Property Management Growth with DoorGrow

Are you a business owner who wants to get good at financial decision making and CEO-level accounting? How can you build a runway to opportunities? By navigating mindset, expenses, and cash.  Today’s guest is Tim Francis from Great Assistant and Profit Factory. Tim’s training, Know Your Numbers, shows how businesses can deal with cash crunch and cash flow. You’ll Learn... [02:48] Free Upcoming Event: Navigate the Cash Crunch. [03:20] Entrepreneurs: Like Indiana Jones, running as fast as possible from expenses. [06:00] Pre-built Spreadsheet: Adding and subtracting, red boxes and green boxes. [06:40] Beyond Profit First: In motion and cutting expenses when DoorGrow sales stop. [10:23] 3-Step Method: Navigating mindset, navigating expenses, and navigating cash. [11:29] Mistakes of sloth, and mistakes of ambition. [12:19] Step 1 - Navigating Mindset: Be good to your body, protect personal and professional relationships, and early action is crucial. [22:51] Step 2 - Navigating Expenses: Business's profit margin and bloat factor involves how many dollars to be sold at top line for $1 at bottom line to spend/buy something. [30:08] Survive and Thrive: When sales go down, create a situation where you don't have to sell as much. You can meet it at a lower sales level and still get by. [31:52] Step 3 - Navigating Cash: The Cash Flow Forecast figures out how much cash can you touch now? There's a big difference between cash and free cash. [45:38] Opportunities for Growth: If your business doesn't cash flow, it will fail. Cash flow first, then focus on growth. Cash comes from different places. Tweetables Entrepreneurs confuse revenue, sales, top line, or top of the P&L statement with cash. There's actually a way to navigate the cash crunch, even if revenue is going down. Property management industry has a massive opportunity due to big shift in the market. Panic isn't productive. It's important to be urgent, not anxious. There's a big difference between cash and free cash. Resources Navigate the Cash Crunch with Jason Hull and Timothy Francis Tim Francis on LinkedIn Great Assistant Profit Factory Know Your Numbers Keith Cunningham Verne Harnish DoorGrow on YouTube DoorGrowClub DoorGrowLive DoorGrow Website Score Quiz DoorGrow Cold Leads Calculator Transcript Jason: Welcome, DoorGrow Hackers, to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker. DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let's get into the show. I am hanging out here with Tim Francis. Tim, welcome to the show again. Tim: Good to see you Jason, again. Jason: Tim and I just started trying to do this on Crowdcast the normal platform. It didn't work out. The internet gods were not kind to us for some reason so we're starting it over. I wanted to introduce Tim to this audience again. Tim has been on the show before because he was talking about his company, Great Assistant, a fantastic company. I've hired assistants through it for US based assistants. His parent corporation, or company, or whatever you want to call it is Profit Factory. I recently went through training with him called Know Your Numbers. One of my goals for this year was to get really good at this learning financial decision making, maybe more business owner, CEO level accounting. Tim is the go to guy for this. He has a program on this that I went through. He had a really cool thing that he showed us how to deal with cash crunch and cash flow. He reached out to me and is putting this out to audiences trying to help businesses out right now. I'm excited to expose my audience to this idea of how they can navigate the cash crunch. Tim, welcome. Tim: Thank you so much for having me. Jason: We're going to do an event here in about a week. I'll just plug that now up front, just get that out of the way. It's for free and we're going to go into greater detail about these things. You're going to be sharing your screen, showing spreadsheets, helping them figure this out. But let's start with talking about the problem. What's going on with the market right now, the cash crunch, and why is this relevant? Tim: Yeah, you bet. If you think of Indiana Jones in Raiders of the Lost Ark, there's this amazing boulder scene. Jason, I have to give you credit for giving me this visual of this boulder rolling behind us as entrepreneurs. We're running as fast as we possibly can, and that boulder, that's expenses. Jason, full credit to you, every time I use this analogy now I'm giving you credit. A bit of the secret here is that there's actually a simple three step method that we can actually turn this into a different Indiana Jones scene. In the Last Crusade, Indiana Jones, there's this like leap of faith scene where he's standing on the very edge and he's looking at this massive chasm between him and where he needs to go. It looks impossible, it looks impossible that he’ll possibly be able to cross this chasm, but then he gets this idea. He takes some sand, and he throws it out and it covers, and there's this hidden balance beam, it's invisible, this invisible balance beam to walk across. That's exactly the three step method that I teach as a passion to entrepreneurs. I think a lot of entrepreneurs confuse revenue, sales, top line, or just that top of the P&L statement with cash. The thing is that they’re two extremely different ideas. Yes, one can lead to the other, however they're not necessary. There's actually a way to navigate the cash crunch, even if revenue is going down. I've helped many, many companies, I think I’ve had 139 board meetings now. I've helped over 70 companies, and at least 7 of them I've helped to escape bankruptcy, including that with them following the exact process that I'm going to teach today. Whether someone despises accounting and numbers, feels pretty good about them but maybe not a pro, or even if someone's an absolute pro at numbers, I think the perspectives that we share today are going to be really, really powerful. Also just in case anyone's afraid of like oh, my god, here we go, numbers and accounting. I hate that topic. I avoid my accountant like the plague. I'll tell you what, I was rejected from Business School three times. I couldn't finish calculus. I don't know my brain wasn't wired that way, and the good news is you don't need any of that to be able to navigate the cash crunch. If you know how to add and subtract, in fact Jason, you don't even need to be able to add, subtract. If you know how to use a calculator to add, subtract, we can make this happen. The tool that I'll go more in depth with you on our webinar coming in about a week from now, everyone will actually get access to a prebuilt spreadsheet. All you got to do, it takes maybe 20 to 30 minutes to put your own info in. Literally where you see a red box is a crisis line, and where you see a green box, you're good to go. That's it. It's adding and subtracting, and red boxes and green boxes, that help you to navigate. To build your very own—personalized to your business—path to navigate the cash crunch. Jason: Before we get into this, I want to touch on and create a little transparency in this. A lot of entrepreneurs are fearful. There's a lot of shame around admitting that something doesn't look perfectly successful. There's a lot of shame around finances and money. Like oh, no, I've got debt or I've got this. I'm going to share what we're experiencing at DoorGrow. Leading up to this, one of my goals for this year was to get control of finances, really understand and get into financials, which is why I did a training with you, Tim, and I'm working with you on different things, because that's a step beyond the Profit First. I've got my Profit First coach and accountant that I work with as well. I've been doing lots of calls with her getting all these different loans that are coming out, getting everything going. I'm glad that I was already working on this stuff prior. We started cutting expenses dramatically, we started doing shifts. As I was getting control of things, I was like why are we paying for that? If we weren't in momentum already—you used the analogy of the airplane flying over the trees—we probably would have hit some trees. We probably would have crashed. We were already in motion. Sales, March just stopped. Property managers stopped buying products and services from DoorGrow because they were holding their wallets tight, they were scared, and that's about half of our revenue. We had to tighten our belt really quickly. We weren't really ready for that, we haven’t budgeted the beginning of our month to do that, so we had to get really creative. Using some of these strategies helped us to keep that plane above the tree level, navigating the cash crunch, or in my Indiana Jones analogy, outpaced the boulder so that we were able to make it through the end of the month. I'm really excited to share this property management. I'll point out that I believe the property management industry has a massive opportunity right now. There are property management companies, especially in California, Florida, and Hawaii, that they are growing. March was one of their biggest growth months in adding new doors, in acquisitions, period, simply because there is a whole big shift in the market. A lot of people are going to be needing property managers. We won't get really into that now but there's a lot of opportunity right now. Property management is a really safe place to be hedging against the market right now. Most property managers will probably have pretty good cash flow. It's only the third and we're already seeing most people are paying rent on single family residential. They're not noticing much of a difference. They've had a few people reach out for payment arrangements, but all things, I'm saying is that it's basically normal. They're a little concerned about May, so this May become even more hyper relevant in the next month or beyond. I want everyone to pay attention to this. Property managers, you guys are blessed right now, while a lot of businesses are just done. They're failing, their revenue is cut to zero, especially luxury markets, vacation markets, restaurants in a lot of situations. Businesses are closing, failing. This also is the perfect excuse for entrepreneurs that are not really committed to their business to get out, perfect excuse. A lot of people are going to take it. If you are not one of those people, and you're committed to making this work and you want to grow, reach out to DoorGrow, I want to make sure we help you capitalize on all this. Tim, let's get into these three things that we need to pay attention to. Tim: There are three things to navigate, navigating mindset, navigating expenses, and navigating cash. I don't normally share this piece, but because of what you just so wisely shared just around the shame that sometimes entrepreneurs feel around money or like oh, I'm a failure or whatnot. I'll tell you what. I think that being a leader is a lot of responsibility. Even if you're a leader of 1 or 100, it doesn't matter. It's that classic man in the arena story. It's not the critic who counts. I think that there's actually something incredibly skilled when an entrepreneur sees that things have changed, and they're ready to change with it. I think that that's actually a sign of prescience is the word, when we can see things that are coming and to act accordingly. I also think that Verne Harnish has a great expression, he says, "Growth sucks cash." If you've been spending a lot of money to grow your company, and that's why you don't have a lot of cash to show for it, there's no shame in being ambitious either. There are mistakes of sloths, and there are mistakes of ambition. Mistakes of sloths are when we make mistakes because we're sitting on the couch not going for it and life passes us by. Mistake of ambition is when we were really going for it and things didn't work out. Mistakes of ambition, it's even arguable to say that it's even a mistake at all. I just think if you're in a position where you’re a little tight on cash, or maybe a lot tight on cash, I get that the shame narrative is available and I don't know that I'd go there. First of all, it's not accurate, and secondly, it's not productive. This leads us into our whole first of our three steps mindset, navigating mindset. Before anyone decides to tune out and say mindset is going to be the secret or some law of attraction, maybe more airy type topic. I assure you, it is not. I assure you that it is not. In 2008 I had a real estate portfolio of my own, not a big portfolio, just four houses, but I ended up losing around $100,000 mostly of other people's money. Around that time, I also had a mentor who ended up being one of the two leaders of a $12 million Ponzi scheme. Didn't start as a Ponzi scheme but it became a Ponzi scheme, that's typically the way they go. His business partner is convicted in court, barred folding securities for 25 years, and ended up actually leaving the country. This is in Canada, where I'm from. It was extremely exhausting and stressful to go through all that and to see everything that was happening around me. It led to me developing an illness called Erythema nodosum. Erythema nodosum is something there's no real cure for. You just have to wait it out. It's just bed rest. Your body really swells up and becomes so painful to walk that you can't, then it becomes so painful that you stand that you can't, and you end up just lying in bed every single day. 50% of cases are stress related. There's no way to know for sure, but I'm pretty sure mine was stress related. If you think an economic collapse like 2008 is bad, or an economic collapse like 2020 is bad... I'll tell you what's even worse is having economic collapse and also having a health collapse, where you actually can't do anything about your situation because you're in bed. Thankfully, at the time, I had very, very, very few dependents, I had no teammates and so the impact, the blast radius was small, it was just on me. Had my mom not paid my mortgage for me for three months, I would have gone double bankrupt, my personal finance, my business finance. Talk about an eye opener, and I was only 28. I was only 28 at the time. When I talk about the importance of managing mindset, this is absolutely crucial that we manage stress. I'll tell you, I've been not just through economic collapse, economic plus physical collapse, and it is not a pretty situation. You do not want to go through that. Along the lines of how do we go about managing mindset, I think that there are a few important perspectives in addition to some of the obvious practices. I'll just start the obvious because it's pretty straightforward. Make sure you're getting some exercise even if it's just a walk on a treadmill, or a peloton bike, or something like that in your living room, whatever the case may be. Get some sunshine if you can, even though we're all locked indoors, that sunshine is super important. Diet, take care of that. Make sure you’re getting lots of water, maybe ease off on the booze a little bit too if you're someone who enjoys to imbibe a little bit. Be good to your body. Probably the biggest of all, for most people, is actually sleep. Sleep is something that we can lose very quickly in times of turmoil and stress. You might need to turn to things like small meditation, reading, journaling, or something before bed to help take your mind off of some of the challenges of the day. I'm telling you that it's absolutely crucial. When I look back at my sleep habits and actually have been keeping track of my sleep for years and years and years. Jason, I'd sleep for four hours and lay on the floor next to my computer, sleep. I'd work till 5:00 in the morning, I'd sleep four hours on the floor next to the computer and I would stand up, go pee, and go back to the computer and start working again. Desperate times sometimes call for desperate measures, but there is such a thing as too high a price to pay. Remember that this too shall pass. September 11th came, the world changed, and we got back to business in a new normal way. The housing crisis came, the world changed, and we got back to business in a new normal way. Jason: Tim, I'm going to touch on what you just said real quick, interject. These are really basic things but they're showing some significant correlations between COVID-19 and melatonin, and nitric oxide in your blood, vitamin D. These are the basic principles of health. I have training for our clients called health secrets and it's these basics. We talk about getting sleep, that's when melatonin starts to get produced in your brain. It's much higher in children, it gets less. You may want to supplement with that but getting good sleep, getting some sunlight, finding a way to get sunshine and sunlight on your body is going to be a big deal that releases nitric oxide from your skin into your blood, if vitamin D gets produced, these are basic. Sleep, nutrition, some physical activity, exercise, some sunshine, water and hydrate. This and all of that lowers your stress levels and it lowers our pressure and noise significantly. I love that you're sharing that. Keep your stress levels as low as possible and start physiologically. Tim: I think along with stress is this idea of engagement. I don't know if I need to share this part, but I'll say it just to be responsible. If someone is not engaged enough right now, you're not paying attention to what's going on in the world. If you're only at about a 6 or 7 out of 10 engagements, goodness gracious, it might be time to pick it up a bit. If you're also to 9 or 10 engagements it's probably too high, you're over stimulated, you're over engaged. We need that 8 out of 10 where we're focused, pupils dilated just a little bit. Eye on the prize. I always say that panic isn't productive. It's important to be urgent, not anxious, to be urgent, not anxious. Jason: I'm too Agilent right now. I'm excited and that's where I'm at. I love chaos, let's be honest. Maybe there are other entrepreneurs like that but when chaos happens, that's opportunity. That's where we get to be a light and we get to stand out, so I'm enjoying this even though it's uncomfortable. Tim: Very nice, very nice. I think that two other mindset pieces, one is that it's important to actually protect relationships. Yes, I mean the personal relationships that we have in our life because they can be such a source of security, joy, and comfort. I also mean business relationships. We're going to get to the other side of this, and unlike other past catastrophes that were measured in years, I think, yes, our economic catastrophe is going to be measured in years on this one for sure. I think that in terms of months, I think this pandemic is going to be measured in months, not years and years and years. One of my questions at each point is what is the state of the relationships of suppliers, vendors in the case of property managers, tenants, if you're managing on behalf of other people like your clients, your investors, and owners. What's the state of those relationships going to look like in three months from now, or six months from now when we're on the other side of this. You might make it through, but do you still have people that respect you? I heard a story the other day of an entrepreneur that just cancelled all their credit cards and said well, everything's just going to fail in terms of expenses and I'm going to add back one by one the few things that make sense. It's a shortcut to just cutting expenses. That's a way to go about it, but are you going to just supremely piss off everyone in the process? I think that protecting relationships is important to keep in mind. That doesn't mean that you're always bringing good news to everyone along the way, especially in the cutting expenses part of our presentation today. I think to be respected for being accountable, navigating agreements that you have with people rather than just abandoning them. My other mindset piece is that early action is crucial. If you discover that you need to get alone, act now before more businesses are closing, and possibly soaking up some lending capacity, or even just work capacity that bankers have to fill out applications and whatnot. If you discover you need to reduce a teammate's hours, tell them as early as possible so they can start making plans of their own personal and family finances. So that if a dip comes for them income-wise, they're prepared for it. If you can help them find a new opportunity elsewhere, do what you can to manage those relationships. I got an interesting perspective from someone who used to have a business helping individuals, not businesses, but individuals navigate bankruptcy. He said one of the most common patterns he saw with people going through bankruptcy is they didn't cut expenses deep enough or soon enough, deep enough or soon enough. I think that that's a very interesting perspective and maybe a usable guideline would be to say anything that's not going to help increase the profitability, and specifically cash coming into your business in the coming six months, I'd probably delay it. If you're thinking of a new website, if that's not going to immediately give you a bump in cash in the next six months, then let's put that on pause. We'll see if we can renegotiate it, put it on hold, delay it, or even cancel it. I think that's a really powerful way and maybe for you, the number isn't six months, maybe it's three months or eight months, whatever. But if we can keep an eye on what's going to bring cash in, in that timeframe, that really makes decision making a lot easier around what expenses you can continue with and which do not. This leads us to our second of the three steps of what we need to navigate and that is expenses. I think that something I'd say in my path of learning accounting and I even went and took night classes at the University of Alberta. I finally did go and take University accounting classes. It was not for credit though, they wouldn't let me into the for credit version, but they'd let me still sit in the classes and study. You know what, Jason, I got 100% of my midterm. I wanted to throw up my middle fingers as I walked into the room. I can't complete calculus, I can't get into business school, but here I'm getting 100% of my midterm. How about that? How do you like them apples? One of the big ahas that I had is that in my brain, because we all grow up thinking about personal finance. I think in personal finance, we think if I make $1, I can spend $1, and $1 in is $1 out. If I want to go buy a car, a pair of jeans, or a pair of shoes, I just need to get that amount of income to be able to pay for the shoes, the jeans, or the car. When it comes to business finance though it's a little bit different. To be able to buy $1 of expenses, we can't just make $1. It's because there's other expenses in the business. That's why we always talk about profit margin. If I have $100,000 in revenue, and I've got $50,000 in expenses, then I have $50,000 in profit. My profit margin is 50%. What that means is at the end of that year, or quarter, that month, for me to have an extra dollar to go buy something the next month, quarter or year, I don't need to make $1, I actually need to make $2 because my profit margin is only 50%. I have to make the $2 at the top, 50% gets stripped away by expenses. I'm left with $1 to now go and spend in the next month, quarter, or year. There's this idea, I invented it, it's called bloat factor. How many dollars do I have to sell at the top line to have $1 at the bottom line to be able to use and go and spend and buy something else in the coming month, quarter, or year? It's very simple math. If you're at 50% profit margin, which very few businesses are—very, very, very, very, very few businesses are—then you'd have to earn $2 to have $1 at the bottom to be able to go and spend in the coming period. If I've got a 25% profit margin, I have to make $4 at the top to have $1 to go and spend. If I'm at a 10% profit margin, which a lot of businesses around that 10% margin mark, I have to go make $10 to be able to have one at the bottom. Jason: This is super important for people to realize. A lot of us entrepreneurs, we look at our bank accounts and we think well, I've got $1 that we made. Now I can go buy this thing for $1. They think it's a one to one relationship. That's a huge mistake. Tim: Whatever your business's profit margin is, you got to figure out the bloat factor. Let's just say for example, you're at a 10% profit margin, that means you have to make $10 to keep $1, your bloat factor is 10X. If you cut $1 of expense, you now don't have to sell 10X that in revenue to be in the exact same place. For example, this is actually an extraordinary story Jason, this going to blow your mind. I talked to one of my private consulting clients here. He and I had like uh-oh, the crisis is coming call like three weeks ago. He cut $9,000 a month in recurring revenue. Does that mean that he doesn't need to sell $9,000 in the coming year? Well, of course not, because it's recurring expenses. Jason: I was going to say he lost them? Tim: No, no, no. He cut $9,000 per month of expenses. At his profit margin, his bloat factor is 8.7. $9,000 times 12 months in a year times 8.7, he does not have to sell $944,882 in the coming year. He cut the need to sell a million dollars just by cutting $9,000 a month in expenses. That is mind expanding. Jason: We have pretty healthy profit margins at DoorGrow, we’re pretty tight. We're a virtual team but we cut a ton of expenses. Maybe if we have time, I could list some of the crazy actions that we took to help make sure that we cash flowed. It makes a ton of sense to me. Tim: Big time. I'll just take a super simple example. I actually set up a calculator which we'll play with in the free webinar you and I will do. We'll play with the bloat calculator a little bit. If I have a profit margin of 10%—not uncommon for businesses—my bloat factor would be 10. If all I removed was $250 a month, that's it, $250 a month of recurring expenses, canceling subscriptions, canceling unused services, access to different websites and whatnot, I would not have to sell $30,000 in the coming year. $250 a month does not sound like that much to cut, and yet a 10X bloat factor, that's $30,000 you do not have to sell anymore. You tell me what's easier, finding $250 a month and cutting it, or going out and generating $30,000 in new revenue in the coming year? Jason: Especially right now for us. My accountant was really impressed with me. We cut $10,000 in monthly expenses, depending on what our profit margin is. That can be pretty significant for us as well in terms of how much sales we don't have to do to make it each month. That's made it breathable for us significantly. Tim: When you talk about being able to survive and thrive even when sales go down, you just created a situation for yourself where you don't have to sell as much. Even if sales go down, you can still meet it at a lower sales level and still get by which is really incredible. Jason: I met with my accountant last night and we mapped out the month with all the recurring revenue that we have coming in. If we do no sales this month, we will make it. Tim: I love that. Jason: We’ve pivoted quickly and reduced the expenses, but right now it’s a great opportunity for property managers to grow and we're offering some crazy deals. Hopefully, we'll also be doing some sales this month and making a big difference. Tim: I love that. I think you were sharing offline about how all these Airbnbs are now switching to long term rental. They got smoked out of the market and now they just want to go back to traditional long term rentals. So there's all this flood towards property managers. For a property manager that knows how to convert an Airbnb into a standard long term rental, ready to rock, and knows how to find those deals, goodness gracious, this could be a really revolutionary time. Jason: There are several channels right now for growth and each one is going to get bigger. Property managers right now, they can capitalize on it. We're pushing our clients aggressively to start taking action on these things right now. Tim: That's so exciting. There's another way that we can navigate the cash crunch even if sales go down. It's not just by managing expenses but it's also by navigating cash. Let's get into the third and final step in navigating the cash crunch. The free webinar that we're gonna do in approximately a week from now, we're actually going to do live exercises. We're actually going to share screens and you're actually going to see this spreadsheet in action. It's super simple. Anyone can do it. It can be a game changer. Of the multi-million dollar companies that I've helped save, some of them I didn't even do private consulting with. They just came, they know your numbers, or they heard me talk about just this one tool, The Cash Flow Forecast. They use it religiously when they're in a tough spot and it helps them get through. It's very exciting. There's actually two parts to this. The very first is actually understanding how much cash can I actually touch right now? There's a big difference between cash and free cash. Cash is the amount of money that's in the bank if you add up your checking and savings accounts. That's cash. Free cash on the other hand, we have to deduct some money out of that total cash to get the free cash to know what we can actually work with. From our total cash amount, we need to set aside committed costs. Committed cost is any amount of money you've promised that you're going to pay. Let's say for example a website, I've signed a legal agreement to get a new website done. If I don't manage that agreement to delay the project, I'm on the hook for it. If that's a $10,000 cash outflow that's coming up in two weeks from now, that is a committed cost. I haven't received the service yet but I've committed to receiving the service or the product for that matter. Jason: It's money that's earmarked. It's money that is going to disappear. If you can't pay it, it could cause some serious problems. Tim: Big time, getting all the way back to that whole topic about managing relationships even through the tough times. The second category that we need to earmark some cash is payables. Let's say that you already had the website built. It was finished last week. You've enjoyed the service. You've received the service or the product for that matter. You're on net 30 terms or net 60 terms and now you got to pay that person. That's a payable. Now, one of the biggest payables that is unavoidable is death is taxes. Thankfully, the payment deadline in the United States has been extended, which allows for some cash flow breathing room for entrepreneurs, which is very important right now. I would do my best to get clear and make sure that I've got a separate account for tax. I actually have a separate bank account. It's a little profit first esque or Richest Man in Babylon esque that there's a separate account for income tax and that's where I would hold my income tax. Jason: I have that too. The idea is to have it at a bank that is difficult to get into. That's completely a normal thing. Tim: You don't know the pin. You give it to someone else. Two keys to authenticate and turn to open the vault. Jason: The worst online bank ever or something like that. Tim: Or the brick and mortar bank that has no online, something like that. After committed costs and payables including income tax, we also need to remove or set aside any deposits that we've got. This is huge in property management because we have deposits from tenants. You can't really spend that money, it's not money that you've earned. It's just money that you're holding as a deposit so we got to park that on the sidelines. Then from there, whatever amount that you've got to pay in credit card debt or any other very short term, high interest debt. Most credit cards are 10% more. If you've got all kinds of rewards on your card, you probably are facing 19.99% or 21.95% interest. We really want to make sure that we're getting that paid off at the end of each month or else we're facing colossal interest rates. I would earmark that money to hold to the side as well. Then from there, there's two more. The next one is ultra-short term debt that you need to pay. Short term debt in accounting refers to any debt that's due this year. A Tim Francisism ultra-short term is in the next 30 days. If there's any portion of debt that you need to pay down in the next 30 days, I would earmark that cash as well because if you don't pay it, a lot of small business loans have liens or guarantees against your house. You might lose your house if you don't pay it, or you don't renegotiate that payment because there are some circumstances now where banks and different lenders are allowing you to skip the payment right now because of what's going on. Our last category where we need to earmark and subtract cash, I actually have a whole separate account in my bank for this particular category, is what's called Unearned Revenue. I don't think that's as big in property management candidly. For example, for someone who's offering other services, unearned revenue can be the difference between life and death to know what is earned and what's not. For example, if someone hires me for a year of consulting and they pay in a block amount of money at the start of the year, they pay the whole year in advance, I can only touch 1/12th of that with each month that goes by because it's unearned revenue until I've delivered that guidance for the year. Understanding our starting point of actual free cash is the first part of managing cash, and then the second part is to build out what we call a cash flow forecast. It's very simple. It's 13 weeks which is 90 days, just three months. We simply plot into the cash flow forecast where we've got cash coming in and cash going out. Jason, would it be appropriate for me to just show a screenshot of a cash flow forecast or should we wait until the webinar? Jason: The podcast listeners won't see it so let's get that, we’ll show it on the webinar. They'll just be listeners but it's pretty cool. I'll give you a testimonial related to this. I met with my accountant. We're mapping out all the recurring revenue that we have at DoorGrow and figuring out what expenses. We basically went through this. She started doing this manually in a spreadsheet real time, basically doing exactly what your spreadsheet does. She was figuring out which things are going to hit, what are the due dates for these. We're figuring it all out. I was like that's so funny because Tim has a thing that does this. She took me through it manually to make sure that our cash flow situation is going to be good because it's not just hey, this month we're going to make X number of dollars. We're going to have X number of expenses and we're okay. It's maybe at the beginning of the month, you have a whole bunch of things that are running and you're making that revenue later in the month or however it might work. You need to make sure it's all going to be timed perfectly. That's the brilliance of your cash flow thing because if it ever dips below zero, you're dead. It goes into the red, that's death. You have to make sure that you always know when things are going to hit and this is what your spreadsheet does, which is pretty brilliant. Tim: I agree. I totally agree. I'll tell you, when people are calling you every single day to collect money, 29 days is an extremely long time. It is an eternity. Being clear about when money is arriving, not just by the month to your point, but to the week. To be very clear about when cash is leaving to the week, and making sure that not you or anyone in your team is sending cash out the door too soon especially without other people like a bookkeeper helping or an executive assistant helping to pay different bills, if you don't direct your team on when to pay bills, people in your office or on your team, they might just pay the bills when they come in. They just might pay it exactly the same day that they open the envelope or they get the statement online. They're like oh, well, I was just doing my job. I was just paying this because it came in. You got to give your teammates leadership, guidance, vision, and direction on items like this especially in a cash crunch. People oftentimes ask me Tim, this tool is brilliant. How often should I be looking at it? I say that you look at the tool as often as you need to, relative to two factors. Number one, how low is your plane flying relative to the treetops? This is just the analogy we talked about earlier. If your wheels are clipping the tree tops and those trees might take your plane down, then you're looking at that cash flow forecast possibly every single week to make absolutely damn sure that you're getting the money in that you're expecting on that week, and you're not sending money out any earlier than you're supposed to on that week. Jason: Even daily. Tim: A hundred percent. The clients that I have that weren't had multimillion dollar businesses which can have a lot of complexity, moving parts, people, teammates, products, clients, and all the rest, they would literally have it open every single day just to make sure things were coming and going, that all the trains are running on time because there was no margin for error. The other reason why you'd want to have your cash flow forecast updated in front of mine regularly is if there's a lot of turbulence in the air. Whether you're flying close to the trees or not close to trees. If you got a lot of altitude, that's great. But if there's a lot of turbulence, that can do a lot of damage to your plane as well. Maybe you're not looking at it every single day, maybe not even every single week, but at least once a month. I hate making absolute statements because there's always an exception to the rule, but more or less 100% of entrepreneurs are in turbulence right now because of the climate that we're operating in. This is not a situation, it's limited to a city, a state, or even a country. This is worldwide. The cash flow forecast is how you make sure that you've got oxygen in your tank and that you can keep moving. Without that oxygen in the tank, doesn't matter how big and fast your flippers are to generate revenue. You got to have the cash in the oxygen tank. If you do hit any spots where you've got red on your cash flow forecast and you need to manage that crisis line, there are a lot of different strategies. Some of the more obvious strategies would be applying for some of the SBA loans. The only downside to that is we don't know when they're going to arrive. Secondly, bank lines of credit or if you've got access to them already and they're just sitting unused, that becomes an option. There's raising money from family and friends or an investor. If you wanted to, this is maybe less attractive for most entrepreneurs, we can actually sell shares in your company to raise money. There's also just the simple renegotiating if you need to pay something. Let's say it's $5,000, it's in three weeks from now, and that's when your first red square hits on the cash flow forecast, that's your crisis line. If you're going to be short just $1,000 or something, maybe you could call that person that you owe the money and say can I make it in two payments? I'll pay you in three weeks half, and then one week after that the other half. Lo and behold, just by splitting to 2 payments over 14 days instead of once, all of a sudden you've made up the difference and now all your squares are green. Now you've got not three weeks of safety, but five weeks of safety. Jason: The plane can fly through all of those and knock at the trees. Tim: Hundred percent. The thing is there's a lot of conversation out there about how we have to pivot our businesses and how we have to change our sales and our marketing. I think that is all extremely important conversation to have, absolutely crucial conversation to have. Inevitably, if we're going to pivot our offerings in any way, shape, or form, it's going to take time to roll them out. If it's going to take, say, four weeks to come up with a new offering of some special for an Airbnb owners that want to convert into long term rental, if you need to create a marketing campaign to identify those people, if you need to train up your staff to call certain Airbnb to see if they're distressed. Whether it's people, projects, processes, offers that you're rolling out, it's going to take some time. Even if you do it really quickly, it will probably still take at least a month, if not a few months, to be able to make that pivot and to make that implementation. It doesn't matter if you've got the best idea. It takes four weeks to roll out, but you only have two weeks of cash. That's like building a brand new airplane that's the world's fastest, sexiest, coolest, most comfortable, smoothest plane in the world, but if you only give it 100 yards of runway, it's not going to take off. It's just not. Jason: To boil this down real simple for those listening, all these opportunities for growth, it does not matter if your business doesn't cash flow. It's going to fail. Cash flow first and then let's get you focused on growth. Tim: Cash can come from different places. It can come from loans and other places, not just from revenue. To your point, Jason, I just think there are so many opportunities on the other side of this. We just have to make sure we have enough runway. Surprisingly, amidst this entire thing, I'd say the thesis of all of this is that the most important factors in navigating a cash crunch is actually not cash itself. It's actually time. Time is what we're playing for and cash gets us time. By getting time, we can now get out of panic. We can get back to being calm, clear because we've got a cash flow forecast. You can see what's coming down the pipe. We're confident because you know the exact steps you need to take and because we're clear, confident, and calm, now we can be creative to take advantage of the opportunities that are coming down the pipe. That is the name of the game. Those three steps, navigating mindset, navigating expenses, and navigating cash are how we build the runway that we then can launch off whatever the new opportunities are to take us into the new economy. Jason: I had Michael McCalla on the show. I've worked with Al Sharpton as a coach. One of the things Al would say is if you lower the pressure noise for an entrepreneur, that's where their brilliance and genius comes out. One of the things Michael Mccalla talked about is that when we have constraints or limitations which this market is creating, it's going to create innovation. If you give somebody the Pareto principle, if you give somebody an endless amount of time to do whatever, they don't have to innovate. We're innovating crazy inside DoorGrow. My team members are getting new ideas. We release some contractors. Our salaried staff are figuring out new ways of doing things, ways to save money, ways that are more efficient, ways that are faster. These are big opportunities right now for you and your team to give them some constraints, have them work with you on lowering expenses, solving the cash crunch crisis that you may be experiencing, and allowing innovation creativity to happen. If you can keep your presence calm, your team will be there as well. This is a step towards that. Tim: Did you want to share with folks maybe a little bit about our presentation we're doing next week? We're actually walking people through building a cash flow forecast. Jason: Yeah. Let's just touch on the details. It's going to be on Thursday, what day is that? Tim: April the 9th. Jason: It's going to be on April 9th. It's going to be 11:00. Our time, we're both in Austin, Central, which is 9:00 AM Pacific noon Eastern. What are we going to be sharing during this? What are you going to be sharing with everyone? Tim: You bet. First of all, folks, go to navigatethecashcrunch.com/doorgrow. I know podcast listeners won't be able to see this, but Jason, I'll just share my screen so you can see it. We've got Navigate the Cash Crunch with Tim Francis and Jason Hull. It's happening Thursday, April 9th, 2020 at 11:00 AM Central, which is Chicago time just like Jason just shared. In it, we'll be sharing the three step process we've talked about today. We're not going to go into as much detail into mindset because we talked about it here today already. We'll cover a few tools around expense management. The real star of the show is building your very own cash flow forecast. You can register for that webinar at navigatethecashcrunch.com/doorgrow. What you'll get is access to the training. You also get the cash flow forecast template as well, which you can just drop into your very own computer and get to work with seeing where your crisis line is. Hopefully, it's not too close and from there, seeing the exact path to navigating safely. If you happen to be listening to this podcast episode of the DoorGrow Show after the webinars already happened, so after April the 9th, 2020, no problem. You can still go back to the exact same URL. You can see the resources and the replays there so that you are not left in the dark. Jason: navigatethecashcrunch.com/doorgrow. Tim: Yes, indeed. Absolutely. Maybe you guys can throw that in the show notes or something like that for anyone listening to the podcast. Jason: Absolutely. Tim: That's that. I think that somewhat as a final thought on my end over here. It's just that deep down inside, we as entrepreneurs, we take on a lot to be great leaders. I do view property managers as entrepreneurs. I hope they do too, because they are there. They're doing the courageous things of entrepreneurs every single day. Sometimes leadership isn't easy. Sometimes it has uncomfortable conversations. Sometimes it has uncomfortable moments. I think that there's something really beautiful about getting clear on where we are. Oftentimes we talk about our goals and what's the most important to us, but we also have to be very clear about where we are. Getting to Austin, Texas is very different if you're starting in Chicago versus Waikiki. Knowing where we are right now with free cash, and then from there being able to map the path with our cash flow forecast, it really creates calm, it really creates clarity. Therefore, it really creates confidence which then creates creativity that we can now take on this new economy. Something I am very sure about is not anyone including myself could have specific data around this. I just know my gut, Jason, that the economy that we had two months ago, it's over. It's gone. I don't just mean bull versus bear. What I mean is the way we did business once upon a time is forever changed. I'm very nervous for what kind of discomfort is coming for anyone who thinks that how we used to do things is coming back to what it used to be. As we chart into these new territories, I think being able to be calm, clear, confident, and creative is the path. It takes courage and just a couple simple tools to be able to have that. I think that if we're operating from clear facts and confidence, we become lighthouses that can attract what we need to attract into our worlds, and also fend away what we need to fend away. We're not left making super emotional decisions. One of my mentors, his name is Keith Cunningham, he talks about emotion and intelligence often working inverse of one another. The more emotional we are, which is really saying the more that we're in our amygdala, the less that we're in the frontal lobe of our brain, the less our executive functioning is there and the less that we're able to make intelligent, clear, confident decisions. On the flip side, the more that we can make calm, clear, confident decisions, the less that we become really emotional about what's going on. That's not to say we're not passionate. We are so passionate about our businesses. Yes, emotion has its right place. We just don't want to get stuck making decisions or taking action that we may regret down the road. Jason: Absolutely. Tim, thanks for coming on the show. Everybody else, make sure you tune in when we do our presentation. For those listening, watch the replay. Until next time to our mutual growth. Bye, everyone. 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The COVID-19 craziness has caused people to stress out and scramble to work remotely. This crisis is pushing everything forward technologically. Why not hire a virtual assistant (VA) to scale your property management business? Today’s guest is Daniel Ramsey of MyOutDesk. Daniel is a real estate investor/broker who loves doing deals, and property management is a way to connect with others and create communities. But he also wants time to take a vacation with his family! You’ll Learn... [02:52] MyOutDesk: Property managers find talent to inexpensively scale their business. [04:05] MLS Porn: Scrolling through new investment properties on the market. [05:05] Remote Reality: In 2018, 5% of America worked remotely, now it’s 50%. [07:58] Work Culture: Maintain good team, quality interaction, and customer service; and reduce operational/overhead costs. [15:00] Steps to Scale: Assess business, compound leverage, develop plan, craft outcome, start interviewing, launch, and training.  [25:48] Match Values, Not Personalities: Define who you are as a person and company. [33:15] Go Remote Guide: Tips for working remotely with new technology. [35:08] Push vs. Pull Leadership: Communicate, don’t micromanage. [44:15] MyOutDesk Mission: VAs need to be indispensable and irreplaceable. [46:15] Pricing vs. Cash Crunch: Do you need help? Can you afford MyOutDesk? [53:52] Care ROI Concept: Emotion is what creates memories. Tweetables I had a need in my own real estate practice. I hired a virtual assistant. I was like, ‘Wow, this works.’ Leverage is compound interest and entrepreneurs’ biggest swing. When I hire somebody, I'm hiring them to grow my revenue. I'm hiring them to save money. I'm hiring them to own an entire process for my business. The biggest cure for the economy is businesses and entrepreneurs staying productive. Resources MyOutDesk Go Remote Guide (text MOD to 31996) MLS Mark Spain Bluefishing by Steve Sims Upwork OpenPotion DoorGrow on YouTube DoorGrowClub DoorGrowLive DoorGrow Website Score Quiz DoorGrow Cold Leads Calculator Transcript Jason: Welcome DoorGrow Hackers to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing your business and life and you're open to doing things a bit differently, then you are a DoorGrow Hacker. DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you're crazy for doing it. You think they're crazy for not because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I'm your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let's get into the show. Today, we have a really cool guest. He is Daniel Ramsey, over at MyOutDesk. Daniel, welcome to the show. Daniel: Thanks for having me, Jason. I'm so glad to be here. Jason: Daniel and I were talking a little bit in the green room chatting up a little bit about what's going on. It's a little bit crazy right now, with COVID-19 and Coronavirus, and all this stuff, the real estate market looks scary. We may get into that a little bit in the show, but our topic today is using a virtual assistant to scale your property management business with MyOutDesk. Before we get into that, Daniel, what I want to hear about your background, your entrepreneurial journey and that should lead us right into the inception of MyOutDesk. Daniel: Yes, sure, man. I love the show. I'm really grateful to be here. I agree, I'm a real estate guy. I love doing deals and property management is just such a great way to connect and create community, and also, it's a great place for deal flow if you're a buyer and want long-term wealth. I love being here. I'm a real estate investor, myself, real estate broker, contractor, mortgage guy, developer, broker, this is my world. I love it. In fact, you'll love this story. My wife and I, we've got two little girls who will drive in the neighborhood and I'm like, "baby, baby, open house, I gotta go look at it," and she's like, "fine, just go." I'm a real estate guy, I love what I do. We help property managers basically find talent and inexpensively scale their business. The topic is timely. Our business was started because I had a need in my own real estate practice. I hired a virtual assistant. I was like, wow, this works. My wife and I went on our honeymoon, and as many entrepreneurs, I brought my laptop on my honeymoon. I'm in Guatemala in a rainforest, and I'm at the bar at like 1:00 or 2:00 in the morning and the bartender in Spanish is making fun of me. He's basically saying things like dumb Gringo, his wife's here, beautiful woman just married, why is he still working? At that moment, I knew something had to shift in my world, and that's when we started to scale and really use leverage at a high level. Jason: I would imagine that most of our partners as entrepreneurs go through quite a bit, and they don't always appreciate us doing things like that. Daniel: My wife calls it MLS porn for me, because at night, I'm scrolling through all the new investment properties that came on the market. I'm really lucky to marry her, and she's understanding. But at the same time I wanted to stay married, and I wanted to have a kid, and a family, and I knew I needed leverage in my business. I wanted to be able to take a vacation. Jason: I'm sure you have kids at home right now. Daniel: That's right. Jason: Me too, it's crazy. One of them just came in to hand me an Xbox controller so I could give them access because I control that, crazy. I'm on air, they don't care. They're like, dad, this is important. Daniel: This is the deal. This is what we're in, and it's crazy timing because we have this call like a month ago, and we're in a crazy place. In 2018, 5% of America worked remotely, 5%. Last week, that number went to 50%, in one week. Jason: The rest are probably not even working. Daniel: Yeah. Here's the thing, as a company, one of the things that we've been doing is we've been remote for 13 years, 100%. We're about 1300 people. If you're listening right now, we figured out how to scale a business remotely with 1300 people, and serve clients like property managers, real estate brokers, investors, flippers, that's what we do. In the last couple of weeks, we've helped more companies just understand the tools required, what systems you have to put in place, how to communicate with your people when they're not physically in your office. We put together a whole like go remote guide that we're going to give away in the show, basically, just to help things like what you just said. We were just on a conference call with our largest client and his two and a half year old son just, hey, daddy, I need more Cheerios. This is just how it is now. Jason: Yeah, that is what it is. There's all these funny videos you'll see online where you've got like some guy on the news and his kid walks in, in a diaper, and then the wife's crawling on the floor because she thinks she's not on camera trying to pull it out, these things. The world we live in, we're fathers, we run companies, there are moms that run companies, and I don't think there's anything that needs to be hidden. It's not like there's something shameful that you have kids or that you have a personal life. For those that are watching this or listening, just own that. It's totally okay, everybody likes to see that you're a real person anyway, instead of just a suit and a tie stuck behind a desk all the time. It's a lot more relatable I would imagine. I've got four kids. I'm slightly insane, I think, and it's crazy, and they need to be quieter, hey guys be quieter. Daniel: That's awesome. Jason: I started my company Open Potion the corporation back in 2008 right around the time everything was falling apart then. I've just worked from home. I've been virtual, my team members are in Toronto, New York, wherever. We've got some in the Philippines. A while ago, there's always a stigma connected to those that were remote, especially if they were not in America. I think that we're going to see some crazy shifts that are going to be happening. One, every company that’s like, “We can’t have people working from home, how will we know that they're actually going to do work?” These things, these concerns, now you have to. If you want them to work, they're working from home. Your office is shut down, you're not doing business. Everybody's figuring out in this new environment, and they're scrambling. I'm sure companies like Zoom are just going to go gangbusters, but this is the new world that we live in. I think it's going to push everything forward technologically which is exciting, and it's going to cut out a lot of bullshit. All the fluff that was just bloated in companies is just eating up resources, like people are just going to realize after this why do we need this $20,000 a month office space for this big corporate building? All these things are going to be shifting, and we're going to have this new culture as a result of everybody being forced to stay indoors and work from home. I think that's going to open people up to the idea that, hey, I can have team members and they don't have to be right geographically near me. I can find the best that are anywhere, and find people that are lower costs, and figure this out. People are going to be a lot more open that have been closed to it before. I imagine this will be really good for companies like yours, to be able to help people out and help people see that you can still maintain a really good team, and quality interaction, and customer service, and you can lower your operational costs, or at least make a more healthy cash flowing business by reducing some of these overhead expenses that you have in the company. I was hanging out on a really great course with training over the last few days with a financial coach. One of the phrases, I don't know who said it but he made this joking comment that overhead walks on two legs. Basically saying people are the biggest piece of overhead a lot of times that we might have in a company. I want to point out, that was a really humble intro you gave, but in the written intro I have here you've got 10 years of experience serving more than 5000 clients, including over half of the real trends, top 10 Real Estate teams. Daniel: Right. Jason: Your company has already got a who's who list of clientele as far as real estate businesses go. Daniel: Yup. Jason: You've built real estates' number one staffing company, and it says you've worked with some of the top clients in the industry from sales organizations like the Mark Spain team to tech providers, like the Zillow Group, Keller Williams, and RE/MAX, and so you sound like you're a pretty cool connected guy as well. Daniel: Maybe connected. I don't know about cool, though. What we do, and I love this. We have a property manager who's in Austin, and I really love this guy. Jason: That's where I'm at. Daniel: Okay, cool. You guys are neighbors. He manages half a billion dollars of commercial real estate, and he's like one of these guys that's just freaking brilliant. I'm like, hey, what are you doing? He's like, I'm sitting with my son and looking at deals. He's middle age, and he's really had a lot of success, but he called us because he had four property managers, a bookkeeper, and an office manager. Five people running half a billion of real estate, and he's like, hey, my people are overworked. I'm worried that nobody's taking vacations. Everybody works on Saturdays and Sundays, and our systems aren't tight. Jason: Burnout is coming. Daniel: Exactly. They had a system that didn't have all the information in it. They had basic terms, but every lease is different. Some tenants are paying for maintaining their HVAC, some are not. He had all of these leases that nobody had actually put into the system. Every time somebody called and said my roof is leaking, he'd be like, okay, we'll call you back, and then they have to dig up the lease, and we have the lease and say, who do we call? Is it our responsibility, or is it their responsibility? Five hours later, they're responding to what could be a really big deal like damage everywhere for the tenants. We started working with him about two years ago, and we started helping him with SOPs, Standard Operating Procedures. We started helping them take their leases and get him into the system, which is any basic scale a business grows, a business scenario. We gave him a book like an AP, AR person, so now his really talented bookkeeper who's managed his whole financial world for his entire career has time in her day to think strategically, and save money for the company. What we did is all the property managers got in the system. We basically gave them somebody to run their system so that there was a person who could enter data and just make sure the system was clean. The bookkeeper got an assistant, and now all of a sudden he's poised for what are some phenomenal growth years that he's had in the last couple of years. It didn't change his world. It really didn't, because we're $21,000 a year for a full-time employee. If you think about that, half a billion dollars making all the rents, literally for almost $100,000 now he's not going to lose his team. That's our story. That's what we do for really big companies like Zillow, and all the way down to small investors who own 5 or 10 properties and just need somebody to help the day to day, keep things running. Jason: Let's get into how this process works. Let's take a typical listener of the show, they're probably maybe a property manager, entrepreneur. Maybe they've got about 200 to 400 doors that they're managing, largely single family residential. They might have a property manager by now or two. They've got maybe somebody having maintenance coordination, and everybody on their team is telling them that they're maxed out on time, because that's what always happens. Every team member is maxed out on time, and they feel like I can't afford to hire anybody right now. Every appointment back on time, and then they call you up. Let's go through the process here of what it would look like maybe for one of these clients to start a conversation and work with you. Daniel: Sure, Jason. I don't want this to be a commercial for us. What I want to do is if you're listening right now, like what the steps that I'm going to go through are the steps to determine how to scale your business. Even though these are our steps, you can actually write these things down and go through the step by step process. Whether you hire us or not, this is the process that we know works, because we've done it 5000 times. The first step is just really assess your business. We do a strategy call with all of our clients where we do a one on one video conference, just like you and I are right now on video, and we go through things like who's on your team, what are your systems. When I say systems, like where are you putting all the information? Do you have a voice phone system so that when people call, you can transfer that number around. A lot of property managers do but some actually don't, and you can imagine during this Coronavirus what happens if you're a property manager and you had regular phones tied to an office that you can't go to anymore. What do you do? We're looking at who's on your team. We're looking at what your systems are, what tech do you have right now to operate, and then we're looking at what your processes are. Talk to me about what happens when you have to turn a tenant over, talk to me about what happens when you put a property out to lease, what's the step by step process. Who owns that process, and so we'll go through those three things in our first strategy call and really identify what's your highest value leverage, and we have this process and I liked it. I love thinking like this. Leverage can be just like compound interest. You can have compound leverage, meaning you as the business owner, or your managers, or the people on your staff can offload some of the not very valuable process based day to day repetitive stuff that you just don't need to do, and then you get two or four hours back of your day, and then you can take those hours and help build your business, and then you get a compounding effect with leverage. That's the next step is what do we need to do to start taking advantage of compound leverage? If you or your team gave up some stuff, how would you then drive revenue for your business or increase your value for your customers? What would you do to really scale and grow if you got half your day back? Jason: You do the strategy call. You figure out team systems attack, you're going over their processes. You're identifying the highest value leverage, I think it's a cool idea of compound leverage. And then what would you do next? What would you recommend next? Daniel: It's developing your plan. From that guy that owns half a billion dollars in property to the person who's got 100 homes, every single person has opportunity. It's standard blocking and tackling in business. We're doing a needs analysis for you. We're saying, okay, what do you need to do now, or who do you need to hire on your team now? It's always been developed with the plan moving forward. Any company like ours who says, oh, we'll just hire somebody for you tomorrow, be scared. Just be scared, because as an entrepreneur, leverage is your biggest swing, it's where you can get the most value for your dollars, you really have to be strategic about it. Step two is what's my plan? What systems do I need in order to do this virtual thing like what we're talking about going remote? Who do I need? What do I need? What conversations need to happen for my internal team? What planning do I need to make? Let's create an outcome statement. You could call step three crafting an outcome. Another thing that's unique about our businesses is we don't do job descriptions, areas of responsibility. I don't say anything wrong, there's nothing wrong with that, but what we do is we create outcomes. For instance, when I hire somebody, I'm hiring them to grow my revenue, I'm hiring them to save money, I'm hiring them to own an entire process for my business. We will help you craft and create a plan that really adds value to your business, so that you're getting a 3 or 4 times return on the $21,000 that you're going to pay us. Jason: You're crafting an outcome, you've developed the plan. You've done the strategy call, you develop the plan. You've crafted this outcome, and then what's the next step? Daniel: At that point, we know exactly what you want to accomplish. As a company, what we'll do is we'll take that outcome, we'll craft a series of interviews with somebody who has experience doing that thing. One challenge that we have in the outsourcing virtual assistant world is you can go on Upwork and hire somebody from India for $3 an hour, and that's what most people think about when they think of outcomes, or outsourcing, or virtual assistants. The thing is we're a virtual professional company. We are very strategic, we hire people who've done it before, who've been there before, who have served that outcome in the past. If you need somebody to answer the phones and be a prospector for you, or handle like client calls or tenant calls. We're going to find somebody who they've been 10 years doing that. They may not be property management, but they've been 10 years on the phone handling concerns and being a support mechanism for businesses similar or very like yours. The next step is to get three to five people right in front of you, so you can interview them, and you can choose somebody who is a great cultural fit plus an expertise and experience. Jason: I love the idea because I think cultural fit is the most important piece to look at first. A lot of people, well, they're great for this job. They look great on paper, they know how to do this job, but if it's not a good cultural fit, and I find as an entrepreneur if you don't feel comfortable around them… There's a great book by a really cool guy called Steve Sims called Bluefishing, and he talks about it in it. He calls it The Chug Test. He's like, what I want to go chug a beer with this person, if the answer's no, like then there's a disconnect, there's a problem. He uses the chug test with clients and different things. I think on our team, it's really important that everybody on our team exists to lower our pressure and noise. They exist to help move the business forward towards our outcomes. If there's resistance there, or discomfort there, and you're adding more and more team members like that, you're building a business you don't even feel like being involved in. It's very important, I think, for us as entrepreneurs to be really conscious of how we feel around our team members. Daniel: I can tell you I've hired people before and you have it too. If you're listening right now, it's interesting because I think this is a mistake that we make as entrepreneurs, we either hire people that we really like, or we hire people who know the job, and have expertise or experience doing the job. The reality is you need both. You've got to enjoy them, or at least feel like there's a fit in who you are and what you think, but they also have to be an expert at what they do, or a professional in our world. I can always tell when I'm talking to somebody who understands growing and scaling a business because they say what you just said, Jason. I appreciate it. Jason: I'll add, I think one of the biggest mistakes I've seen entrepreneurs make in trying to grow, or scale their business, or hire in their team is that the biggest mistake we make is that we try to hire somebody like our self a lot of times. We have a natural rapport for people that are like us. In NLP, Neuro-Linguistic Programming, they teach if you mirror or communicate at the same pace of these sorts of things, then you can build artificial rapport, or build real rapport perhaps really quickly. But, the challenge is we also tend to have a blind spot and hire people that are like us. A lot of times, the people that we need to do a certain job, or not the entrepreneurial, visionary, cowboy personality type, or whatever personality type you are as an entrepreneur. You might need a different personality type for that role, and sometimes we're trying to get people like us, which we don't even want to do those things, and we're trying to put them into that role. We need to find people that love and enjoy doing that particular thing that we don't want to do. Somewhat, they need to be different from us, but we need to be able to have a relationship with them that feels comfortable and feels good and that we value. We enjoy being around them or having them on our team. Daniel: Some things I'm going to add because I'm a nerd. I love people, I love growing and scaling. I think there's another possibility which is when values match. If you're very clear about what your values are as a human and a business, then you can be with somebody who maybe doesn't match up with your personality, because you feel like you at least have that commonality and value. Jason: You guys trust them. Daniel: Yeah, exactly. One of our values as a family is we take care of our people. I teach my kids, we don't give up. I naturally gravitate to people who care about people, and who have a bit of grit. Defining who you are as a person and defining who you are as a company, and having those values can help you in selecting somebody who you may not love hanging out with, but there's a value match, and they have an expertise match. Things just jive as a company. Jason: I find that's one of the biggest flaws that I see in property management businesses, probably any business. As entrepreneurs go from the stage of solopreneur to building a team, they build a team around them but they're operating like a solopreneur. They're trying to micromanage them. They're viewing these people as people that are supposed to be extensions of them in some way, and instead of building a team around them, of people that are taking things off of their plate and their jobs to lower their pressure and noise, they're hiring people for jobs, people for roles they think the business needs instead of what they need. In order to hire a team and build a team around you that is what you need as an entrepreneur, there needs to be clear values. Those need to be defined. That's one of the foundational things we coach clients through is getting clear on their business, why we get entrepreneurs personal why, how those connect, creating, figuring out their core values. If they don't have that, they don't have culture. Culture comes from the entrepreneur, and it's the business that is supposed to exist to serve the entrepreneurs needs in some way, and it's also supposed to exist to solve a problem in the marketplace. If they have those things in alignment, it significantly affects their ability to close deals and create trust. That speeds up rapidly. If they don't have that, then not only are they having challenges with that, but they also have a team around them that they have to micromanage, that they always feel like they have to tell what to do, and that are not believers in them or in the business because they've never given them anything you believe in. Having a team of believers feels great. You feel like you're Iron Man. You feel like you've got the super suit, you've got all these people supporting you. We had an issue this morning, there was a client that had a product or something and they were frustrated or upset because they didn't do any of the work and they didn't get the results, obviously. They didn't do some things that needed to be done, didn't show up any calls, that didn't do anything. We want this client to get a result. One of my team members is brilliant at coaching and helping clients just feel the negative energy and transform it. He's just a brilliant coach in that, and he talked to this client for like 60 minutes. The client was like, okay, I'm excited to work with you guys, I'm not going to sue you now. My approach probably would have been a little bit more hardline and hard nosed. I've got another team member, and he deals with the clients directly. He's super diplomatic, and I'd be like just do it this way. But he's like, why don't we say it like this? I'm like, that's better. Our team members protect us. They protect the business, especially if they believe in you. You always feel like you're being supported. God, it is so stressful. It's worse having a team than being a solopreneur if you have a team that isn't there to believe in you, to support you, and lower your pressure and noise, it's worse. Daniel: Agreed. Agreed. Jason: You want to talk about the next step? You've got this outcome crafted. I love that idea because ultimately what matters is results, the outcome is what matters. A lot of people will hire just to fill a wall. They're like, "We need this." They think that's the outcome, we solved it, we got this person. The real outcome is them helping the business achieve a goal, achieve the outcome, that's involved. I like the idea of crafting outcomes. What's next? Daniel: You know what? I have to follow it up with the outcome. I want clarity for your audience around why we do that, it's really important. When you have a person coming into it and you give him a job, they could do a job and not get a result. Jason: Absolutely. Daniel: That's the challenge. When you craft an outcome and there's massive clarity between you and the employee about what the outcome is, how to do the job is well informed. It's like, "Look, we are going to need you to book X, Y, and Z so that the clients have this result." They're like, "Well, I booked it." Yeah, you booked it but the client didn't get this result. This is a challenge. Outcomes just align the interests of the entrepreneur business owner and the employee so that the coaching conversations and the interactions are super, super, clean. There is some responsibility on the entrepreneur because I can't say, "Look, I want to fly to Pluto one day. I'm going to hire you to help me do that." That's just not a possibility right now. We have a lot of clients here who are like, "I don't know how to do that. I need to hire somebody. Daniel, can your virtual professionals help me?" I'm like, "Absolutely not, we can't help you. You don't even know how to do it. How would we know if you don't know?" The military has this great concept, "You can't give one unless you have one." They don't promote from outside. You're not going to get a two star General who used to work at Coca-Cola, they're not just going to make him the general. They have a process of rising through the ranks because that experience is so important. When our clients say, "Hey, I want to try this thing out." We're like, "Hey, we can't help you because we're not a try-it-out company. We're a professional organization that helps entrepreneurs get time freedom in their life and high caliber leverage." We're not going to experiment something with you, we're not going to try to create the shift that's going to go to pluto. We just don't know how to do that. That's some clarity on the outcome. Our next step after an outcome, we start interviewing. Then, it just moves into the launch which is why we have the Go Remote gift for your audience which is really timely because 50% of the world is now working at home. How do you do that? What are some of the technologies? How do I communicate? Jason, you're going to love this one. You and I, we've been working remote for a while. Most people would be on a chat platform, "Hey, I got to go to the bathroom." Nobody wants to see that, but we're all humans. What do you say? In our Go Remote guide we're going to give out, you type ‘bio.be right back.’ It's just a little bit better to see that on a chat platform in your corporate office, maybe 100 people. We've got a lot of tips, tricks, what's the right etiquette, and all that. After you interview, which is about a launch, that's probably where all the magic happens—the first 90 days. Jason: Yeah. I just saw on Facebook, it went viral, that all these people are working from home now. People are doing Zoom meetings and stuff. Some lady in her team of 20 or 30 people on a Zoom call forgot that her camera and her mic was still active while she was going to the bathroom. She said, "I'll just go to the bathroom," and took things with her. How awkward would that be? They need to understand some basic etiquette dealing with this new technology. Daniel: Sure. The fun thing about it, we're all humans. We all have kids, we all go to the bathroom, we all need a lunch break, and the rules are different now working at home. If you find yourself as a manager or an employee, you have to hyper communicate now because nobody can see if you're actually working. If you find yourself as a leader, you have to give people the benefit of the doubt, and really communicate, communicate, communicate. This is a time unprecedented in history. Nobody can plan for needing to take your entire team remote in a matter of seven days. It just can't be planned for. Having a little bit of grace as a leader, and also increasing your communication for your employees as a leader is really super important right now. Jason: Yeah. One of my coaches, Al Sharpton, gave me the idea that the best way was push communication rather than pull in which as a leader, you don't have to go to hold them, stand over their shoulder, and ask them, "Hey, did you do this? Are you doing this? Where's this at?" That's pull communication. You're always trying to get things from them but you set up systems in which the system, they're reporting, submitting things, and providing the information to you so you'll feel comfortable, and you don't feel the need to micromanage them that way. Daniel: That's a great point. Part of our onboarding is helping people understand what a start of the day report looks like and the end of the day report looks like. Each of our folks, 1300-ish, 1200 or 1300 people, are doing a start of day report where they're like, "Hey, these are the seven things I'm going to accomplish today." And an end of the day report, "Hey, those seven things I knocked out five of the seven. I did three others and these two are pushed to the next day." Again, if you've got those communication systems well-oiled, one of the things because we've been virtual for so long, we have a tech platform where all of our virtual professionals enter their time. They start their day and they do their start of the day report in our system. At the end of the day, they report in our system. It keeps tabs and track of our virtual professionals so that we have a system of knowing, "Hey, they took a break." They enter into a system, "I'm taking my lunch break," or, "I'm taking my 15 minute break." We have a system that reports to our clients everything they do throughout the day. Our clients can login to that portal and just see it. We've been doing that because that's normal. Now, everybody's like, "Hey, how do I do that?" That's another example. You just have a start and end of day report so your managers and your people have a clear way of communicating what their day looks like. Jason: Yeah. That same coach I mentioned, I once asked, "How do you know if somebody in your team is a believer?" He just said, "They're getting their work done. You've got the outcomes and the things they're supposed to be doing. They're reporting that they're getting these things done. The performance is there and you're getting the results that you want. You don't have to micromanage them, you don't have to live in fear. They're getting things done.” That's ultimately what you want. You want to pay money, you want them to help you make more of it. You want them to get it done. Strategic call, development plan, crafting an outcome, interviewing, and you said launch. The launch is then setting, you've got these systems in place. For your clients, they can login, they can see what the team members are doing. Clarifying question. There's two types, I've noticed, of assistant companies or outsourcing companies where they're like, "Hey, we'll answer your phones and we've got 50-100 people here in a call center. Some random ones are going to answer the call." Or, you've got Raymond who's assigned to your phone and he's going to do this, he's going to do this job for you. Maybe you could help the listeners understand what MyOutDesk and this relationship looks like. Daniel: Yeah, make sense. The first example is for major corporations. Our business is designed for SMBs—Small and Medium Sized Businesses. We think of us like an extension of your business. You get to interview them, you get to onboard them. They report everyday to you. It's like, "Hey, Jason. I'm here. Daniel's here. I'm ready to login. I'm going to rock it. Do you need anything today? Here's my start of the day report." Every single day, they login. We typically do Monday to Friday. Some of our clients will have multiple schedules depending on coverage needs. LIke over the weekend, late night calls, or emergency phone numbers. Just think of us like an extension of your business. We're giving you leverage. We're a real estate staffing company that is specific to property managers, brokers, busters, mortgage companies. Our whole world is around helping you grow and scale. After the launch, it goes through training. Most entrepreneurs who ever hired somebody realizes that in the beginning, I liked this X. If you've been watching us on video right now, I'm doing an X. In the beginning, it's low value because they're brandnew to your business. They don't know your culture, they don't know your customers, they don't know your value proposition. There's just not a lot of value in the first two weeks. At some point, the value goes up. The amount of time you have to spend with somebody is high in the beginning because you need to tell them everything that's in your brain. That all of this tribal knowledge that you need to impart and give to them. You might already have it documented, you might not. The first 90 days is really teaching them how you want them to serve the business. Communicating, giving around like, "Hey, here's how to use our system. Here's the training platform. Here's all the team members. Here's all the systems you need to learn." The first 90 days, it's just getting them up to speed. After that, typically our clients are recording a 60% or 70% savings with the exact same result they were getting prior. It's pretty awesome. Jason: Now, these team members, is it hourly or are you dedicating a monthly? Fulltime? How does this tend to work? Daniel: There's a couple of things. We're different. Obviously, they're virtual professionals so they're working full time. We're a subscription based business. You pay us, we pay them. We also carry their healthcare, their vacation time, and all their benefits. Most companies, they're making a very razor thin margin. Honestly, 90% of what you guys pay us, what our clients pay us, actually goes to benefits for their virtual professionals—benefits, vacation, health plan, we do conferences. We have an entire support system, team, tech, and all that kind of craziness. The point is they're our people. We're helping you get up to speed so they can help you grow and scale your business. At some point, we all become a team. Meaning, the company is here to support the virtual assistant, support the client, and everybody wins. That's what I love about working here. I'm going to help people find jobs in the Philippines, that's where we operate. I get to help businesses scale and grow. It's like the coolest place to be especially because we’ve helped over 5000 clients. I’ve gotten to see growth plans, org charts, systems. It's just so exciting every day to see so many Small and Medium Sized Businesses really see under the hood—profitability, who's on your team, what are some of your struggles. It's just really awesome for me and my team because every day, we're just serving our community. Jason: Love it. What are some of the frequently asked questions that people have that maybe we haven't covered? That somebody might be asking during the process? Daniel: A lot of people are like, "What does my commitment look like? How long do I have to stay in contract?" I'm a real estate guy and very firmly believed in value. We don't lock our people into any long term contracts. Every two weeks, every single one of my clients is voting with their credit card, honestly. Imagine if your business, 100%, runs on adding value for others. That’s how our business works. One of the missions that we've embraced at a really high level is our virtual assistants or virtual professionals need to be indispensable to your business. That's the guiding light, it has been from the beginning. If they come in and they take things off of your plate, you have all this time freedom, all of these opportunities to crack, and grow your business, then we just created an indispensability, it is irreplaceable. That's our whole mission as a company. We're really excited. Jason: Very cool. Do we talk about pricing? What is it going to cost? Typically, I know that the people listening, that's the big question. They're like, "Can I afford this? Would this make sense for me?" Most of them are thinking, "I can barely afford the team I have now. Is this something I can do to get to that next level? Maybe this will help me bridge that gap." For example, in property management, what I call the first sandtrap is the property manager that's maybe broken about 50 doors, they broke that barrier there. They're between 50-100 doors, they can't break the 100-door barrier. They're operating as a solopreneur, they can't afford to hire their first team member. Their pricing is too low, they've taken on too many crappy properties to manage. They've got a lot of leaks. They're trying to figure out, "How do I get ahead?" They can change some of these other things but one of the things is, "I need another person." Maybe you can touch on that and give people an idea of what they should budget for and make this work. Daniel: Step one, three, or five, is 100% free. If you're listening right now and you're like, "I need support," or, "I need help," I just want you to jump on our website, myoutdesk.com. Just go and schedule a consultation, go through the process. Worst case scenario, we walk away as buds. We high five each other, say, "Congratulations," and we walk away. Best case scenario, we find a way to make it a win-win where you're getting time freedom back into your world and you're able to focus on growing and scaling your business. If you decide to move forward with us, I always like to say, "Look, it's $400 a week. It's $400 and some change." It's not a super expensive value proposition in our world. It's $1747 a month, all in—benefits, vacation time. Like an entire team supporting you. All the systems and processes that we’ve developed over the years will help you. This Go Remote guide we're going to give out is 12 pages and 5000 clients later worth of really good this-is-how-you-run-a-remote-team guide. We're going to give everything away for free because that's what we do. Including our time, energy, and effort. We were just on the news last week. We basically gave out consultations to help business leaders, C-suite people, and entrepreneurs figure out how to go remote. There's this bottleneck in California. Everybody got shelter in place. California went down, people were scrambling. We helped our insurance broker, we helped our attorneys. We were just helping people figure this out and give them some confidence in this. If you're listening right now and you think this might be an avenue, I would just encourage you to reach out because it costs you nothing but your time. You'll walk away with a lot of value. Jason: Another major issue right now is the cash crunch. Every business is feeling a cash crunch. Cash is just shortened, people are laying people off. Companies are furloughing people, their team members can collect their employment insurance. This is a painful time period. They're having to figure out how to cut expenses. Some businesses will not be the same after this. This might be another option if they're having to layoff staff and they're not able to fund or keep cash flow positive. The big challenge then is how do we keep some sort of level of service? How do we still deliver to our clients if we cannot afford that overhead anymore, and we need to lower the overhead. For those listening, that's what you need to do right now, to cash crunch, and solve that problem. If you can be healthy there, then you can get on some higher level problems to deal with like how do we keep the [...] economy or what not. You've got to solve the immediate cash crunch issue. That might be an SBA loan, that might be some of these things coming out. Maybe having a conversation with your team might help facilitate that. Daniel: We have a good friend of mine who owns a recruiting firm. One of her right hand women has a 1 year old and a 3 year old. They're all at home. She needs support now, not tomorrow, because she's contractually obligated to add value to her clients. If she doesn't, they have the opportunity to walk away and cancel. We're seeing a big uptake in people who are like, "Hey, we're having staffing issues right now. I'm not sure. We need support in X, Y, and Z.” We're happy to go through that process with somebody and say, "We can help you here," or, "No, this isn't what we specialize in but these people are your best option." There's a lot of companies like ours. There's lots of resources out there where the SBA thing, that's one of our free gifts in the Go Remote right now. When we give that away, we have a guide to getting the SBA disaster loan there. We have a guide for what's happening with the taxes right now. We have a guide for what you are saying to your clients right now in this weird, uncertain time. You can't say you want to buy or sell, this is an odd time to be a sales person but it's a great time to have conversations, ask questions, and connect people on a human to human basis. We put together a little guide for people in that space. We should give it away. What do you think, Jason? Jason: Let's do it. How do we get it? Daniel: All you have to do is text MOD—MyOutDesk—MOD to 31996. Anybody that wants it can go there. You'll get a link to our Go Remote stuff, all those free guides are down there. Here's the other thing, normally, you understand marketing, we date our content. Normally, we help people register and do a bunch of stuff so that we know who they are. Because of this disaster and because of everything that's happening in the world, when you text MOD to 31996, we're giving that stuff in a Word format. Meaning, you can take the Go Remote guide, put your logo on it, and give it away to your customers and clients. You can put your logo on our disaster recovery plan. We have a CEO mindset conversation. It's time to adapt your value proposition for your customers because we're in a new world right now. All that stuff is given away free because we're all in this together. The biggest cure for the economy right now is businesses and entrepreneurs staying productive. Jason: Right. I'm texting it right now so I can check it out. It's 31996 and I just do MOD. Daniel: That's right. I can't wait to see Jason from across my phone. It's going to be awesome. There we go. Boom! "MyOutDesk is your partner in going remote!" That's exactly it, brother. Right there. Here's the thing, we were on TV. I think it's an important message. I think we can wrap it up with your audience with this one thing. As entrepreneurs, as business leaders, it is our job to stay productive. It's our civic duty right now. Our economy is going to be challenged. The people at the bottom who have the normal middle class jobs, they're going to go through pain. As a leader in my community, my job is to help everybody I can stay as productive as possible. That's what's going to shift, that's what's going to change this world. That's why we put together a guide. That's why we're giving it up free. I hope it's valuable to you guys, your audience, and Jason—even you guys. Jason: Awesome. I just did a training just last week. Property management and property managers are going to be even more critical during this time than ever before. This is an opportunity for property managers to plant seeds for the future. I taught a concept called Care ROI. Right now may not be the time to focus on financial ROI but Care ROI will lead to that in the future as things shift. In turn, people will remember. Because emotions are heightened right now, anything that we do, and it actually takes a communication that we do as an entrepreneur, as a business owner, will be magnified times 10 in the mind of our customers or consumers because emotion is what creates memory. It's the difference between what you were doing the day before 9/11 or the day on 9/11. People's memories are very different because of the emotions attached. Right now, you have the opportunity to get a 10x ROI on positive things that you do out to your customers, to your audience, and your potential clients. That is massive.  Everyone listening, make sure you checkout the training that I did and leverage that Care ROI. I want to thank you for coming on and doing this even though it's crazy right now. I honor you for putting out this awesome guide to help people out. That's awesome. I look forward to having some more conversations with you in the future, Daniel. Daniel: Jason, thanks for your time, man. We really appreciate you today. Jason: I'll say one more thing, Everybody, businesses exist to solve a problem. That's why businesses exist. If the business is not solving a problem, it's taking people's money and not delivering results. There's no higher purpose or cause that entrepreneurs can do right now than to solve people's problems and to also make money. Making money helps you help the economy, it helps everybody. It helps you help your team. Find ways to help people solve their problems and to make money. I don't think there's anything wrong. Some people try to guilt and shame right now. They're the people that are just taking from the system, don't worry about them. The other thing I'll point out is if you're an entrepreneur, you don't like your business, you've been looking for your out. You're an entrepreneur, this is your perfect out. This is the perfect opportunity to choose out of your business and just not do it anymore. You have the perfect excuse. For the rest of us that are driven, that we’re passionate about what we do, if you are a property management entrepreneur, you're still wanting to grow, still wanting to be part of the community, check us out at doorgrowclub.com. Get inside our Facebook group community there. There's lots of helpful things going around, property management trying to solve problems for each other, and figure out what to do with things. Make sure to have a conversation with us at DoorGrow. Our goal right now is to plant those Care seeds, ROI as well, and help you out in any way that we can. Check us out at doorgrow.com. Daniel, thanks again for coming and hanging out. Daniel: It's been my pleasure. Jason: All right. We'll let you go. Everyone check out his website. It is myoutdesk.com. Make sure to do the text message thing. Until next time, everybody. To our mutual growth. Bye, everyone. You just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet, in the DoorGrow Club. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead, content, social, direct mail, and they still struggle to grow. At DoorGrow, we solve your biggest challenge in getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today’s episode on our blog at doorgrow.com. To get notified of future events and news, subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow hacking your business and your life. Always use the JS Compressor to shrink before you publish a website.

