#DoorGrowShow - Property Management Growth

DGS 96: Freedom of Time and Money Through Better Business Practices with Steve Welty of Good Life Property Management 0

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, I am hanging out with John Higgins of Steady Marketplace. John, welcome to the DoorGrow Show.

John: It's great to be here, Jason. Thanks for having me.

Jason: John, you've got a really big bio and you're really impressive. Do you want me to read all of it?

John: You can read whatever you want to read. I'm not that impressive. I'll say you're more impressive hosting this show and with your following in the space. I'm just a guy trying to make a difference.

Jason: I appreciate it. That's what every good entrepreneur is trying to do is make a difference, at least I hope. Otherwise, they're just causing problems.

I'll read a little bit here. It says you are the co-founder and CEO of Steady Technologies Inc., a leading technology platform for property owners and property managers. Steady, through subsidiaries, offers financial products that benefit property owners and managers. Their first product is rent default insurance, offered in partnership with the top US insurance carrier that is a Fortune 100 company, rated A+ by AM Best, and S&P.

Prior to co-founding Steady, Mr. Higgins founded Nobadeer Advisors which provided business development and capital market expertise to technology-enabled lending platforms across the variety of consumers and business, lending verticals, and backed by top venture capital firms globally.

Prior to Nobadeer, Mr. Higgins spent 2.5 years at Prosper Marketplace, Inc. where he helped build the institutional loan program growing it from $0 to over $5 billion over his tenure and help scale Prosper's monthly origination volumes over 4000% during his time at the firm.

Mr. Higgins also previously served as a director at Topwater Capital, now owned by Leucadia, where he made investments between $5-$100 million to hedge fund managers across a variety of strategies via structured managed accounts.

Prior to Topwater, Mr. Higgins spent five years working for event-driven, distressed, and activist hedge fund managers with assets as large as $1.85 billion.

There's a lot of big financial numbers here, John. A lot of big financial numbers.

John: Want me to dive a bit deeper on it and summarize for you?

Jason: Yeah. Let's dive into that and then tell us how you got into all of these.

John: Sure. I can start from how I got into the hedge funds space which led me through here. I started and talk my way into an internship my junior college, totally unqualified, at the University of New Hampshire versus people that are top of their class from top business schools. Got a shot to join big hedge fund on my way up. I worked my tail off that summer and got a full time offer. I joined that firm full time after I graduated college. I was really lucky. I worked for the really brilliant entrepreneur there who would start this business with $500,000. Four years later, he grew it to almost $2 billion.

Then, left that company and went to Topwater where I was invested in hedge fund strategies via structured managed accounts, kind of cross the bench of the long, short, and distressed credit. That company was acquired by Leucadia which is now Jefferies Investment Bank; the two merged. Leucadia was at a big stake and Jefferies a long story anyway. As that transaction was transpiring, I was approached by the former management team across the marketplace who've I known from the hedge fund industry. They had great entrepreneurs that built and sold the company that served hedge funds called Merlin Securities. They're backed by Sequoia. Sold that business to Wells Fargo and decided they were going to take over Prosper.

They reached out and said, "We're looking for someone to help us build out this business as we take it over and turn it around." Really fortunate to work with tremendous entrepreneurs and the tremendous team there. During my time there, we went from about 50 employees up to about 600+ when I left. That was my first foray into more pure play technology.

We're a financial technology platform. We're offering unsecured personal loans online to end consumers. If you're thinking about going online, applying for a personal loan, no human interaction, [...] pricing, I can get you a loan in a matter of days as opposed to having to leave your house, go to a bank, et cetera, and fill up paper forms.

After leaving Prosper, I was consulting for various lending platforms as you touched on in the intro. I got to work again with tremendous entrepreneurs across a bunch of different verticals. One of the people I've got to work with was doing some lending into the small landlord space. It's fix and flip lending and also rental lending. I started looking at the opportunities. I said, "This is really interesting. I know all of these products that helped multifamily owners protect them against bad tenant outcomes."

There's a lot of companies that pop up doing that, but no one's really going after single family. I started looking at the space and opportunity. As you and everyone else in the space realizes, it's actually bigger than the multifamily space.

When you live in New York, everyone thinks rental properties are the big highrise. In fact, there's roughly more than 16 million single family rental units in the US, then another 8 million duplexes, triplex quads. All in all, you have about 20 million rental units in the US owned by individual investors that owned less than 10 units.

These owners actually can't solve for this risk which is if the tenant goes bad. The smart owners are getting professional property managers or actually better at picking tenants at the established processes and procedures. They're getting bad tenants out. It can help manage those properties and have better outcomes. But still, when there’s a loss of rental income due to tenant default, there is no protection.

In fact, my business partner and co-founder, Viken, had a property in New York City that he was renting. Person just skips town in the middle of the night. He was left with close to $20,000. It actually might have been north of $20,000 loss because the tenant just left the unit and didn't say anything. It took awhile to get it rerented. He had no coverage. If he had, it had no protection against that. If you had Steady or some of these other providers that are popping up, they could've indemnify themselves from that loss, and could've been made whole for a modest premium.

Long story short, there's a big need in the market to this type of product. What we're really excited about is working with all the property managers across the country to help ensure this is product underlying landlords and finding ways for everyone to win.

Jason: Cool. Let's talk about the product specifically. Explain this to somebody that's never heard of this. They might even be an unseasoned property manager. Describe the problem that exists, that this solves for.

John: Sure. When you look at it, if the tenant goes bad whether it's professionally managed or not—let’s suppose it’s some professionally managed properties; that's really who we're serving here in this podcast, and who we speak to—if their tenants goes bad, the owner's mad at them. They might've lose that door because guess what? They probably picked the tenant. They were entrusted by the landlord or the owner to find the tenant, to select the right tenant, and now the tenant's bad. So, the owner's mad, they might lose every relationship. The owner's also rental income. As a result, property managers also lost their property management fee income. Generally, they're charging based on the property management fee.

If you look globally, across Australia, New Zealand, and Europe, this type of insurance product, rent default insurance, is widely available and widely adopted. The reason is that, if you look in other jurisdictions, primarily Europe, it's flipped from the US. It's about 70% renter 30% owner. As we know, post financial crisis, more and more US consumers are now choosing to rent instead of own. So, the property management space is going to be larger and the rental property market is getting larger.

As this is occuring, we think that more and more people will be in need of this insurance because we have a growing market. The insurance itself indemnifies and there's different flavors. We'll speak generally about rent default insurance and what's out there as opposed to Steady, specifically. What we want to do is educate the market on the availability of these types of products.

Rent default insurance, generally speaking, indemnifies the owner against losses as a result of the bad tenant outcome. It could be eviction, tenant skips, et cetera; different programs to different coverages. What this does is it allows the owner who can't self-insure due to the diversification to recoup losses if they are unfortunately stuck with the bad tenant that stops paying rent or needs to get evicted.

Different people had different approaches to it. Us at Steady, we've taken a lot of the learnings from the online lending space using technology to streamline processes, operations, and try to deliver a great product that are at a reasonable price to the end market.

A lot of property managers are saying, "Hey, this is great. This is a huge concern that my underlying owners have. What happens if the tenant doesn't pay rent?" They see property management companies out there that have eviction protection plans or other plans. You've got the SureVestors, the Rent Rescues, and a bunch of other great companies out here, all serving for these types of risks and helping solve these pain points.

The reason for that is this huge market is a huge concern. If you've got one property, say you own a home and you move for work across the country. You can't sell your home or whatever reason you have. You put it with the professional property manager. They're managing that, but you're relying on that cash flow for maintenance, upkeep, taxes, et cetera. In many cases, to pay the mortgage.

If that tenant goes bad, all of a sudden, you're break even or your cash flowing property gone upside down and now you're coming out of pocket. You now have a liability that you have to come out of the pocket for every month. That's a big pain point, a big concern, and what these types of products do is solve for those types of risk, help landlords have peace of mind, and protect against bad tenant outcomes.

Jason: You name dropped some of your own competitors, which is very generous of you. How does Steady standout or differ? How do you compare, standout, or differ in the space?

John: We've taken a bit of a different approach on how we can structure our products and policy. A lot of other competitors, not just in space but in insurance generally, what they do is copy and paste what other products work on their markets or other products that other people have launched, and there's not a lot of innovation. As a result, we haven't seen a huge take rate for these types of product in the US.

