t seen it yet. If you’re tracking your numbers and you’re following patterns in the industry, you’ll see the shift, and you’ll be able to pivot. Fake it till you Make It: Shifting with Momentum Changing the business model requires preparation and confidence. When Brock moved from sales to management, he spent $3,000 on a phone system that led callers to believe his company had a number of different departments (they didn’t…yet). He sent out some direct mail with a paragraph about their company, some bullet points, and a call to action. People called. People called because there was a need for this type of business. Accidental landlords were just arriving on the scene, and they needed their properties managed. Now, there’s less of a need for fancy phone systems and direct mail campaigns, and there’s better marketing through Google Ads and Pay-Per-Click. Brock says those marketing platforms have been life changing. And, he knows his numbers. 2017 Marketing Numbers: Marketing spend: $37,300. Cost per lead: $234.59. Cost per client: $643.10. Conversion rate: 41%. This year, Brock is spending about $72,000 on marketing. It’s an aggressive growth budget. Justifying the Marketing Spend You may be cringing at Brock’s numbers. But, he says it’s important to know what your clients are worth. Brock’s company earns an average of $20,000 per client. That’s the average over the last five years. Who wouldn’t spend $234.59 to get $20,000? Not a lot of property managers understand what a client is worth. One of Brock’s competitors on LinkedIn said they’d pay $100 for a referral of up to 10 units, and $200 for a referral to a client with 100 units. That company clearly doesn’t understand a client’s value. You have to know your numbers, and you have to be willing to spend the money. This is a business. Slowing Down the Sales Process: Closing Those Leads You probably wouldn’t mind closing 41 percent of your leads. Brock has learned how to sell. While interviewing other property managers to get a sense of his competition, he noticed that very few companies have an effective sales process. They’ll hand over the property management agreement as if it’s sales collateral. It’s not. Slowing down the sales process is the best way to convert leads. When someone calls, Brock asks them questions. This is the revolutionary question that makes such a huge difference: So, tell me a bit more about yourself and your property. It’s hard NOT to close the sale when you ask that, and you’re willing to listen. After hearing what he needs to hear, Brock sets up another call before that initial call is over. The second call will cover the Q&A. The prospect can ask any questions they want, and get some good answers. Pricing is on the website, and it’s a flat fee. So, that question is easy and out of the way. Slowing the sales process down this way also gives you a chance to do some research. If you’re selective about the types of properties you manage, you’ll be able to determine whether this is a client you even want to add. Brock takes on all the properties he can. He says it can be scary, but they take on the property and then they figure it out. While he’s doing all the sales now, his plan is to hire a BDM in the Buffalo office once he gets to 50 or 100 properties in that market. The management agreement is not a sales pitch. Repeat that to yourself if you’re currently handing it out to anyone who fills out an online form or calls your office: The management agreement is not a sales pitch. Put in the work. Slow down the process. Talk through the discovery process and find out what the prospect really needs. Be patient and answer questions. Establishing trust is critical. Investors are preparing to hand over their asset while they’re living in Germany or Israel or across the country. You have to get to know each other. Your Sales Process Challenge On your next 10 leads, try this system of slowing down the process. See what happens. Do your discovery and learn what you can about the prospect and their unit(s). Set up the next call before the first call ends. Send them some content that matches their pain points. Call back and answer their questions. Close the lead and sign the agreement. Choosing Your Market: Where to Expand How do you sell in a market where you don’t have local knowledge? It takes work. You might want to visit the area at least half a dozen times before you open your doors. But remember that a lot of work will be done over the phone rather than in person. You can begin gathering business before you have sales boots on the ground there. It might take longer. You’ll miss out on those face to face leads. But the number of leads you can close over the phone are likely to far outnumber the leads you’d close in person.  Competition is what drove Brad to decide to expand into Buffalo and Rochester. He went online and searched for property management in those areas. He found an opening for a company like his. It’s easy to learn what you need to know. If you have a good contractor in the area and some leasing people ready to go to work, you can get all the information you need about a place online or over the phone. You Know You Need Ancillary Services Construction services have been folded into Brock’s business, and they offer full remodels and construction work. It’s easy to pitch this an advantage. Owners are getting professionals who know their properties. The safety and liability concerns are nonexistent because there’s no third party company to worry about. Keep in mind that the construction industry is going through its own pivot. One out of three construction jobs are vacant because it’s