Are you a property manager who spends too much time struggling with leasing requirements? It may be time to automate rental property management and focus more on how to grow your business. Today’s guest is Faizan Khan from LetHub, an AI leasing assistant service for property management businesses. LetHub utilizes AI to interact with renters, resolve their problems, and get them to the doors.  You’ll Learn... [03:40] Why LetHub? Opportunity to use AI to automate rental property management. [04:21] Myth: AI is a simple chatbot with multiple threads of what needs to be done. [05:00] Reality: AI goes beyond basics by understanding how the human brain works.  [05:26] Good vs. Genius AI: What’s the difference? Ability to learn and fix mistakes. [06:39] How to build an AI: Data scientist, algorithms, machine learning (ML), and supervised learning approach are needed to get started.  [07:29] LetHub’s Goal: Make experience for renters and landlords very easy.  [07:55] Property Management Problem: Difficult to get a rental apartment. Demand is high. Everyone is looking. AI can help. [09:05] Why LetHub uses AI? AI is not going to replace humans, but it’s a substitute. [09:19] Retention Rate: Property managers want to get the best tenants and keep them.  [10:25] LetHub’s AI: Replies to questions, books tours, provides CRM, handles emails. [12:15] LetHub’s Automated System: Requires less staff and time to generate results. [15:35] Pre-call Process: Top four questions focus on pets, moving date, student or employed, and tell me about yourself.  [17:25] API and Integrations: Connect to Buildium, Yardi, or other account. [20:00] LetHub Listings: All channels have Web link; connect email with Web platform.  Tweetables LetHub’s goal is to make the experience for renters and landlords very easy. Get people to the door. A good AI understands; a genius AI learns from its mistakes. AI won’t replace humans, but be a substitute for property managers to focus on growth. People like to chat. They don't want to call. They want instant replies.  Resources Faizan Khan’s Email LetHub Buildium Yardi Rent Manager RealPage DoorGrow on YouTube DoorGrowClub DoorGrowLive DoorGrow Website Score Quiz DoorGrow Cold Leads Calculator Transcript Jason: Welcome, DoorGrow Hackers, to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker. DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show. Today's guest, I'm hanging out with Faizan Khan. Faizan, how are you today? Faizan: I'm good. How are you? Jason: Welcome to the DoorGrow Show. I'm doing great. Faizan Khan has one of the coolest names that we’ve ever had on the DoorGrow Show. We were joking in green room that it sounds like he’s a gangster rapper, just cool. Actually, you made that joke, because I’m a nerd I said it sounds like some badass [...]. Faizan: That’s right, yeah. It’s a different name. I haven’t heard this name myself before. Faizan, I'm really excited to have you. You have a service that we're going to be talking about today called LetHub. I know nothing about it. I'm excited to ask you a lot of questions. I get curious. Before we get into that, let's talk about you. Where this guy with this cool name came from, what your background is, and why people should listen. Faizan: As a child, I had been involved in entrepreneurship stuff and starting businesses small or big. I'm originally born and brought up in Dubai and Pakistan, considered like a mixture. Then I moved to the UK for a bit and after that I have been living in Canada. I've lived in five different countries throughout my life. I love traveling. Whenever I get a chance, I try to go to any other spot that I can go to, provided there's no Coronavirus over there. I'm really interested in real estate. I've had a bunch of start-ups before. I saw this opportunity of using AI to automate rental property management, so I started this company called LetHub. We are in our start-up phase but we're doing pretty well working with a few clients in Canada and States. We're trying to help people to automate all of their leasing requirements so they could sit down and focus more on how to grow. Right now, we're using a very sophisticated AI to interact with renters, resolve their problems, get them to the doors, and all that stuff. We can get deeper into that. That's my background of why I started and who I am. Jason: This sounds really interesting. A lot of people talk about AI and you hear that thrown around. I think the term can sometimes be used very loosely. Their version of an AI is they're creating a chatbot with multiple threads of what they need to be done. Faizan: That’s a very good question. I think a lot of people are sort of sold on the idea that AI is basically just like a pre-made thread of questions or a pre-scripted bot. But the truth here is that it understands something in a similar way as a human would, like the sentences or words I'm saying to you, your brain is breaking them down, understanding the context of that, processing it, and then replying. That's how our brain works. A good AI would understand that, even a better or a genius AI would really learn. If it creates a mistake, you can teach it what to do or it could teach itself what to do next. An example would be if someone says hey, do you allow pets, or hey, do you love furry friends? The AI would respond saying that, hey, we do. This is our pet policy. The renter would say, hey, is a small dog or cat okay? The third thing that the renter says is context. The context is do you allow any pets. Truly, I would not understand that, but an actual AI would understand the context. Jason: How does one go about starting to build an AI thing? Is there an AI system that you are leveraging to build? Is that how this works? Faizan: Yeah, that's a good question. You need a data scientist, number one, and you need to build some algorithms. You need to understand how machine learning works. It's a lot of techy-techy stuff to get data, to train the AI from an infant to a child to an adult. It's a simple process like any other human would be trained, how we grow up, we learn a few words, and then we're taught a few things. Pretty much like that. We use a supervised learning approach. It's a very sophisticated machine learning approach. Our goal is to make the experience for renters and landlords very easy. From our tests, we see that a lot of people ask the same questions. We cut that down, get people to the door rather than them giving you a call or sending you hundreds of emails. Jason: Let's talk about the problem first. What problem have you seen to the property managers you're dealing with that you thought maybe AI can help with this? Faizan: First and foremost in a very dense city where I was living in Vancouver, it's very hard to get a rental apartment. The demand is high. Everyone is looking. For us as renters, it was getting impossible. It would take two months to get something, that's how I started. I was like, why is this process not solved? If I send an email to a landlord, why am I not getting a reply? If I show up there are 20, 30 other people, I need to fill out a new rental application every time. If you go into 10 units or 10 different spots or places, it will be 10 different applications and that's all while you're working 9:00 to 5:00 as a professional. That's how I started. Why do we use AI? AI is not going to replace humans, but it's going to substitute a lot of their work that they do so they can focus on other stuff. A lot of the problems that property managers face are mostly around getting the best tenants and then keeping them. What's the retention rate? That's one of the bigger problems in multifamily and also single family.  I believe that you can cut that whole process down to finding someone from a listing, to getting them to the door, and to sign the lease. You can cut the time down by around 60 to 70%. If you're spending four to five hours a day, if you have a lot of vacancies or spending a lot of time just on replying to people with the same questions and it gets monotonous, you might lose focus. You're not that happy talking to people. That's where an automated system comes in.  People like to chat, especially millennials. They don't want to call. They want instant replies. Our product comes in there and solves this problem. It replies to everyone's questions and books you a tour right away into the leasing team's calendar. It provides a nice CRM for property managers just to have a look at who's coming when, weather details, do they qualify, all that good stuff. It also handles emails coming through. We see that 50 to 60% of property managers get emails than calls. Emails and texts are the king right now in terms of communicating. We deal with that as well. Jason: LetHub is handling emails? Faizan: Yes. Jason: It's dealing with text messaging too? Faizan: Yeah. Apart from calling, everything. Our AI assistant is dealing with all the online web chat. You can put it on your website or you can just post it on ours. It would reply to your emails. It would reply to the text. It will send reminders, all that good stuff. Honestly, there's a lot of companies that have already built this, but the automation piece is missing. There's always some manual work. We built it in a way where you can just click a button and start using it. There's no need for a three week training. I hate that. Jason: What are you seeing in terms of how this is impacting the clients that you brought on some of your initial prospects? What are you seeing? What are they noticing? What's different for now? Faizan: I don't want to jump the gun on this one, but I think it's helping people not to hire more which is scary. An example is one of our clients, they used to hire interns who would take calls, reply to emails, and then give the lead to a leasing agent who would go out there and show the unit, do a tour and then sign the lease and all that stuff. They stopped hiring an intern because now the system’s so automated, they’re getting good results. From a leasing agent’s perspective, they’re leasing faster. Those hundreds of emails they get, because it’s automated, they can filter through renters faster and get signed leases faster. The rate of listing to lease, the timeline has decreased. We've been measuring that very specifically. Minutely looking at is that the USP, is that actually the time spent by a leasing agent, but it's both. If someone spends on these activities, that goes down and the time to lease goes down as well. Jason: Let's go through the lifecycle then. I want to understand which pieces of the lifecycle of dealing with prospective tenants, showing the property, getting the lease, then on boarding, how much of this is LetHub connecting with and helping with? Faizan: Our goal is to get people to the door. Jason: It's getting people to the showings and getting showings scheduled and that sort of thing? Faizan: Yeah. It's answering our questions, dealing with increased, pre-qualifying people, and getting them to the door according to your schedule. Just get them to the door and then after that you could do the rental application or whatever you'd want to do, but also we get feedback as well. We're getting them to the door. If they don't like the property, we're getting some feedback as to why they didn't like the property or something like that. The goal is to get them to the door fastest with good pre-qualification, answering all their questions that they might have, and booking tours in a smart way. If you manage more than 400 units, 1000 units, or even 2000 in our case, then your time is money in that sense. There'll be no shows. There'll be people who are not that qualified. You'll always be dealing with not a higher quality of tenant like prospective renters. Jason: Give listeners an idea of the pre-call process, like some of the questions you might ask or what property management might have connected or built out in that piece. Faizan: I've built the algorithm myself with the help of my CTO. It's highly customizable. Obviously staying within human rights, there's some questions you cannot ask but it's customizable. You put your criteria and river our AI. We'll make sure she gets those answers from people. Jason: What are some of the questions that it's asking? You had mentioned earlier like maybe pets, maybe if they've had an eviction before. Faizan: You could ask anything from if you had an eviction, do you smoke, do you have any pets, how many people are moving in, why are you moving, are you a student. A lot of people ask this. We suggest people not to ask more than four questions, otherwise, that drives renters away. The top four I'm telling you is number one is pets, what's your moving date, when do you want to move in, are you a student or do you have a job, that sort of thing, and then the fourth is please tell me a bit about yourself. Generally, tell us whatever you would want. Though you can keep the criteria strict. If they don't fall under your criteria, they don't actually book a tour. We'd show them other properties. Jason: I understand the idea of decreasing the amount of time wasting type of calls where they're just asking details about the property. Will this be able to pull in some of the data on some of the properties through API or connect, because most property managers have all this in their property management software? If somebody's getting into your chat tool or the system and asking what's the square footage on this property or where is this located, how many of these things can it feel? Faizan: All we ask people to do is connect their Buildium or Yardi account and then go from there. We are constantly working on improving the integration and it will have enhanced integration with time. Right now if you as a property manager want to have a taste of LetHub, just let us know and we'll add a few of your properties. You can have an experience and then we can attach your integration and all that stuff. But we're not really partners with any of these companies, we just want to be clear. These are one off requests from property managers where they say this software, can you integrate so that we help them integrate. There's some softwares that do not have APIs. Jason: What manager has a full API, I guess property now has an API? Faizan: Yeah, probably Rent Manager. I was talking to the folks at Rent Manager as well. We're in moving talks with them soon. We'll meet with them at the conference as well. With Buildium, they don't really have an open API, same way as bigger companies like Yardi or RealPage. They have a paid API so they have this whole program. But we're happy to work with anyone. The key is to cut down the time it would take to on board anyone if they are using a very sophisticated software. We're happy to work with them and help them set that up while not changing anything. That's the important part. They keep doing what they're doing, we're just going to be working on the side getting them into leads. Jason: LetHub can operate as a chat tool on their website for people that are coming there. How does it help them via their listings that are out on the internet on various channels? Faizan: All the channels, email, text, and just having a web link, when you list your property, all you do is you just connect your email with our web platform. When you list your property just in the description and say, hey, click here to book a tour, or you can just redirect users to your own website. If you spent a lot of money on branding and making your website amazing, which a lot of people have, just redirect them to your own website and the river would just pop up and guide the user to book a tour or answer any questions. Jason: What questions are property managers asking you that are a little bit curious or wary or whatever? What are some of the most common questions they're asking about LetHub before they're willing to take it for a full spin and utilize it? Faizan: That's a good question. I think it depends on the size of the company. We were in talks with Aimco which has 10,000 units, bigger company, and multifamily. Their number one problem is integration so they would want integration with their current software which is totally fine. Make sense, bigger companies, got more complex. With the smaller property managers, I think their major concern is that will people be okay chatting with an AI versus a human. I want to be clear on this that nobody's replacing nobody over here. We're just helping people and we've got the tests to show you that that's the future. There's a lot of banks using this technology and you can order a pizza. I don't know how smart it is, but you can order a piece of pizza through an AI assistant. Jason: Anything else you want to let people know about LetHub before we wrap this up and how can people get in touch and maybe check this out? Faizan: Yeah, for sure. I think if you're a property manager who is looking to automate things so you don't have to run after renters and if you're looking to really use the latest and greatest tech, then please get in touch with us. Our website is lethub.co. You can email me at faizan@lethub.co, I'll be happy to do a demo myself or one of my team members would do it for you. Happy to chat about your problems and see if we can build a more customized solution for you. Yeah, that's about it. Keep growing I guess. Jason: Faizan Khan, really great having you on the show. I appreciate you hanging out with me today and we'll let you go. Faizan: Awesome. Thank you so much. Jason: Awesome to have him on. Check out LetHub and let us know inside the DoorGrowClub Facebook group what your experiences are if you decide to try them out, what you think. We'd be really curious to hear about your feedback. Go post an update inside the DoorGrowClub. Get to that on doorgrowclub.com. That's our community for this property management podcast. If you are wanting to figure out how to grow your business, you're struggling to grow, you're running into issues, reach out to our team. Check us out at doorgrow.com. Until next time everybody, to our mutual growth. Bye, everyone.