What we found—you might feel differently—my business partner, Viken, grew up in Paris. What works in Europe doesn't necessarily work in the US. What works in Australia doesn't necessarily work for the US. What Viken and I did when we came together is we deconstructed how these programs work globally. We took a lot of the learning from online lending to build what we believe is a better program here in the US.

One differentiation is automation. Our entire process is fully automated. We just set an email prior to this event saying, "We are now in 20 states." We've got the ability to be in all 50 states. The reason we're not in all 50 states right now is because we want to automate everything. It is going slow to go fast. As we start to take it off here and ramp because the updates have been very strong, it's continuing to go stronger daily, everything will be automated. What that will result in is more efficient processes, procedures, and better pricing.

Jason: Explain what that means so everyone understands. You're saying that automation is a differentiator and that it's fully automated. What's automated?

John: A property manager or a property owner can go online to the website, inquire about rent default insurance on their own, and complete the entire process in less than two minutes. There's no human interaction necessary and they could do everything themselves. Now, newer company, newer brand, we’re lucky to be aligned with the very strong brand in the insurance space, but nothing's perfect. As you know, as an entrepreneur, you think you've got something perfect and they realize you need to make it better. That's how the process works. It's constant iteration to get better, and better, and better.

Jason: The perfect businesses are out of business.

John: Right. We continue to constantly push new development releases and streamlining things. What we believe is that, if you can make the process as easy as buying, say for instance, travel insurance when you're buying a flight and make it that easy, that will be a great outcome for us and for this market. The way which you can do that is through API integrations, the right product structures, the right creativity, the right business development strategies, et cetera.

If you look at our product, where our technology is our technology, our product is our product, the two weren't built separately. They're built together. They work very closely together and in tandem. Because of that, it allows us to deliver a great customer experience, a frictionless process, high scalability, and keep headcount well.

Right now, our biggest expenses have been legal and engineering, as you can imagine. It's a technology company, but legal because we invest heavily in making sure that we do everything right and by the book. Also, that our partners do things right by the book.

As you know, the property management space has some instances where people have more of a cavalier or cowboy type approach that works until it doesn't. For us, we have ambitions to be a very large company and we operate in a highly regulated space. It's non negotiable for us to run into issues on the regulatory front or have our partners run into those issues. We take that very seriously and focus on in making sure everything is done the right way.

Jason: That makes sense. The number one challenge when it comes to any solution or software or third party service is adoption. It's how easy is it for them to adopt this and use. If adoption is a challenge, then it's not going to work. It's not going to grow. People are not going to use it or it's going to be confusing or frustrating.

I'm a big Apple fan. Apple made adoption very easy. My AirPods, I just hold them out, open them up, my phone just show them on the screen, and they connect. It was magic, it's easy, I didn’t have to fill around weird Bluetooth settings or hold down buttons. What you're saying makes a lot of sense.

You've mentioned that it's easy for the consumer or for the property manager. One challenge that I see a lot of firms run into is when you're servicing an audience that's servicing that same audience. You almost can become competitors with them. How do you negotiate that? How does the property manager still have a competitive advantage against them just working with you directly?

John: I guess, education, awareness, and understanding. People [...] this in massive market. People don't even know about this product. One parallel I draw frequently is pet insurance. I’ve got a pet, I’ve got a dog who's five now. I have pet insurance that I pay $70 or $80 a month. They haven’t got a good plan because the vet at the time said, "Hey, you should consider pet insurance if there's ever an issue."

To me, the asset there is the pet. A little bit different than a rental property, maybe not as emotional as a rental property would be. They said, "Maybe you should look at this." It's a similar thing as what you're seeing happening in the property management space. Property managers are the fiduciary, the trusted advisor to the asset and the asset owner, which is the landlord or the small rental property owner who's contracted the property manager for their services. If they can be introduced to this product, it's for their benefit.

We don't have a big direct push. We're not looking to go after single family rental landlords directly. Our entire business model is predicated on partnerships. Based on our analysis, there's roughly eight million rental units in the US managed professionally. We've love to see that grow larger. Those are also, for us, we believe the best risk. As I touched on earlier, we believe strongly that property managers are better at picking tenants, have an established processes and procedures in getting bad tenants out, and they can get units rented more quickly.

Jason: Which lowers your risk as an insurance provider.

John: Correct, which results in better outcomes from the underwriting perspective.

Jason: Okay, makes sense. Your interests are aligned directly with property managers. They're your focus.

John: Yes. They are our focus. We just did a giveaway today to property management conference for people that could enter. We view property managers as our partners. Again, the reason I mentioned some of our competitors earlier because the rising tide lifts all boats. We want to see everyone do well, we want to see landlords have access to the solution so they get better outcomes, and we want to see property managers to be able to benefit from this as well.

Jason: Yeah, I love it. I believe that too. I have said before, rising tide raises all ships, but sometimes the bar is so low in property management in some areas and in some markets, that I don't think every ship's going to rise. Some have too many holes and are going to sink, but that's okay.

John: That's right. That's Darwinism.

Jason: Right, survival of the fittest. What are some of the most frequently asked questions or concerns that property managers are asking you or have been asking in sales conversations? So that we can make sure we address them here on this show.

John: A lot of things that a lot of property managers ask is simply how it work. We have an FAQ section on our website and we can share the link on it. "How does it work?" "Why does this exist?" "How can no one else is doing is?"

As I catch on, this is the third time I'll mention SureVestor, Rent Rescue, and others. The awareness is growing and that's what the biggest challenge is for all of us in this space is awareness that these types of solutions are available. This isn't like rental insurance or pet insurance. Pet insurance, I guess, is now becoming widely adopted, but people don't know about it and don't understand it. Most of the reactions we got is, "Wow, this exists? This is great. How does it work?" "Wow, that's inexpensive. This makes a lot of sense." It all depends on the property address, the rent amount, and the pricing.

Jason: For anyone that's confused, let's just explain the difference between renter's insurance and rent default insurance.

John: Renter's insurance covers the renter's possessions and liability to the landlord, generally speaking. It's paid for by the renter and they're doing it, so if there's a fire in the unit, they're not covered from the landlord's policy. Their possessions are gone. The landlord gets the unit rebuild, the house rebuilt, but they don’t receive anything. Now with renter's insurance, then we get some coverage for that.

From the landlord's perspective, if the renter has renter's insurance, they have a guest over, they slip and fall, and break their leg, it protects the liability to the landlord for them getting sued from that slip and fall. That's renter's insurance.

Rent default insurance, it depends on the program. Different people, different features. Generally speaking, it covers loss of rent due to tenant skips, eviction, and tenant nonpayment for whatever reason.

Jason: Sometimes, we have to make sure things are at an 8 year old level so that everybody gets it.

John: I generally need things at an 8 year old level to understand.

Jason: Right. Most entrepreneurs do because we're just so damn impatient at paying attention to things sometimes.

All right. We talked about how it works, why is anyone doing this. Any other frequently asked questions that people are concerned about?

John: "What's the catch?" generally. Insurance companies, for better or for worse, generally don't always have the best reputation for making it easy to make claims, et cetera. That's another thing. Some people want to see the policies and see things in that nature.

Again, the big thing is people just don't understand these types of products exists. That's why we're out there educating the market and letting people know that there are these types of coverages available and you can get the coverage to these types of risks.

Jason: Let's touch on the benefits for a property management business in having this in their repertoire of services and how this can help them sell and close more deals, give them the competitive advantage, maybe.

John: What do you see is property managers are now looking at this and some are saying, "I'm just going to include it in all my plans," and say, "This makes a lot of sense.” Now, we've got a differentiator. All of my property management packages include three months of rent default insurance if the tenant goes bad. They're out there marketing and saying that it includes it.

Others are saying, "This is interesting. How can we offer this and earn some B revenue?" The only way it works, as I touched on earlier with compliance, is you can't get paid for the sales, solicitation, negotiation of insurance, unless you're an insurance producer. You can do other things such as marketing fees, et cetera, but you can't make conditions on the sale, solicitation, negotiation, and insurance.

That's why we spend so much to make sure that anything we do, anything our partners do in partnership with us, is fully vetted and above board. We make sure everyone stays on the right side of the rules.