hard to find someone to do the work. So, construction and maintenance as part of a property management business are valuable. Facebook Marketing for Talent Everyone who owns a property management company is forever on the lookout for new talent and reliable team members. Brock uses Facebook, and you can too. The process is simple. Create a landing page for the position you’re looking to fill. Maybe it’s a leasing agent or a contractor or a business development manager. Target your Facebook ad to the people who might be a good fit: Realtors and handymen. If you have good copy and good information, you’ll get some leads. It’s not dissimilar to attracting new clients. The Future of Property Management We’re going to start asking all our guests what they see for the future of property management. Brock sees it continuing to grow. This industry started in 2008, because of the recession. Renter’s Warehouse and Real Property Management got involved early, and it has grown since then. It will continue to do so. Warren Buffet said he would buy as many investment properties as he could if he knew how to manage them. All types of people are in this industry. It’s getting bigger, and it’s getting better. If you have any questions about what we’ve discussed with Brock, please contact us at Fourandhalf. The post How to Expand Into a New Market Without Acquisition appeared first on Fourandhalf Marketing Agency for Property Managers.

Growth has been the topic of our last few podcasts, and today we have a guest who can help provide some mutual mentorship and coaching with Alex, our host. Growing is easy, but putting a framework around growth to have a successful, profitable business with happy people is challenging. It requires real leadership.  Steve Rozenberg hardly needs an introduction. He has been on this show previously, and there’s a good chance you already know who he is. Steve is the co-founder of Empire Industries, he’s a commercial airline pilot, and he’s an international speaker. We’re talking about how companies can sometimes choke on growth, especially if there’s not a structure in place to support it. Steve will share the four specific things that he and his company are doing to make growth manageable. These 4 things are: Develop a leadership team. Put together a scorecard. Provide Tier 1 and Tier 2 positions. Develop quarterly themes. Leading versus Managing: Growth Depends on Vision and Structure Growth is sexy, and everyone wants it. But, someone needs to steer the ship. If everyone in the company is rowing and no one is steering, you could be going in the wrong direction. Your company needs to have a structure in place to manage the growth. As a leader, it’s up to you to show your team members what the vision is for the company. It’s easy to lose the vision and start managing. But, if you’re managing, you’re not leading. If you have found that you’re spending most of your time managing people and systems, then suddenly you’re doing a job – you’re not leading a company. You cannot grow that way. You should have a compelling story of what your company is doing. When you’re hiring new team members, make sure you’re able to talk about what your company stands for. As a property management company, you’re providing solutions. You’re solving problems for your clients, and you’re trying to be the best customer service company in your area. Create a Leadership Team Every company should create a leadership team comprised of leaders from different departments who have a say in the company. These are individuals who can see the company’s vision. At Empire Industries, Steve has a five-member leadership team, and they meet for an hour and a half every Tuesday morning. The first thing they talk about is the company’s scorecard. Everyone has to contribute to the discussion of the KPIs (Key Performance Indicators). This is a 30,000-foot view. They’re not digging through the weeds; they’re simply checking to see if they’re on track or not on track. Put Together a Scorecard You don’t want to track any more than seven to 10 metrics. These are the things that can kill your company. Focus on business metrics, not property management metrics. Look at the number of doors that have been gained or lost; the number of leads that are coming in; what your conversion rate is; how many doors you lost; how much money is in the bank. Track these things weekly, and you’ll know if you’re on track to grow in a way that aligns with your vision. Developing a Tier System  To get the most out of your team, you need to separate tactical roles from strategic roles. Your property managers won’t be productive if they’re handling the 100 phone calls per day that come in from owners, tenants, and vendors. Steve and his company have divided tasks and responsibilities into three tiers. Tier 3 is upper level management. Tier 2 is strategic property management. Tier 1 is the tactical response team; the people answering the phones and deciding what can be handled at that level and what needs to be escalated. Steve’s Tier 1 people are in Mexico, where he has a team of 16 people working directly for Empire Industries. This system protects the time and productivity of your best team members. Property managers feel stressed and burnt out when they’re trying to manage properties and at the same time answer the same phone calls and solve the same problems. You don’t need a property manager to respond to a tenant who can’t log into their portal or an owner who is confused about an HOA bill. Losing property managers means losing money. When a property manager quits, that manager actually quit three months ago – you just didn’t know it. And, when you lose a property manager, you also lose a lot of very valuable knowledge about your clients and their properties. Hiring someone new requires a training period. You might lose clients as well. The best way to retain your best property managers is by keeping them in strategic roles so they are productive and growing with your company; not answering 100 phone calls a day.  