Do you have a coach to help guide you to grow your property management business? If you want to excel at what you're doing, you must have somebody who's playing a bigger game than you. Today, Jason Hull and Jon Ray of DoorGrow continue their discussion on premature expansion in property management. Besides putting planning and process documentation systems into place to be more efficient, they focus on the third system: Communication (internal and external).  You’ll Learn... [01:33] Interruptions and Inefficiency: Every interruption costs 18 minutes of productivity.  [02:13] Pay to Play: Learn from coaches how to protect and guard against interruptions. [02:40] Cut the Slack: Chat tool that creates interruptions and crushes team productivity.  [03:15] Under-Communication: Creates interruptions that prevent momentum and flow. [04:07] Communication System: Only involve those internally that need to know, and find ways to improve external client communication. [06:01] Organizational Structure: Clear line of communication for delegation. [08:15] Who does what? Pair effective visionary with brilliant operator to get things done. [18:18] Sales solves all problems—not always true. Growth feeds business. [19:25] Get things in place, and then it's not premature. [21:00] Jack of All Trades, Master of None: Entrepreneurs find opportunity everywhere.  [25:34] DoorGrow OS: Consolidate systems, processes, professionals to be successful. [31:10] Three Currencies: Growth involves time, money, and effort. Tweetables Every interruption costs about 18 minutes of productivity for one team member.  Under-Communication: Creates as many interruptions that prevent momentum and flow. Every team member you add lowers your pressure and noise. Every team member you add makes your job and life easier.  Get things in place, and then it's not premature. Resources Intercom Help Scout Voxer Process Street Jason Fried of Basecamp Warren Buffett Slack Entrepreneurial Operating System (EOS)/Traction Mastering the Rockefeller Habits: What You Must Do to Increase the Value of Your Growing Firm HireSmartVAs Anequim with Mexican VAs DoorGrow on YouTube DoorGrowClub DoorGrowLive DoorGrow Website Score Quiz DoorGrow Cold Leads Calculator Transcript Jon: I have worked with coaches for the past 20 years. I believe in them wholeheartedly. If you're going to excel at what you're doing, you have to have somebody who's playing a bigger game than you. Jason: Welcome, DoorGrow Hackers, to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker. DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show. I’m hanging out here with someone else from DoorGrow, Jon Ray. Jon: Yeah. Thanks for having me. Jason: The third system that's necessary so that you can avoid premature expansion is you need an internal communication system. If you're still operating on sneakernet, or constant interruptions like sneakernet as they walk into your office all the time and interrupt you, then you're operating really inefficiently. Every interruption costs you about 18 minutes of productivity for one team member. If one team member interrupts another team member that's 18 minutes times 2. I don't know what that is, but it's more than a half-hour. Jon: Thirty-six minutes. Jason: Too many minutes, like 40 minutes down the drain because two people decided to talk to each other, or one person interrupted somebody else. You have to protect and guard against interruptions. All of this stuff is stuff that has to be learned. It's stuff that I've had to pay lots of money to learn from different coaches.  I had met with Jason Freed, the creator of Basecamp, and hung out with me on a call like this for 90 minutes. He cut my staffing costs in half overnight. We're high tech. We were using all kinds of technology. He pointed out how we are using this chat tool that had group rings. It was causing everybody to interrupt everybody all the time. Everybody feels like they had to read everything. It made our entire business completely inefficient. The software was Slack for those of you that are big Slack fans. Slack was absolutely killing and crushing our productivity as a team. It is basically an endless diarrhea without context or stream of information for every single project. Everyone on the team felt like they had to read every single thing. Jon: One of the things that entrepreneurs are aware of is that when a team is under communicated, that's not a good thing. But there's this idea that maybe over-communication is the way to go. That's actually just as bad, if not as bad, because it creates so many interruptions that then prevent people from finding the momentum and flow that allows them to be most efficient. Jason: The reason it costs you 18 minutes of productivity is because that's about how long after somebody that causes interruption, regardless of how much time they're spending with you. They might spend 15 minutes with you, and then it's 18 minutes. It takes time to get back into the flow. What was I doing? How do I rebuild this house of cards that I was building before Steve came in from finance and interrupted everything? There needs to be an internal communication system that works effectively for the team that only involves the people that need to know or deal with a certain thing at a certain given time, rather than everybody needing to see everything. If you're a control freak as an entrepreneur, and you need to know everything, and see everything, you're probably the biggest bottleneck in the company. You need a planning system, you need a process and documentation system, you need an internal communication system. The other system that you need is you need an external communication system. You need a client communication system that makes it easy. We use Intercom. Some people will use HubScout. You also might use your property management software in some ways for this. You might have phones, but you have to clearly have an effective client communication system. That's something we're always working on improving is client communication. We use Voxer internally as a team, and some of my coaching clients will use that as well. We've got a lot of tools that we use to increase communication, but most of it is one-on-one. It's not causing big group interruptions or situations like that. Jon: An important thing to reference here—when it comes to creating the right communication systems—is that there has to be clear lines for delegation. Part of your process documentation needs to be letting each employee at each level and in each role understand what type of tasks are appropriate to delegate up to you and what needs to be delegated down. Jason: All that comes with the process documentation, but planning helps with that a lot at that system, and then you need an internal communication system. As part of that, that's kind of the organizational structure. There needs to be a clear line of communication where somebody reports to somebody. I was talking with a property manager the other day. They had their part of another business. What she said is that this other business that she's a part of—outside of a property management business—that there are three bosses. Over one department there's two managers. I said, “Well, how did the team members know which one to go to?” I said, “Are they very different personality-wise? Do they get different answers?” She's like, “Absolutely.” So then, how do they know which one to go to? There's so much confusion in this entity. She could see it. Me hearing about it just made my skin crawl because I was like, “I would feel so crazy and uncomfortable because it sounds like a nightmare.” There's all this infighting and politics and all the stuff going on because nobody has any clarity. People don't even know. She said somebody got promoted in this business and everybody said, “Hey, congratulations.” There was a celebration. Jon: I’m going to take this time and just pause you. I know that there are people out there that are saying, “This sounds like a lot of work. I'm already too stressed out.” There's so much resistance to putting in this work. What we're talking about is do you want to win at a new level of the maze? Do you want to be a high achiever? Because if you're satisfied with being in this mediocre average zone of success, then maybe you don't need all of this. If you ever want to get to a level where you're dominating your local marketplace, and you're running a business that isn't just growing but is growing comfortably, these things are mandatory, right? Jason: Yeah. I can empathize with that strongly. The little story—just to wrap it—was everybody was congratulating this person. They were asking him, “Cool. What are you going to do now?” He said, “I don't know. I’ll figure it out as I go, I guess.”  Anyway, let's go back to the question. What was the question again? Sorry, I have to finish the thread. Jon: There's so much resistance around showing up and having to actually do all of this stuff. Maybe you can talk about why it's important to push through that resistance, or how to do that? Then why ultimately, the short term resistance and discomfort leads to a more comfortable, more profitable, and more fun business down the line? Jason: I just would rather kill the resistance. Here's what I realized. I had a ton of resistance. When I started working with some of the best operational companies, ­­I was working with probably the best operational coach that might exist in the business world. I had already studied traction, and EoS (end of sale), and I'd heard of the Rockefeller Habits, and scaling up, and I went to this thing called warrior. There are other systems out there similar to the 90-day year. All these planning systems have some commonalities between them, which I sort of outlined when we discussed the planning system. I felt a ton of anxiety when I was going and learning this stuff. You want to know why? Because I'm not the person that should be doing that stuff. That kind of stuff is stuff that operationally minded people love. I can geek out on a system like I could see the genius in it, but me doing it, and me implementing it, me running meetings, I'm not the person to do that. Most CEOs and entrepreneurs are the worst to run team meetings, to manage their team, to manage operations, to manage operational processes. That's why you'll see almost any visionary—that's really effective—paired up with some sort of person that's operationally brilliant. It gives them the freedom to create ideas, create a vision. The operator helps them make that stuff come true and happen. Jon: If I'm a property manager and I'm still in that first sandtrap, and maybe I'm not even doing more than a quarter-million a year in revenue, and I don't really have the budget to bring these people on. Can you talk about what it would look like to start thinking about a hiring trajectory and mapping out some of the milestones of how I can get to this place? Jason: This is a learned process to know clearly where your time is going, how you're the biggest bottleneck in the business, what needs to happen next? This is stuff that we teach, but it's a process. There's a system for knowing exactly what you need next to take the business to the next level. It's part of the stuff that we teach clients.  Ultimately, for those that maybe they’re the lower level like, “I can't hire a COO. I can't hire an operational manager. I can't even hire an operations assistant yet.” Maybe they just get a personal assistant, executive assistant, somebody that loves planning. They love process. They love documenting things. They love systems. They geek out on these things. They like calendars and spreadsheets. They'd love to color coordinate sock drawers. Their closet is organized. Their desk is spotless. These are not typical visionary entrepreneur personality types that are high-driven types of people. If you are not that personality type—now on property management, you do get some operationally-minded people, but they might not also be the driver. They may need to get a BDM (business development manager) in the business. Somebody that's out there crushing it, and closing deals, and aggressive because maybe they're that operationally-minded person. That's why I think every business needs to be built around you, the entrepreneur, but if you're hearing this and you're getting anxious. You're like, “All these systems, all this stuff,” and you're overwhelmed. That probably means you're not the operations-minded person. The operations person, they probably have some of these, and they get excited about that. Those property managers are the ones that are like, “I can't grow yet. We're working on all of our systems and processes first,” and they have 10 doors. They're documenting everything and getting everything dialed in and then you have the opposite. You have to figure out which type are you? The other thing to point out is this stuff doesn't make your life crazier, and it doesn't make your life more chaotic, and it doesn't feel it's not more work. Because when you start to get these things implemented, and you're offloading, and you're systemizing, and you have planning, and you have vision, your team can actually help you do all of this. Every team member you add actually lowers your pressure and noise. Every team member I've added to the team has made my job and life easier. I'm doing less. Every day I'm doing less. Every new person—I brought you on—I’m doing less. What that allows me to do is to do more of the things that I really should be doing, the things that I'd really love, the things that really make me feel alive. I'm to the point now that I enjoy doing sales, but you've taken that off my plate, and you're taking some of the marketing stuff off my plate. I enjoy doing marketing, but there are things that I now want to do more than those things. As you build out your team—the very first person you need usually is an assistant, very first person. Hopefully, that's a person that you can grow into the role of being an operations assistant, an operations manager, maybe a COO of your company at some point if they’re brilliant and effective enough. Because that's going to lower your pressure significantly, and they're going to help you get all of this stuff dialed in and implemented. Jon: I know a lot of people have hired somebody at $10 an hour to be a personal assistant. They've had a bad experience, or that person just didn't really do what they were supposed to do. Is there some way to think about bringing on a personal assistant where that's actually going to be a successful relationship? Jason: Oh man. We've had people in the show like HireSmartVAs and Anequim with the Mexican VAs. If you're not an expert, and you don't know how to answer that question, and you want to just get a virtual assistant like those, or a great assistant we've had on the show—if you want a US-based assistant, you need help. Because you don't know how to identify these people. The mistake we make as entrepreneurs is we tend to hire people we like or that are like us. That's not the person you usually need. You usually need a person that's somewhat your opposite that can balance you out, and handle the things, and take things off your plate that gives you more pressure noise. We have a process we take people through to identify that so that you can build up the ultimate job description for your dream team member. The silliest thing I ever hear—and I mentioned this in some of the system shows—is when an entrepreneur starts asking around, “What do you have your assistant do?” That's like walking around the grocery store asking people, “Hey, what do you eat? What are you having for dinner?” Because they have no clarity. You're not ready to hire. It's not what they can do, it's what do you need? You have to get really clear on what do you not enjoy? What drains you? What's sapping your energy? What is that has alignment with you personally? That's one of the things we get people really strong clarity on is who they are, what they should and shouldn't be doing, so the business can be built around the entrepreneur instead of built around somebody else's system, or somebody else's process. This is my major problem with traction and some of these other systems. It’s building according to somebody's ideal system, which ironically is a system that requires some special coach that's super expensive that you have to do it that one exact way. You need this thing called an integrator that is only one that can do it. Jon: I was going to say I think the people that I see who are the worst at delegation are really nice people. Because really nice people hate asking other people to do stuff that they don't want to do themselves. The misconception there is that other people like the same type of work that you like. You can always find somebody who loves to do the things that you hate to do. That's how you should be thinking about hiring. Let me find somebody that I can bring on as an assistant who can start to help me offload all the things I don't want to do, but they love doing those things. Jason: The biggest mistake we can make as an entrepreneur in our business—when it comes to team members—is to assume that our team members think the way we do. Almost none of them do. They're very different. Otherwise, they'd be entrepreneurs. Entrepreneurs are just different. My team members love being told what to do each day and having clear ideas of what to do. Me, I want freedom and I want autonomy. There are huge differences. You need to recognize that the stuff that you hate doing, somebody loves doing that. I don't like calendars. I don't like staring at spreadsheets all day. I don't like doing graphic design in front of a computer all day. Can I do these? Can I enjoy them sometimes? Yes, but that doesn't mean that that's my best use in the business or in life and that I want to do that. My team members that love those things, they love those things. They could do that every day. That's just fun for them. I don't ever have to motivate them. That's how I know I've gotten somebody in the right position because they love doing what they're doing. Without getting too far off-track—because we could do a whole episode just on hiring, planning, whatever. Jon: How does all this tie back into premature expansion and whether or not I as a property manager am ready to expand? Jason: The one other system we didn't mention is you need a sales process and system. You need some growth system that's feeding the business. This might be the most important. Some say sales solves all problems. Not totally true, but without sales, you don't have a business. There's no revenue. You can't pay your team members. Things get scary. You can't pay your mortgage, or rent, or whatever you’re doing, you can't pay the lease on your building. Sales have to be happening. Bit growth has to be happening in the business. All of these things go together. You need all these different systems in order to work. If you have all these systems, then you almost have a franchise model in which you can open up another office, or a new location, expand into a new market. Ultimately, you're going to want to keep as much as possible—probably centralized—to lower operational costs, to reduce redundancies, and get what you need to support that new location. Then you know, all right, this is not premature. We've thought this out. The baby is ready to be born. This is all set up. The reason I call premature expansion because there's nothing premature that is usually considered positive. Anything that's premature—whatever you can think of—is usually a bad thing. I wanted people to understand it's too early, it's too early. You don't have things in place. Get the things in place, and then it's not premature. Does that mean you're going to learn? Yeah, you're still going to learn. Are there going to be mistakes? Absolutely. Is it going to be messy sometimes? Sure, but that's running a business. Perfect businesses don't exist. That's part of just what's going to happen. If you're dealing with that, the idea of starting this new location expanding everything else and everything else is already a mess, you're just pouring gasoline on a fire that's already there and it's just getting worse. Jon: These processes and systems really give you a leverage that allows you to be really successful in a lot of different styles of expansion. Whether that's opening another office, or acquiring something. The best investors in the world—like Warren Buffett—are essentially people who are really good at systems and processes. When they go and acquire a business that's in chaos, they know that they can immediately implement the right systems, processes, and management team, and that business will become profitable very quickly. It puts you in a position where you have a huge competitive advantage over anybody who's just bootstrapping it or shooting from the hip. Jason: Another form of premature expansion is death by opportunity. Entrepreneurs, we see opportunities everywhere. You know you're the opportunist type of property manager or entrepreneur business owner if you are like, “We can start a roofing company. Let's start a maintenance company and we could serve these other companies. Let's do roofing. Let's get a house cleaning business. Let's do carpet cleaning.” I know business owners that they have new property management, and they have seven or eight other businesses. Jon: It's like the jack of all trades, master of none. Jason: Some of them can be good. They can build out teams, they can have things really well dialed in. If you learn to do it for one—like you we're saying—you can do this for all of these businesses and make sure that it's going well. But if one's a mess, you're just adding more problems and making it more challenging. What it does is it dilutes focus. Focus is one of the key ingredients for making money. If you want to make a certain amount of money, and you're like, “Well, let's add more services.” You would think that would add more money. What it usually does for most entrepreneurs is it just dilutes what they can already do. It just divides that up and it becomes more and more challenging. It's a lot easier to make a million dollars in one company than a million dollars to 10 annually. That's another form of premature expansion. That all comes back to the planning system. The planning system, and our vision, and goals as a company give me constraints as an entrepreneur and as a visionary. I'm like, “We could do this and we could do that.” My team is like, “We can't. We've got all these goals that we’re working towards. We've got this, we got this. Maybe we can make room for that next quarter or next year.” This protects them from the grenade when I come back from the conference and I have all these ideas and want to change everything. They'll say, “I can see that I don't want to lose sight of what we have going already and destroy that momentum. I want to achieve these objectives. It's going to get us money. It's going to get us making a difference. All these things that I want. We need to keep that going. Then we can figure out where that can fit in.” It just allows us to not just go through the buffet line, throw a ton of stuff on a plate, and then end up not being able to utilize even half of it. Jon: Once everything that you're talking about—the communication systems, the processes, the systems—once all that's in place, it also gives your staff and your employees a mechanism for delivering feedback to you, even if that's uncomfortable feedback. Almost always—maybe not almost always, but at least in the businesses that I've run as a high-level manager—the employees who are actually doing the operations a lot of the time have really solid ideas on how to make things more efficient, but they feel afraid of communicating those up. By opening up those channels of communication and making it so that it's not uncomfortable for a lower-level employee to give a great idea and have that idea be received, you can actually empower your team to fix a lot of the inefficiencies. Jason: Here's a real simple thing that I thought of that you can recognize if you're ready for premature expansion. If you are the one running all your team meetings, and you're the first to speak in all those meetings, you're already losing. Have you noticed that I'm not running the meetings, and everyone asks me what I think less? “Hey, are you stuck on anything?” I'm the last one to go. Because it's so easy for us as entrepreneurs to say, “Hey, here's my idea. Everyone should do this.” Then when you ask your team members they're going to go, “Yeah, what the boss says. He pays me. That sounds like a good idea. I'll go with what he says. That's the safest answer.” Jon: Growth in all levels—personally and it when it's directly related to revenue—means that there has to be an integration of discomfort sometimes. The proper communication levels mitigate and buffer the discomfort that employees have for communicating good ideas. Oftentimes, the people on the ground level are the ones most capable of finding the thing that's going to work for your current team dynamic. Jason: This is something we've been thinking about a while. We run our business using a system that we called DoorGrow OS that I feel like is one of the most brilliant planning systems out there. It's a consolidation of several different planning systems, operational coaches I've worked with, having brilliant operators on my team. It's something I built out even software-wise that we use internally as a team. You've just started to get a taste of this. There's clarity. There's communication. Everyone knows what they're doing. We're hitting targets, and goals, and objectives each week. The momentum is strong. This is how we grew 300% in a year. Jon: It's a really interesting way of running a team. I've run a lot of teams that have a lot of branches underneath the management. This just provides a level of efficiency and oversight that still makes upward and downward communication very feasible and very easy. Maybe at some point, I'll convince you to share that system with the rest of the world, but right now, it's been really interesting for me to understand some of those principles and see how the years and years of working with all these coaches have been baked into some of these ideas and the things that you're identifying as the ways to know whether what you're doing is premature expansion or actually profitable growth. I don't know if you have anything else on your list, but I know that we're starting to get a little bit long. Maybe we could just recap what we’ve talked about. I'll turn it over to you for any final words of how somebody can take what we spoke about in this podcast and make it actionable. For somebody who has nodded their head to at least one or two of the things that you said during this podcast, what should be their next step for starting to figure out how they can start to tweak the knobs and levers of their business in order to be more in line with what will actually make them successful? Jason: Every business owner is doing the best they can with what they know. Every person on the planet really is doing the best they can with the limited access to knowledge and resources they currently possess. If you knew better, you would do better. There's a lot of things I don't know. There's a lot of things that I can't see. My best feedback is—you've probably heard a lot of ideas on this recording. Maybe you were nodding your head, but ultimately, if you feel stuck, or you don't feel like you're going as fast as you want, or you don't feel like your company's in momentum, then you need help. You need to reach out. That's one of the scariest things for us to do as entrepreneurs, but I do it. I have coaches that I pay. I go and I get help. If I don't know something, I hire a coach. I've got an event I’m planning on going to in March to learn something that I feel like I'm weak at in the business. Normally I would hand up to other team members but something I've avoided that I need to know more about. You need to have enough vulnerability to recognize that you can't do it all on your own. You're not Atlas holding the entire globe on your back. You need to get support.  If you don't feel like you have support, if you don't feel like you have somebody in your corner, if you feel like you're the smartest person in the room in your company, and everybody's just going to say yes to whatever you throw at them, there's a big problem. You've got big blind spots. You need to reach out. You need to get help. That could be us at DoorGrow. Set up a call with us, reach out. We can help you identify some of the blind spots, some of the leaks, some of the inefficiencies, and get you into a high state of momentum. We start in those five core functions at the very beginning. Jon: I want to just mention—because I can feel that somebody just had some resistance to, “You can't do it on your own. You need a coach.” That almost sounds too salesy. Maybe we could alter that statement and soften it for that person who feels resistance to that because you could do it on your own. You could go to the bookstore. You could buy all the books. You could read through them all. You could slowly implement things, and see what works, and what doesn't work, and it would take you forever, or you can work with a coach and collapse time. For people who are looking to collapse time, that's when it becomes incredibly valuable to work with somebody who's already done all of that research and extracted the best practices, split testing all the ideas and figured out what works. Now, you can have a roadmap for how to get to success in the quickest way possible instead of having to trial and error your way down the road. Jason: I am a big fan of trial and error, but I do also like collapsing time. My coaches have helped me collapse time dramatically. I was that guy. I was for many years. I was the guy that thought I could watch another Youtube video, or read another book, and I could figure out on my own. It took a ton of time. You have to recognize there are at least three currencies. If you want growth, it involves time, it's going to involve money, and it's going to involve focus, or energy, or work, or effort, whatever you want to call it. Those could probably be broken up even further, but you've got these three currencies. If you use all three and invest all three you can grow faster. If you decide, “I'm not going to invest money. I don’t want to go hire a coach. I don't want to pay DoorGrow. I don’t want to go spend money on this.” Then you can go buy cheap things like books, and watch free YouTube videos, and get a lot of some good stuff. Some stuff that's leading you the wrong way but you don't know. They're experts so maybe they'll be telling the truth. You try it out. Then what ends up happening is it's just going to take infinitely more time. That was my challenge. I spent a massive amount of time. It was painful. When I finally started to invest serious money towards the best that I could afford at the time, I collapsed time dramatically, and I always made that money back. Not even just made it back. I made it back monthly. I was making more than I paid the coach. That's almost been my experience with every coach. I've got so many coaches that I paid $5000 a month. It gets ridiculous, but do I make more of that in a month? Absolutely. Jon: One of the things that I hear on the calls is if someone isn't seriously setting goals for their business, it feels to me like it's because they're afraid that they're not going to hit them. If they don't say them out loud then they don't have to suffer the defeat of not hitting it. One of the reasons to work with a coach is to have the accountability and the hand-holding required to get you over that resistance and that hump so that you can actually start hitting those numbers. The first time that you hit one of the goals that you set, you get addicted to it. You want to keep hitting goals, but because people have set so many goals in the past and then failed at hitting them, they don't set goals anymore. Jason: They don’t trust themselves. Jon: One of the things that a good coach can do is get you back in alignment with your goals so that you recognize that that vision is possible to hit. That's part of that collapsing time. There's a ton of great business books out there, there's a ton of great niche courses out there. You can throw money into a million different ways to “grow your business,” but if you're not looking at your business holistically, and you're just looking to fix the symptom with some kind of a band-aid, you're never going to be an A-player in anything that you're doing. There's an opportunity to level up by working with a coach—whether that's DoorGrow or somebody else. I have worked with coaches for the past 20 years. I believe in them wholeheartedly. If you're going to excel at what you're doing, you have to have somebody who's playing a bigger game than you. Jason: That's very true. I agree. Let's end on that note. Jon, I appreciate you and hanging out with you again. Those that are watching, make sure to—if you're watching this on Youtube—subscribe, like us. If you're hearing this in iTunes, please, be sure to leave us some feedback. We want to hear your real feedback there. Leave us a review. That helps us out. Jon: I’m also going to say before this goes out. Join us in the Facebook group because this can be an ongoing conversation that we have in the Facebook group. We have so many stellar examples of property managers who are doing all the right things there. You can interface with them, you can interface with the people on our team, and you can tell us what's working, not working in your business. Then if you disagree with everything that we just said, we invite you to come and have that conversation as well. Because any type of conversation whether you're praising what we're doing or trying to chip it down with an ax is going to allow us to grow, and iterate, and become better. We want to have you in that group. Jason: Well said. Until next time, everybody. To our mutual growth. Bye, everyone. You just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet, in the DoorGrow Club. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead, content, social, direct mail, and they still struggle to grow. At DoorGrow, we solve your biggest challenge in getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today’s episode on our blog at doorgrow.com. To get notified of future events and news, subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow hacking your business and your life.

If you walked out the door for a month, would the business you started survive? Would it still operate? Do you have the right people in the right roles? Today, Jason Hull and John Ray of DoorGrow discuss the problem of premature expansion in property management. What is the best way to see consistent, comfortable growth? You’ll Learn... [03:25] Plateau vs. Premature Expansion: Buy new business, location, or expand to make more money: [04:33] Debunking New Market Myths: Easier, less work, and shortcut to growth. [07:20] Duplication: Split energy leads to struggling to successfully do double the work. [08:43] Clone Your Competitor: Takes 10 people to duplicate tasks and do them better.  [13:00] New Locations: Avoid burnout by building a team and support to be scalable. [15:21] Processes: If employee leaves, document tasks to prevent disconnect. [22:55] Expansion: Continue to grow in the same, new, or additional location? . [24:20] Systems: Plan and set monthly and annual growth targets, goals, and more. [31:15] Process Documentation: Who does what and how to do what they do. Tweetables What is the best strategy to see consistent, comfortable growth? Entrepreneurs: Build the business you want, not what you can. Success: Strive for pie in the sky dreams or a pile of manure?  Resources Rent Manager AppFolio Iceberg Report Tony Robbins Process Street DGS 80: Automating Your Business with Process Street with Vinay Patankar DoorGrow on YouTube DoorGrowLive DoorGrow Website Score Quiz DoorGrow Cold Leads Calculator Transcript Jason: How dialed in is your business now that if you walked out the door and left for a month, would it fall apart? Would there be a problem? Would it still operate? Maybe then, if the answer is, “Yeah, it would be totally fine,” maybe then it’s time to open up a new location because that means you have things really dialed in, you’ve got the right people. Welcome, DoorGrow Hackers, to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker. DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show. I’m hanging out here with someone else from DoorGrow, Jon Ray. Jon: Thanks for having me, we’re a part of the DoorGrow growth hacker team. Jason: We were sitting and I’m thinking, “What can we talk about?” The topic that I wanted to talk about is a common problem that I see come up. I coined a phrase for it and I don’t know that anybody else has ever talked about this phrase, but this is just what I felt like calling it. Our topic today is premature expansion in property management. Jon: Premature expansion, tell us about it, Jason. I’ll preface it by saying I’ve been talking to a lot of our seed hackers, a lot of property managers that are a part of the Facebook group. Ultimately, everybody is trying to figure out what is the best way to seek consistent, comfortable growth. One of the things that has come up on a recurring basis on these calls is that as people are thinking about the various strategies that are available to them for growth—especially at some kind of an accelerated pace over what they’re doing—oftentimes there is a consideration if not an outward movement towards moving into another market.  As you and I were talking about that that can sometimes be a great strategy, but sometimes it can be an absolute failing strategy. Premature expansion is basically your term and how you’re packaging that concept of when that kind of expansion into another market may not be the best strategy. Can you talk about in more detail on how somebody should be thinking about whether or not they should move into another marketplace? Jason: There’s a lot that goes into deciding whether to move into a new marketplace, or premature expansion could be even buying a new business, or a new location. It's any sort of expansion. Usually, the motivation behind it is they want to grow, they want to make more money. Their challenge is that sometimes it’s not all that it’s cracked up to be. The most common scenario—one of the most—is somebody will come in and they’ll say, “Hey, we want to buy another property management company in another market,” or “We’re going to open up a new office in another new market.”  Usually, when I ask them why, they feel like they’ve hit a plateau in their growth in their current market. This is usually what’s fueling this. They feel stuck. They were doing something that was working, they usually get to maybe the 200-400 door range and what I call the second sandtrap. Once they get into that space, they think, “Well, we got this far in this location. We’re hitting a limit or a plateau. Let’s just go duplicate that effort and do it somewhere else.” It makes sense on the surface. It sounds so easy like, “We did it here. Maybe we tap this out. Maybe now it’s time to go to a new market.” I think there’s a lot of myths that drive that. One myth is that it’s going to be easier in another market, in the second market it will be easier. That’s almost never, ever, ever the case. The second location is always more difficult. It’s more difficult to manage, it’s more difficult to maintain. If you have a second office, you’re going to need a second set of staff. It’s just harder. It might mean that you’re doing double the amount of work as an entrepreneur trying to run two locations. Also, they think, “What worked here,” I think that’s a myth, “What worked in our first location to get us to this point might work there.”  If they’ve been in business for maybe 10 years, and they played this pay-per-click game in the beginning, or they were doing all property management leads in the beginning, and that stuff has shifted, and it's not as easy. Things have shifted and changed, but they're thinking, “Well, we got this far. Let's just go do what we're doing now over here. Maybe it will grow just as fast.” They run into some problems because fundamentally, what used to work may not be working.  Another myth is that it's some sort of shortcut to growth, and it's not really a shortcut. There's a lot of challenges and difficulties. What's easier than opening up a new location, and then trying to add more doors, and to build out basically a whole another company, essentially, is to grow where you're at. That's far easier.  A lot of times, when I ask them, here's the golden question to ask yourself if you're a person listening to this thinking, “I want to expand. Let's open up and go into a new city.” First of all, you need to ask yourself, do you really want to be there? Do you want to drive out there? Do you want your team to be taking trips out there? Does that feel comfortable to you? Because ultimately, you can build a business that you want to have. It doesn't have to be the business that you can do. That's a big temptation we make as entrepreneurs is we build the business we can’t. “Oh, well we can do this. I can add this service. We can do that.” Then we get scattered. We end up diluting our effectiveness.  In the case of premature expansion, they open up a second market. What inevitably I see happen—almost every time—is their first primary location starts to suffer and struggle, and they start to lose those doors, and customer service levels drop, and there are challenges, and they're having a more difficult time running both. Things have to be incredibly well dialed in in order to do that, to make that work. Jon: Ultimately, what you're talking about here is this concept of duplication. We all wish that we could duplicate ourselves so that we could do twice as much work. In entrepreneurship—in order to successfully duplicate yourself—there are some certain things that have to happen. Otherwise, that duplication just looks like split energy, and then neither of the parts are getting as much as the first whole. Maybe you can talk a little bit about what it looks like to successfully duplicate yourself.  When I was running teams at Google, and when we were thinking about whether we were going to expand into a new marketplace, we wanted to make sure that we had maximized our efforts in the current city that we were in as much as humanly possible, and we wanted to make sure that we had templatized all of our processes so that the management wasn't directly involved in the success of the business. They were guiding strategy and vision, but they weren't operationally necessary other than that high-level guidance. Maybe you can talk a little bit about what that would look like in a property management business, and how somebody should think about that concept of duplication. Jason: I love what you're saying about what they would do at Google. It makes a lot of sense. What I've seen is in my experience in helping hundreds—maybe even thousands of entrepreneurs—is there's always this myth that if I could just clone myself, all my hopes and dreams would come true. I know all this stuff, I can do all this stuff, and then all my hopes and dreams would come true.  Let me tell you from experience what it took to duplicate myself, because I pretty much got somebody to do every single role that I used to do in the business, and it takes probably about ten people. That's my experience. It takes about ten people to duplicate yourself. You're never going to find that one person that can do it all. If you do, they're going to become your new competitor, or they're going to go start their own business, or they're going to leave you after they realize that they can probably do stuff better than you, just like you probably figured out back when you were working for somebody. You’re like, “I could do this better.”  That's the e-myth—that's the entrepreneur myth. That's what everybody wants to do. They're like, “I could do this.” A lot of business owners that are running businesses now they used to work for somebody, and they're like. “I could do this.” Then they'd start learning that they need to become an accountant, and they need to become a graphic designer, and they need to become whatever. Whatever all the different roles are and the different hats that you wear.  Just like that in a property management business, if you're going to expand into any market, you have to realize which hats are you still wearing, which seats are you still sitting in on this bus that's the business? If you're managing, and you're acting as BDM, and you're acting as the property manager, or maintenance coordinator, or any of these operationally tactical, critical roles, then the challenge is you go into the market, your life's going to become twice as hard with another location. There's that momentum and that inertia in getting something new going.  Training one new person makes your life twice as hard. If you're going to build out a new team there, if you're going to build out maybe a satellite staff, it's still a lot more work to get that all built up. That's why if you don't have high leverage when it comes to systems, high leverage when it comes to the process—I think maybe that's a good question to ask yourself is: how dialed in is your business now that if you walked out the door and left for a month, would it fall apart? Would there be a problem? Would it still operate? Maybe then, if the answer is, “Yeah. It’d be totally fine,” maybe then it's time to open up a new location because that means you have things really well dialed in, you've got the right people.  The question is also connected to that: if you lost any single team member—think of who you think is the most critical person on your team—if they killed over and died—god forbid—or they left your business, or they went to work for a competitor, or they went to start their own property management business, how quickly would you be able to get back up to speed? Do you have all their processes defined? Do you know what they're doing? Do you know what they do on a day-to-day basis? Do you feel like somebody else could step into that role very easily because everything's documented? If not, opening up into a second location is dangerous because you're not going to have all those things dialed in.  Ultimately, overwhelm is going to set in. This is the big thing for us entrepreneurs. We operate, basically, at two speeds. It's like we're in momentum, we’re on fire, and we feel alive, or we're in a state of overwhelm feeling stuck, and frustrated, and stressed. If you're already feeling stressed, and stuck, and frustrated, that's probably not the time to go heap more on to your plate. Jon: Just playing devil's advocate because I think a lot of the people that I talk to in the property management space that are considering this move are like, “Well, that may be accurate advice for most people, but I'm better than most people. I was able to bootstrap where I'm at now, and I was able to scrap it altogether, and I didn’t document all of these processes. Why can't I do the same thing for a second location?”  Maybe you can talk a little bit to me, and explain to me why it's different from the second location? Because it is true that you can figure things out when you're physically there in person, but as you start to satellite out, it's a different kind of mentality that you have to take, and the bootstrapping method doesn't work so well. Can you talk about why that is? Jason: When you open up a business—just through sheer will of force and just personality—if somebody can sell, and somebody is driven, they can create a business. They can probably even get it up to about $1 million in revenue annually just through that. But beyond that, you have to have a team. In property management, you're going to probably need a team long before you hit that amount in revenue, and you need support. Otherwise, it's just not scalable. You're going to start to burn out really quickly. This is why we see so many people get stuck in the first sandtrap, which is about 50 or 60 units. It's the solopreneur. They'll get stuck there.  If you're at the place where you're at about 200-400 units you probably got some team members, you probably at least have a maintenance coordinator, maybe a property manager, somebody helping with showings. You got some pieces in place. You've gotten that off your plate. That doesn't mean now you could go up and open up a whole new location because still, tons of things are still relying on you. Just pay attention. If your team members are coming into your office, or texting you throughout the day, then you are a bottleneck in your business already. You will be even a bigger bottleneck.  My entire team, we're virtual. If you bring on people that are at a remote office, they're not going to be able to get their questions answered quickly, they're not going to have the support that they need, you need to live there for at least 90 days so everybody's on board with it, systems are in place, and be able to do that. That's possible to build that up, but that means you need everything really well dialed in so that stuff doesn't just gravitate towards chaos. There needs to be protections in place so that you can ensure that people are doing what needs to be done. Jon: I want to unpack that word systems and really the phrase systems and processes because I think a lot of people—at least in the calls that I'm having with property managers—when I say systems and processes they're like, “Oh, yeah. Well, we're already on that folio. We already have a rent manager.” That's actually not what you're talking about. Can you unpack that a little bit? Jason: When it comes to processes you need to have—here's the way I look at it, if somebody on your team quit, fired, or died, or whatever, that means somebody else could step in, they could read a process, they would know exactly how to do it, and they'd be able to figure it out. If all the processes exist in that person's head and your head, then I'll tell you what, there's a massive gap usually, or significant gaps between what you think they're doing, and what they think they should be doing. There always is because it's all just in their head.  We know internally at DoorGrow that this happens, and we have processes documented. There’s still a disconnect sometimes. One team member thinks, “Well, this is how I've been doing it. I think this is how it's supposed to be done.” We have it documented, which is it might even be a little bit different because sometimes people don't refer to the documentation all the time. Then there's what the visionary or the entrepreneur thinks should be done all the time, and the team's documented, or decided it's being done differently. These things are in constant negotiations that need to be brought together.  You can collapse time on that by having processes that people have to actually follow, like you have to actually mark it off and complete it. There's a checklist that they're signing off on that they're actually doing so that there's some accountability that they followed those steps. There needs to be accountability in place because most people—just like learning to drive a car, you maybe read a manual once, took a test, passed the test, maybe the first few times you drove you we're checking your mirrors all the time, and making sure nothing was going on around the car. Now you just get in and you just do it. You're probably skipping a bunch of steps you thought you needed to do in the beginning. Over time, maybe you start to skip other steps. Some drivers don't turn on their blinkers when they're changing lanes. They’re like, “People will figure it out around me.” They just don't do these things, so they're not following the process. They're breaking the law.  You have these things that you want to be followed because it keeps the business safe, it protects you from liability in the business, whatever. Your team members, they're going to gravitate towards skipping steps. They're going to gravitate towards what's easiest. If there aren't checks and balances, and accountability in place, what happens over time is everything's kind of gravitating towards some sort of ease, and some sort of chaos, and you're not really aware of it. Then somebody quits because usually when you look at what they were doing, you're like, “Oh my gosh.” It's usually the person that the entrepreneur thinks is the most critical and essential in the business.  Every time I've had that person on my team that I thought, “If they left, my whole world would fall apart. My business would crumble. It'd be the worst thing ever.” That was always the best person for me to lose. Why? Because what was happening was the reason you feel like they’re so critical is because you have so much uncertainty around what they do. You feel like they're the only one that knows how to do it, and it's their job security they love to maintain. But really, if it can be done by them, it can probably be done by just about anybody that has maybe the right demeanor, and the right personality type for that position, but you need to have those processes documented so they can step in. That’s how I gauge it. Jon: I’ll chime in with as far as efficiency goes, you can keep all the same people, but there's so much mental anguish that happens when something isn't well-defined. Even at DoorGrow, and in many of the businesses that I've worked in, when you go and ask someone what they do in their day-to-day, they feel like that's a subjective question because they feel like they're doing something different, or at least slightly different in every single moment, in every single day. There's so much time and energy that gets wasted when you're constantly having to reanalyze the entire problem, and then make a decision on what the action should be.  When you actually start to document what each person is doing on a regular basis throughout the day, and you look at that from a macro perspective, even within that subjective lens of maybe some things are approached in a different way depending on the scenario, there are very clear processes, tasks, and activities that are being done on a regular basis. If those can be defined, and then clear expectations, and processes can be attached to each of those bullet points, it allows each of your employees to have a better reference point for how to handle certain engagements in the business.  One of the things that creates turnover in a business—in my experience—is that when that level of certainty on what somebody should be doing to be successful in their role is not there, resentment starts to build towards whoever the entrepreneur, or visionary, or guiding light in the business is. That resentment ultimately gets to a boiling point where it's no longer sustainable, and then that results in somebody quitting, or throwing a fit, or making a mistake, or having an accident.  Documenting these processes is one of the best things that you can do to create a level of certainty in each of your employees’ minds so that they can be more successful and more satisfied in their position, which means that retention-wise, you're going to keep your staff longer. Jason: Let's talk about some systems that are required so that your expansion into another market or in general is not premature. Because if it is premature, your operational costs are going to go up significantly. I'll give you an example. I talked to a property management company, and they had 2000 doors. They’re on the East Coast, they had over 20 offices, but only about 2000 doors. It was split among 20 different offices. What their strategy for growth was going and buying up all these little mom-and-pop shops. They would keep those shops intact, they would keep the staff and everything. Their operational costs were ridiculous.  Then there's another client. He had 2000 doors, and he had three locations: two in Utah, one in Idaho. Eventually, became part of the HomeRiver Group. His operational costs were far lower. Same amount of doors, his market was probably even a lower rent market, but he was probably making more money because operationally among those doors, he didn't have 20 offices, 20 buildings to pay the lease, or whatever taxes on, or whatever. All the support staff that goes with each of these offices, all this duplicated stuff.  Here's what I think is essential to take a look at if you're thinking, “Hey, I want to expand into another location.” First thing you ask yourself, would I do it even if I were able to continue to grow here? If I were able to continue to have the doors in this area—where I want it—would I do it? The thing to keep in mind is, according to the Iceberg Report (the last I saw), it was 30% of rental properties are professionally managed, there's 70% in single-family residential at least, there's 70% available potential market share to be created. A lot of people think, “Well, it's impossible to do that,” but if you look at Australia, you've got 80% of single-family residential almost professionally managed. They, at some point, we're probably around where we are, and they've gotten it to 80%. We have so much opportunity there, there's so much blue ocean. Everybody's fighting in the bloody red water. We've talked about them on the show before. The idea that we've run out of options is not always true. It is true if you're playing the game everyone else is playing: SEO, pay-per-click, content marketing, social media marketing, pay-per-lead service. If you're doing those things, it's super competitive because that's what everybody's doing. That is focused on that small existing amount of market share. The people that are already looking for you rather than reaching out and creating new market share, which is what we help our clients focus on. That's one thing to take a look at. The systems that need to be in place. Here are some of the systems that we have in our own business at DoorGrow. One, you need a planning system. Most businesses don't have a plan, they have no planning system. That means you have annual targets, and you have quarterly goals as a company, things to implement, monthly goals. You're not just coming back from every property management conference with a list and chucking a grenade into the middle of the room after pulling the pin and saying, “Hey guys, I'm excited about this. We're going to do all these things.” Everybody goes, “How? We're already maxed out.”  You don't have a system for growth because you don't have a system of planning in the business. If you don't have a planning system, if you can't tell me a realistic annual goal that you're going to hit, if you've been operating in so you think you have a system, and if you've not hit your annual goal for the last year, or two, or three you have a b******* system. It's not real, you’re not hitting your targets. Jon: I want to pause you there and unpack that statement that you made about coming back from the conference with all of these great ideas, and then chunking the grenade in the room, because I do think that happens in every industry but especially property management. Because one, there are so many conferences, and two, it's really easy to get excited about an idea, and then just chunk it on to your staff and say, “Implement this.” When you're talking about a planning system, the way that we do it here in DoorGrow—that I think is really effective—is you're talking about how do we reverse engineer everything on that list and put it in yearly, 6-month, 90-day, monthly, and weekly commitments so that we know all of the steps that are required to achieve each bullet point on that vision list that came from the conference.  Jason: If we take it even a step back further—and you're new to the team so you've gotten to see this happen—you'll remember, we go through and we take a look at the business as a whole. Every business has five core functions in the business—something I learned from one of my business coaches, Al Sharpen. This is basically the whole pipeline of the business. The goal of the business is to make money, that's how it is successful. Then it also needs some sort of purpose besides just making money.  Those things drive everything that we do. We take a look at these five core functions, and we look at each of them, and we figure out where are we deficient, where can we be stronger? It's impossible to be solid on all of them. That's impossible because for example, if you ramp up sales, then your fulfillment side’s going to hit constraints. You’re going to have difficulties as a team. If you're closing a bunch of doors your team's going to have difficulty onboarding all these new clients, for example, so that's going to go down.  Everything's always in flux. The thing to work on is the thing that's weakest. Generally, that's earliest in the sales pipeline. We take a look at that, and we figure out, “All right, what are the things, and what could we do? Then we decide what we will do as a team? Then we figure out what is possible for us to do over the next quarter.” These will all go back to our annual goal, which we have a couple of annual goals, and it's all broken down. We reverse-engineer it from what the business actually needs. If our goal is to focus on lead gen—if we're a property management company—we're not going to go and implement a maintenance coordination software that quarter if that's already going really well. That maybe we’d do that next quarter.  The problem is, businesses don't have a planning system, they don't know how to break this down, and business owners come back. If they do come up with goals they go to some Tony Robbins event, and they're adding extra zeros to the end of everything, and they’re getting super pumped up, and that demoralizes your team because your team, all they hear is, “This is impossible,” and they're losing. There's no way you're going to hit these goals because they're pie in the sky dreams.  We get excited about them as entrepreneurs, but that's not the same for our team. Our team wants to see that we're hitting our numbers every month, not that we, “Oh, well, we missed it this month.” That idea in setting goals that a lot of people will throw out there, which I don't believe is true, is that it's better as a team to aim for the stars than a pile of manure and hit. It's better as a team to aim for the pile of manure and have success. Your team can feel what it's like to win and have momentum. Jon: I just want to make sure that we're making this actionable for people, and give people a clear way to assess whether they're prematurely expanding, or whether expansion maybe is the right step. Jason: It’s a real simple question, do you have a planning system? Can you say with certainty that you have an annual goal that you are confident that your team is going to hit financially? Do you have a quarterly goal that you know what you're doing this quarter, and that you feel pretty confident that you're going to get these quarterly targets implemented? Do you feel confident that your team can hit the 30-day goals that are going to help create those quarterly targets? Does your team know what they're doing every single week relevant to those 30-day goals? If the answer isn't yes to all of that, then you're just operating with the shotgun approach, and your team feels confused, they're concerned, they don't know where the company is going, so they can't really help you get there.  Everybody at DoorGrow is aligned towards what's going in my goal of revenue, making a difference in the industry, all these things are very clear. We talk about them during every meeting: our whole planning system, what we're doing, even what we're doing on a weekly basis that we meet as a team like we did yesterday. To go over our weekly commitments we checked in, what did you do towards these commitments that you had for last week? Did you get these done? There's this high-level of accountability. That's a planning system. That's one system the business needs. Jon: So far, to analyze whether it's too premature to expand, we’ve got: if you as the entrepreneur walked away from the business, would the business still continue to operate with success? Then we have if you could add the number of doors that you want to add in your existing marketplace without having to go to another locale would you prefer to just add them in your existing marketplace, or is there some other reason for you to want to be in another city. Then do you have a clear planning system where you've got annual, 6-month, 90-day, monthly, and weekly commitments that are all being reverse-engineered so your staff can be successful? Really, that's part of operating without you being directly involved in the operations. What else? Jason: The other thing that's essential in the business before you can expand is—we've mentioned this already—you need process documentation. You need a system in the business for finding, and storing, and updating documentation. You need a process system or documentation system in the business that includes job descriptions, org charts. There needs to be clarity as to who's supposed to be doing what and how to do things. That's absolutely critical in a business especially if it's going to scale because once you have a team, there's turnover, there's hiring. These things can derail a business if they're critical roles if you don't have these things in place. Process documentation system is really important.  The software we use is Process Street. Everyone can check out the episode that I did with the founder and CEO of Process Street. We use that as an internal documentation system, and then we also have job descriptions, org charts, these kinds of things. We're going through a process because we've got a jumble routine. When you add a new team member it screws everything up, Jon. Now, my role changes. My job description is different. You're stealing things from me, which I love. Everybody else's job changes a bit too. We're making all these adjustments.  Ashley—my ex-wife—she works for me now, and works in the business, and she's great. She's over some of our operational pieces, you're taking on sales and marketing. These are all things that I used to do, they were my role. Like I said, I used to do every single thing in the business, every single thing. Now we have at least 10 people on the team, and they're all doing something that I used to do. Pretty much all of them are better at it than me. Everyone's better at these things than I am.  Jon: I just want to speak from the perspective of an employee because anytime I've gone into a new business, if it's chaotic, and nobody knows what they're doing, and nobody has clearly defined roles, it is so uncomfortable for a new person to step into that environment. That's why there's a lot of 90-day churn and turnover for new hires because when somebody says, “Yeah, I don't feel like it's a good fit.” What they mean is, “You didn't provide me with the level of certainty that I was looking for in this role.” When everything is clearly defined and documented the way that you've done at DoorGrow, it allows me as a new hire to come in with so much certainty, and I feel like everything is teed up for me to be successful in my position which makes me want to do more in the position. Jason: You just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet, in the DoorGrow Club. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead, content, social, direct mail, and they still struggle to grow. At DoorGrow, we solve your biggest challenge in getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today’s episode on our blog at doorgrow.com. To get notified of future events and news, subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow hacking your business and your life.