Jason: Do they become somewhat of an insurance agent? Or you're just laying that all together?

John: No. They do not become insurance agents in any way, shape, or form unless they've got an insurance agent license. Then, they could be an insurance agent, obviously.

Jason: Okay. John, it's great to see an entrepreneur doing something that's impacting the industry. I believe these products are going to have massive ripple effect in the industry. They're going to create a lot more safety and certainty in the property management space. It's going to lower the risk. It's going to lower the pain threshold for landlords to trust somebody else to manage their properties. It's going to protect all the parties involved and that means it's going to help the industry grow.

If Australians, somebody said their markets are any indicator, it seems like these types of products help these markets grow significantly in a relatively short period of time, over a decade. They've grown phenomenally. I heard stats like Australia's grown through 25% in a decade. Largely, they claimed that it was connected to that. I don't know if that's accurately or true, but if that were true and the industry—single family residential—were maybe about 30% are professionally managed, that almost be our industry doubling here in the US. I don't know that there's enough companies here in the US right now to handle that level of growth. That would mean we need to double the amount of companies or we need to double the size of every company that exists. Something in between that.

John: Or let's double the size of every company that exists. That'll be a good outcome for everyone.

Jason: Yeah. Regardless, I want to make sure that we've got the best. Let's raise the tide. I appreciate that you're seeking to raise the tide. I think collaboration over competition is what builds market, it's what builds the category. It's always important to build the category before you try to build the individual brand. That's Marketing 101, everybody.

Property management is in the same boat. Property management has very low awareness, in general, here in the US and right now, we've got a lot of people going around something in their chest, trying to fill their individual brand. We need to build the category first. There's a lesson for the industry to take away from what you've mentioned and what's going on in what you're doing, so I appreciate that.

John: NARPM’s done a good job trying to get the industry moving in the right direction. People like you and a lot of others that are trying to educate and build awareness are very helpful as well. It's great to see everyone working together in some way, shape, or form.

Jason: There's no scarcity in property management. There just really isn't. There's 70% in single family residential that are self-managing right now. That does not indicate scarcity. In certain channels of marketing, there is a lot of scarcity because everybody's doing the same stuff, there is scarcity.

John, I appreciate you coming in the show. How can people get in touch with Steady and learn more about this?

John: They can go to the website www.steadymarketplace.com or shoot me an email john@steadymarketplace.com.

Jason: Perfect. John, I appreciate you coming on the show, I appreciate what you're doing, and I wish Steady success.

John: Thank you, Jason. Thanks for having me.

Jason: Check them out at steadymarketplace.com. If you are, for some reason, not getting the growth that you want, you're growth is good, but you want to pour a little gasoline on that fire, if you find that you're getting a lot of your business lately from word of mouth, and from the trust that you built in the marketplace, I would love to pour gasoline on that fire.

That's what DoorGrow specializes in, optimizing your warmly funnel and optimizing your business for more organic growth, which is a lot less expensive than showing up tens of thousands of dollars a year towards pay per click, SEO, and everything that everybody is competing and already doing.

Like I said, I don't believe there's scarcity in the industry, but I believe there's false scarcity that's been created by marketers, and you can avoid that. For those who can't see, I'm wearing my "SEO won't save you" shirt. A lot of people are relying on SEO to save you.

Don't get me wrong, SEO is great. If you have the top spot in Google, that's great to have search engine optimization. But there are things that are better than having the top spot in Google like being the most trusted company in your market. Our whole system is focused on building trust for your brand, for your business, and helping you to go after that blue ocean where there's all that business available; that 70%.

I appreciate John being on the show. Until next time, to our mutual growth. Bye, everyone.

Download this Episode

Sep 17, 2019

Freedom of time, money, relationships, and purpose is what we all want. Property managers, realtors, and investors help clients build wealth through real estate.

Today, I am talking to Steve Welty, owner of Good Life Property Management business and podcast. He enjoys meeting amazing people and indoctrinating listeners with his philosophies.

You’ll Learn...

[03:23] Stop whining about solvable issues, such as online reviews to get warm leads.

[04:41] Steve surfs to success with Good Life Property Management.

[06:43] Podcast Passion Project: Do content for content's sake; add value to people's lives for opportunities and connections to come your way.

[10:19] Don’t lose focus on why and what fires you up; limit time and effort spent on your business to achieve outcomes.

[15:00] Purpose of Business: Not to make money; build a business that makes money.

[16:25] How to be happy: Create momentum for other people to gain momentum. If you wish to become great, learn to become the servant of many.

[18:12] Zig when they Zag: Success outside outsource sandbox to reduce costs.

[18:55] Results-based Biz: Hire young, smart, motivated people and leave them alone.

[19:31] Big Issues, Big Success: More people can lead to more problems; paint a compelling vision to keep good people and let them do what they want to do.

[20:10] Move Out and Outwork Others: Create freedom of time and money by hiring CFO or profit first coach/accountant to offer advice, not control over finances.

[26:10] Value-add Revenue Sources: If you don't charge for it, you're doing it poorly.

[28:25] Opportunities in Other States/Markets: Pop-up shops to buy cash flow property.

[29:05] To Die List and Time Study: Procrastination problem property managers and owners experience.

[35:00] Barriers/Protections: Teach team and customers how to treat and reach you.

[37:35] Opinions vs. Observations: Co-creation/coaching is transformational and transactional superpower that changes lives.

[46:45] Give up control and allow people to fail, or you create an unsafe business.

[52:30] What Matters: Million ways to get to end results and outcomes.

[54:05] Hire and Fire: Center on core values; be reliable, positive, and go-giver (RPG).

[57:10] Epiphany: Everything worthwhile lives on the other side of fear.

[1:03:05] Money is one side of it. Easiest decision to make is to be a different person.

Tweetables

Do content for content's sake.

Limit time in your business; achieve outcomes with least amount of effort.

Add limitations or constraints to create a necessity for innovation.

First key to greater time, money, and purpose is to create space for yourself.

Resources

Steve Welty’s Email

Good Life Property Management

Good Life Property Management Podcast

Steve Welty on Spotify

Steve Welty on Apple

PM Grow

Orange Tree Property Management

GatherKudos

National Association of Residential Property Managers (NARPM)

Brad Larson

Gary Vaynerchuk

The 4-hour Workweek by Tim Ferriss

Todd Breen

Making Money is Killing Your Business by Chuck Blakeman

How I Built This with Guy Raz

Let My People Go Surfing by Yvon Chouinard

Voxer

Jason Goldberg (Strategic Coach)

Extreme Ownership Book

E-Myth Book

The Go-Giver

KingJasonHull’s Whimple on SoundCloud

DGS 95: 5 Characteristics of Successful Property Management Companies with Marc Cunningham 0

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 little 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 change 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 really excited, we’re hanging out with Steve Welty. Steve, welcome to the DoorGrow show.

Steve: What’s up Jason? Good to be here.

Jason: Steve and I were reminiscing. I saw Steve at a broker owner conference, the very first one I went to several years ago and we were sitting at the same table and I guess I said hi to you and we were chatting it up.

Steve: Yeah. It's funny, I remember that day very vividly and it's interesting because I have a very poor memory. You were the mysterious man behind me and you were dressed really nice.

Jason: I don't dress nice anymore. I'm too lazy now.

Steve: Yeah, you're just soaking it all, but we were talking before the show, was that really one of your first conferences?

Jason: That was the first conference I'd gone to, yeah. My dad had just started property management business. He's got maybe about 200 doors now, but he had just started a property management business. He had been a hospital administrator for 30 years or something and he said, “I'm going to do what Bryan’s doing and start a property management business.” My brother has got maybe 1000 doors or something like that and he is out of Orange County. Not too far from you down San Diego. He thought, “Bryan’s doing it, maybe I could do this too.” He decided to become an entrepreneur.

Caught the bug. It's been fun to watch that, but I was like, “Dad, let's go do this. I want to see what happens there. The only way I can go is if I'm with you, you're a broker owner.” I was his director of marketing and I was just the fly on the wall for Orange Tree Property Management, just checking out what goes on a broker owner. I just want to see what happened there.