With a tier system in place, 80 percent of the work can be systemized. That takes a lot of pressure of your property managers, and your company can start growing the way it should. But what about that single point of contact? One of the challenges that you may face, whether you adopt a tier system like Steve or a squad system that you may have heard Alex talk about at Fourandhalf, is that clients speak to a lot of different people. They may get fussy with that, and ask who is really in charge of their account.  There is a perception that people want a single point of contact. But, the reality is – people want their problems solved. If you have a problem with your phone, and your carrier is AT&T, do you want to talk to the same person every time you call AT&T, or do you just want your phone problem fixed? Your phone probably rings for one of two reasons: leads or problems. If your clients understand that your experts are going to solve their problems, they won’t expect to talk to the same person all the time. Your maintenance guy isn’t going to solve a client’s accounting issue. A single point of contact may sound ideal, but if your company has a whole maintenance department dedicated to repairs and vendors and follow up, your clients who call with a repair issue will want to talk to that department, not their assigned property manager. Those are the experts, and if you communicate this to your clients, and set up the expectations so they know how you operate, everyone will be prepared. Let them know how you operate. Property managers don’t have to take 100 calls a day. They don’t have to do data entry. The tier system works. If someone at the Tier 1 level is having trouble answering a client’s question or solving the problem to their satisfaction, that person can always schedule a meeting with the property manager. Maybe an owner calls irate because of a $25 HOA bill. Instead of trying to track down the property manager right away, your Tier 1 person can look at the manager’s schedule, and offer the owner a meeting time. Then, the client gets a chance to calm down and the property manager can prepare for the meeting and do a little research ahead of time. You’re being proactive. Back to the Leadership Team and the Scorecard When an issue is escalated to Tier 3, and the same problem shows up in a leadership meeting two weeks in a row, it goes on the Issue List. The entire leadership team is responsible for deciding what’s acceptable and what needs to be fixed. If something is becoming a problem, get it on your scorecard and address it. You should be measuring everything. Measure how many phone calls the front office is getting, and track why people are calling. Measure every marketing campaign. In the leadership meetings, there’s no need to discuss the details of those marketing campaigns, but you do want to know how many opportunities are showing up, what your conversion rate is, and how long it takes to close a client. You need to know how many contracts you sign on a weekly basis. Developing Quarterly Themes Finally, task your leadership team to come up with a quarterly theme. This theme should reflect what you’re struggling with the most at any given time. Maybe it’s communication or maintenance. Fix it once, and fix it forever. This is no time for Band-Aids.  If your company is struggling with maintenance and you have lots of open tickets and you can’t seem to keep your owners happy with the way maintenance is being performed, you can identify this as a quarterly theme. Focus your whole leadership team on maintenance and talk about what you can do to increase maintenance efficiencies, how to decrease customer complaints on maintenance, and how to increase turn time. With the whole company working on the theme, the problem will quickly go away. Your core values should require you to fix whatever problems are hindering your growth. The brain works best in 90 day increments, so choose a quarterly theme and start focusing on a new theme every 90 days. It’s a good way to decide if you’re on track or off track, and the leadership team is collaborating to help solve these issues. This is a good way to demonstrate you believe in the company’s vision and core. Leaders ask questions, so prepare to hear from your employees on how to solve these quarterly themes. Southwest Airlines has a slogan: Bags Fly Free. It wasn’t the CEO who came up with that; it was a maintenance technician. Don’t let your ego trick you into thinking you are the only one with good ideas for your company.  