Do you like dealing with people or properties? Most real estate investors and property managers leave dealing with numbers to their accountants. Today, I am talking to Kyle Redding, Head of Growth and Sales for Proper. The property management tool uses artificial intelligence (AI) and machine learning (ML) to provide accounting and bookkeeping services. As a former CPA, Kyle has extensive knowledge of accounting, bookkeeping, and customer experience.  You’ll Learn... [05:12] Purpose of Proper: Partner with property management companies to set up accounting automation for back office. [06:10] Proper Position: Works with, doesn’t replace other property management tools. [10:00] Sophistication Fog: Property managers who need additional software and staff to optimize accounting automation. [12:15] Proper Process: Property managers handle invoices via dedicated email inbox, training, and automated processing. [17:45] Reminders: Rent is due! Rent is late! Proper’s frequency of property management invoices and statements. [21:10] Proper Competition: Hire bookkeepers/accountants with qualifications, education, and experience to alleviate single point-of-failure. [29:55] Proper Pricing: Affordable and sliding-fee scale based on price per unit. Tweetables Proper manages the books, you manage the properties. Proper’s Primary Focus: Accounting automation for more scalability and less stress. Proper’s accounting team is not your run-of-the-mill bookkeepers. Leverage Growth: Partner with Proper to take property management to the next level. Resources Kyle Redding’s Email Proper Ernst & Young QuickFee Buildium AppFolio Rent Manager Propertyware Yardi QuickBooks DGS 101: Take Confusion Out of Property Management with the Proper App  DoorGrowClub Facebook Group DoorGrow on YouTube DoorGrowLive DoorGrow Website Score Quiz DoorGrow Cold Leads Calculator Transcript Jason: Welcome, DoorGrow Hackers, to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker. DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show. Today’s guest is Kyle Redding of Proper. We’re going to be learning about what Proper is now. I think we’ve had you guys on the show before and it’s different. Kyle, welcome to the Door Grow Show, glad to have you. Let’s get into your background and maybe you could share with people your entrepreneurial journey, I think you have a cool story and I think it’d be fun to get into first. Kyle: Yeah, thanks, Jason. This is exciting, thanks for having us. Up at baseball in college really all I wanted to do fell into accounting. That sounds a little crazy, but Accounting 101 was in all those classes that I took and got 100% in. Don’t ask me how, but it just happened. While playing baseball I was like, “Okay, I think I can do this.” You travel a bit, you miss a bunch of classes but still, somehow worked it out. That revolved into an internship with Ernst & Young and then ultimately, a full-time job. I started up at EY in Orange County, California for about five years or so in the real estate group. A lot of my clients were public REITs or real estate developers. I ultimately then transferred out to Australia where I work at EY. Again with some real estate clients and some other industries. Ultimately, I got out of the public accounting game and was attracted to start-up life. I found this little start-up in Australia that was looking for an accountant that could sell, and I thought I’d give this a crack. We are a little finance online payment company in the professional services, all of our clients were accounting firms and law firms. We got really deep into the accounting industry and the CPA world and how they run their business. We grew that business and brought it to the US about four years ago. I took that company public in July last year. While that happened, I’ve always stayed in touch with one of my best friends, Matt, who is our COO and head of finance at Proper and Mark, an old college roommate from USC. We used to make surfboards and Matt and I worked at Ernst & Young together. At that time, Proper was really trying to solve a lot of different challenges for a property managing company, mainly on the maintenance side, which I think he comes and talks about before. Mark, our COO, was just religious about user research and first principles, light up thinking, breaking down problems, and finding the best solution for those problems; which is how we ended up coming back to Matt and I’s core background from the CPA world and real estate and addressing that [...] maintenance side of things, which is a nice to have and people want that to be better. The real true problem that we found was on the accounting side. A lot of property managers don’t necessarily get into this business because they like doing the accounting, or they do not do the accounting because (like you said) different from the real estate sales. It allows them to grab a hold of these owners and these properties, and develop other business opportunities but at the end of the month, the key deliverable that they all have is a financial package on that owner’s investment. That’s where we are today, helping a lot of property management companies solve that challenge and get better and focus on growth as opposed to running a call center and operations. Jason: Cool, so let’s get into how would you describe Proper now to those that are listening? What does Proper do? Kyle: Yep, sure. We partner with company management companies to help automate their back-office essentially, from everything, from AR to AP, to bank [...], to owner reporting. We use very high caliber accountants who have all got an accounting degree from big universities, that work in a big board accounting firm, that works at a Fortune 500 accounting firm. We power our team with machine learning, automation, and artificial intelligence to help make their job easier and allow our clients, the property managers, to scale a lot faster without having to worry about hiring more staff for training those people or maybe delaying, bringing on more portfolio because they need to do those things before they can get to that next step. We focus on accounting automation. Jason: Help me understand then how that works. Most property management entrepreneurs and business owners that are listening to the show right now are probably thinking, “Well, I’ve already got AppFolio, I’ve already got Rent Manager, I’ve already got Buildium. I’ve got a property management back office or accounting solution.” Is Proper something that you guys are positioning yourself to replace these tools or is this something where work in conjunction? How does this work? Kyle: Good question. We work alongside all of those tools. We’ve got a big mix, we don’t just work in AppFolio, we don’t just work in Propertyware. We’ve got clients that use Buildium, use Yardi, AppFolio, Propertyware, Rent Manager, you name it. We’ve even got clients who start out with QuickBooks and then as we help them grow, we transition into something more appropriate like a property management software. Right now, we’re not looking to replace any of those tools. We help optimize them for our clients. We help them set up a foundation to better utilize those and then manage those as well. A big part of what we do is helping them set up the appropriate level of internal controls. Are they set up for growth? Is that foundation there to really pile on top of? When we take on a new client, a lot of times it’s retooling the way they’ve set up AppFolio, Buildium, or Propertyware. It’s helping them get their [...] matrices set up. It’s all of those things to create efficiency, get them out of the weeds of the mundane repetitive low-level tasks that are [...] time set from their day, put that on to our plate, and get them back out to the field, so they can grow their business. Jason: It’s not just accounting because you’re helping with some of the operational aspects as well. Kyle: Correct. What we found is depending on a property manager and the company and the way they’re staffed, there’s a lot of leaving in and out of that accounting process. There’s a property manager who might spend 10%–15% of their day doing some accounting function that they probably shouldn’t be doing. The other side of that is you might be the owner or the broker-owner going, “I wish my PMs are out there losing these vacant apartments I’ve got, but they’re stuck doing this paperwork because there’s no one else to do it,” or it’s part of a process that they set up that hasn’t been revisited or fine-tuned. So, we help alleviate all those little bits of pieces there, then create more capacity for them to focus on what they want to focus on. Jason: Is this difficult to get going, get set up, and is there a certain level that a property management business owner has to be at before it would make sense to work with you guys? Kyle: Let me tackle that second question first which is do we have a minimum or a certain size. The short answer is no. We’ve got clients who have as little as six units. We’ve got clients who start with us at say 30 units and grow to 50–60 within three months. I’d probably say where it starts to make the most sense where they can move away from that one part-time admin or office staff handling some of these admin related tasks or accounting related tasks. Generally, to make it to that 30–40 unit mark and they’re starting to gain some momentum and get a little serious is where we can usually help them get to that next level. Where we see a clear difference is with somebody’s property managers who we call in the sophistication fog. They’ve half thought on their AppFolio or Yardi to do some things for them, but they still have some low-level staff that may or may not have an accounting background. They’re essentially taking off things on the checklist on a daily basis to help get that job done but there really isn’t an optimization to that process yet, it hasn’t really been optimized. We can come in and create efficiencies for them and help them, ultimately, have them repurpose those people to maybe a more interesting role or a more revenue-generating role, and then start to use some automation and fine-tune their property management software to do more for them. Jason: When it comes to automation and the technology side, do you guys have a homegrown software that’s running and doing the stuff? Are you using a certain software platform that you work within? Kyle: We continue to optimize and build other tools mainly around AP. Our goal is to attack one of these functions at a time. We found by measuring our accountants’ time that on average it takes about 5 minutes and 59 seconds to process an invoice. We built a proprietary tool that allows us to take that 5 minutes and 59 seconds down to (say) 30 seconds. From a scaling perspective, that property manager then takes on another 200 units. There isn’t the fear of being able to handle that, and we don’t need to staff another five people on their account to get that work done. We can continue getting through that work at a very high accuracy rate by training our model over and over with the different touches and windows that we see. Jason: How are the property managers feeding stuff into the system as if they’re feeding it into Proper? Kyle: Just like maybe a more specific property manager we may have set up where, let’s say 70%–80% of their invoices from their [...] vendors are coming in by email. They might have a dedicated inbox, ap@xyzpm.com or billing@xyzpm.com. If they don’t already have something like that set-up, then we’ll help create something like that. We’ll work with their vendors and their team to start training those invoices to come through to that inbox, at which point we can then adjust them and start processing them through our automation tools. Jason: What are some of the big questions that you’ve been getting? Everybody’s using their property management software, they probably have their systems and processes going to where they’re afraid to even mess with it a little bit, they feel comfortable. Then hearing you say, “Hey, we can help you make things faster. We can make it better, we can help you utilize things better, we work alongside,” and they’re probably thinking, “This is going to be really expensive, I don’t know if this makes sense. I’m going to have to do something different or something new.” What are some of the concerns and how are you addressing those? Maybe you can address them here so people listening, they’re popping up in their head. Kyle: Sure. I’ll probably revisit one of the questions you asked earlier which I didn’t address, which was what does it look like to get started or to start working with us? What does that process [...]? Our onboarding process, usually depending on the size of the PM, say, between two and four weeks to where we’ve fully taken over the accounting work off of their plate. When we start working with a new client we’ll basically do a deep dive walkthrough through every single one of their processes that they have. We’ll then document that process, so if they do continue to grow or they want these policies, procedures, and manuals for their own internal use, they’ll have those and we can use those to hire additional staff as they continue to grow. That’s probably a big first step, is understanding what they do, how they do it, what is being done, who’s doing what, et cetera. During that onboarding process, if we see a glaring opportunity for an improvement or an optimization, we’ll help them execute it right there on the spot. In the first instance, we’re going to match what they do so there’s the least amount of distraction to their day. Then over time, the next 30-60 days, we’ll tweak that some more and optimize it a little bit further to where they’ve got a smooth running engine behind [...] essentially. That’s a big question for a lot of prospects of clients that we take on is how do we get started, how does this work? That’s a very high level. Jason: Let me recap that. Some of these direct out with accounting, they’re frustrated with some of their internal processes connected to these, their day-to-day, and in 2–4 weeks you feel like Proper can significantly lighten their load and allow them to breathe. Kyle: Yeah. For example, just in the last month, 80% of our clients had increased their unit count on a month-to-month basis. Obviously, there are ebbs and flows, they might lose an owner (which drops the units), but generally speaking, once Proper gets in there, we alleviate and free up. We have one client, we freed up 35 hours a month of their time. This is a seasoned property manager who’s just, at the end of the day having to review work, or they were using another accounting partner. Jason: Then roughly how many doors did they have that they were freeing up that much time? Kyle: About 200, let’s say. Not a massive one but a decent-sized property managing company. Working with Proper, we generally saved in terms of card cost of headcount, up to 30% of their accounting staff wages over time. Maybe not on day one because if we’re not going to replace a team, that comes in phases, but over time, we generally see about a 30% cost reduction. We can fix this cost for them as opposed to them running a call center. They want to be making more money so let us fix this cost for you. Keep the quality at a very high level so that financial output and what you’re delivering to your owners. We also see a significant reduction in the number of questions or queries that our clients get from owners every single month because now our accountants are coming in and doing things may be the way they should’ve been done before or at a slightly better cadence or faster cadence which helps them keep their relationships. Jason: What are you seeing in all the property management businesses that you’re working with? How often are they sending out statements? Rent is sometimes trickling in. Rent [...] coming [...] a month. Sometimes it’s late, rent is really late. In these situations, what are you seeing as a frequency for invoices going out? Kyle: Definitely ranges depending on who it is that we’re taking on board but ultimately during that onboarding and stabilization period, generally it’s within 60 days or so. We have them all recording on the 10th of the following month and that’s a pretty standard cadence across the industry, but we make sure it’s consistent. There isn’t that, “We’d like to get it done by the 10th. Sometimes it’s the 15th or sometimes it’s the 20th.” We try and help standardize that across all of their owners. That might even come down to giving them some advice around, “Hey, you don’t have this clause in your owner agreement negotiated property, let’s help you fix that real quick.” That way you have some consistency. There are fewer exemptions and less, “Oh, this one requires that and this one requires that.” Again, building for scale, they can make those tweaks and continue to pile on top of what they’ve already built. Jason: One of the questions that pop up in my head hearing about this and owners giving some of their subs, they’re concerned about checks and balances. How am I going to make sure everything between my management software reconciles with my trust accounts, banking accounts, and everything is going in and out? How do I make sure everything is legit and stable? If I’m going to hand it off to somebody, I want to feel safe that these checks and balances are in place otherwise I’m going to have to check everything. Isn’t that true? Kyle: Yeah. A big way that we approach that is through those onboarding walkthroughs. When we do a deep dive into each process, whether it’s collecting rent or AP, or with the owner recording if there are only [...] there, we go into extreme detail, we document and create a manual for that process. Then there is a consistent agreed way of doing it, whether we try to make recommendations to improve it, or we say, “Hey, you guys have got some great process here.” We just formalize it in that way there’s a clear line of, “This is how it’s going to work.” Then we use tools to keep people accountable. Set reminders for (say) someone on the PM side, they haven’t approved an invoice for us yet, we need to garnish their approval. We use tools that allow us to keep those people accountable, so we can keep them [...]. Jason: Short callers and text messages? Kyle: We communicate daily pretty much with all of our clients from Google Hangouts, workflow collaboration tools, things like that, so there’s clear visibility. Jason: What are some of the other frequently asked questions that people give you when they’re going through the sales prospects sort of process with you? Kyle: What are our qualifications, what makes us qualified to do this sort of thing. As I said, Matt and I—Matt is our head of operations—we’re both CPAs with extensive real estate experience at Ernst & Young. All of our accounting team—I think I mentioned this before—got an accounting degree from college, they’ve worked at a Fortune 500 company, or [...] accounting firms. Our staff is not your run-of-the-mill bookkeepers. They’re highly trained, they’ve got extensive experience, we require our team to do at least 10 hours of CP in real estate accounting every year, that generally gives them some confidence. Then we’ve got some clients out of their really sticky situation with back books and unreconciled accounts for a long period of time and if we can come in and clean that up in a very short amount of time. We have one client who had nine months of unreconciled accounts, and we helped clean that up in about 3½ weeks. When we can show our clients that we can do this for them and help them get to a part where they can sell all their managing company and their portfolio, that speaks volumes for the rest of the people that we talk to. Jason: Let’s throw stones at some of the competition. Kyle: Sure. Jason: One of the main competitors is going to be the property management that’s like, “I’m just going to go higher because the alternative will be I’m going to go higher than somebody. She’ll help me with my bookkeeping or my accounting, or data entry with checks and invoices and all this kind of stuff.” They bring in somebody, they’re probably one of the lowest-paying members of their team, and they’re trying to teach them how they do it and it gets really messy. I don’t know if you want to say anything else, maybe I already threw stones at it. Kyle: No, that’s good. It’s definitely a challenge that we come across, where they’re weighing up, “Do we do this in-house or do we bring on a partner like you guys?” What we often see or hear from people who maybe have gone down that road and then maybe come back to someone like Proper is that it's a single point of failure. It’s one person who’s a real accountant. They go on vacation, things get missed or they get tired if they’re growing quickly, and they’re not organized. All of those things are risks that a team like Proper doesn’t let happen because we have more than one person while working on your portfolio. We could do that and your pricing is still fixed. That’s one of the ways that we help alleviate those sorts of risks from that setup but that might be the right set up for some people. Jason: Yeah, I’m sure every property manager that’s brought anybody else in to touch anything financial in their business has noticed some really ugly mistakes that they’re having to clean up. They’re having to reissue their statements, they’re having to undo or apologize for a notice to quit or something that went out to the tenant that shouldn’t have. Let’s compare this now to just going and getting an accountant, like somebody maybe, “I’m going to go hire a local accountant. They know my area, they’ll get to know my business. Steve down the street, this guy, CPA.” Let’s throw stones at that now. Kyle: The biggest downside to that scenario is that they’re often doing things in arrears. The accountant isn’t there, the CPA isn’t there every day to do and process invoices or reconcile the bank account. They usually come in the first week of the next month to catch up on everything. The client isn’t super organized, they’re going to have to be digging through things, distracting their clients, asking them questions about stuff that happened three or four weeks ago. Which can be a big challenge. You might be able to navigate through that and create some processes, but that can be burdensome. Even more at a time sucks especially if people on the go are not doing things the way they should be along the way. With our team, we’re reconciling bank accounts on a daily basis as transactions go through. We’re processing invoices instantaneously as they come through. There are benefits of us essentially being an extension of your team, just maybe not sitting in your office, but having the same people every day in and out doing that work for you as you go. The other thing about the traditional CPA firm is they’d rather do the higher margin advisory work, tax consulting. It’s expensive for them to do the low-level bookkeeping. They’ll do it for a relationship, but they don’t necessarily like doing it. We actually get a lot of referrals from CPA firms who have clients who need property accounting done at an affordable price. Jason: You go get an accountant, they’re looking at things after the fact, they’re pointing out things you need to clean up, they’re disrupting your day. You’re having to communicate with them, you’re trying to find the problem they’re pointing out rather than these things being taken care of on a day-to-day basis. If you guys fix something that’s messed up within a day or even two, it’s dealt with. Thirty days later, some stuff to undo your mess. Kyle: Correct. Jason: What are some other alternatives to going without Proper? I guess doing it themselves. Kyle: Yeah, doing it themselves but again you’re constantly fighting that growth battle. How do I get to the next stage, whether it’s right? We all look for leverage to put us into that next zone. We get a lot of clients coming to us who want to grow. They get to the point of, “I can’t do anymore. I need a partner to get to the next stage.” We get people who’ve been burned by other accounting partners who maybe just don’t have the same quality control so now they’re looking for a new partner that isn’t going to mess things up that they don’t have to keep an eye on. I think because we focus exclusively on property managing companies, we’re not doing restaurants, we’re not doing eCommerce businesses. We’re 100% real estate accounting. That gives a bit of confidence in partnering with someone like us. Jason: Got it. If you’re working with some sort of accounting bookkeeping firm, you’re having to force the system, and you’re having to explain to them what you do and that rent’s going to come in, and certain amounts are going to be taken out, and all of those kinds of mess, and they just don’t get it. You’re having to use every time, like change the account rep that’s working with you this company has turned over. That can be a mess, you can guess it. Any other frequently asked questions that people come in to look at your firm would maybe want to hear on this podcast? Kyle: How quickly we can get started with people or whether we can help them retool their software stack. Another one we get quite a bit and gotten quite a bit recently is “Can you handle our overflow accounting?” As in they might already have a full accounting team with that capacity that they’re hungry to grow, and they want to buy four portfolios in the next quarter 400–500 units each. “Can we engage you guys to help do the mapping and the chart of accounts to our chart of accounts and the monthly accounting into a ready to transition them from whatever software they are on now to ours?” We handle a bit of our work as well or even maybe some ad hoc research of which one would outgrow this solution, what else should we look to do. We can scope in that sort of work and continue to partner with them on their growth. Jason: Okay, pricing. If we can really give any numbers here but if you can help people understand how do you price this out, how affordable this is, how does this work? Kyle: Great question. Our pricing scale is part of our client’s scale. As in the price per unit drops, the number of units continues to rise. We might start out someone with $12.99 per unit, we might have 100 units. Then if they get up to 2000 plus, we could get as low as $6.99 per unit. We calculate on a monthly basis and as the unit count fluctuates we adjust the pricing, so it’s a fixed note cost for them each month based on their unit count. If we don’t have to work on 100 units that they lost last month then cool, their fees are going to reflect that. So, between $12.99 a unit and $6.99 per unit per month for a full suite service. Jason: Got it. Well no matter how you work the numbers, doing that here at my screen, it’s going to be a lot cheaper than even a part-time employee generally would be. That’s handling the stuff, that’s a single weak link in the chain, that can be a bottleneck, that might get sick, go on vacation, or whatever, or yourself holding the entire company back because maybe this is not your area of genius or your life’s purpose to handle all this stuff. Kyle: Yup, exactly. We don’t necessarily provide à la carte services or our different functions of the accounting process other than accounts payable. We know that AP typically takes up about 60% of the time across the entire accounting function. We can get scale on AP pretty quickly especially with automation. If we’ve got someone who’s looking to maybe test us out, try before they buy sort of thing, we might take on just AP for them or maybe 60% of their workload at an appropriate price point for them to handle just AP, then move that into taking on the rest of their accounting services. Otherwise, we get people who just say, “We need this, let’s get started right now.” We’ll work with their team, get up to speed in a very short period of time, and then take everything off their plate. Jason: It’s just crazy to imagine that some of the property managers are going to listen to this. You’re dealing with some of the stuff, you’re running into headaches, you’re frustrated, this could be dealt with based on what Kyle’s saying here in like a month. It could be literally off your plate and your life could be infinitely easier. Kyle: That’s very true. We do start taking stuff off their plate in the first week or two but that first 2–4 weeks we like to really just make sure we’ve got a good understanding of what’s going on so that mistakes don’t happen, so that by week 4, we’re fully optimizing, we’re ready to roll. Jason: Cool. Well, I’ve gotten too deep with you and some of the members of your team and I know you guys are sharp. This sounds even better than what I thought we were going to be talking about today, so it sounds pretty exciting. I’m sure you’ll get some people reaching out that are running into some difficulties [...] off the top of my head that has been complaining about some of the stuff so it should be interesting to see the attraction you get on this episode. Kyle: The main thing, Jason, that we wanted to do is really give our clients their time back and give them the confidence and reliance on this financial that every month they got to deliver to their owners without having to worry, want it to be consistent, and want it to be high quality. We want them to not have to fear about getting right or spending time checking things. We want to be their partner in growth. We look for clients who want to grow and are like-minded with us to really help transform their business. Jason: I think those types of clients are my type of clients. These are the people that are focused on growth, so awesome. This is the Door Grow Show so hopefully, the people listening are that type of people. How do people get in touch with Proper? How do they get started? What’s the next step for those who might be listening that might be interested? Kyle: My email is kyle@proper.ai. You can check out our site proper.ai. Shoot us a note. We’d love to do a free consultation for you, show you a little bit about how we work. We’re happy to be in touch with any of our customers as well if you want to reference check us. Please reach out, and we’d love to work with anyone who’s interested. Jason: Awesome. Kyle, thanks for being on the DoorGrow Show. Kyle: Thanks for having us, Jason. I appreciate it. Jason: You just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet, in the DoorGrow Club. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead, content, social, direct mail, and they still struggle to grow. At DoorGrow, we solve your biggest challenge in getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today’s episode on our blog at doorgrow.com. To get notified of future events and news, subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow hacking your business and your life.