It was challenging for me though because the entire time I'm hearing people talk about problems, and challenges, and I'm just biting my tongue the whole time. I’m like, “I could solve that challenge. I can help with that.” I just had to sit there and be quiet. I've even got a text message from one of my clients that was sitting in the room and he said, “I'll bet this is just killing you right now,” I texted him back, “You have no idea.” It was just really funny to hear people whining about stuff that I think is solvable.

Steve: What was something out of all those issues you're biting your tongue about that you can reflect on today.

Jason: Now you’re interviewing me.

Steve: I'm interested to hear that.

Jason: I remember one of the things that really killed me was people were like, “How do you deal with your online reviews? How do you get more positive online reviews?” We have our system GatherKudos, and we have coaching material around that that we’d go through with clients to figure out how to identify peak happiness, leverage a lot of reciprocity, how to get more reviews, how to build a system in your business as part of your onboarding process with new tenants so you get more reviews. I think that's a better system to have than even most marketing systems, because that creates warm leads. I was just sitting there listening to them talk and some of the ideas were, “We're okay, we're good,” but I was like, “This is so solvable.”

Steve: Reviews are still a big issue, six years later or whatever it is.

Jason: Correct.

Steve: People still can’t figure it out. It’s tough. I still try to figure it out on a daily basis.

Jason. Yeah. Cool. Steve, you've got an awesome property management business. You've got your own podcast that you do. You've got a lot of stuff going on. Help my audience understand who you are and give us a little bit of background on Steve, your adventures in property management, and how you got into it.

Steve: For sure. I graduated from San Diego State 2005 and stayed in construction for a little while. I was working with constructions in college, just bumming around, surfing, and doing whatever I was doing. Got my real estate license finally and did some deals 2006-2007. I hear a lot of stories like this, it’s like 2006-2007 sales, all of our sales, we should start a Facebook group for sales guys that flamed out, well I think it is, it’s probably called than NARPM of Facebook group. It seemed like everyone has that story.

I made some nice checks in sales and I thought I was great, and then I became broke very fast. I was 26-27 and I was broke. I was applying for any job that I could get and I went to work for a French entrepreneur in Carlsbad as a personal assistant. He wanted someone to manage his property manager that had a real estate license because he didn't trust his property manager.

Jason: Okay, so you were the spy that was going to monitor whether he was doing his job or not.

Steve: Yeah, most managers hate it when the owner micromanages you. Imagine a realtor micromanaging you. I was like, “Yeah, I can do that,” I never managed anything in my life, but I figured it out and worked with him. He actually taught me some great business lessons looking back, but two years in, it was very stressful working for him. He was not the nicest guy, but he did teach me a lot and then I went out on my own with a business partner at the time. We decided, “Hey, let's start our own management company and just got it enough off the ground to allow me to quit my job, be on property management with my partner I think in 2008. We grew that until about 2012 and then we decided to part ways. I started Good Life in 2013 and then been doing Good Life ever since.

I started the Good Life Property Management podcast which has nothing to do with clients, nothing to do with getting new customers. It was really a passion project and something I learned out of that was that I encourage people to do content for content's sake if their heart tells them to do that. A lot of times we try to figure out, “Well, how am I going to monetize that?”

I remember when I asked Brad Larson, I think he was one of the first people to do a podcast that was a property manager. I was like, “What are you doing this for?” and he was like, “Oh, it's fun,” I was like, “It didn’t make any sense, you're wasting time.” When you add value, like Gary V—a lot of people have really put this in the forefront—when you add value to people's lives, opportunities come your way, connections come your way.

I have so much fun doing the Good Life Property Management podcast and we serve the same community you serve which is property management entrepreneurs. I don't run ads. I have ran ads in the past, but I don't anymore. I don't necessarily get anything out of it other than just meeting cool people and getting to indoctrinate my listeners with my philosophies which are really along the same lines in a lot of ways as you, Jason. I really resonate with your manifesto in a lot of ways, so that's cool. That's it.

I'm big into music. I do a lot of music. Steve Welty, I’m on Spotify and Apple, and that's my passion. I'm going more and more into that. Also, we have tried mastermind for property management entrepreneurs to max out their business and life. That's what's up for me.

Jason: Cool stuff. I think we have a lot in common. Not only are we both California guys. A lot of people listening may not know this, but I had a band in college. I wrote all the music, I played guitar. I didn’t know I was an entrepreneur then. I didn't know that was in my blood, but I was the guy going door-to-door with a guitar and a clipboard pre selling CDs at girl’s dorms that I could fund to self-produce an album, and I was playing music.

Steve: That’s [...].

Jason: I know, it was pretty crazy. The album is on SoundCloud if people are searching for it.

Steve: Let’s check it out, what’s it called, how can we find it?

Jason: My username on SoundCloud is my username everywhere, which is KingJasonHull, and the album is called Whimple, that was the name of my band.

Steve: I love it. I think you told me that a while back, but I forgot, but I'm really fascinated with that because that was my story, too. I was a songwriter. That was hustle. I give you street credit like going dorm-to-dorm, playing for chicks, that's pretty cool. I thought I was going to be a rock star. That was my deal, but it's so funny looking back. I didn’t even practice. I just thought I have the natural talent and I used to drink a lot so I was probably delusional.

I had this moment, this crossroads where I was like, “Okay, you're not going make it,” I'm not going to be okay being older and broke, so I'm going to go on a business route. I just gave up music completely, and then I was in a strategic coach workshop. I have given it up five or six years and I met this entrepreneur. I was telling him about my story. I was like, “I don't really play music anymore,” and he's like, “Oh, that sucks.” I’m like, “Yeah, it does suck.” Then he’s like, “Well, you have a guitar in your office don’t you?” and I was like, “No.” He’s like, “Well you’re the boss, aren’t you?”

Jason: I can see it right behind you.

Steve: Yeah, right now I do it. He’s like, “You’re the boss.” I’m like, “Yeah.” He’s like, “Well, why don’t you try this, try just putting a guitar in your office. Just make a commitment to picking it up once a day even if it's for one second.” It really resonated with me because I had given up a part of myself that was really important because I think a lot of time as business owners, we just get so focused on like, “We got to make this company work,” and we’d lose focus of why and what fires us up on an internal level.

I did that and that about two years ago, fast forward to today, I'm putting many hours a day into music, into song writing, into recording, into building my audience and it's helped my business so much because when you limit the amount of time that you're in your business, you can only do the things that you're really good at and so that's what I'm really passionate about, is figuring out how can I achieve an outcome with the least amount of effort possible.

Jason: Yeah, because when we add limitation or constraint, it creates the byproduct of limitation or creating a constraint is it creates a necessity for innovation. If you have unlimited amounts of time, unlimited amounts of money, unlimited whatever, there's no innovation because it's so easy to be lazy. It's so easy to just let things unfold in a different way, but when we have some time constraints or we have some financial constraints, we have to get creative and that's where the genius starts to come out, that's where new ideas start to come out.

I've noticed that even with team members, if I say “I need this done by this time,” they get creative or if I need this done under this budget, they get creative, then they start to innovate. If I say, “Yeah, do it whenever, take as much time as you want, spend as much money as you want,” there's no innovation. They're just going to go towards whatever seems easiest, which is the status quo.

Steve: Yeah, you nailed it. I've been really interested in constraints. I had a son, my first child, he’s six months old, Myles, and I was encouraged by a friend of mine. He said “Take 30 days off, Steve,” he's like “It'll be the best thing you ever did for your business. Don't check in, don't do anything. Take 30 days off. Be with your son.” It was in December, so it was like the perfect time and so I did that, and man he was right. It really levelled up my business, my team got way better. They were already good, but just putting these things into place that force you to grow. That 30 days off was huge.

Next year I'm planning a 60-day trip to another country that I’m really passionate about using that. I even got my operations manager. He doesn't work out of the office anymore. I moved out of my office a long time ago because when you're in the office, you are often the bottleneck for your company and everyone comes to you for the answers and the solutions. I really grabbed on to that concept and constantly looking for new ways to use constraints to my advantage.

Jason: I love it. It's been awhile since I've told the client to do this, but a lot of clients will ask questions like, “How do I become a business owner instead of my own best employee?” I would tell them, “You just start doing it. You take a vacation.” If you schedule a week-long vacation, if you're not taking vacations, for those listening, you schedule week long vacation and you can't take off a week, you're going to have to figure out how to make everything not fall apart for that week. To go 30 days, that's incredible, 60 days is ridiculous, that's pretty awesome. At that point, you've arrived as owner of the company instead of being your own best employee.