Don’t Be Afraid to Say No Growth is stressful and scary. Adding to that stress is the fact that in property management, you don’t start seeing revenue that matches your growth for several months. You might be growing, but what if you can’t pay your bills? It’s time to take a loan, perhaps. Whatever you do – make sure it’s in your plan. Sticking to the plan can be a challenge, especially when there are opportunities to do other things. Be disciplined. If it’s not in the plan, you need to say no to that particular opportunity, or you need to re-write the plan. Mental toughness is required to say no to juicy opportunities that are not aligned with your direction and purpose. The most successful people in the world say no more than they say yes. That’s a pretty common theme in the stories of super-successful people. They protect their time. As an entrepreneur, you will grind away until you build the business that you want. Just remember to be flexible. You have to change with the business, and you have to grow with the company. The things that get you to $5 million are not the same things that get you to $50 million. You’ll need to read different books, and network with different people. Your actions will dictate where you go. If you want to talk to Steve about how he’s been leading his company to growth, contact him through his website at empireindustriesllc.com. You can always contact us at Fourandhalf if you have any questions or need any direction.  The post Essential Ways to Adapt Your Property Management Business to Growth appeared first on Fourandhalf Marketing Agency for Property Managers.

Elevate Operations, Systems, and Talent on both Pre and Post Sale Sides of the Business, or Become Irrelevant On November 9th, 2016, we gathered a group of industry leaders on this podcast live at the NARPM National Conference in Hawaii. Our aim was to decode the future industry trends and help property management entrepreneurs develop strategic plans to take advantage of industry opportunities. We discussed: Industry consolidation Competitive advantages of smaller independent companies Tasks for the CEO of a property management company Building a company culture Property management technology Today, we’ve gathered the same group of people on The Property Management Show to update our vision for 2018 and beyond. Guest Introductions Andy Propst is the CEO of HomeRiver, one of the largest privately-owned property management platform companies with operations in 15 states. He’s the past national president of NARPM, an international speaker, and one of the most respected thought leaders in the property management industry. He also speaks fluent Russian and made a movie about his experience as a missionary in Russia in the late 1990s called The Saratov Approach. Michael Monteiro is the CEO of Buildium, and has spent the last decade turning Buildium from a home-grown software solution that was created out of individual frustration to one of the largest property management software companies in the world. Over 12,500 property managers are using Buildium, and Michael is going to help decode the future of the industry. Jordan Muela is the CEO of LeadSimple, the first and only true CRM and sales process solution for the property management space. He’s the co-founder of PM Grow Summit, which is the fastest growing annual conference for top-level property management entrepreneurs. Jordan is also the co-founder and CEO of Profit Coach, and he authored the only property management financial benchmarking study of its kind, which demystifies profitability. Alex Osenenko, your host, is the CEO of Fourandhalf, a marketing company helping to solve growth for property management clients. Fourandhalf has grown over the last six years to 32 team members who are absolutely committed to their craft. Alex is a co-founder of PM Grow Summit and his latest venture has been the creation of the OnePartner Platform, which combines the latest conversion and SEO science into a website that drives quality leads for property managers on the front end, and a business performance dashboard on the back end, tracking actionable marketing and sales KPIs. The OnePartner team converts that data into decisions, driving a constantly improving process. With these four leaders talking about the property management industry, there are tens of thousands of hours of experience that can help your business fine-tune its pre-sale and post-sale operations. The Property Management Industry View for 2018: Accidental Landlords Cycle Out, Investors Cycle In In 2016, when this group first got together, there was still a large number of reluctant and accidental landlords, and their expectations of price and value varied based on their individual experiences. Today, the market has crested to the top of the cycle parabola, and economic uncertainty keeps amateur investors and accidental landlords mostly on the sidelines. The largest pool of prospective clients to emerge are sophisticated and disciplined investors, who demand transparency and results. Who is knocking on the door, and do those prospective owners match your perfect client profile? The Effect of Less Inventory One difference today is inventory. When accidental landlords were the predominant clients, there was a lot of inventory that couldn’t sell. Today, all those single family homes that used to be rental properties are now being sold. Inventory is going down, but demand for single family rentals is going up. Single family homes are in demand among renters, but they aren’t coming onto the market fast enough. There’s a shortage in the construction industry. One out of every three construction jobs is unfilled. Fewer young people are going into construction, and the industry still hasn’t recovered from the last recession, when a lot of migrant workers went home and never returned. Without the inventory, demand will continue to outstrip supply. Investors are buying outside their Markets A lot of investors are buying outside of their markets, and they need professional property management. These are investors that may have managed on their own locally, but in their markets, cap rates are down in the 3 or 4 percent range. To increase ROI, they’re moving into other markets that can provide that 7 or 8 cap. Coastal investors buying property in Memphis or Kansas City will need professional management services. There’s also a generational shift. A lot of the landlords and owners come from a generation of people who do things on their own. If your father wanted a clean car, he’d probably spend two hours on a Saturday washing his car. Today, you aren’t going to go out and wash your car. You’ll spend five minutes in an automated car wash. This translates to property management. Younger investors and owners will not want to do the work on their own; they’ll be more willing to pay for the services of a professional.    