Are you a property manager who loves or hates creating systems by leveraging technology? Do you enjoy or dislike doing inspections, dealing with tenant issues, and handling renewals? Have you considered putting processes and people in place to automate your business? Today, I am talking to Paul Kankowski, a real estate investor with more than 200 doors. Paul increased systems to build a better property management business. He describes how he created computer-based processes for his employees to do everything his way, the same way, the right way. You’ll Learn... [03:10] One-man Show: Learn how to get the job done right and then do what you want. [04:41] Paul prefers to create processes and systems to solve problems. [05:29] No Secret Sauce: NARPM speaker/expert on automated processes/systems.  [07:29] Paradise is Possible: People make more money, if they have good systems. [08:39] Fines: Do I charge? Do I not charge? Decision made by process, not employee.  [09:25] Everything that doesn't have a process, Paul deals with until he creates one. [10:52] Manuals and How To Videos: From simple checklists to 195+ steps to follow.  [13:37] First Process: Tackle the one that's losing you the most money. [16:40] Make or Break and Placing Blame: Mistakes are made by processes or people.  [25:40] People as Process: Property management will never be completely automated. [29:30] Retention vs. Growth: Give good customer service and don't let doors leave.  [36:20] Stay in Your Space: Identify what energizes or drains you, then offload them.  Tweetables Mistakes are made when processes are broken or employees skip steps. Be involved in your systems. Know how they're running for your business to run right. Processes are not a secret sauce that everyone has to have a different one.  Why people like systems: They make more money, if they have a good system. Resources PM Systems Conference (Aug. 10-13, 2020, in Las Vegas) AppFolio Asana Process Street Podio Wolfgang Croskey Mark Cunningham Landlord Source Property Meld DGS 80: Automating Your Business with Process Street with Vinay Patankar  DGS 76: Outsourcing Rules for Small, Medium and Large Companies with Todd Breen of VirtuallyinCredible DGS 69: HireSmart Virtual Assistants with Anne Lackey DoorGrowClub Facebook Group DoorGrow on YouTube DoorGrowLive DoorGrow Website Score Quiz DoorGrow Cold Leads Calculator Transcript Jason: Welcome, DoorGrow Hackers, to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker. DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show. Today I am hanging out with Paul Kankowski. Welcome to the show, Paul. I'm excited to have you on. I told you in the green room that I was really excited to have you because this is a topic I think everybody would be interested in. Everybody loves this idea of creating systems in the property management business, figuring out how to leverage technology. Before we get into this topic, qualify yourself. Tell everybody about you. You’ve done some really cool things in the property management space connected to this. Introduce yourself. Pau: Hi, my name is Paul Kankowski. I'm out here in Temecula, California, this is Southern California. I have over 200 doors right now. We're not huge, but we have increased our systems in order to make ourselves better. I actually started in education. I was a school principal and a math teacher for 18 years, and I was a real estate investor. I've been a real estate investor for over 20 years. I bought a lot of properties and when the crash happened, I became a flipper. I bought a lot of rental properties and people were doing a really crappy job in my area. Now I actually know a lot of property managers in my area, but back then I didn't. At the time, I just didn't have anyone that could do the job right, so I started taking some NARPM classes and I started using that to manage my own properties. I only cared about managing my own properties and family for the first two or three years, and then I went into that to turn it into a business. Since I've turned into a business, now, I don't want to manage everyday things. I don't want to be doing inspections. I don't want to be doing all the stuff that you have to do as a one-person show. We have eight employees and I've created processes and systems so that they do everything that is done by computer and everything in the same way, I can work on higher-level things, more networking, and doing stuff that is more enjoyable in the industry. Jason: More enjoyable for you, right? Because some entrepreneurs hate that stuff. Paul: Yes. More enjoyable, in the sense, that I don't like doing inspections. I don't do them anymore. I don't like dealing with some tenant issues. I don't like dealing with renewals, but I like everything being done my way. I like it being done well. I like it to be done the same type every way. Before (as you know) I have to get my hands on everything to make sure things are being done, so we are giving the best customer service. Now, we have systems in place, so I know that things are being done the way we state it and ought to just hope that my employees are doing it the right way. Jason: Right. What's cool about Paul, for those watching, is Paul's built this business around himself and what he wants to spend his time doing, versus what most business owners think they should or have to do. You get to do things you enjoy doing on a daily basis, which really is different for every single entrepreneur. Paul: Yeah, it's great. I like doing the processes and systems are working on them, but I can't. I was a math teacher for 12 years, so systems and stuff are like math problems. If you have a problem, how are you going to solve it and how do you solve them the same way each time? It also (I think) a great way for people to hire people that can do it for them, to get it done right, but you have to be involved in your systems. I don't care if you don't like the math portion of it. It's just very important that you know how they're running so that your business will run right. Jason: Right. You can't just stick your head in the sand and throw it at somebody and expect that it's going to be done well. Paul: I agree. Jason: Let's take a step back. Everybody listening to this, I want to point this out, too. You’ve run some conferences related to automation and technology. You've got some things going related to that, you didn't mention that. You're an expert at this. You’ve spoken at NARPM, the Broker-Owner, I think, related to this, or the national conference or something like that. Paul: I spoke at the national conference in San Diego. It was something similar to this. I have had four conferences on systems and I have a systems conference. My next one's in August, that will be our 5th one. This has been really good. It's a small conference, they only allow 50 property managers to go do it. It's a workshop, not a conference, I always like to say, because it's not a bunch of speakers speaking. It's a lot of time you getting down and dirty, actually doing the processes, having fun with property managers, and really getting in conversations. “How is your move out? What's your move out different?” Sitting there and discussing with other people what they're doing and then creating the process on people that have already paved the path to do good process. I find that when you sit there and you work with five or six other people, you learn where your inefficiencies are, what's great about someone else's processes that you can copy. Processes are not this secret sauce that everyone has to have a different one. You can take a good process and you can adapt it to your business. That's what our workshops are about. It's a really great time. They usually sell out in about three to four weeks. I usually have a long waiting list afterward, just because we do keep it small. I don't want to get so big where people can't actually sit and have a conversation with each other. Jason: I like the idea. Let's talk about your business. Let's paint a picture of what's possible or what you see other business owners do that had been in these conferences, some of the people that are plugged in, they've got technology, they're leveraging it. I want to paint a picture of paradise or a possibility for those that are listening because I think a lot of people listening are going, “It sounds so complicated. It's probably not possible. I'm sure what I'm doing is nearly just as good.” What are you noticing in your own business? Maybe in terms of margins, systemization, and staff? Paul: This is the biggest thing and this is why people like systems. You'll make more money if you have a good system. I'll look at HOA. HOA was an issue a year ago. We tackled; we were not doing as good of a job. We were handling every HOA issue as its own individual thing. We weren't getting emails to owners. We were dealing with the HOAs, but we weren't letting the owners know, “Hey, we're dealing with it every week.” I lost a big owner because they thought we weren't dealing with the HOA issue, even though we were, but I lost it because of perception. The perception was they were getting email weekly, so we create a process where the owners get updated every week on the condition of the HOA when the things are going to be resolved. The other things that would make more money, first off, we have owners that are happy. Second, the fines that we’re giving to tenants, they were happening 100% of the time. When it’s not in a set process, a lot of times I'm like, “I'm not going to charge that because it wasn't that big a deal. He left the trash can out.” Well no, it is a big deal and it's a $25 charge. You're going to get a charge no matter what now because it's in the steps. The employee who's doing it doesn't have to make that decision, “Do I charge? Do I not charge? Is this one of those things?” That's a step that might have been missed. We've noticed our revenue—when we have processes—doing really well, it goes up dramatically. I would say HOA fines, we might have a couple of $100 in HOA fines the year before and now, it's thousands of dollars. That's a huge difference because we were not being consistent on the fine. That's a huge thing about the process. The other thing is everything that doesn't have a process, I have to deal with. Here's one that we have not created yet, owners leaving us, and we have to exit them. That’s the next process we’re making in the next two months. Right now, when an owner leaves, I have to do all the work because I don't have a process. I'm afraid that my employees might do it their way. They might make a mistake. They might not take them out of the property mill. I'm going to be paying $2 a month for that door that’s not even active because it's not been deactivated or up fully own and that it's $1.50 a month. All these little things that you think, “It's only $2, only $1.50.” You have 20 doors that you're being charged $2 a month, that’s $40. Over a year, you're looking at $480. You have to have good processes so you don't skip minor steps. You say, “Well, I don’t skip.” If it's not written down, you make mistakes. You might not make mistakes but your employees are going to. They're not bleeding the business day-to-day that they're not going to sleep thinking about the business like you are as the property owner. If you write it down and you have every detail there, not only you're going to make more money, you're also not going to lose money from having money just shot through. Jason: Okay. You were just talking about a process that you haven't yet created, that you're working on right now. When you get into this process of creating a new process, how involved are these? Are these like insane, and they have lots of different steps? You're thinking of every nuance and every detail or are a lot of your processes simple? Paul: When I started, they were really simple. When I started, I was Asana, it was a checklist. It was a checklist and everything was the same and it was fine. It was better than nothing, but it wasn't good. Now, my utilities processes are 195 steps. Jason: Your utilities process. Paul: Are 195 steps. When someone does utility, it's about eight steps for them to finish it because one of the things is every utility is listed and so you put SDG&E, or you put Edison, a different step is going to come up for every single utility. It asks you questions and then Neil, my person has to go through 195 steps, they go through nine steps. They go through SDG&E, then it tells them the phone number to call, who they have to talk to. Sometimes, one of our processes for a little water company we deal with it says, “Talk to Susan,” because Susan's the one in the office that they have to talk to in order to pay this bill because this is [...] water district, and they're just kind of backward, I believe that's the one. It says every detail. There are videos there. If I get a new person on, they can watch a video and the video shows them step-by-step how we do, how we put the invoice in AppFolio, how we do everything. It's a training tool for my new employees. I just had a new employee last week. The first thing we tell them is, “You need to go through Process Street. You need to watch these processes and you need to go through this 20 times,” and then I want you to try it, without me even instructing you and see if you know how to do the process. I'm going to watch you do it. If you know how to do it, then I created a good process. If you watch these videos and go through it 20 times and you still don't have a clue how to do your job, then my process isn't good enough at this stage I'm at right now. You can be as small as just wanting a checklist and having people skip steps, which is fine, but there's more chance for mistakes to being so detailed that it's a training manual for every person that comes on. Jason: I love it. For those listening, you're currently using Process Street. We had Process Street founder, CEO on the show before. It was a great episode. Make sure you go back and listen to that episode where we're talking about Process Street. We use it internally here at DoorGrow. I think it's a great software. Now, if somebody is looking to get started with this, or they're showing up at your conference for the first time, they're one of these 50 people, they've got the deer in the headlights, eyeballs going on, and they're like looking around, they're feeling really inseminated, what is the first process that usually people should tackle? Paul: The one that's losing you the most money. The one that's a hemorrhage point. It’s usually either moving, leasing, those are usually two of the big ones, move out. It's funny, right now, we've changed our compass around a little bit. I'm doing a pre-session on the first day, so we're doing it for four hours, where I'm going to work with a small group (10 people), and we're going to break down your process and build it together for the first four hours. You're right, I have people at all stages of my conference now, I have people that have been to every single one of mine. This August, it will be their 5th time going and I have people that's their first time going. We want to give the difference between those that are first-timers and those that have been to four of them. When I started this systems conference two years ago, it was two years ago last September, I started it because I thought my processes sucked. I hired a speaker to come and speak to us, and he was pretty expensive. This is how this conference has started. I put on Facebook, “Anybody wants to share on the speaker cost, we’ll just meet in Vegas.” We had 10-12 companies there and it just started because 12 of us got together, we split the cost of the speaker, and we went together and hung out. We had such a great time, we found that it was so great just talking with other property managers, that we kind of tweaked it a little bit, and then we’re like, “Okay, we are kind of the speakers because we are in the industry. We know what each other needs.” Now it's all about helping each other. If you go to this, you're going to the four hours (in the beginning where you're going to get that), and then just go and sit with other property managers, see what they're doing, write little notes, and get your checklist. Start as basic as you can. I have one guy that will only use Google. Everything is Google sheets, but he has his steps written down and it works for him. Other people are Asana, other people Process Street. Other people like Wolfgang Croskey, have Podio everything automated. All his emails are sent automatically. Everybody that goes, they're using different software, they're using different things, but their whole goal is to help each other and to make it so that your process will be good. Jason: Yeah. I would imagine one of the best things about being there, talking with other people, seeing and hearing how they do things, you're just going to get ideas, and there's a lot of ways to implement that idea. A process is software-agnostic in general. It's a process. You need certain steps to be done, it can be done by humans, it could be done by technology like Podio, it could be done by whatever, but it needs to be done. You need to know what the vision is so that you can create it. Sometimes, this just comes from getting ideas from other people. “Oh my gosh, that’s a great idea,” and you're doing that in your business. “We should do that too,” and then, “How can we do that with the tools and resources that we're currently using?” Paul: Jason, I would say, to start a good process, the first thing you do is you get every employee that's working on a process on the table. You get a big white sheet of paper and you write down, “What are you doing?” This is our creation of the process. Our process is to get them right. It’ll take about two months. It sounds like a long time, but it's really not because of the process we do to get our processes. We start out by getting all the people involved in the process, and we write down, “What steps are you doing? What do you do?” We don't skip anything. After we get all of the steps down, I send it to someone in my office named David who will sit there and put it into a Process Street with all the bells and whistles, all the changes, and when this is going to happen. We sit there, and we go through it, and I try to break it. I go through every single step and I see where it ran into a problem. That's the very first month. I only work for an hour here and an hour there. I work on for an hour and say, “Hey, this is tweaked,” and “Are we clear?” He fixes that. I look at it and say, “Okay, this is good.” After that, we give it to the person who’s actually going to be doing the job. Their job for the first month is to try to find where the process doesn't work and to either, doing the process to be like, “Oh my gosh, we forgot to put the charge into the tenant,” or whatever it is. If they find something wrong with the process, then I'm going to praise them beyond belief because they broke my process. Breaking my process is a good thing. Throughout the entire year or whenever we have a process, whenever a problem occurs in my company—an HOA gets missed, and we have some major issues with some HOA—we look through the process, and we say, Was it a mistake by the employee, or the mistake by the process?” If it’s a mistake by the process, we fix the process right then, right there and get it right again. If the mistake is by the employee, we show them, “Look here are the steps, what happened? Why did you skip it?” “Oh, I'm sorry. I just skipped this step,” now they know that it was them. It's really easy. In the past when you just have, “ Hey, here's what you do with an employee, you're always blaming the employee,” a lot of times, it is not the employee’s fault, it's your process. Jason: Yeah, that makes sense. A broken process ensures you're going to have a bad employee a lot of times. Paul: I agree. Jason: I'm going to recap, this is what I wrote down. It takes about two months. You're going to first document it, sit down as a team, then you're going to build it, then you're going to break it, then you're going to fix it, then you're going to test it. It sounds like over time, you're going to optimize it based on what feedback you're getting from your team, and what feedback you're getting from clients, tenants, owners, and problems that are coming out. Paul: Exactly and that process is never done because the second something goes wrong in our company, you look at what the process is. If you have a move-in and the move-in is a disaster, it's either the employee or process, and you have to check and find out. It's so easy when you have a good process, to find out where the breakdown occurred. Jason: I think this is an interesting thing to point out because I get a lot of people that come to me, and they're like, “I need the perfect magic owner's manual. Where can I buy that?” or “I need this,” and I tell them, “Every single property management business is so unique, so different. How you want things done is going to be different and no business is ever perfect,” it's never just done. I think a lot of property managers think, “Well, I just need this one thing that I could just strap onto my business and it'll finally be perfect, it’ll finally be done, and I won't have to ever mess with it again.” I think that's just not reality. You’ve got things really well dialed in and you're still working on stuff. Paul: I bought multiple different companies through NARPM that I'm glad I bought them because I did look at them. I can tell you right now, there are some things I bought that I never looked at, we never really did, and it says, “Blank your property manager company name,” it is very, very detailed and stuff like that, but until you sit down, if you buy something, it gives you a basis to start working on your thing, don't think, “Oh, I spent $1000 on this. Now, I can just implement it in my company,” you have a framework. By the time you're done rewriting that, it's going to be 50%-60% different (I think) than what you bought. It's still going to help you. It's still going to help you pay Mark Cunningham, or any of these people, or Landlord Source for something that they have, is going to help you in getting your brain thinking about what you need to do for that role or position, but how Mark Cunningham or Landlord Source do their business is not the same way. I don't do my business the same way as anyone and I get a lot of their information. I look at them and I'm like, “Oh my gosh, it’s really cool how they did that,” but then we might have a different law in California, a different ruling, a different way of doing what we have to. You can't assume that what someone else do you can just implement in your company on day one. Jason: Yeah. For a lot of us, it's easier to create something. Especially, for starting from scratch. If you're a startup, or you're a new property manager, you never documented your processes, sometimes it's helpful to have some resources to look at. It might not even be that great. Sometimes the bad processes with the bad ideas are even better because you can look at that and the contrast from what you know you're doing and what you're reading about, you're like, “Okay, we don't want to do anything like this, and I want to make sure that we avoid these things.” I like the idea that you intensely try to break your processes. Paul: Yeah. The other thing I want to add is, I think automation is amazing, but this is my fear of automation. I will automate a lot of my processes, and they’ll be better automated than it is something that we're going to work on. But any bad process that’s automated, you're not going to see that's a bad process. If you have an email that’s automated going out and says, “Dear tenant’s last name.” Putting the tenant’s last name because you're not actually having any human do it at the beginning, then you're going to be automating that for 70-80 emails that are going to be sending “Dear tenant’s last name.” I think you need to do a process for a while by hand. You need to have an actual human being doing the process, checking the boxes, and making sure it's right, so they could find things that are wrong. When you get a process really good, then your next step is to automate, because yes, it's great to save time and have an email every week go out that tells them about their HOA violation or tells them about the moving processes. I still look at emails every once in a while and I'm like, “Oh my gosh, we forgot to change the wording from this move-in email to this move-in email saying the second week.” If it's automated, it’s going to be automated. Something automated bad is going to be badly automated forever. All I'm saying is that a lot of people want to go from no process to everything being automated, and them not being involved. I don't think that's possible. Wolfgang Croskey, he’s automated, and he does an amazing job, but I don't think he went from not having a process to everything running on its own, and him not involved in it. Jason: No. There was a coaching plan for a good while and I know he didn't start at Podio. I think he was using Process Street and even before that, he was working on stuff. I love the idea. You got to do it manually. A lot of property managers are already doing a lot of things manually. They're doing it that way first. They now need to document it, then they need to figure out, how can we start to systemize this? How can we create consistency? How can we automate this? How can we make sure it's being done the same way every single time and there are checks and balances? That's one of the reasons I like Process Street because you can build a process and that’s one step, and you just paste it in a Word document if you have to. Really, really low level and maybe that's the best you've got. Eventually, you can break it into some multiple steps. Then you can get it into something crazy like you're 100 plus step thing that's got context-sensitive options based on what you pick, and it's going to give you different tasks to do depending on what options you're selecting, and you can get really crazy (if that makes sense). The cool thing about having a process though is you can continually improve it. It can get better over time. That means that you're lowering operational costs, you're lowering drag, you're improving your team member’s ability to accomplish things and win, and get things done. Now, what do you think about the challenge of people as a process? What I mean is, everybody has team members that they need in order to think. If somebody is making decisions, they're planning, they're coming up with ideas. Then you have team members that really are operating like a computer. Their job is just to follow the process. How do you balance this in your own company and determine, is this just anybody on the planet that could just follow this checklist, or they need some customer service skills, and they need to be able to communicate? How do you balance the discrepancy that people have that are fearful of processes because they're like, “I want my clients to be taken care of really well.” Paul: You still have to think. You still have to go through it. You still look and see what's going on. How many of us property owners, managers, et cetera, spend nights thinking about everything we have to do the next day? You write steps down on a sheet of paper before you go to bed and then you try to get it out of your mind so the next day you don't forget it. You're not doing that because you don't want to care about your business or you don’t what I think about it, you're doing it because you don't want to be staying up at 1:00 in the morning, sitting there and trying to think what you need to do. Everything we do in life, if something tells us how to do it, then we can start thinking about things that are higher level. You can take your employees. If you could take a lease renewal process and you can make it so that every single time it's done correctly, it's done right, no one wants to think about it, then there's no stress on these renewals. Now, when something does come up that’s stressful, people that are higher level can think about the things that are higher level. You have a maintenance issue where someone falls off the roof and you're getting sued. You're not going to process for that. Now, instead of you thinking about lease renewals and wasting your time on something that can be automated, something that can be just automatic, you can spend your time on high-level items, and you're going to have employees that need to spend their time with high-level items, so you could spend your time on other high-level items. Probably the management will never be completely automated. There are companies that say, “Oh, we could just automate everything,” no, you can automate a lot of stuff so you can spend your time on the 10% of the stuff that really, really matters, that’s really stressful, and that can't be automated. Jason: We talked about this on the show I think probably several times with different companies, but ultimately, the goal (in my opinion) when it comes to technology, when it comes automation, when it comes to systems, is to take off the plate of yourself and your team members, the stuff that's really redundant, the stuff that could be systemized so that you can focus more on depth. I think that's where property managers are going to be able to compete with the big conglomerates, the big companies that are super tech-based, is that it's going to be about relationships. Property management is a high touch relationship type of business. If process and systems allow you to create a more personal touch, to go deeper, to spend more time communicating more intimately with more depth with tenants, residents, owners, then I think you're creating a business that is going to have significant value, and it's going to have longevity because it’s built on relationships. Ultimately, it's people that are giving you the money. As people, we tend to like humanity, and we tend to like people. Paul: If you're spending, as a business owner, 20 hours a month on something that can be automated or something that can be done by someone at a less level, you have to think of your time as value. When I had 30 doors, I did everything. When I had 50 doors, I was still doing everything. You have to figure out where you value your time. I have five remote employees and I have two employees in my office. People are like, “Oh my gosh, that's a ridiculous amount of employees you have for the number of doors you have.” We’re profitable, and we’re profitable because we're in California, we price ourselves well. It's the customer service level we give our competition. Some of them are missing the mark. They are not giving that customer service, so we are giving it. Someone is not going to leave because of some deep discount or just giving really bad customer service where retention is so huge. I'm seeing so many property managers talk about retention being better than growth because if you are losing 20% or 30% of your doors, all your time and ability is going to just stay even. People are spending $500–$1000 a door to get a new lead, but there are others that walk out the door. My thing is to give really good customer service and don't let those doors leave you. They are going to leave you because they are selling, but don't let them leave you because you are not doing the job right. Jason: I find that with clients. A lot of times, the issue with retention. I agree, retention is a significant thing. The issue with retention is often created during the sales and onboarding so if you can really systemize, automate, and build a really solid process during the sales and onboarding, you've got a really solid sales and onboarding process that really develops a strong relationship, that would carry you for years with some clients. Paul: I agree. Jason: And the trust level is higher even if the communication (later on) is really low. If you created them in the beginning, they are going to trust you and it's going to be a lot stronger. If that's not done effectively during onboarding and sales and isn't created well, there's going to be a lot of uncertainty, a lot of fear. They are going to be questioning everything that you do. You might end up a lot more operational costs related to that, and they are probably not going to stay with you as well. Paul: I agree. We have one person whose new onboarding is their main priority. It's making sure that new owners have a good experience and are treated well, and the onboarding experience is great. Never lose a customer. I think one of the podcasts I heard about that, I read the book. It was a great book. It's about customer service and taking it to the next level.  The thing is people will spend so much money on different things and then don’t answer the phone. If you can have your people working on the process, working on other things, then you answer your phone, you are not going to let that lead that. You just play when it clicks, $30, $20 get away. Processes are huge for your business to me, they are the number one building block.  I don't think everyone on all the boards is always, "How can I grow? How can I grow? How can I grow?" I think growth is important, but if you grow and all of a sudden, you add 100 doors in one year and it was just you, you don't have a process and everything is in your head, then you are going to lose all those doors because you are not going to be able to give. When you had 30 doors, and you go from 30 to 130 and you’re at the customer service, you gave those 30 people. You are not going to be able to give 130 because all of a sudden, then you are hiring someone. They are going to be like, "Well, how do I do it?"  "Well, you just got to listen to my head." No one can read your head. So, even if you are a single person that's by themself, if you want to give a task away, then start working on the process for it as soon you have to give that away. If you are at 50, 60, 70 doors, I would tell those people it's more important for you to start working your processes right now unless you plan just staying at 50 or 60 and never want to grow.  Jason: This is one of the greatest secrets that I coach entrepreneurs when they come into our program. One of the very first things to start them with is helping them get clarity on where they can get leverage the quickest first. It's usually different for everybody. There are some similarities but the way to identify that is usually done through getting clear on where you are actually going. I have them do a time study, then I have them identify which things are energizing them and which things are draining them, then which things are strategic versus tactical. The strategic stuff grows your business, tactical stuff just keeps it going. Most of the process would work by its tactical work. The strategic work is what you are talking about doing in creating a new process. You are like, "We are going to work for this new process for the next two months when we get this dialed-in." That's what grows companies.  If you get to stay in your area of genius, the things you really enjoy doing as a business owner, and you've identified what does are because you are clear on which things are causing you grief and energizing you versus draining you, then you know exactly what to offload. You know what to give to your assistant and different people. We've had different great companies here talking about [...], hire smart VAs, great assistants. We've had companies talking about virtual team members and whatnot. Those are great episodes if you want to listen to those on the DoorGrow Show. We touched a lot on those different ideas. Ultimately, one takeaway you want everybody to get is that everybody can have the property management business that they enjoy, that they love having, and if we built around you and what your unique strengths are, maybe you love the accounting side, maybe you love doing the phone calls, the customer service, connection with people. Maybe you’re a people person, maybe you geek out on systems and process, but you can do whatever you want to do in your business if that's your intention. I think we get stuck sometimes having the business that we think that we need to do like the job that we need to do in the business instead of the business that we want. Paul: I would agree with that 100%. Last year, we grew 80 doors so that's probably the average of what our average. We are averaging between 5 and 10 doors a month. We haven't really started spending money on marketing because I really wanted to first get everything correct and right. One of my property management friends (who is my mastermind guru) calls me once a month and asks me, "Hey, Paul. Did you talk to a tenant this month?" and I'm not allowed to talk to tenants because it was taking time away that I could be doing other high-level things and I need to trust my team to deal with my tenants.  Now, if it gets to a certain level and I have to talk to a tenant, then that's a different call, but I have to make sure that I am actually thinking about when I talk to a tenant. When a tenant calls because they are pissed-off about the fact that we paid the utility bill and make every charge, I have to trust my team’s going to handle it, my team's going to do it, and that I am not going to get involved in it because I find when I get involved in it, then I might do something that wasn't like the process we agreed upon as a team. I even had to, as an owner, that's $25. You are talking for 10 minutes, not worth my time for $25.  I have to be out of it because I will be like, “Yeah, just waive the $25. I don't want to talk to them anymore.” It's really important that no matter who you are, that you follow what you tell your team to follow. A lot of times, you can do it yourself, you made your own decision, but once you make a decision on how you are going to run your process or what your rules are, you have to stick to it company-wide.  I laugh because it's usually us, as the owner, are the worst culprits of not following what we are going to do. The employees do it because a lot of times my employees’ bonuses are based on serving certain goals so if I don't accept anything, they are like, "Man, you are hitting on my bonus. Don't be messing with my goals."  That's something I've learned is just find what you like. Find what you are good at and get a group of property managers around you that can be like a mastermind group that can keep you focused because you need other owners to tell you, "Stop doing that," because your employees won't always tell you exactly what you need to do, what you need to hear.  The other thing is when systems aren't working right. Now, there's a system in there where my employees can say, "Well, you didn't follow the system here." Every person is accountable for checking off what they have to do in the system. When I don't check it off at the end of the week, an email goes out to every person who missed any steps of the system. I have an employee that's checking that. My name is on there. I miss a part of my system and it will list. I never want to be there with three or four items that I missed because that would look really bad. That's another thing, the accountability, I'm not doing the accountability part. I have an employee on Saturday that answers the phones and her job on Saturday if it’s not very busy, is to go through every single process in [...] and write down who hasn't met their deadlines for that process. Jason: Yeah, accountability. Paul: It works really well. None of us wants to see our name on that list, so everybody is getting their stuff done and it's not because I'm going to yell at them, it's because we don't want to be mass emailed to the whole team that you didn't do your job. Jason: It creates a lot of pressure which is a positive thing. That means you don't have to come down on them all the time. There's this lateral pressure, this internal peer pressure in which most employees and team members are recognition-based. That's how they are most motivated rather than financially, so they want to be seen as doing a good job, and they want to be recognized. That's the opposite. There's that pressure, so they want to make sure they avoid that. Paul: Exactly. Jason: It makes sense.  Paul: And we also do our bonuses based on not being recognized. Even my bonuses. Everything is based on getting your job done. What I saw in the past, we didn't have someone that was going through it weekly. We had some process where they’d be open three or four weeks and not being completed yet. Now, it's very rare for the process. It will definitely not be there if you are listed on that one week. If you are listed in the second week for the same one, then you are going to have a conversation with me, then you’re going to me. Our processes are never missed for more than 5–7days, which is huge.  The only thing that I'm still trying to figure out is maintenance because I use Property Meld and I'm still trying to figure out how I can make sure my maintenance team doesn’t get missed. Property Meld does good ways of doing that. That's something I'm currently working on is how on a weekly basis, we can check to make sure none of that's missed.  Everything that you do, you got to find using the software systems that will work to check on the system.  Jason: All right. Paul, I think it has been really fascinating. I think everybody listening got a lot of value out of this. I loved your tips about where to start. Anything else that you throw out there and want to say to anybody before we wrap this up about creating systems in the business? Paul: I just tell them the dates. Our website is pmsystemsconference.com and the dates of our conference will be August 10th through 13th. It's in Las Vegas and it will be in Rio. It is not up yet, we should have it up next week or two. We are still working on it. We just got the rooms and booked everything yesterday. We just booked for August, but it's a really good time. Last time in January, we went ziplining on one of the nights. We also try new fun stuff because if you are working all day, you also want to have fun. There was a time we went bowling one night which is a great time to get together with a small number of property managers and get to know them. I enjoyed it.  People always ask me how long I am going to do it, I'm going to do it until I stop getting fun. When it becomes a job, then I'll stop doing that workshop, but now I go there and it's like seeing a bunch of old friends.  Jason: Cool, love it. All right, Paul, thanks for coming to the DoorGrow show. I appreciate you. Paul: Thank you so much, Jason. You have a wonderful day.  Jason: All right, so check out his website. Check that out. Thanks everybody for tuning in. If you have a moment, make sure to like and subscribe. If you are watching this on YouTube, be sure to like and subscribe. If you are listening to this on a podcast on iTunes, then please leave us a review. We would love it. That would be great. If you are a property management entrepreneur, you are struggling, you are frustrated, you are not sure what you need to do in order to grow, there's a lot of different ways you can approach growth depending on what challenges you are dealing with now. We have solutions for various things here at DoorGrow that we can help you with, please reach out. You can check us out at doorgrow.com, and we will talk to you soon, everybody. Until next time, to our mutual growth. Bye, everyone. You just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet, in the DoorGrow Club. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead, content, social, direct mail, and they still struggle to grow. At DoorGrow, we solve your biggest challenge getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today’s episode on our blog at doorgrow.com. To get notified of future events and news, subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow hacking your business and your life.