I noticed when I would take off time or vacation, I would be surprised by how my team would step up. I'd be surprised by the things leading up to that vacation, more would get done than would get done sometimes in months. There are so many little things that you need to get dialed in. “Oh my gosh, they’re going to be gone for a week. How are we going to live without Jason? We got to get this.” My team would say, “Hey Jason, I need this,” or, “I need to access to this,” or, “I need to know how to do this.” Suddenly everybody's rallying around this idea of taking some stuff off your plate because they need to be able to make sure things don't break and it creates the possibility for you to do that more or forever.

Steve: Yeah, and I think its baby steps. I remember when I first read the four-hour work week. I thought Tim Ferriss was a god. I was like, that makes no sense.

Jason: Did you almost move to Thailand?

Steve: Close, but no, it was just really interesting. I guess from a personal level, having time was even more appealing than being a billionaire I guess to me personally. When I see people like Todd Breen and other people talk at NARPM that would talk about running your business from the beach or not is just very appealing to me. I wanted to grow a self-managing company and it was baby steps.

There's this book called Making Money is Killing Your Business and they say it really why. It says the purpose of the business is not to make money, it's to build a business that makes money, like time and money equals wealth. Your business should throw off time and money. Now, if you want to then use that extra time to just pour more time in your business, doesn't mean you got to go live on a beach. You could do other adventures. For me, what's really worked and what I'm super blessed to have now is that it's created space in my life to actually start cultivating the other things that light me up, like music, other things. It gives you those options, but that's what I think in our industry especially in a lot of industries, we want to help people, help them anyway we can to experience that.

Jason: They say, “What the world needs is people that are alive” I think as entrepreneurs that's where we feel. We want momentum. That's what we crave. The rest of the world, they're just trying to figure out how to be happy. “If I could just be happy then everything would be great.” It's whether they're happy or sad, depressed or excited, but for entrepreneurs, I feel like our two speeds are momentum or stuck, that's it. It’s momentum or overwhelm. We either feel like we're in complete overwhelm, we’re stuck, we can't move forward or we’re frustrated, or were on fire and alive. That's my version of happy or sad. I want to feel like I'm in momentum and I feel like as entrepreneurs, we get momentum when we give it away. When we create momentum for other people, whether it's our clients or the people in our family, the people around us, when we're creating momentum for other people, we get that sense of momentum, too.

Steve: Yeah, and that's something I resonate with and I’ve heard you talk about it Jason. I love that message. I really think that the blue ocean is caring about people more than anyone else, like proactively putting the people in your life in the forefront, figuring out, “Who do I want to be a hero to?” and being a hero is usually used in a reactive way.

Jason: Right, like there's a crisis or a problem, now you're going to be a hero.

Steve: Right, as opposed to being a proactive hero like spending time and saying, “Okay, who are the most essential people or buckets or groups of people in my life and how can I serve them more deeply and impactfully today,” because the best quote of success I've ever heard is something like become a servant of many. If you wish to become great, learn to become the servant of many.

I sometimes get a little jaded in certain groups because you constantly hear the feedbacks, the reduce the cost, the get it all out sourced. I use VAs, I look to reduce cost, I look to get fair fees, so I'm not knocking that, but everyone's playing in that sandbox. I'm very interested in seeing what is everyone else doing and how can I do the opposite because that's one of the ways to become successful that I've learned is that you go zig when they zag. That’s cliché.

You can't do that when you're buried in tenant complaints and one-star reviews and a team you have to micromanage. I'm a big believer in hiring young, smart, motivated people and leaving them alone. We're a results-based company at Good Life. You can work from home, you could bring your dog, although actually our manager of our building said we can't anymore. I don't really care, with the exception of a couple like the front desk needs to be there in case someone walks in and things like that, but do your thing. There's a great podcast I heard yesterday on how I built this with Guy Raz where the owner of Patagonia wrote this book called “Let Them Go Surfing” and it's all about that.

I think our biggest issues once we get to a certain size is people problems, and then we don't know why we can't keep good people, it’s because we don't paint it in a compelling vision. We micromanage. We don't let them do what they want to do. We try to fit corporate bureaucracies into the more entrepreneurial company that people want to be a part of these days. Would you rather follow just checklists and not have a future or would you rather be able to create your own future? Like I tell my team, “You can become anything with me. The sky's the limit wherever you want to go.” So, I think those are big parts of success.

Jason: That's really what we're talking about today. The topic is freedom of time, money, and relationships through better business practices. What are some of the practices that you've implemented at Good Life that you feel like you've created more freedom of time and money?

Steve: It starts with the business owner and probably a series of game changers. The first was moving out of my office. I had this epiphany and I was taught this by someone and I told the team, we had a meeting, I said, “I apologize. I've stood in the way of you guy’s future and I apologize for it. When I'm here, I'm the bottle neck. I'm stunting your growth. You can come to me for all the answers,” and the fact is as entrepreneurs if you serve 100 people and say, “Where do you do your best work?” nobody says at their office, who does the best work at their office? Why are we working out of our offices? It's just because that's how it's always been done.

I kicked myself out. I don't have a desk at my office on purpose. I used to have the stereotypical nicest office in the corner with the best view, and then it freed up so much space, it helped my team grow. Once I created that space, now I work out of my home, and the first key to greater time, money, and purpose is to create space I believe, for yourself. I came from a place where three or four years ago, my dad always taught me outwork everyone else. I remember one time he came to visit me at a college and he asked me how much I was working, I said about 60 hours a week. He’s like, “60 hours? I work 60 hours, I'm retired. What the hell is wrong with you?”

Jason: Step it up Steve.

Steve: Yeah, and it's great. I love my dad. His work ethic was the reason I'm here today, because it got me to that. There are seasons of life. I knew there had to be a better way, so when I'd made that decision to move out of my office, I said, “Hey, you guys are going to have a bigger opportunity to move up now.” Some of the other things we did was hiring an operations manager. That was huge. That created space and that was something I look forward, and it took me probably eight or nine months to pull the trigger on that, but the operations manager was huge.

Slowly but surely, I went from just being stressed out all the time, not having any space in my life. An over-scheduled entrepreneur has no time to transform. I said, “Alright, I'm going to create some space,” and then all the ideas and all the answers start bubbling to the surface because spiritually we all have all the answers inside of us, just we’re so distracted and so just going that we don't allow it.

Jason: We’re preloaded, we're in fight or flight, we're up in our monkey brain, and all the great things, our greatest geniuses as an entrepreneur can't bubble up or can't come through when we're in that state.

Steve: Exactly, and so that's time that just forced me to get more time because as an entrepreneur, you can make that decision.

Jason: We’re buying time. Every person that we pay on our team, we’re buying time. That's what we're buying. I think the mistake we make as entrepreneurs, a lot of entrepreneurs I see, they go hire based on an org chart. They don't hire based on what they personally need in order to off load or get themselves out of the things that they don't really energetically enjoy. You getting an operations manager if you're a visionary entrepreneur is brilliant, because that's like the yin to the yang. It's the exact opposite personality type of the driven entrepreneur is to have somebody that is systems-minded, process-minded, and that can make sure everything's running. Generally, us entrepreneurs, we’re terrible managers. We think we're great at everything, but we're really terrible managers and usually the operations manager is much better at making sure everything runs smoothly.

Steve: It's hard to take off or get more time initially if you don't have the money. The money component is important. I went on a Mastermind trip to Mexico a few years back with a handful of people and we looked at everyone's P&L and that was one of the biggest game changers for me was not only understanding my numbers. I think everyone needs a CFO at least part time or at least some outside eyes on the business is so important.

Jason: I have a profit first coach and accountant. I'm not really a big fan of having a CFO in a business. Usually, my take on it is every story I've heard of embezzlement or of challenges it's always like the CFOs, and so they're also the crusher of all hopes and dreams. I don't want somebody making too big of decisions there personally, but I want to be coached, and I want to have input and I want to have insight from a third-party perspective, but I don't want them to have control over my stuff.

Steve: Totally. I get that. I don't have a CFO, we use a profit coach.

Jason: Yeah, similar thing.