This is a market that demands flexibility from property management business owners. With properties selling off, you might need to focus on sales. You might need to think differently about churn in your business. You may need to meet ancillary needs in your local market. Flexibility and adaptability will protect you from irrelevance. If your management company is losing doors and you’re not already doing maintenance, rehab, and construction work, now is the time to start thinking about those services. You can grow even as you lose doors.  What do Sophisticated and Intentional Investors Require? With the loss of the accidental landlord as your primary client, your business must meet the needs of sophisticated and intentional investors. These are people who want to do everything on their phones. These are people who will expect more from their property manager in terms of speed, service, and technology. They want data. They want online financials. They want constant access to their information. That raises the bar for what property managers need to deliver. The property management industry in general can be slow at times. Speedy delivery of information and service to both tenants and owners has become critical. Speed is a new currency that property managers need to adapt to and offer. Tenants and residents want a consumer grade experience because of the way they’re living. With Lyft and other apps, they’re conditioned to expect simplicity and responsiveness. If you can meet this need and double down on service, you’ll see your business growth respond. Remember that companies outside of the property management industry are setting your customer’s expectations. As soon as you put your hands on something, you have to commit yourself to an exceptional user experience. That’s not going away; it’s a long term trend. A full stack experience is required for all of your customers. Consolidations and Acquisitions: Valuing Your Company and Succession Planning Acquiring property management companies was a hot topic in 2016. Today, it’s extremely geographical. According to Andy, many of the management companies interested in getting out of the business or joining HomeRiver are on the east and west coasts. The real estate markets there are hot, and the number of doors to be managed is dwindling. They are far more motivated than property managers in the south and the Midwest. There aren’t as many property managers there – 80 percent of the property management industry is on the coast. In the Midwest and southern markets, there’s not a lot of interest in consolidating or leaving the local market. They aren’t losing quite as many doors. Technology impacts succession planning and consolidation. Before these tech platforms, it was harder to consolidate in disparate locations, but with modern platforms, management firms with owners that are ready to retire or exit the industry will be able to join companies like HomeRiver. The market is still healthy. Property management companies are still being acquired, people are interested in selling and succession. This integration is good for the industry, even if there’s a bit of panic within coastal markets. Remember that vacancy rates are lower than normal nationwide, and there’s a huge demand for rentals. The industry cannot provide housing fast enough, and in many properties, 30 or 40 applications are coming in as soon as the home is on the market. Competitive Advantage: How Can Independent Operators Grow and Win Big? If an independent management company doesn’t want to sell the business, but they want to grow and build their brand, how can it be done? Alex thinks these companies win big by driving local market knowledge through deep, long-form content creation, and networking. Small blog content isn’t enough today. You need to dive a little deeper with radio shows, podcasts, and other differentiators. This is something that Duke Dodson with Dodson Property Management does really well. Check out his podcast in Richmond, Virginia. He’s talking about politicians, famous local disk jockeys, and a lot of good, local stuff. That’s one way to differentiate.  This isn’t unique to property management. Real estate sales face the same type of shift. Brokers aren’t going away, but the nature of what brokers do is going to change. Authentic, local knowledge has a ton of value, and a small, independent operator can stand out by knowing the local market better than anyone else.  Building deep, local relationships with people in your market can help your business. Establishing an online presence is great, but the people actually out making things happen in your market are the people you want to meet. Get out from under your desk and tell them how well you know your market. Find a way to work together and grow your business. The differentiating factor can be the degree to which you treat what you are doing as a fully functional business, and not just an income stream. Recurring revenue is the blessing and curse of this industry. Your future will depend on your ability to do different things like operationalize the sales and marketing function of your business. Do you know your customer acquisition cost and your lifetime customer value? Someone in your market is doing that math. Either it’s going to be you or your competition.    