Why is your business remarkable? What are you doing differently that gives you a competitive advantage? Why should customers trust you over someone else? These are foundational elements that every entrepreneur should consider.  Today, I am talking to John Ray, formerly of Inspect & Cloud and now part of the DoorGrow team. John is a Search Engine Optimization (SEO) expert who helps property management entrepreneurs grow revenue and attract new customers. You’ll Learn... [01:27] Internet Marketing: Seeking clarity, relevance, and truth through so much noise. [01:57] Seed Program: Training purpose of DoorGrowSecrets, not SEO. [03:38] Keywords and Rankings: Transparency and truth, not tricks, deliver value. [05:29] Can authority and expertise be effectively and successfully outsourced? [07:35] Deliverables and Outcomes: Steps in purpose-driven SEO content process. [10:00] Who are we in-service to? Don’t write directly to a search engine.  [11:25] Micromanagement Culture: Solopreneur businesses get stuck at 200-400 doors. [14:20] SEO’s Place in Property Management: Communicate authority in community to make conversions. [18:00] Does SEO make sense, right now? Do the right things at the right time.  Tweetables The higher the level of trust, the lower the level of price sensitivity. The worst thing that you can do for SEO is write directly to Google. SEO has a place in property management, as a way to communicate authority and make conversions. Do you need SEO to grow and be great? Resources DGS 27: Inspect & Cloud: Inspection Software For Property Managers  Inspect & Cloud DoorGrow Seed Program DoorGrowClub Facebook Group DoorGrow on YouTube DoorGrowLive DoorGrow Website Score Quiz DoorGrow Cold Leads Calculator Transcript Jason: Welcome, DoorGrow Hackers, to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker. DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not, because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change the perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show. I've got a very special guest today. He's been on the show before, Jon Ray. John, welcome. Jon: Hey, thanks for having me. Jason: Yeah. I think we're getting to a point now in terms of internet marketing and the internet where there's so much noise. People are looking for clarity, they're looking for things to be succinct. They're not looking for paragraphs and paragraphs of keyword targeted content. They're looking for relevancy. They're looking for the truth. That's a great way to stand out. Going back before, you talked about a business having a higher purpose. This is one of the things we focus on expressly in the seed program. We have a training called Purpose Secrets. I think it is the most important training in the program but it's not what people come to us for. They don't say, "Hey, I really like this." Once they get into it or want this, that's one of the most impactful things they can do—have a clear set of values, have a clear set of purpose behind what they do, and be able to relate that. It creates trust. That's ultimately what the website's job is to do, to create trust. Trust is what closes deals. Not tricking people. We also have city keyword landing pages and neighborhood keyword landing pages that will help the client I'm with input into the site to capture those longer tail keywords instead of just trying to focus on the main one market big, giant keyword. These are all things that we've thought about in our program to build out into, to prime the pond and get them started with all of these. It all helps with SEO but the program was never designed just for SEO. It's designed to create trust. It's designed to please people. The side effect is that some of our clients get rankings on some of these pages. Ultimately, for me, the most important thing was always if somebody lands on the page–whether it's through them doing prospecting, or going to real estate meetup group, or they handout a card, word of mouth, or whatever that is. If somebody goes to that page, it sells people on trusting them, and them being trustworthy rather than trying to manipulate Google and trick them into showing people the page. Jon: Right. There's a level of transparency, honesty, and alignment with truth that comes to actually delivering value versus just writing articles to hack the system. That means that in the customer's mind, maybe you're cutting corners on other things. To a certain extent, especially if someone knows the techniques that you're using and knows that you're just trying to manipulate the system, it leaves a bad taste in their mouth.  One of the things that you can do to deliver real value and to understand both what your customer wants and what Google is looking for, what the search engine's are looking for, is type in the keyword phrase that you want to rank for. Then search the web the way that your prospects are searching the web. Open all 10 of those websites and actually read the content on all 10 of those websites. Then take all that content in your mind, or have whoever's writing your content look at those 10 posts. For instance, for the neighborhood-specific pages that I was talking about, let's say you want to rank for property management Far West to Austin. You would write an article. First, you would type in "property management Far West, Austin '' into Google. You would see what Google thinks the experts and authority in that particular keyword phrase look like. You read all of the pages on page one of Google, you take notes at the type of things that are in those posts.  Then, you approach your article and you say, "How can I summarize everything that I felt was valuable in these articles?" Then, you go above and beyond to deliver value. If you can effectively do that for every single keyword, then Google will start to see you as the authority but it takes more time. It means that you just can't outsource this to somebody in another country. You have to have somebody who actually understands that neighborhood, who actually understands what’s valuable to property owners in that neighborhood, and who knows how to properly amalgamate all of that content that your competition is putting out, then rewrite it in a way that provides even more value while still answering all the same questions. Jason: I love it.  Jon: The foundational elements are always asking yourself why is my business remarkable? What are we doing that's different? What are our competitive advantages? Why should people trust me over the other 10 people on page one of Google? Most of the time, when you click through the top 10 results for any search term, the website is not aligned with any kind of value structure. They don't really have a competitive advantage statement that they're clearly communicating. That leaves a huge advantage for anyone who is purpose-driven, is showing up in the community in an interesting way to differentiate, and to be able to charge more money.  The interesting thing about aligning yourself with integrity is that when you're aligned with integrity, people will pay more money for your services. Jason: The higher the level of trust, the lower the level of price sensitivity. It's been proven. As a property manager, if you're listening to this, if you're constantly butting up against people that are price sensitive, you have a trust problem or you're targeting the wrong audience. You're targeting the worst list price—the most price sensitive people which are probably the people that you're getting through cold leads that don't trust you. You get a word of mouth, high trust, referral, they're way less price sensitive. Jon: It's such a vague statement to say, “Yeah, you need to be purpose-driven." Maybe we could talk a little bit about what that looks like in practicality, and some steps maybe someone could take without giving away all the Purpose Secrets in the DoorGrow seed program. I do think that it's important for somebody to be able to unpack that word "purpose" and understand what does that actually mean. Jason: Some of the deliverables and outcomes that our clients end up with—they may not make sense to people just listening to this call—they end up with a personal why statement which is where they're getting really clear on why they're doing what they're doing. That's a really difficult thing for people to figure out.  I have some really cool processes that I take people through. I came to that conclusion for myself. Then we figure out what the purpose is for their business so that they have a very succinct mission statement that people can actually remember which means it's not some b*llsh*t piece of document that is like huge paragraphs of stuff that nobody ever looks at and never uses. Nobody on the team, if you ask them, "What's our mission statement?" Nobody will be able to say it. We want something real that is memorable.  Then, we get into creating a client-centric mission where you're getting really clear on your target audience—who you want. You don't want every client. If you're in the space right now where you’re trying to take on anybody, and anybody you talk to you think you need to try and get them on, you're in a very uncomfortable, probably negative, space running your business right now. You probably have operational costs that are far higher than they should be because you're taking on people that you probably shouldn't be taking on. That's another thing. We get them really clear on who they want to serve and how they want to serve them. This keeps the business focused, aligned. As they're doing planning, they can challenge it against this measuring stick, so to speak. Whether they're still in alignment with their values. Jon: I want to pause you real quick there. You're moving quickly through this. I really want to focus on something that you said. Whether you're running a PPC campaign or pay per click campaign, whether you're doing SEO or whether you're just trying to determine how to make your business remarkable, which is then going to add fuel to whatever fire you're trying to soak.  The one question that I think is important to answer is who are we in service to? That is going to help align all of your content. You don't own a right to a search engine. The worst thing that you can do for a SEO is write directly to Google. Google doesn't care about your business, Google isn't your customer. What you want to do, and this could be a tangible exercise that somebody could take away from this podcast, is at the top of a sheet of paper, write, "Who are we in service to?" Then answer that question as many times as you can. Now, hang that over your computer or give it to the person who is creating your content. You should write all of your SEO articles, or any article or marketing or advertising campaign that you should write should be written as a love letter to the people that you wrote—that you put on that list. If you will do that and just make that small shift in perspective where all your content is targeted towards the people you're in service to, your campaigns will convert better. Jason: Yeah, I like it.  Some of the other things we get into than finding the values of the company, everything to create the right culture. One of the challenges I see—and I guess we're gravitating out of SEO here—is that property managers, businesses, tend to fall apart when they get to about 200-400 doors. This is a really painful category for property management business owners because they are operating still as a solopreneur, mindset-wise. They now have a team usually that they built around them without culture, without clarity and purpose, and without clarity and vision.  That means they haven't attracted the leaders that support them and make their lives easier. They basically got a pile of people that they need to micromanage and tell what to do. They're trying to force trust through the veins of their company. It's a painful place to be in. It gets more and more challenging. As they approach 400-500 units, most property management business owners are massively stressed out. That's silly because if you build a team the right way, your life and your day to day should get easier and easier with every person that you add. You're just doing it wrong. When we talk about the seed program being the ultimate foundation, it not only is a foundation to be able to eventually do SEO type work properly. It's a foundation for culture for their business so that they don't get stuck in that second sandtrap of 200-400 doors. They're unable to grow because they built the wrong team and they don't have culture. They're held back and they can't expand. Jon: Yeah. I'll bring that back to SEO. What you're talking about is being able to build a little space between the business and the visionary. The visionary entrepreneur should be able to focus on developing thought leadership and authority in the community with a powerful team full of integrity that can take any assignments that are put in there. At some point, some of that thought leadership and authority has to be extracted so that the team has it for use.  One exercise that you can do as a delegation management tool so that you're not having to optimize your website yourself is find somebody in your office who can help you compile the most important questions that your prospects—those people that you’re in service to—have. Just informally have someone in your office interview you as the authority and thought leader, ask you those questions, and record it. This video does not have to go online because I know a lot of people are afraid of video, they're afraid of putting themselves out there. This audio is just going to be internal unless you want it to be a public piece.  The value of this is that now, this person in your office has a recorded response of how you would guide a prospect or someone you're in service to through a particular question. They can transcribe that and use that as the foundational basis for creating a really compelling piece of content. I think that SEO definitely has a place in the property management industry. It's definitely a way to communicate your thought leadership and your expertise and to show up in your local community with authority which will then allow you to convert at a much higher level whether you're doing PPC, SEO, or just bringing in organic leads because you're remarkable. The exercises, I guess, that I would send somebody home with is one, any keyword that you want to rank for, any keyword phrase that you want to rank for, go and type it into Google right now. Open the 10 pages that are on page one of Google. See what kind of content Google thinks is valuable around that searchphrase. Then think about how you can essentially summarize all of the key points that Google thinks that are important in your own words, adding your own level of expertise, and authority. Then go above and beyond delivering even more value. That's a really good way to think about creating content. Two, at the top of the sheet of a paper, write, "Who am I inservice to?" Make a list of all the people that you want to be in service to. All of your content should be written as a love letter to those people because if you're speaking to them and just pick one on the list and write it as a personal letter to that one person, it's really difficult to write content to a group of people. But if you can identify customer avatars, someone on that list of people that you want to be in service to, act like you're writing a letter to them. Your content will be digested so much better. It will resonate at a more emotional level. Then three, think about some of the longer tail keywords. Instead of thinking that the only thing you need to be writing content for is this top level city name, then property management. Instead, think about some of the longertail things, the neighborhoods that you can rank for, the value that you can deliver on a page by talking about some of the landmarks, businesses, problems that you know are happening in that neighborhood, and how you're going to show up as the authority in that neighborhood.  If you can do those three things, that alone will put you lightyears ahead of where most people are creating their SEO from. If you are working with an SEO professional, make sure that before they start doing the competitive analysis on what the other people who are ranking on page one are doing. If one of your competitors has 65,000 inbound links and really, really, solid content, it's going to be very difficult to knock them out of the number one spot no matter how much money you spend on content creation. Before you even start paying someone to write articles, they need to do a competitive analysis to see if it even makes sense for you to invest in SEO. There are some local markets that somebody over the last three years may have spent $40,000 on content creation. That likely means that you're going to have to make a similar investment in order to rank number one. That $40,000 might be better spent somewhere else and provide more value if you invest it into making your business remarkable. Jason: Love it. To go back to the original question, am I anti-SEO? I'm not. We built our business on SEO. We have good rankings for different things. We get customers all the time that find us on Google. I'm a fan of people doing what works. I feel like everybody should do the right things at the right time in their business, not doing the wrong things prematurely with hopes of an outcome that is not achievable.  If you are at a place where you think SEO might make sense, I encourage you to reach out to our team, have a conversation with Jon, that is something we can help you with. If you feel like you want to grow and your main goal is to add doors, we’ll have a conversation with you on DoorGrow, and figure out what's going to make the most sense for you where your business is at right now. Jon: Yeah. I've had a lot of calls with property managers over the last two months about whether SEO is right for them. Almost all of them, I talked them out of SEO because it wasn't the highest priority thing that they needed to focus on. It wasn't going to deliver enough return on investment. What I can promise is that if you book time with me and have a conversation with me, I'll be very transparent. I will be very honest. I will give you a clear indication of what kind of investment you're going to have to make and how quickly you're going to have to make that investment to make any dent in your search ranking. You will have all the information you need to decide if that's an investment that's worthwhile or if that money's better spent somewhere else. Jason: I think that's something we have a lot of clarity at DoorGrow. We know what types of clients we want to work with. We know who we want to serve, who we want to help. We know our avatar. We know what types of clients would not be a good fit for various programs. We make clients qualify. Our main seed program, we make people apply to be part of it. We're even talking about stepping up the requirements for that application to filter out even more people.  I think that's the secret in having clients you love working with that get great results, that build a good reputation in the market regardless of what business you have. You are really clear on who you want to serve and you’re picky about who you take on. Reach out and have a conversation. If you're somebody that's listening to this and you're like, "I really want to grow." Or, "I think I need SEO." Or, "Somebody's saying I need it." Or, "I didn't ever think I needed it." Maybe you do. Reach out and have a conversation with us. Is there anything else you think, Jon, before we go? Jon: Yeah. I'll just say one final thing. Tagging on to what you just said, what I see in 15+ years of entrepreneurial consulting is that the entrepreneurs who are successful are the ones who are showing up in a big way in their business and actively seeking out how they can be remarkable. Almost always, when people historically call me for PPC or SEO, it's because they're not in integrity with themselves. They want to be able to set it and forget it. They want to be able to pay for something that's going to grow their business without actually having to show up. It is a way for them to opt out of doing the real work that is required to be great.  What I'm interested in is working with people who want to be great and are willing to show up in that way. Jason: Amen. On that note, Jon, I'm so glad to have you as part of the team. I'm really grateful that you're part of DoorGrow. It's super cool that we're both now in Austin and able to get together. I really appreciate you being on the team and the energy that you bring to it. You just fit our culture so nicely. I just want to throw that out there publicly. For anybody that's listening, if you have comments about SEO, if you think we said something that was off, you're confused, you have questions, feel free to challenge us. Feel free to ask us questions. Throw these out inside of our Facebook community, it's a free group. We're very careful about who we let in. You'll have to apply to get in. You can go to the doorgrowclub.com to check out the DoorGrow Club and get into this group.  We only let property management business owners or entrepreneurs or those that are seriously considering starting a property management business into this group which keeps it clean, which keeps it very un-noisy. It's got really high quality people. We got over 2000 property management entrepreneurs in there. It's a fantastic group and resource. If you ever get stuck, you don't have to be stuck. There's lots of people who are willing to support you and help you in that group. On that note, until next time. To our mutual growth. Bye, everyone. Jon: Bye. Jason: You just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet, in the DoorGrow Club. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead, content, social, direct mail, and they still struggle to grow. At DoorGrow, we solve your biggest challenge getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today’s episode on our blog at doorgrow.com. To get notified of future events and news, subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow hacking your business and your life.

How can you utilize the Internet with your blog and website content to attract prospects and grow your property management business?  Today, I am talking to John Ray, formerly of Inspect & Cloud. John decided to join the DoorGrow team to help entrepreneurs align with a higher purpose through transparency to grow revenue and attract new customers. You’ll Learn... [02:45] Bromance: Similar passion, vision, and success for property management. [08:50] Anti-SEO? Merging of minds and skill sets to increase customer base. [11:16] What is property management? Lack of name recognition and understanding. [12:15] Lead Gen: What clients want vs. what they actually need from marketers. [15:13] Digital Marketing: Ancillary to foundational basics of a business. [15:35] Purpose of Seed Program: Clients not quite ready for digital marketing solutions. [18:17] SEO and Pay-Per-Click (PPC): Getting the cart before the horse. [18:24] What makes marketing work? Storytelling. Do or say something interesting. [19:07] Hook, Line, and Resonance: Shifting away from SEO the right way.  [21:48] Blue Ocean Concept: Opportunities for professional property management. [27:35] FAQs: How do you respond? Are you a property management expert/authority? [30:02] Quality vs. Quantity: Add value, not noise. Google’s goal is to please people. Tweetables Every marketer sells what’s easy. Digital Marketing: Ancillary to foundational basics of a business. Forget cold calls; trust is what closes deals. SEO and PPC: Putting the cart before the horse.  Resources DGS 27: Inspect & Cloud: Inspection Software For Property Managers  Inspect & Cloud DoorGrow Seed Program DoorGrowClub Facebook Group DoorGrow on YouTube DoorGrowLive DoorGrow Website Score Quiz DoorGrow Cold Leads Calculator Transcript Jason: Welcome, DoorGrow Hackers, to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker. DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not, because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change the perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show. I've got a very special guest today. He's been on the show before. Jon Ray. Jon, welcome. Jon: Hey, thanks for having me. We're finally doing a DoorGrow Jon Ray-Jason podcast again. I'm really excited to share some of the things that we're going to talk about on how to best utilize the internet, content on your blog, in your website, and some of the things that you can really do to dial in the way that you're attracting prospects on your website using SEO. Also, just to talk about how fun it has been working for DoorGrow and joining the team. Jason: All right. Let's take a step back. I had you on the podcast, and we hit it off right away. We were joking before, we're having fun afterwards. We have little conversations here and there. We talk about random crazy stuff. Then, for a little while, we started meeting just as entrepreneurial friends hanging out like on Fridays or something. We were just setting a time to chat.  You've joined the team here at DoorGrow, but you came to me and reached out at one point. I was thinking about something at the back of my head. I was thinking, "Man, it'd be so cool if Jon and I work together. It'll be so awesome to have him on the team." Then you reached out. Why don't you tell your side? Jon: Yeah. Part of my purpose is helping entrepreneurs figure out how to align themselves with higher purpose and use transparency in their business as a way to grow their revenue and attract more customers. My why and my purpose was really aligned with your why and your purpose. To connect some of the dots of my history, I've been an entrepreneurial consultant in the digital marketing space for over 15 years now. I went and worked for Google for a few years. I was helping run their global field marketing team.  A business partner friend of mine started a SaaS product in the property management space called Inspect & Cloud, which is a digital inspection tool that helps you determine how much security deposit to give back and make sure that your maintenance team and your property owners have clear communication with you. That was birth out of this marriage. In my early 20s, I was a realtor and property manager. I was one of the people who had to go out and file eviction on people. This was over 15 years ago. When I had to go and file eviction on somebody, that meant that I have to drive up to the storage unit. I had to go through hundreds of file cabinets and files and hope that we had an inventory movement condition form, that we still had a copy of their lease, that wasn't just stained in coffee and doughnut crumbs. Sometimes I meant moving like six or seven file cabinets out-of-the-way, so I can get to the one that actually had the information I needed, so that I can go and file eviction on somebody who had been in the property for three or four years. We just didn't have good access to those records.  When I left the real estate space to go work for Google, I still was in contact with a lot of these people. One of these people is Gilbert Quinones who was my business partner in Inspect & Cloud. He's still successfully running Inspect & Cloud (inspectandcloud.com, if you want to check that out). The idea with Inspect & Cloud was we've got to solve the frustration of milling this status of a property and being able to effectively get that information when we need it. I married everything that I have learned at Google, doing digital marketing with the experience that I've had in the property management world. Those things joined together to become Inspect & Cloud.  We were very successful in growing that. I met a lot of property managers and really got inside the head of trajectory that property management was going. There were so many opportunities for property managers to dominate their local market because nobody was doing anything that I felt was remarkable. When I decided to walk away as an active owner-operator in Inspect & Cloud, to explore some personal things that I was interested—mostly coaching at a more philosophical and spiritual level. Really aligning businesses with purpose is what I wanted.  I was looking for methods that would pair traditional marketing and digital marketing with some kind of unique purpose that made a business remarkable. Ever since we've done our interview, it was so obvious to me that you were super passionate about what you're doing. You're seeing a lot of success with your seed program, growing people's businesses, and helping them align with purpose, given so much overlapping our wheelhouses, and in the way we wanted to consult with businesses.  I'm a builder. I'm somebody who can build businesses, run a team, handle operations, implement marketing, and jump on sales calls. I do my best work when I'm aligned with a visionary and with somebody who's helping create the intellectual property that then I could go and distribute. I kept seeing what you were doing, tuning into your podcast in the background. We started meeting on Zoom. It just seems like our two historical paths were meeting at this point that was better suited with us working together because I think we compliment each other really well. Without going into more about this bromance, I thought that the most effective way that you and I could continue to deliver value to property managers and conscious entrepreneurs was for us to partner and capitalize on each other's strengths. We could really grow DoorGrow to a whole new level. I think we're doing that. It's been really fun to talk to a lot of seed hackers, to be on the sales calls, to go through the seed program myself, and really have a whole understanding for the first time.  I was always somebody out here looking in and being, "Well, how much more value could this program really have?" Then I got to actually go through it. I was like, "Oh, this is so much more aligned than I ever even thought." I think that has helped me in my genius zone since I've been working with you because I'm able to draw all of these other experiences that I've had working with entrepreneurs over the last 15 years and channel it through the lens of what you've created in the seed program. A big part of that was me bringing some of my skill set in, which as I was working for Google and in this past 15 years of digital marketing consulting, I've become an expert on Search Engine Optimization, and building really solid content campaigns that drive revenue, increase attention, and increase your customer base.  I think that for property managers, SEO's is an interesting strategy that they can implement. I think that a lot of people think that you're anti-SEO. I thought that would be interesting for us to have a conversation and talk about each of our perspectives—why I'm really bullish on SEO and why you're (at least publicly) seemed to be more bearish on SEO. Maybe we can come to a merging of the minds on that. Jason: Yeah, we'll chat about that. I'm not really a builder. I help other people build their companies, but it's through my innovation that I [...]. I'm an innovator. I love sitting down, being the mad professor. I didn't want to be the guy who's been doing videos or in the foreground. I have business coaches who were like, "Jason, if you're not going to do it, nobody's going to do it. You got to do it." They pushed me into that space and I've gotten a lot more comfortable on that. Even still, it's really nice to have somebody coming on the team that I trust to understand the vision behind what I want to do, and allow me the space to innovate and create new stuff. Now that I have you on the team, I'm really excited about the new stuff that DoorGrow's going to be doing to solve property management problems here in the future. I've got some cool ideas and now I can start to focus on those, work on those, and we get along really well. We just have so much fun together. A lot of people do think I'm anti-SEO. In the past, I love throwing stones at different things that I think are causing challenges in the industry. Because we were focused on SEO—we did pay-per-click management, and we're focused on the search engines in the beginning—the challenge was, this is an industry (I saw) that has very little name recognition. It's an industry that has very little understanding in public opinion as to what property management is or what a property manager does. Random people that have rental properties just weren't looking for property management. It's what seemed to be the situation. The challenge was we just had clients that would play that game, and they found the trap of some of the marketing agencies. Every marketer sells what's easy. It's very easy if people still come to us. It's very easy if somebody comes to us and says, "Hey, I want SEO, I want pay-per-click, I want content marketing, I want social media marketing." This is what everybody says you're supposed to be doing online. "I want pay-per-leads."  These are the things people were looking for. Sometimes the confusion people have about DoorGrow is like, "What do you guys do if it's not those things?" That's all people know what to do, is what marketers are telling them. Why? Because that's what marketers sell. They're selling it. They're not doing it because they're evil. They're doing it because that's what customers are asking them for. Maybe they're in some ways smarter than me. This is what the client is saying, "I want." Even though my perception is, "It's not working. It's not working for a lot of these companies."  The challenge I saw is that if the companies weren't at least 200–400 doors, it didn't even make sense to be running ad campaigns, getting all these cold leads, and trying to take the time to do it. Really, there should be part-time sales people that only have 10–15 hours a week to focus on leads. If they're getting these leads that are colder, they weren't even answering their phones. The lead's only good for maybe 5–10 minutes a lot of times. Then the close rate or conversion rate dropped significantly. The challenge was when we're running ad campaigns and doing these things for clients, they weren't capitalizing on the leads. And because they didn't have the bandwidth, they weren't answering the phone calls. Usually, companies have to be about 200–400 doors minimum, they needed a full-time BDM, they needed that just to do pay-per-click on the SEO side. If they're in a big city market and it's super competitive, maybe there's more search volume, even still property management's very little search line. No matter how big the market is, there are very few people looking. It felt dishonest or disingenuous to sell it to clients just because we can make money. All the time I started realizing, it's not effective. I started because I've talked to thousands of property managers. We literally have hundreds of clients right now that are active. I get to see inside their business. They come and ask me for help, and they ask me for coaching. I would occasionally run into a client doing something unique. They come to me and say, "Oh, yeah. We've been in business for three years. We're at 300 doors." "That's amazing. How did you do that?" Every now and then I would notice an exception. I will pay attention to these things. I will get super curious and I'll ask questions. Over time, I suddenly noticed things that were working, and it wasn't the digital marketing stuff that they were doing. Now, that doesn't mean that if you don't do the foundational basics, that it wouldn't make sense to then shift and start doing more. The analogy I would typically use with clients once I understood this, I would say, it's just like in bodybuilding. You can go get creatine, glutamine, supplements, protein powders and whatever, but if you're not getting sleep and you're not eating food, even though you're working out, you're not going to get great results because those things are ancillary.  That's how I view a lot of digital marketing. It's ancillary to the foundational basics that are involved in a business. The sales pipeline and word-of-mouth is significantly impacted by your brand, your website, your reputation, your sales process, all these things that we focus on in seed programs. That's why I built the seed program to shore up these leaks. The ironic thing is I originally built the seed program because clients weren't ready for the digital marketing stuff that I wanted to sell. They weren't ready. I was like, "Let's get them ready. I'll create a program that once they do it, they'll be ready for all this digital marketing stuff. They'll want to do cold lead advertising and marketing with us. Then we'll make more money." If there weren't enough companies that can capitalize on it and if they're going to try doing it and fail and quit, I'm going to create a program that gets them ready to have this stuff. So, I built out my first iteration called the SeedPackage of the seed program. I created this and clients get these amazing results. The crazy side effect of it was when they went through, and we shored up all these trust leaks that existed in their sales pipeline because trust is what closes deals, they didn't need or want cold leads anymore. It didn't do what I wanted to do. It didn't get us more marketing clients to actually prevent them from meeting it at all. Even though they were the ones that most likely to be able to use it now. But they didn't need it because they're getting so many warm leads and warm leads the closer is so much higher.  Then I started putting up this message like, "SEO won't save you." A lot of people view SEO as savior. They thought, "If I could just get the top spot on Google, all my hopes and dreams for my property management business would come true." It's just like playing the lottery or gambling. If I just get that one jackpot, I'll have everything that I need financially. It really is. It's like the SEO lottery. They would play the lottery and I kept getting stories of losers coming to me from other property management marketing companies. They were sad, they were upset, they've done a one-year contract of doing uncomfortable videos, doing SEO, doing content marketing stuff, and they didn't have doors to show for it. They were really, really frustrated. They didn't trust me. There was a distrust in all marketing in general because they've been burned. I think a lot of property managers have been burned because it's very easy for people to sell what people don't need if they're asking for it. I felt like it was unethical. Jon: Yeah. It's definitely a space where there's a spectrum of charlatans and all the way to people who are in integrity and really good at SEO. I think everything that you're saying is right in many ways. SEO and pay-per-click is getting the cart before the horse.  From a fundamental level, what makes marketing work is really great storytelling. You have to be doing and saying something that is interesting or remarkable for any amplification of that message to convert. What people think they need to do is just hire somebody to write four articles a month, and eventually they're going to be on page one of Google. That's the lie of digital marketing and SEO.  I'm going to give some really practical tips and advice for any property manager that wants to start doing an effective in-house SEO campaign. I promise that before the end of this podcast, we'll give you some action items that you can walk away, so that you can start shifting away SEO in the right way. What happens is when you first start, especially if you're in new business or never done any type of optimization on your website, you're likely showing up on page 8, 9, or 10, or not even being indexed by Google. The way that people search the web is they type in "property management Austin Texas."  Then they open the first 10 links on page one of Google in 10 different tabs. Then they quickly scan each of those pages looking for something that feels like resonance to them. They're looking for some kind of a hook that says, "That's the person I want to work with."  If you haven't effectively created that hook for your business, then no SEO is going to convert for you even if you're in page 1 because the page 10 spot is going to convert better than the page 1 spot if the page 10 spot has a better story and is creating more interesting trust indicators on the website. What that comes down to is making sure that you have a really solid reputation in your local community—that has a lot to do in online reviews—then making sure you're showing up as a thought leader and an authority in your local space. That means that you actually have to be an authority or bring an authority onto your team. You have to learn how to effectively communicate that authority.  SEO can be a really good delivery mechanism for thought leadership and authority but only if you already have those things and are showing up in your community as that. One of the things that I always resonated with the way that you approach digital marketing and SEO—it's the things I always have reached in my own consulting practice—is that you have to learn how to tell an effective brand story before you spend any money on any type of amplification of that.  Jason: You're right. SEO and [...] Google's [...]. It's really hard to dethrone somebody that's been there for 10–20 years. It can be really expensive, it can be really time costly, and a lot of these property managers starting out, that maybe not the game they should play. You're right. There are companies with the top spot in Google right now, due to the way the market is right now, they’re losing more doors than they're getting on due to the sell off.  It's really difficult to outpace the market when the market shifts with marketing. Yet, there's this huge blue ocean of potential property management clients that are not aware of property management yet, of real estate investors, people that run rental properties. We see only in the single family residential only maybe 30% are professionally managed versus Australia which is 80%. There are all these opportunities, yet people are fighting over the scraps that fall off my client's table. They're not focused on the word-of-mouth. They're not focused on networking. They're not focused on community marketing, going out, connecting with that blue ocean, establishing rapports, building trust, and being an authority. They're focused on, "I'm just going to pay a company to just shotgun for leads and hope I get something," then you're getting the coldest, most price-sensitive worst stuff, that are what’s leftover at the end of the sell cycle, after word-of-mouth capture the good stuff. Jon: Yeah. When you talk about the blue ocean, I want to unpack that a little bit. I think that's an important concept because when you're paying for leads or when you're trying to SEO your website to be able to compete for search terms, you're only competing for a very small sliver of the overall pie that is available. Only maybe 10%–15%, depending on your local market of property owners that are open to finding a manager, are actively searching at any given moment. That means that 85%–90% of the potential market place isn't actively searching. You wouldn't be able to track those people through PPC or SEO anyway.  I think there's a misconception that if you rank on page one of Google that you're going to have access to all of the available leads out there. Actually, the larger slice of the pie that's available in the property management industry, and really in any industry is the 85%-90% of people who would be open to some kind of service or some kind of value add, but they don't have enough pain to be actively searching for it. However, if someone they trust said, "Hey. You know, this person works with people like you or businesses like you. They're showing up in the community in a really interesting way right now. Maybe you should talk to them," that's a much easier handoff to somebody to make. That's why having a really strong community-driven purpose is an interesting foundational element to create that will then benefit you when you start to do an active SEO campaign or pay-per-click campaign.  If you don't have that powerful story that is going to create a resonance and the competitive advantage over the other 10 people that are in the 9 of their tabs that somebody has opened in their Internet Explorer or Google Chrome, then no amount of investment in the pay-per-click or SEO is going to be able to convert at a ratio that will make it valuable for you. That's why at DoorGrow and the advice I've always given when people come to me for SEO advice is, what's your story? How are you aligned with your community? How are you aligned with some purpose above and beyond just making money?  That comes back to good business planning. In the property management space and in a lot of service-based industries, people start as a solopreneur. They're not always thinking about the big picture. "Where is this business going up in the next 5–10 years?" They're just kind of nickel-and-diming trying to make enough where they can pay for their families' expenses. That puts them in the weeds and fires of the business, which doesn't allow them to show up as a visionary or even develop their authority in the community. They have no real competitive advantage. Because they're operating in the place of solopreneur scarcity, they're not closing at a conversion ratio that would warrant spending money on advertising or SEO. One of the things that SEO can be really good at doing is helping you create that community authority. You have to look at what you are actually an expert at. What a lot of people do, they hire somebody in another country, or they hire somebody who's just a generic content creator, who's good at writing but knows nothing about the property management industry. What does that person do? They pull up property management on Wikipedia. They rewrite some of those articles so that you have the right keyword density in your article. Ultimately, it's a big nothing burger because when somebody comes to that page, it creates no emotional resonance. Yeah, maybe you captured the click-through from Google, but they're going to immediately click back. That actually hurts your ranking. You always want to make sure that the SEO post that you are writing is providing genuine value to the person who lands on the page. Google will actually penalize you if you have content that ranks on page 1 of Google and somebody clicks through it, then it's not the answer to the question or it doesn't hold them on the page for longer than 90 seconds, if they click back, you're going to be penalized for that. The thing to think about as a property manager, when you're meeting with prospects, what are the most frequently asked questions that you get? How do you answer those questions in person? Sometimes I'll have people record the way that they answer certain objections or questions, and then transcribe those. That could be a good basis for a solid SEO article that starts to give the prospect value and sets you apart as an expert and an authority. Another really good piece of content is neighborhood-specific content. Everybody's focused on these macro keywords. If I'm in Austin, Texas, then the keyword that every property manager in Austin, Texas thinks that they want is "property management Austin." All the articles are targeted towards that macro keyword phrase. There's actually all kinds of what we call long tail phrases which would be like neighborhood phrases. In Austin, there's a neighborhood called Brentwood. You could write a post all about why Brentwood is an interesting place to live as a tenant, but as a property owner, how you serve the Brentwood community. That is going to be an easier term for you to rank for. You're going to be able to provide some actual expertise about how you manage properties in that specific neighborhood. You're going to be able to reference landmarks, grocery stores, and local venues that makes the property owner feel like you know what their property needs because you're familiar with the neighborhood. What that does is "property management Brentwood Austin '' is an easier keyword to rank for. It gives you SEO juice that then points up to the main keyword phrase that you want—that macro phrase of "property management Austin." You build out 50 neighborhood pages and those all start ranking well, you're going to rank for this macro phrase. But most people do it in reverse order. All their articles are these boring regurgitations of Wikipedia trying to rank for a macro term. They're providing no value. They're not ranking for any long tail keywords. Ultimately, their SEO investment nets them nothing because they're not tuned into how competitive the marketplace is. Jason: And it's just that noise instead of value. It's not having real value. One of the things I always said to clients for over a decade, my philosophy when it comes to Google is, "Google's goal is to please people. That's how it's able to sell ads." If your goal is to please people and help people, you're always in alignment with that. Now, what most people do is their goal is not to please people. It's to manipulate the search engine and the robots. If that's your goal, eventually, you're going to be penalized for that. That's going to be viewed as black hat. You might find the hack, somebody who has the hack that they're doing, where they're doing SEO on videos, and they've got 20 different company accounts. They're making them all, liking comments on each other's stuff. Google's smart. It's going to figure out that you've got a game going on. I had one property management company out in Atlanta. He had paid these guys in India to do backlinks. Any backlink was considered relevant. A backlink, for those listening, is a link to your website. So they would go out, scour the web, and find any website they could, directory they could, and they would put links to his website in Atlanta. Then Google realized people were playing that game, trying to manipulate the search engines again.  What they did is they started adding a quality score. They started gauging websites that are not reputable or not relevant and which ones are. Then they release an update. His site wasn't just down-ranked. It was removed from Google rankings all together because he had so many shady, [...] backlinks. Google said, "This site must be bad. It's dangerous to people." They pulled it down. It was like a sandbox. Jon: Yeah. One of the things on any consulting call that I have was somebody about SEO, very often that comes up. "What if I invest all this money in SEO and then Google decides to remove my site from search?" They're only going to do that if you're working against their terms of service and if you're not providing real value. Ultimately, like you said, they want Google to be the search engine that immediately takes you to the content that is most relevant to you. Their algorithm is always shifting to determine what the most valuable content is. That's why everything, even as they're moving to artificial intelligence, everything more and more, is being catered towards who is the thought leader and who's the authority in this local market place around this topic. The way that you identify yourself as that person is by having a stellar reputation with a lot of five star reviews, and then making sure that every single article that you write is providing value where if you were your customer, and you read that article, would you actually read it? Or would you immediately be like, "This is an SEO article"? That's a dead ringer. If you go to a website and the first word is bolded out, there's all these links linking to other pages, it's all keywords that are linked, and you're not actually answering the question that is in the user's head, then you're going to be devalued in the eyes of Google because if that person bounces off your website which means they clicked on Google to your website, they didn't see what they wanted, so then they clicked back to Google to go to a different website, that ultimately is not going to serve you.  You can spend a ton of money on SEO, and if it's not the right content, it can actually hurt your business and hurt your website. It's better to add one really high quality piece of content a month than it is to add 30 super low value pieces of content that don't help the user in some way. Jason: You just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet, in the DoorGrow Club. Join your fellow DoorGrow hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead, content, social, direct mail, and they still struggle to grow. At DoorGrow, we solve your biggest challenge getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today’s episode on our blog at doorgrow.com. To get notified of future events and news, subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow hacking your business and your life.