Steve: Right, but I found that I wasn't going to build a business I thought I was going to build because I'm a feel guy. Like I learn by doing. Does this feel right and I’ll make a decision, but I make decisions very quickly. I'm a high quick start, so I'll make 10 decisions, eight will be bad, two will be great but in the same time that someone else makes one decision. I sometimes can stay a step ahead, but I had to add some revenues and I wanted them to be value-added revenue sources where everyone was a win-win-win, so things like doing inspections better in charging for them. When you don't charge for something, you usually do them poorly. Every manager that doesn't charge for inspections, I guarantee 90% of you are behind on your inspections.

Jason: Let's say that again. I like that concept. If you don't charge for it, you're probably doing it poorly.

Steve: Right. I'm a believer in this. Just take inspections for example. You go survey people around NARPM or any property management group and everyone's behind on their inspections so they don't do them right. We send a letter to our clients. We said, “Hey, inspections are actually really important. This is when we identify how well the tenant is taking care of the place is when we get out in front of preventive maintenance and it needs to be done well, so we need to hire someone to do this full time and we want to invest in this X amount we charge. It’s going to probably save you three times at least that amount by getting out in front of some of this stuff,” so that was a win-win and our clients loved it.

Maybe they didn't want to get charged initially, but once they saw the improved inspection, once they saw the improved communication and results, that was a big win. Then just some other ones that we added in. I think you got to keep the investor fees-friendly. The worst thing we can do as managers is fee our owners to death and they’d get out of the business.

Ultimately, the freedom of time, money, relationships, and purpose is what we want, but it's a human need. It's what your clients want, too. So, we have a unique position as property managers, realtors, and investors ourselves in a lot of cases to help people build wealth through real estate. You're a manager and you make it easy, because if you don't make it easy, they burn out and they sell, but if they hold that house specially in San Diego for 30 years, that’s all you have to do and you've set your family up for life. They burn out, so we have a big position, a big part to play here.

Jason: I love it, and I love that it’s like a mantra, having others build through real estate, and ultimately what property managers could be allowed towards doing. It’s not just managing a property. If your interests are in line with theirs, which that's their goal. Their goal is to build some wealth, otherwise, why would they be holding on to that property.

Steve: Exactly. There's different ways to do that. Right now, we're looking at some other states to buy cash flow property and figure out how to have our owners follow us into some of these other markets. I think with technology these days, that's what all the venture people are doing, how to just pop up shops anywhere. That's something that's exciting to me right now because in San Diego it doesn't make sense to buy an $800,000 house that rents for $2800. We're sitting on some stuff when the market turns for San Diego, but yeah, there's different opportunities out there.

Jason: Alright, cool. What should we talk about next?

Steve: You know what I'm interested in? I actually thought of this today, and there's some things I've been thinking about doing that I procrastinate on. You know the saying…

Jason: I think every business owner can say that.

Steve: I know right?

Jason: I call it the to-die list. We all have to do list of stuff. Just last week, I have my weekly commitments and I realized I was carrying all of these things over from week-to-week. I'm the guy that says to my clients, “If there's anything on your to do list for more than two weeks, you're not the person that should be doing it.” That's the problem. Yes, we all tend to do that as entrepreneurs. We tend to hold on to things instead of finding the right person to do them or giving it up somebody else.

Steve: That’s so true.

Jason: Talk about the to die list.

Steve: Yeah, the to die list. I was thinking about this today. Two examples of things I have been procrastinating on. One, I don't want to answer email, anymore. I literally want to have email leave my life. I have gotten email down to just like 10 minutes a day at the end of the day, have an assistant, but literally that is still bugging me. I once got this really inspiring auto responder from this really smart cool guy, let’s see if I can find it.

Jason: I don't deal with email anymore?

Steve: He said, “Thank you for your message. Perhaps you are overwhelmed by email. In fact, last year I sent 43,742 emails, read and review countless more so in order to serve our stakeholders much more efficiently, I have asked my highly capable assistant that’s in New York to review, assign and reply all my email request moving forward,” and then it says some other stuff.

That's something I want to do, but it's big and scary, and yeah, I know I'll probably have to respond to some emails, but I'm talking about eliminating it more. I'm like, “Why don’t I just try that? Why do I have to make this decision I procrastinate on forever? Why don't I just try that?” I think it comes back to we don't want to fail like that, we're always raised with, “There is no try, it's to do or die,” or whatever. You don't try, you either do it or you don't, but it's like, “Why can't I just try that? I have an assistant. Why don’t I run that for two or three weeks and see how it goes?”

The other thing and I'm sure you've probably thought of this, Jason, is like Gary V, having maybe a semi full-time person doing vlogs, recording not just every few days, like every day. I'm just sitting on that and I'm like, “Well, why don't I just try it for like a freaking month?” I think there's so much possibility with that and I wanted to see what you thought because I'm like, “I don't have to commit to it.” There's so much stuff. Even hiring someone. I was thinking about hiring a GM or an operations manager for eight or nine months. What if I just said, “Hey, let's try it.” I mean this isn’t Canada or some other places where I don't think you can fire people. Try it, hire the person, and if it doesn't work out, let them go.

Jason: Yeah. Let's go back to the email and then we can go the other thing. Here's how I identify stuff. I mentioned this on the previous episode, but I personally will do a time study probably about once a quarter and if I bring on a new team member that takes something off my plate, because how I identify what I need to get off my plate is by doing a time study. I have to be accountable. Where's my time actually going and which things are low dollar an hour work, which things are things that I don't enjoy.

I actually write a plus or minus sign next to each thing that I'm doing, whether it energizes me or it drains me, and then identify the things that are tactical or strategic, things that are self-care versus family time. I have a whole system, I take clients through for doing time studies. When I do this, that helps me get clarity for what I need to get rid of.

I gave up email a long time ago because I hated email. It was always a minus sign, it was always tactical, it was never like my hopes and dreams were coming true when I was writing an email. I don't even look at my email. So, if you've emailed me, I'm sorry, I don't look at it. My assistant will take care of the email. She reads it. If she has any questions, she sends me a message through a walkie talkie app, because I don't want to type to her. She'll send me a voice message through Voxer.

We use Voxer and I use it with coaching clients, she will send me a Voxer voice message and say “Jason, what do you think, how should we respond to this email. They're asking this.” I say, “Just tell them this, this and this, but say it nicer than I just said.” Then she’ll take care of it, and she's asking me questions throughout the day.

We also do daily huddles as a team and that's usually where she gets most of her questions in. I say, “Is anybody stuck on anything?” She's like, “Yeah, did you get my message about this?” “No, I wasn't paying attention.” “Okay, what do you need?” I answer it and she can respond to the email for me. She's gotten really good at understanding over time, she gets better and better at knowing my voice, knowing what I would say and she takes care of more and more and more. Every day she'll give me a short list, “Here are the emails I don't know what to do with. You need to take care of these,” and I begrudgingly will deal with them within a day or two.

That's how it works. [...] then I’ll talk with them and move them forward, but outside of that, usually she hands it off to my team or has somebody else in the team deal with it. If it's support-related, I think most of my clients have learned that they're not getting a fast response by coming to me directly. They get their best response by emailing our support email address or system and so I think every property manager needs to do the same. Initially, when you're small you're the guy. They probably have your cell phone number.

Tenants owners, everybody, and eventually you change your phone number and you create some barriers and protections, you have to educate and teach people how you want them to treat you, and you’re going to teach your customers what are the right channels and you have to teach your team what are the right channels. My days are pretty quiet.

Steve: I love that. That's super inspiring. You fired me up even more and I love how you said it's tactical. It's very transactional-tactical. I want to be playing in the sandbox of transformational. I feel like I'm retired now because I do what I want and I'm blessed to say that. There's been a lot of hard work behind that, but I'm to the point to where I'm not going to do stuff that doesn't light me up and there's a small subset of tasks like creating content—podcast is one of them—that I could do all day and I have endless energy for. That's where I add the most value.

So, the bigger the impact on people that I can have is going to be when I'm fired up and passionate and not dragging off of email, but I think we don't give ourselves permission to do that. You saying that, I'm all in now. I was 80% in, Jason, now I'm all in. I hope some listeners are all in to move forward.