Focus on Niche Skills and Services You also have to build something special. Do what no one else does.  Your market needs something that isn’t currently being provided by property management companies. The first company to figure it out and offer it to clients will grow as fast as they want to. Think about specializing in something. Maybe it’s single family homes or student housing or short term and vacation rentals. Maybe it’s high end condo rentals. Specializing can help you differentiate. People can be reluctant to do that because they don’t want to narrow the size of their market. That market is narrowing anyway. When you focus and get really good at something, you can differentiate yourself and grow. This transcends property management and applies to any industry. Buildium focuses on rental management, for example. Douglas Skipworth has carved out an impressive niche in a market that works. He grew by finding properties, rehabbing them, and then selling them. Once they sell, he manages those homes. Do that 3,000 times, and you’ve got some explosive growth. The Role of the CEO: What is in Your Job Description? Fred Wilson said the CEO should focus on three things: Develop the overall vision of the company and communicate that vision to all stakeholders. Recruit and hire the best talent. Make sure there is enough cash in the bank. But, can anyone accomplish all those things? Setting that organizational clarity is important. Establish and communicate where you are going as a business in the next three to five years. The Table Group, which publishes some of the best books on business and leadership, says that organizational health is critical. You need clarity on key questions like: Why do we exist? What do we believe? How will we grow? Answer those basic but essential questions. It’s your job as CEO. For a lot of property management owners, being CEO is not a full time job. If you work with a small team of 10 or 20 people, you have other work to do. There’s day to day responsibilities and business development that falls on your desk, in addition to your CEO duties. Look at technology and consider systemizing everything you can. Work with partners so you can operate more like a CEO. Operations and Systemizing your Processes and Partners Driving the systemization of processes and partners is an essential role of any CEO. Take an internal focus, outsource what you can, and focus on transparency so you can position your company as trustworthy. If a CEO is thinking about pricing and all of your fees are posted and published, you don’t have to have that conversation with new clients. Figure out your operations. You can delegate parts of your business to other people so you can do all the things a CEO should be doing. It’s hard to figure out where your business is going to be when you’re still posting listings and collecting rent. Distractions come with a huge cost. CEOs need to get ahead of distractions that make you busy but not productive. Your whole day cannot be spent responding to things. Property management is one of the busiest industries in the world, and the distractions cost hundreds of thousands of dollars. Culture as a Natural Progression of Business Growth Culture starts with the best people aligned behind a single purpose. Procuring good people and building a team is an essential role of any leader. It starts with clarity on what’s important to your company, and how you expect people to behave. Michael once relied on intuition when he was hiring. But as Buildium grew, assessing candidates required a scorecard with outcomes and competencies. Do the foundational work before you begin to build a team. A lot of a company’s culture has to do with external facing customer commitments. What do you want to achieve for the customer? That can transcend any hiring process. Whatever your cultural commitments, you need proof of them – otherwise, it’s just a philosophical idea. Good people cost money. To compete with other companies who are also hiring good people, you can outsource and systemize. If you move tactical operations to near shore or offshore, and invest the money you save there into your strategic, local talent, you’ll have a tremendous advantage. Organizing and structuring your team into squads can also help with advancement and opportunity, creating a positive culture. Check out the podcast with Adam Hooley for more guidance on that. Remember that the best people are expensive. It’s also expensive when you lose good people. This is similar to your customer acquisitions. You know how much it costs to acquire a customer, so you want to retain them. Retain your good employees as well. Every property manager should measure employee happiness. You can do it online with a tool like Google Forms or the Gallup Employee Index. If you don’t measure how happy your team is with your company culture, it’s hard to improve.  Purpose, money, and fun. If you can provide those three things, you will have all the talent you need, and a culture that serves your company’s mission. This was a different conversation than the one in 2016, and we plan to gather the group together every 12 or 18 months to take the pulse of the property management industry. If you have any questions about what you’ve read, be sure to contact us at Fourandhalf. The post Property Management Industry Trends 2018 appeared first on Fourandhalf Marketing Agency for Property Managers.