What is cost segregation, and how does it work? If you're knowledgeable of the tax code and understand what you’re able to do, you will put money in your pocket.  Today, I am talking to Kim Lochridge, Executive Vice-President at Engineered Tax Services. The company started with about six employees and has grown to 130 to do 150-200 cost segregation studies a month. Kim loves talking about taxes. She’s here to help make sense of it all!  You’ll Learn... [03:10] Investment Depreciation Concept: What you get when you have an investment property. It's a tax deduction. [05:15] Depreciation is everything and anything, including buildings, carpet, walls, paint, countertops, and cabinets that depreciate over 27.5 years (unrealistic). [07:17] Cost Segregation Metamorphosis: IRS allows building professional/engineer that understands property and tax laws to segment each component of a building.  [10:30] Does Kim use cost segregation? No matter how big or small, she doesn’t do a deal without cost seg. [11:53] Cost Segregation Studies: How long are you going to own the property? What are you going to be doing with the property?  [12:03] Justify Numbers: Don’t do a cost seg study unless it makes sense financially to pay less in taxes for more money to reinvest. [15:10] Audit Defense: Engineered Tax Services covers questions from IRS about cost seg performed by internal engineers. [16:00] Tax Strategy: Know how to use it and when to use it. Too many people don't understand taxes and let their professionals handle it.  [16:21] Motto: We do believe that everyone should pay tax, but there's nothing in the code that says you have to leave a tip. [16:55] When and when not to do cost seg? Ask questions. If something doesn't make sense, make it make sense.  [21:35] Bonus Depreciation: Too good to be true? Or, leaving money on the table by not doing cost seg? Probaby 80-90% of real estate agents are missing out.  [29:30] Depreciating Bonus Depreciation: Do it now before it decreases from 100% to 20% in 2026. Tweetables Engineered Tax Services’s Motto: Everyone should pay tax, but there's nothing in the code that says you have to leave a tip. Depreciation: What you get when you have an investment property. It's a tax deduction. Don't do a deal without cost seg. It doesn't matter how big or how small. Bonus Depreciation: It’s a big deal, not a scam, to spark the economy.  Resources Kim Lochridge’s Email Engineered Tax Services Schedule E W-2 Form 1099 Tax Cuts and Jobs Act (TCJA) Opportunity Zones DoorGrowClub Facebook Group DoorGrow on YouTube DoorGrowLive DoorGrow Website Score Quiz DoorGrow Cold Leads Calculator Transcript Jason: Welcome, DoorGrow Hackers, to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker. DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not, because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change the perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show. My guest today is Kim Lochridge. Kim, welcome to the show. Kim: Thank you, Jason. Thanks for having me. Jason: Kim is here with Engineered Tax Services. We're going to be chatting a little bit today about cost segregation and how it works. Those of you that don't really geek out on accounting, that's okay because I pay people to help me with that stuff. I don't either, so I'm going to ask all the questions. We're going to figure this out and make sure it'll all make sense. Kim, give us a little bit of background on you, and how you got started with Engineered Tax Services. Kim: Thank you for the internal question. I've been with Engineered Tax Services. I'm the Executive Vice-President, and I've been with them for about 10 years. I started out as an associate. I was on the board of a manufacturing company, and they were looking into some energy-efficient tax credits. It was just a brand new program that came out and tax rules. I found this company because they were doing that early on. That was really my beginning and how I met them. I just thought I came on board.  We've been growing the company since we started about five or six employees. Now we have about 130 across the country. We're doing about 150-200 studies a month across the country. It's pretty impressive. Jason: All right. We will get into what those studies are in just a minute. Let's get into the subject at hand. Maybe we start in the preshow, in the Green Room, we were chatting for just a little bit. It was like, "When is this stuff?" "Maybe I should explain it a little bit to you, Jason." You did which is very gracious of you. Why don't we start with the concept of depreciation on an investment? Just to make sure those that are not yet investors, or they're just new in the space, and they're starting to deal with real estate investors, understand this concept. Kim: Okay. Depreciation is something that you get when you have an investment property. It's a tax deduction, essentially. On top of the mortgage interest or any of that expenditures that you spend on that property, you also get depreciation.  Depreciation is calculated depending on the type of property that you have. If it's a single family home or some type of residence like a multifamily and then in capacity, you're required to depreciate that property over 27½ years. If it's any other type of property like an office, retail, or anything commercial, that is 39 years. For today, I think almost everybody in the audience is more of a single family-owned, we’ll target more at 27½. Just know that that's interchangeable with 39 if it's commercial. Essentially, if you have (say) a $300,000 single family home, you're going to be able to depreciate according to the IRS. You're going to divide that by 27½ and you end up getting $10,909 every year, that you can help use that to offset the income that you made on that property and then not pay tax on it. Sometimes, if it's a smaller home, that might cover it, that and any expenses, and you won't have to pay any tax on the income (which is nice). But sometimes, if your cash flow's pretty good, once you're high right now, mortgage rates are low, you might've owned it for a while, then this could be something that could help you. If you have that, your income is more than the depreciation, then you're going to want to make sure to do something else. This is where cost segregation comes in. Also, if you end up having multiple properties, and one is cash flowing much more than another, then you can basically take that cash flow, and you can do from one to another if it's in the excess. We'll go over some of those details a little bit more. Essentially, the depreciation is just that. You have depreciation. You're required to depreciate a building if it's on a Schedule E or if it's a rental income. If it’s a second home, you're not going to depreciate it. It has to be a Schedule E or some sort of an income revenue-generating project. Jason: The idea with depreciation is that everything in the property is going to depreciate at the same way? Kim: Yeah, everything. It contains the whole building, whatever you bought. That means carpet, walls, paint, countertops, cabinets, anything that you bought in that purchase is going to be depreciated over 27½ years. Jason: [...] lasts about 27½ years, right? Kim: That's what the IRS says.  Jason: Okay, that's not reality. How do we solve this problem there? Kim: Yeah, it's not reality. For decades since the 40s, cost segregation as a whole, what we're going to talk about today, has been around since the 40s when it began in court cases. That's because property owners went and argued the fact that, "This is what I'm doing. This isn't really fair because assets that I'm depreciating over 27½ years or 39 years are not going to last that long. I'm replacing them, in some cases, multiple times over the course of ownership. I want different rules. I want to be able to depreciate those separately." It made it very difficult for a CPA to say how much is the carpet or how much is the building when you just bought up a building. You didn't put it in. You don't have receipts. You don't know how much the roof, the HVAC, the water heater and all that were. They can't break it down. The CPA doesn't have the ability to do that. The IRS came back and over years of morphing cost segregation, they said, "We're going to give you the ability to do cost segregation, which means you have to have a building professional or an engineer, somebody who understands property and tax laws to come into the building, and segment (hence, the segregation) out each of the component of your building." As a result of segmenting those out, you can depreciate them in different time zones, or different buckets. For instance—these are just some examples, depending on the purpose on some of those components—carpeting is always going to land in a five-year bucket. You're going to be able to depreciate all of your carpet in five years, not 27½.  Things like all of your landscaping, your driveways, curbing, gutter, landscape bushes, trees, all of Rockwell expenses, all of that stuff, gets to be depreciated over 15 years. That's more realistic. Things are going to be overgrown. You're going to have to rip things out. You're going to have to replace fences, all those types of things. They'll give you that bucket as well.  The law also says that you can break down certain components like mechanical, electrical, and plumbing, as long as it's for specific purpose for the building, and not necessarily for the building itself. It has to be for the business.  It gets pretty complicated and these rules have morphed since the 40s. There have been massive amounts of court cases that give us these rules today. As an example, something traditional out of today, if you have that same $300,000 single family home, percentage-wise, we're going to be able to take (conservatively) about 40% of the cost of that building or $120,000, and we're going to be able to shift that into faster class lives for you. You won't have to depreciate all of it over 27½ years, but we can break it out.  Essentially with that, that would be $180,000 gets depreciated over 27½ years, and about $120,000 gets split up between five and 15 years. Those are the good rules of thumb numbers to use. Following so far? Jason: I'm with you. Kim: I have to tell you, I love tax. I know it's really geeky, but it's okay. I can help you through it. Jason: That's why people hire you. You're weird. Kim: I get excited about it. Just to kind of give you an idea, I'm also a real estate investor myself. I have my day job, but I'm also an investor. I have invested in about 800 doors in multifamily in Texas. We have cannabis warehouses, we have a mobile home park, just my husband and I. We manage them all ourselves (which is pretty incredible) plus a full-time job. Jason: Do you use this? Do you use cost segregation? Kim: Of course. I don't do a deal without cost seg. It doesn't matter how big or how small. Jason: That's the cool phrase for it, it's cost seg. Kim: Yes, short for cost segregation. Jason: Guys, get yourselves some cost seg. Pretty dope. Explain how your company helps with this. Obviously, accountants can do these. The property manager isn't doing this. The investor doesn't know when they will buy this property. How do we solve this problem? Kim: Engineered Tax Services, this is our specialty. This is one of the main service lines that we offer as cost segregation. This is where I was saying that we do about 150-200 studies per month across the country, whether it's a single family residence all the way up to something like the AI Building in Chicago—big, high-rise, office buildings. We do cost segregations. We're very good at it. It's cost effective. Most CPAs, if it's not over $2,000,000 then it's going to be too expensive. We have single family home rates. We have different levels of studies that we can do according to how long you are going to own the property, what you are going to be doing with the property and those types of things. Maybe we should go in and talk about some numbers, Jason, just to tell everybody (the listeners and the viewers) what it would mean for them. Jason: Yeah. I don't know if this is where you're headed but if you're saying that a lot of people say, "Oh, that's for the big properties. That's too expensive to do for my clients on this single family home or my investment property." Help them justify the cost of doing this study. Nobody would ever do it with you ever unless it made sense financially. Kim: I haven't since a project that isn't at minimum like a 50-to-1 return. It's going to be better than any improvement you can do in the house, any tenant change over, addition, or whatever you're going to do, your returns on this are going to be [...]. Jason: By doing this, by getting the cost seg study, working with you guys, and with their accountant to make this all happen, what has this allowed the investor then to do that they wouldn't have been able to do otherwise? Kim: They're going to be able to depreciate more in the first years rather than just the $10,900 on the $300,000 property that we talked about.  Jason: Which means they're just reducing their tax liability? Paying less taxes? Which maybe means they have more money to reinvest? Kim: Exactly. I want to preface this with the fact that there's a lot of investors that this is passive income for them. If you don't know whether your income from your investment property is passive or active, you want to talk to your CPA because sometimes this gets locked up. We're only talking about if you're a non-real estate professional, how to offset the income from the property so you're not going to have to pay tax on that. This isn't a loophole. This is nothing that is illegal. This has been around for decades. This isn't something that I’m going to get in trouble if I do this. This is simply just a different method of accounting and it requires a professional to come in. Just like an inspector or an appraiser would come in to tell you more specific about a building that you're building. This is basically more of a professional coming in to explain more of the accounting side of it. Jason: Okay. What do you call these experts that come out to the property to do a cost seg? Kim: They're engineers. Jason: Engineers? Kim: Yeah. Engineers come out. They're either structural professionals or mechanical engineers that understand building mechanics. They understand how to break down different components in the building. They're our own employees across the country. They come out to do those studies to document everything.  Just keep in mind that the IRS says that if you have the building professional onsite, then that is required by the IRS. A CPA can do some sort of cost seg if they're knowledgeable about it, but many of them aren't going to be able to tell you how much the [...] costs. If they do, they're just going to do it from a square foot allocation. It's not going to be able to stand up in the event of an audit.  We offer audit defense, so if the IRS does come back and question this, we're going to cover all of that for you. We're going to defend that for you. Our reports are going to be solid. We're going to be here and that's what this covers. We're going to stay behind the product. Jason: Okay. What else should people know about cost segregation or about your company that they may ask? Kim: I think we need to talk about tax strategy because I think this is really important for people to understand. So many people (and I think in my opinion, too many people) don't understand taxes, and they let their professional handle it. That’s exactly what you said in the very beginning, Jason. Jason: Yeah, that's what I do. Kim: Yeah. We have a motto at Engineered Tax Services. The motto is we do believe that everyone should pay tax, but there's nothing in the code that says you have to leave a tip. Jason: I love it. Kim: If you're knowledgeable of that tax code and you understand what you are able to do, you will literally put money in your pocket. That's what this strategy does. That's what these studies do for you. You have to know how to use it and when to use it. That's what I can help with. We help with realizing when is the good time to do cost seg and when it may not be a good time. When it would not be a good time to do a cost seg study is if you just flip. You're going to buy and you're going to renovate it. You're going to get rid of it. You will probably not want to accelerate depreciation. It's just not smart because you're essentially taking more depreciation upfront because you're going to hold on to those assets like the carpet, and you’re depreciating it over five years. You're not going to get all that money and keep it if you sell the building. Jason: Right. You don't want to pay for the future owner of the place’s carpet. Kim: Right. Unless you're doing substantial rehab—that's a different story—and if you're actually going to depreciate the property on a flip, you usually don't depreciate it because you're never placing it in service, if that makes sense. You're never really putting in service because it's all going to be under renovation. You're not going to depreciate it. This does not include flippers, but it does include people who are renting their property. If you have this passive income, let's just take our $300,000 example from the beginning, you're giving the $10,900 in the depreciation every year. If your cash flow is bigger than that, more than that, and you're still paying some tax on that income, you might have to figure that out because you might have a job in your W-2, and you're not really sure what part of this is what you owed in tax because of the house and the income, and what's on your W2.  It's really important for you to see where this is coming from. "How much of my paying tax is from my rental property?" Ask those questions to your CPA, or we can work with you on that. We're looking at tax returns and can help you there. That's the first thing. Just ask some questions. If it doesn't make sense, let's make it make sense. Let's make sure that the common sense is there. At least, you trigger certain things in the brain. When you get into that and you start realizing that you are paying tax on the income, that $10,000 isn't enough, then you're going to want to do some sort of cost segregation, so you can accelerate the depreciation faster especially if you're going to do renovations. Many times we buy property, and then we're doing renovations, either immediately or very soon after or even just repairs and maintenance, and we have to capitalize that in many cases. Now, you're actually depreciating two assets. Let's say you bought a building that had a roof, then the roof gets replaced in five years, now you can't write off the roof. You have to capitalize it which means you have to depreciate it. You don't just get an expense for the cost of the roof. You have to capitalize it and depreciate it. Now you have two roofs. You're depreciating one in the purchase and you're depreciating one you just bought. That's where we really want to come back from that and say, "I don't want to depreciate two roofs. When I sell this property, I'm going to get killed in the accumulated depreciation on both of those assets. I only have one in the building. Why am I depreciating two?" If you do a cost seg study on the original purchase, then you replace the roof, not only do you have to capitalize the new roof, but you can write off the remaining depreciation of the old roof. Traditionally, CPAs can't do that because they don't know how to value the roof if you don't have a cost segregation study.  Not only are we going to help you with your depreciation, but you're now going to have a very detailed fixed asset report that's going to outline every single aspect, every component of that building, and it's going to have a number attached to it. Every light switch plate cover on the wall, every baseboard, every layer of the roof, HVACs, and hot water heater. Now, you have this really great report that every time you do any improvement, it has to be capitalized. You're going to write off the remaining depreciation of the old.  Let's think about this for a minute. Let's say you buy a property. You have it for three years and the hot water heater goes out. It's a significant dollar amount, you have to replace it. You can now take that hot water heater if it's not expensable. You capitalize it and write off the old hot water heater. If you have it in a straight-line depreciation, that water is being depreciated over 27½ years. That means you're going to have 24½ years left of depreciation on the old one. Now, you're depreciating two of them. Why not get that money right now and help cover the cost of the new water heater? That's the beauty of cost segregation. Jason: Nice. You mentioned real estate agents. Are they not allowed to do cost segregation on their properties if they're an agent? Kim: No. It actually gets better for them. If you're a real estate professional, this is a whole different conversation. Jason: A lot of our listeners, they're property management business owners, but they're also brokers, real estate agents, and are licensed, most of them. Kim: Yeah. That's where we really want to get into. This is part of the tax strategy that I was talking about. If you are a real estate professional in any capacity, whether you're self-proclaimed real estate professional and you're managing your own property, or if you're actually a real estate professional, an agent, or a manager. If you are paying tax, if you are a W-2 employee or if it's a 1099, if you're paying tax, and you're a real estate professional, you have had some misinformation. This industry right now, we have a real estate president, like him or hate him, it doesn't matter. He's a real estate president. He walked in and just literally handed the real estate industry a gift with a big red bow. It's called bonus depreciation. Remember what when we said the $300,000, you'd have over 27½ years. You'd have $10,900. Then if we did a cost segregation, we would be able to accelerate the depreciation. That would be a lot better, actually. Now, with the Tax Cuts and Jobs Act of 2018, President Trump passed the bill for bonus depreciation. Let me go back a little bit in history. Bonus depreciation has been around since 2006. It was 50% bonus depreciation (and I'll cover what that 50% of what in a minute) on new construction or renovations. You're essentially able to really expense a lot of stuff to a certain point—at least half of it—for a long time from 2006 until through 2017.  In 2018, President Trump passed this Tax Cuts and Jobs Act. Not only increasing the bonus depreciation to 100% from 50%, they also expanded it to allow purchases not just new construction. What this means is that, say you're a real estate professional. Let's say you're making $200,000 a year. Maybe it's tons more, but let's just call it that. Let's say you're making $200,000 a year, and at that level you're probably paying 33% tax rate or something like that. Maybe a little bit less. Let's call it 35% just to be generous. Each year you're paying about $70,000 in income taxes. If you are a real estate professional and you go buy a property, let's just say you go buy this $300,000 house, and you're going to start renting it out. We have the cash flow, we have the income from that which is also a factor, but let's just talk about the tax for a minute. When and if you do buy a $300,000 property and you're a real estate professional, then you do a cost seg study on that building. Essentially, we're going to be able to write off about 40% of it. That's $120,000. Normally, if you're not a real estate professional, that's locked up in your passive income and it cannot offset your W-2 wages. It has to just stick with the income from the property or other properties that you owned.  If it goes in your Schedule E, if you own 10 properties, then that $120,000 will house all the other properties. But it is still stuck on the passive side because it's passive income. When you're a real estate professional, it's an active income. This is active depreciation, which also covers all of your regular W-2 or 1099 income when you're in the real estate industry. Remember when I said that the $120,000 will be shifted over five or 15 years. We have to prorate that all out over these buckets. What's really cool about bonus depreciation, that means 100%, not 50% anymore on purchases, but 100% of your purchase price that is allocated to a class life less than 20 years. You heard me talk about the 5-year buckets and the 15-year buckets. Anything in a cost seg study that you reclassify that's less than 20 years which would be about 40% of this building, you're going to take as a writeoff in year one. Now you get this $120,000 in the year that you purchase it. You can go buy a property on December 31st and it closes before the end of the year. You can offset your taxes by the amount of your results of cost seg study. In this case, $120,000 that you get to offset, all of your $200,000. You've made $200,000, you're going to depreciate $120,000. Now you're only paying tax on $80,000. But if you buy two houses, you basically just wrote it off, and you can pocket that $70,000 that you would've paid in taxes. Let's just run the numbers real quick. If you have $300,000 and you're saying you're going to put 30% down, that's $90,000. Let's just say the $120,000 times the tax rate of 33%, so $40,000. Basically, what the $120,000 would equate to is about $40,000 in cash. Instead of coming up with your down payment of 30%, if you have to come up with 30%, you've got to come up with the $90,000 down payment to buy that $300,000 house. But you're going to get $40,000 back in your pocket. Immediately. As soon you file your tax return. You get to write that off. Buy two properties and you just write off your entire tax liability for the year. Jason: Okay. This sounds almost too good to be true. Help me understand. How many agents do you think are doing this type of stuff, that they're not doing cost seg, and they're just leaving tens or hundreds of thousands of dollars on the table. Kim: Probaby 80%-90%. Jason: This is a pretty big problem. Kim: That’s why I’m on the show because I want to raise awareness. I will tell you personally, I'm an executive, my husband's an executive, we have high incomes, and when they came out with this bill, the first thing that I told my husband was, "We have to go and buy some properties." I am a real estate professional by trade because of what I do anyway, so I'm a professional. We are under contract to buy a mobile home park. We're closing on December 31st. We have good income and I bought it, but I actually am going to have about $400,000-$500,000 write-off this year for my taxes. Jason: Nice. Is there anything else that people need to know about this? That was a really good point. Any other major things that we should be aware of? Kim: Yeah. Bonus depreciation goes through 2026.  Jason: Okay, then what happens? Kim: Then it starts to phase out starting in 2023. It goes from 100% to 80%. Then 2024, it goes down to 60%. Then 2025, it goes to 40%. Then in 2026, there's only a 20% bonus depreciation. It doesn't mean cost seg is not beneficial. It's still beneficial to do that just like it would've been without bonus depreciation, but there's a greater incentive to do it now. This is all brand new tax rules that just came out in 2018. If you're saying to yourself, "Hey, why haven't I heard of this? This has got to be a scam." It's not. This is a big deal. It's huge for President Trump [...]. Jason: It's a big deal. Was this done to basically spark the economy? Is that why they're throwing this out there? Such a big [...], so to speak, then they're depreciating their bonus depreciation over time? They're going to be taking it down, but is that the mindset of why was it put out there? Kim: Yeah. I'm in the tax community for the real estate roundtable in Washington, DC. When the Tax Cuts and Jobs Act was being formulated, we had long discussions about how to deal with depreciation and what to do. Everyone was worried about the real estate being in the 7th or 8th inning as far as the cycle goes. “Hey, we’re a little bit worried about this. How can I continue to be sustainable at this rate?” The big talk of this Tax Cuts and Jobs Act on President Trump's docket was solely to raise the GDP and just really get the economy going a little bit better. What they did to incentivize that is to offer this bonus depreciation. This was part of that incentive to buy property, exchange property. They also, in this package, were part of the opportunity zone, which I know a lot about. If you don't know about that, we can do a whole another show on that, about purchasing property in an opportunity zone, and having essentially no tax liability on that after you held it for 10 years (as long as you do some improvements). That's a whole another show that we can do. All of these are part of the Tax Cuts and Jobs Act. It's very powerful, and in my opinion, I think we probably, at that time, went from a 7th or 8th inning in real estate back down to a 5th or 6th inning. That's where it really continued to boost and postpone any kind of real estate downturn.  Jason: Who is aware of this and is capitalizing on this? Obviously, your company and your clients. Who's been taking advantage of this? Kim: We do a really good job educating CPAs across the country. We try. There are a lot of CPAs out there. We cannot touch them all. We've got 120 people and there's literally hundreds and thousands of CPAs. We do the best we can. We love CPAs. We want to educate them. We want to connect with them. If you are not doing this and you want to do this, it would be great for us to work together. I really want to talk to your CPA because he has more of use out there that I want to make sure he’s or she's aware and give him or her resources to be able to let other people know that we do this. We do this very economically. I work with a lot of property management companies, investors, and funds. I work with a lot of family offices. I work with a lot of individuals. The word is now starting to get out there. There's a lot more individuals that are starting. We do a lot of shows like this to bring what really the wealthy has done for a long time down into mainstream. That's really what we've been doing. Jason: Random seg question, if property managers came to you, and they've got lots of investors, is there some sort of service that they could work with on you that they can add as a new revenue stream to push their investors towards you? Kim: Yeah. Absolutely have them call us. We can do some sort of [...] share or something like that, or just the finder's fee or something like that. Property managers, historically, have been difficult. Property managers do the property management. They usually don't get involved in the taxes. It's hard for them to have those discussions because a lot of times with the owners they'll say, "Hey, you should really do cost seg," they're going to go, "Oh, it's taxes. My CPA handles that." Now you're dealing with two different layers. Just like you said in the beginning, "If it has anything to do with taxes, I'll let my CPA do it." Those people have that mentality like, "Oh. I'm sure my CPA's already doing this if it's that big." I'm telling you, please listen to me, most CPAs are not doing this. I'm telling you that right now. Most of them aren't. Be proactive. Take your own taxes and your knowledge into your own hands and ask the appropriate question.  I will leave you with a kind of case study of a project I've been working on right now. This is incredible. I literally have a client that I was referred to from a CPA. The CPA brought me the client—a very good CPA client of mine. He owns tons of property all over the country. His family owns property and I've done all their cost seg for about five or six years. We finished the project. I was in my closing call with them, explaining those studies in the last report and everything. He says to me, "I'm part owner in this mobile home park. I think we should probably do this. Do you think it will be worth it?" I said, "Absolutely. Mobile home parks are killer. They're amazing." They do way better than single family homes or multifamily with that matter.  They said, "Yes. It's absolutely worth it. Get me the depreciation schedule, and we'll go over it." He put his partner on the phone with me, and we talked about it. Then, they finally sent me the depreciation schedule. The mobile home park was put on their depreciation schedule as land, $3.5 million as land. I looked at that and I almost gasped, that I called, and I was like, "That's not good. You're not depreciating this at all. Land is not depreciable. It looks like you just bought a raw piece of land." He goes, "Well, that's just all there is. We don't own any of the parks." I go, "Yeah. But you own the pads, the electrical post, you own a laundry facility and there's a house there, there's fencing and there are all kinds of stuff. They are land improvements. That's all 15 year depreciation. You have to pull out the land first then depreciate what's left." He goes, "Oh, man." Long story short, we get on the phone with the CPA. They're like, "Why didn’t you depreciate this? Why is it all on land?" He's like, "Oh, well. I didn't know." The CPAs don't know this stuff. Make sure that you're asking questions. If you have even just the inkling, reach out to me. I try to be very responsive to my emails, text messages, and whatnot. Email me. It's klochridge@engineeredtaxservices.com. Shoot me an email. Give me some synopsis on what's going on. Send me your depreciation schedule and I'll be able to tell you real quick if we can do something or not.  Most CPAs are not doing this because we don't have the resources. They don't even know. How was a CPA to know how much the electrical post we're going to depreciate? How was he supposed to know how much the pads are? They don't. You have to have a professional to go out there. Appraisers can't do it because they're going to tell you what's in there and what's the total value is. They're not going to break it down. Inspectors are going to tell you what's wrong. Nobody's going to tell you what the cost of every component is in that building. That's where the power comes. Jason: Awesome. This is really interesting to me. I appreciate you coming on the show, Kim. You gave out your email address, which we will have in the show notes as well, and on the website. How else can they get in touch with your company? Kim: Our website is engineeredtaxservices.com. I'm also on the back page with our team. Just pick my profile and shoot me an email from there as well. I'm happy to help you. I have an assistant that can handle all the influx of emails that might come. We'll be able to work through them all. I'd love to hear it from you and please just reach out, so we can at least talk about tax. Jason: Perfect. Kim, thanks for coming out and hanging out with me here on the DoorGrow Show. Kim: Anytime. Jason: All right. We'll let you go. Bye. Kim: Okay. I’ll talk to you soon. Bye, Jason. Jason: All right. There you have it. Really interesting topic. I didn't know about that. It's really fascinating. I'm sure it might be new to a lot of you. If that was helpful, make sure to reach out to them. If you are watching this on YouTube, make sure to subscribe, and catch these videos as they come out. If you are paying attention to us on iTunes and listening, make sure to subscribe on iTunes. If you can give us a little review, like this video, whatever you can do to help us about, it means a lot.  We're putting out a lot of free content. We would love it if you would reciprocate just a little bit and help us out. It helps us get the message out. It helps us get greater awareness and help more property managers change this industry. I'm Jason Hull of DoorGrow. This is right towards the end of the year. This may come out in 2020 on iTunes and other places. To everybody, happy holidays. I hope you have a fantastic 2020. If you're looking to grow your business, you're wanting a vision for 2020, you want 20/20 vision, you have a plan, and you want to do something different, reach out to DoorGrow. I'll say this real quick, if you didn’t get the results you wanted in 2019 or the result you wanted in 2018 or in 2017, you know exactly where you're going to be at the end of 2020. You're going to be at the same level of results you had every year so far. That's your default future. If you want to have a creative future that's dramatically different, then I would love and be honored to help you create that. We've helped hundreds of companies do that. Those that listened to me, followed, do what I tell them to do, and show up to our coaching calls, they get those results. They get it. I would love that to be you. That's it. Bye, everyone. Until next time, to our mutual growth. You just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet, in the DoorGrow Club. Join your fellow DoorGrow hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead, content, social, direct mail, and they still struggle to grow. At DoorGrow, we solve your biggest challenge getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today’s episode on our blog at doorgrow.com. To get notified of future events and news, subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow hacking your business and your life.