That's what I love about podcasts and other things with so much being shared these days. A lot of times we think things, or we know things internally, or we feel things a certain way, but we don't give ourselves permission to actually say that or feel that in public because sometimes we just need someone else to say it to give us the courage.

I've noticed that happening so much lately that I finally got pissed, and I'm like, “You know what? I'm making a list of everything that I believe in whole-heartedly, that I think is a little off mainstream maybe.” That way I can have it in writing and I'm just going to start saying these things because I'm tired of being, “Oh yeah, and I felt that way, too,” but I never said anything.

Jason: I mention this on the previous episode, too, that I've been really opinionated in the past and I've realized that I think I'm a little more humble now that I realized my way isn't always the exact right way for everyone, so I'm learning. I was just in Columbus for a week and one of the things that really hit me hard is that I've been really opinionated and I think it's important to put out things more as observations rather than gospel truth. Somebody may love email or somebody may hate doing podcast stuff.

Everybody is different and I think everybody's perception is different, everybody's experiences as to what works or doesn't work in marketing could be different, their market might be different. There are so many variables involved, so I think moving forward, my content is a lot more observational because I've realized I was attracting clients or creating monsters in the industry that are hyper-opinionated and the hyper-opinionated people become like, “Oh my God, [...],” but the problem is they create a lot of negativity in the industry. They become the rampant [...] guys that are heartless, that want to crush all the hopes and dreams of every tenant on the planet. We need to be careful in any business or any industry in being too opinionated because what ends up happening is we end up attracting most opinionated people. Those are the people that turn on you. Those are the owners you don't want eventually. Those are the people that give you the negative reviews when one little thing goes wrong.

I want open minded people, and these are the clients that I’ve loved the most, but I was attracting less of them per capita because of the message that was so in your face. “This is the [...], do this,” and I was just so strong willed that way and I realize now that that creates its own monster. I think it's important to share though, honestly, these little things that we have, that are weird about is or that are woo-woo that we feel like the rest of the world will judge. To say. “This is me, this is how I am, this is my experience,” and yeah I think you when we let our freak flag fly, so to speak, there are people that run with it. As long as we're not, “Hey, this is the gospel truth. This is the only way to do it,” we're not going to turn off so much so many of the people that don't resonate. They might go, “You know, Jason, that’s cool that you're into that weird stuff, but I'm more of a practical guy and I don’t resonate with that, but I like a lot of the stuff you say.” If I say, “This is the only way to do it,” I'm forcing them to make a choice to go all in and do everything my way or the highway.

Steve: Your coach helped you nail that idea. I had that opposite issue. I think the issue for me was that I didn't want to ever come off as opinionated. I'm scared almost having an opinion because I'm like, “Do your thing, man,” so I’m always quick to anything I believe in. I'm quick to say, “Do what works for you. This is just my journey. Do what works for you.” I think like attracts like and that's a really cool observation that you started attracting all these opinionated people. The coaching thing, I love that you have coaches and you’re a coach yourself because the power of coaching has changed my life.

Strategic coach, I work with Jason Goldberg. Every time I have a call with him, I transform. It's really crazy. If there's one thing I'm super high on right now, it's co-creation. Co-creation is the super power that nobody's talking about and I've experienced it in many ways. First through music. Although I normally do music on my own and I'll just write songs. When I get in the room with the right people, they don't even have to be a great musician, it's just that the energy. If we’re vibrating on the same frequency, things just come out so great.

I played with this rapper the other day. Two of our new songs are two of my favorite songs I've recorded in the past year. Back when I had a casual mastermind that we used to do, helping each other co-create, kick this process back to you, now you kick it back to me and blah, blah, blah, everything just accelerated. So, I think outside eyes on the business, coaches, casual masterminds, paid masterminds, whatever it is, I think the more we're interacting with others and having a sounding board, the faster we're going to get to where we're going and the more transformative the experience will be.

Jason: I agree. To touch on that, every single person you'll notice, everybody listening will know this is true. You can talk about it in terms of inner energy or spirituality or whatever, but every single person that you’re around brings out a different side of you. There are people that when I'm around them, I feel I'm freaking hilarious, I’m the funniest guy on the planet. They’re laughing at everything I say. It's awesome. Then there's people that I'm around that I feel I'm super mental, analytical, and logical. That's how they perceive me and that's what they bring out in me. And there are people that feel I'm this emotional sensitive person. My kids would probably say, “No, he’s Mr. Analytical.”

There are different people that bring out a different side to us. This is also why I have a strong introverted side. I need space away from people to reconnect with who I am and to make I'm me. I feel when we're around other people, part of it is how they perceive and see us, brings that out in us, it allows us to be [...] energy and yes absolutely there's this connection and a certain combination of different people, or different energies, or different whatever that will create a different music.

You've got the Beatles, for example. These four guys came together and they created all kinds of interesting sounds and music that had a really strong impact and all them wrote songs [...], but on their own, none of them really created as strong of a situation without the others. Just the energy between Paul McCartney and John Lennon was pretty magical.

Steve: Totally, and country artists or country songwriters write typically with at least two but usually three or four people in the same room. I think there's parallels because I can speak from experience. I was constantly, with the exception of going to maybe two conferences a year, I was at the desk in my office, head down, genius with 1000 helpers, although I wasn't a genius that is just a saying I’ve heard by any stretch of the imagination.

Jason: The emperor with no clothes.

Steve: Right, the fool with too much control, and that’s the thing now. I'm in charge, but I'm not in control and that’s self-freeing. It's the people, my people that are awesome are in control and the cool thing now to get to the impact or the purpose part that is super firing me up these days is that I've gotten to a point now to where my job with Good Life is to take care of my team. It's to figure out how can I make their lives better. How can I figure out, what are their dangers, their opportunities, their strengths?

Where do they want to be in three years? How can I cultivate that? How can I make it so all of them would run through a wall for me and take a bullet for me because if they would do that, they will treat my money like their money, my company like their company. The reason I started really researching how, I was like how does the military sail hundreds of 18-year-olds across the sea and set up forward military bases. It's just mind boggling, and I read Extreme Ownership. It’s a great book, some other books, but you talk about decentralized command. The top gives them the mission and then that leader gives them the mission and then the lieutenant, I’m butchering correct words.

Jason: The hierarchy?

Steve: Yeah, the hierarchy, but they are allowed to come up with the game plan and the battle plan. One of my jobs at Good Life is to make it okay to fail. To be okay to test things and screw things up and get beat up over it.

Jason: Because if they're afraid to fail, guess what happens? They start hiding crap from you. Then there's all the secret stuff going on then there’s interoffice politics, there’s backbiting. People have to be allowed to fail and not feel they're going to have their head chopped off. Otherwise, you have a business that’s unsafe for you.

I love the idea of you giving up control, I've given up control over my email. I don't even know what's getting sent out half the time, but I've created trust and I trust her. She's very cautious in how she does it. I've given up my schedule. I was in Vegas last week, the week before that I think it was in Columbus, a week before that I was I think in Phoenix. I don't choose anymore. My assistant, she's like, “Here’s a speaking opportunity. You're going to go speak here.” She sets up these podcast episodes, everything I've given up autonomy on my time, but I still blackout Mondays and Fridays so I can do some of the things I want and then I have my weekends, but you give up control.

The higher you move up in your business, the less control you have and the more you give to the people around you. I just do what they tell me to do. I show up. My job is to support them. I love what you were saying that you've transitioned because I think as we start out as entrepreneurs and we get our first few team members. We’re always asking the question and frustrated why can't my team just do what I say. Then eventually we transition and we transform and evolve and realizing they are some of our best assets, they're supporting us, they're better at us in things that they do, they love their areas of expertise and now it's, how can I support them? How can I help them get ahead? How can I make it easier? How can I help them avoid burnout?

You also threw out the words transformational and transactional, and I think those are two very different leadership styles that I think are important to point out. I think what you’ve just been describing is you're trying to create a team that is transformational. Transformational leadership is where you give them an outcome and say, “That's where I want to go,” and they say, “Great,. We'll figure it out, we'll help you get there.” Transactional leadership is, “We're going to go here and here's exactly how we’re going to do it and we’ll do it my way,” and then there's no buy-in, there’s no ownership, they don't get to fail because if they do what you tell them to do and it doesn't work, whose fault is it?