Over the last 48 episodes of The Property Management Show, at least 40 of them have covered sales and marketing. So, there’s a wealth of information for growing your property management business. If you missed those, go back in the archives and pull out a roadmap on structuring your sales team, organizing your marketing, and growing your business. Today is a little different. Many property managers want to grow their businesses, but they feel like they cannot take on any additional growth. They think it would be irresponsible to continue growing, because they are struggling to keep up with serving the customers they currently have. That’s a good problem, and a real problem. Today, we’re talking to Todd Ortscheid, who can systemize a business better than anyone. Background on Todd Ortscheid Todd is at GTL Real Estate, where he manages around 400 units with five employees on the payroll, including himself. He systemizes, outsources, and uses independent contractors whenever he can. Todd feels he can add 200 properties without adding any full time staff. The plan is to do that with more outsourcing and automation. Releasing Less Profitable Properties The first thing Todd did was to look at his portfolio and let go of the less profitable and labor intense owners. Most of the work was coming from the same 10 percent of owners and tenants. Those were C-class properties, which are usually owed by C-class owners and attract C-class tenants. All the company’s work was there. When Todd decided to change their processes and procedures, it was a natural point at which to get rid of the properties that weren’t working. If you’re wondering whether it was hard to withstand the revenue hit – there wasn’t one. At the same time that these properties were being released, Todd’s company instituted some new ancillary fees. Owners began getting charged for yearly inspections, and the rest of the new fees were coming from the tenants. The application fee went up, and other things that they hadn’t charged for previously were suddenly falling into place. That canceled out the lost revenue of those 55 properties that they shed from their portfolio.  That’s important. The concurrent implementation of ancillary fees while culling the herd of properties can be the way to go when you don’t want your revenue affected. Occupancy and Tenant-Related Systems Automating the processes related to tenants and occupancy can save money and provide scalability. Are your leasing agents bogged down with calls and emails? Instead of having them spend their time taking phone calls from prospective tenants, explore different options. Todd’s company uses Rently, and there are other platforms that use similar technology. There’s a combination lockbox and leasing line that make it easy to outsource the showing and leasing process. When someone calls based on a sign that they see or an advertisement, the call is routed to Rently. Everything is automated. If they want to see the house, they get a code and they let themselves in to see the property. If they have questions or want to talk to someone, those calls are routed through PropertyWare.  This is an important piece of the leasing process that property managers can get off their plates. Prospective tenants always ask the same questions. They want to know if the property has a fence or they want to know what the leasing qualifications are. When a call center takes care of answering these questions, your leasing agents can protect their time and only get involved if there’s an unusual question or a problem.  Integrating the Application Process with the Leasing Process After a prospective tenant views the property, they get an automatic questionnaire that they’re asked to fill out. This gives you the opportunity to collect feedback on the condition of the home, etc. The prospects are also asked to indicate whether they want to apply. If so, they get a link to the online application. This is an integrated process and a good way to improve the tenant’s experience. You might worry that people will want to meet with someone – get through the process face to face. But, do you really come across those people very often? Maybe renters of a different generation, but most tenants today are Millennials, and they are not interested in meeting with someone in person. They want to look at properties and fill out applications on their own time and on their own schedule, without ever speaking to a person. For Todd, the application is hosted by PropertyWare. With this system, all of the application information becomes the leasing information. E-signatures are gathered, and after the tenant is approved, the lease goes right out to the new tenant. Todd and his team don’t interact with the tenants until they get past the approval stage.  Once a tenant is approved, they receive an email with their security deposit information. Lower credit scores often have a contingency fee. This is the first time the tenants hear from their property managers. They pay the security deposit, and the property is taken off the market.  Operations and Information Flow The tenant moves in, and all of their information is stored with PropertyWare. Other software systems do the same thing. The lease is auto filled by the information collected on the tenant’s application. Everything is streamlined and efficient. There is no manual entry needed. You can use a system like this for management agreements and independent contractor agreements, and even vendor contracts. With the click of a button, everyone can sign documents electronically, and it’s all stored. This will make it easy for you to stay organized. There is some effort on the front end to build all this out. But, it will take hours and save you a lot of time in the long term.  With systems like Microsoft Forms, Jot Forms, and others, you can also manage your information and paperwork. For example, if a tenant has been charged for a maintenance issue and they want to dispute that charge, they can fill out and submit a form. It saves a property manager from having a 45-minute conversation with the tenant. Instead, the tenant can state their case, and submit it. Todd’s team reviews the situation, and a decision is made. The time cost is very minimal.  You can also use systems like these for owner surveys. A lot of information can be collected to make your operations more efficient. SharePoint is another example of technology that can work for you and save you time. Todd uses SharePoint as his company’s intranet. All of the documents, pictures, and HR information is stored there. Staff can access videos and other information. It’s Outlook-based, and Google has similar tools. Business Process Outsourcing Think about your maintenance process and work order system. How much time are work orders taking from your property managers? Is everything flowing, or is this one of the reasons you don’t think you can support any more growth?  With work orders, two big things work for Todd, and they go hand in hand. Property Meld and EZ Repair Hotline are what he’s using, and there are other companies doing the same things. This enables a call center to handle repair and maintenance requests. If you’re spending hours of every day looking through service requests, dispatching vendors, and trying to get in touch with tenants to schedule maintenance; you are wasting your time. EZ Repair Hotline takes every tenant request, whether it’s submitted online or over the phone, and dispatches a vendor from the list that Todd has provided. Property managers don’t have to get involved unless there is a problem. Text messages and robo-calls are also part of the process. If you’ve got tenants who are late with rent, you can schedule robo-calls to remind them to pay. For Todd, every tenant with an unpaid balance gets a text on every Friday. It also works when leases haven’t been signed or when owners owe you money. This is a valuable resource for any situation where you need to get information out without spending the time to reach out to each person individually.  Utilizing platforms like Help Scout or Zendesk can help you share information. Think about the common questions you get. If you had a collection of articles that answered those questions, you could send them right to the tenants or the owners who ask them. Help Scout keeps all the commonly ask questions, and if there’s not an article or a response already stored, one is easily created. So, when a tenant asks if their late fee can be waived, that tenant will get an article with your late fee policy and a list of situations in which they might be waived.  Streamlining customer emails through a platform like this can save you time while offering exceptional support. The benefit is that when there’s something that cannot be addressed by Help Scout, they email the question to you, and your entire team can see it. So, if you’re not free to answer the question, another member of your team can take it. This is better than an email or a voicemail message sitting in someone’s inbox for 12 hours. Property Management Growth and the Future One size no longer fits all when it comes to property management. To grow both your capacity and your client base, you need to be willing to discover new solutions. Lately, the industry has developed so many new things. The technology is finally coming around, and you may not realize how many tools you have at your disposal. Next for Todd is to complete the outsourcing of all his back office processes. He doesn’t want his staff spending time on anything that doesn’t require boots on the ground. He’s using virtual assistants and implementing new technology. You can help your staff handle more properties and wow customers. Todd thinks he can grow by 12 properties a month and move into high growth mode. If you want to talk to him about how he’s managed the automation and outsourcing of the things that were taking up all his time, visit him at gtlrealestate.com. You can also find him talking about this in one of the property management Facebook groups. As always, you can contact us at Fourandhalf if you have any questions about how to grow your property management company and increase your capacity for that growth. The post Support My Growing Property Management Business: A Guide to Automation and Outsourcing appeared first on Fourandhalf Marketing Agency for Property Managers.

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