It’s mine, but that means they can't win too. If they can't fail, they can never win, and you're never going to keep A players on your team that never get to win. This is why people get so frustrated by millennials, because they're dinosaur business owners, they're running their business like assholes, they're tyrants, they're trying to micromanage their team, tell everybody to do it, and it’s transactional. They're saying, “I'm giving you money, just do what I tell you to do. I paid you, do it.”

Millennials don't stand for that. They value themselves more. They want something beyond just being told what to do and getting a paycheck. Believe me, I have team members on my team that would just be there to show up and [...] and get their check. They don't believe in you, they don’t believe in the company, they're hypers, and they go home and complain about you, and the job, and they live for the weekends. But if team members enjoy the work and they feel they have freedom and they have autonomy, you have their discretionary time. They're thinking about you after work. “How can we make this better?” They’re thinking about you on the weekends. They do extra stuff because they're in love with what they're doing.

Steve: Totally. Now, you said that really well and I think what comes up for me as the EMyth, which was a very transformational book to use that word for me. Checklist, at certain points at Good Life, we are a results based company, but a lot of times I get pulled to these meetings it’s like this person is not… they checked the box and they didn't do it or they didn't check the box and they should have, you know I mean? What's the results? Is the days on market good? Where is his KPIs? Although they’re good, we have this back and forth. So, here's something that I want to stick my flag in the sand as something that's not conventional and goes away from my instinct which is let them figure it out. I don't care about the checklist.

We're not all going to be McDonald's. Honestly, I'm not trying to scale my business across the whole country, if I was, I probably would have to make sure everybody checks that box, but I'm really interested in the small giants approach, where it's going deep with the smaller amount of people, still having a big business that makes a big impact. I say, “Hey, look at the results. Make it a results-based company because they can own it. They have more ownership in that regard.” Something else that comes to mind was, I remember I used to walk into the office when I used to go to the office every day and people would be on YouTube and I would freaking be so mad.

They're watching some videos, I would stew about, I wouldn’t say anything right away. I would go in my office and fume. Then I remember I talked to a friend about it, someone I respect, a mentor. He's like, “Man, you got to let that go. If they get the results, who cares how many cat videos they're watching. You want a fun environment. If you go lay the hammer down on that, you're going to not have the team that you need to have to make your dreams come true.” Someone I respected telling me that was me letting go of a helium balloon. All this weight was just lifted and I was free. I didn't have to micromanage.

Jason: I think it's interesting because sometimes usually the person or the team that gets really caught up on the checklist and everything being done a certain way, that's usually the operations person. They love that stuff, and it needs to be done this way, but I think that's our job as the visionaries to remind them it's the outcome that matters. It's the end result that matters. The end result is making sure we have a profitable business. The end result is to make sure that we're honoring our customers and we're treating people well. These sort of things, if we want to get to the outcome.

How we get to that outcome, there's probably a million ways we can do it, and whether a certain box wasn't checked or certain thing didn't end up happening. Well, maybe that process is too cumbersome. Maybe it needs to be supplied, as long as getting a result. There’s always this balance. You can have a 30-point checklist that somebody has to complete, but if you can get it down to 10 steps and they can actually do it every time and it doesn't feel it’s in the way, then you're better off than the people that are operating without looking at a process document because most people don’t. They'll do it once and then just skip it. You need something that they can live with on an ongoing basis.

I think that's really important to point out what you said is that it's the results, that results don't lie, it's the outcome that really matters. So, I think if you take a step back and say, “Well, what outcome are we going to achieve? Somebody's talking about checklist not being done well. What was the outcome we were trying to achieve? What's the outcome? Okay, did we achieve it? Who was responsible for it and how do we know whether it got done or not? Okay great, well then we're good, maybe we should change the process.”

Steve: Exactly. Those are some things, but the exciting part is having freedom of time, money, relationships, the people you work with, the people you get to do business with, I know you talk a lot about firing the bad clients. That was an amazing experience, our profit went way up when we fired the wrong types of clients and getting really centered on our core values because then it's easy to hire and fire people and hire clients based on your core values.

Ours are really simple. It’s RPG: be reliable, be positive, and be a go giver. It's based off that book, The Go Giver, and it's just simple. We used to have seven or eight, but then I couldn't even remember what they were and they felt weird, so we made it really simple. Now, my business development manager just goes down the list, like, “Are they reliable? Were they at the appointment on time? Did they send you the thing they said they were going to send you?” It just makes this compass of how to do business with the type of people that are going to make you successful.

Jason: That's one of the things that coach clients through is to get clear on their three, maybe four core values because you can have a list to 10, you can have 20, but really your team aren’t going to remember all of those and you can usually boil it down to three core things. For us, ours are a little bit different. One of my core values is just transparency.

That's originally why I call my company Open Potion and in just creating transparency I think in the industry has created some various significant shifts. I think also for [...] just how I operate. That's a value that is central to me and I want my team to espouse and really our companies are just extensions of us. It's my Iron Man suit that I get the strap on every day, that's my team and everything around me. It increases my capacity. It makes me feel a super human. I'm getting more done. I've got India handling my email and Adam handing fulfillment. I feel like I’m a superhuman.

Steve: He’s awesome, by the way.

Jason: Thank you. I think of other things I'm really big on is just eliminating constraints and looking for the big constraints that are preventing momentum, so that I can create momentum. It’s all about creating momentum for my clients and for myself. I think it's going to be different for everybody. With all the different things that we are inspired or that resonates with us and I think every business owner needs to get clear on really what their values are because you can't have it.

There are only two types of team members. There are hiders we talked about that are hiding and they are living for the weekend and they show up for paycheck or there's believers. The only way you can have believers is if you have something for them to believe in. If you want believers on your team and you want clients that believe in you, you have to have values that you make transparent or clear to the marketplace or to your team so that they can they can buy in to them. It's amazing to see companies get to a large size without even having that in place. Once you get it in place, I imagine the shift is traumatic for the culture.

Steve: And if there's one last thing I would leave the listeners with that’s going to be probably the most impactful thing for me in the last 24 months was, I had this epiphany that everything worthwhile lives on the other side of fear. I knew that instinctually and I've been told that before.

You know how you can read a book, that's why they say re-read the books that you love because you read it four times and then you'll start to actually really get it. I knew that, but I didn't really get it and it hit me, it became crystal clear. I was like, “Okay, if I want my dreams to happen and be fulfilled and live a life that I want, I have to figure out what scares me and do that.”

I have a two-part test. Does it scare me, part one. Part two, does my heart tell me to do it? If the answer to both of those is yes, you do it. I even made a wristband that says, “What scares you, do that.” I don't have it on me right now, I took it off. Just to remind me and it goes back to the try thing.

All my biggest leaps came after I did something I wasn't prepared for and I was scared to do, like going to that mastermind. I couldn’t afford it, it was really expensive. Hiring my operations manager, hiring a marketing manager. I gave a talk recently at PM Grow that I thought I was going to be broke after I hired my marketing person because I didn't think I have the margin and we ended up having our best year ever.

It comes back to the try thing. Figure out what scares you, do that, try it, whatever it is. I think that's where we make our biggest leaps and that's what sets people apart from living a life that they intended to having regrets, which is the number one regrets of the dying is that they didn't live a life true to themselves, instead they lived a life other people expected them to live. That's the thing that scares me more than anything in the world and so I’m passionate about sharing that message.

Jason: Steve, it’s been awesome having you on the show. I'll second that. It really is that voice deep down that is that voice of truth, and also you can ask yourself deep down, “Do I really want to be doing this?” Deep down, “Should I be doing this thing?” Deep down, “Does this really resonates with me,” and if the answer isn't a, “Hell yes,” then there's a lack of congruency and I think that's where you're saying your heart is yes. I think [...] of something that isn't working is the death of something inside you. It means change, something has to die.

You want to know what's really interesting? I've noticed a lot of this on [...]. The scariest thing to kill or to allow to die is the fantasy of something great. I’ll explain this, I've noticed this a lot lately with business owners. They have this fantasy of having a really healthy business, or having a business that is growing, or a business that they contribute, or they get to do great things, and that fantasy is so exciting to them and juicy to them that they don't want to take action on it, because to take action on it means they have to kill it.

They have the brutally pull out the knife and slaughter their fantasy the second they start taking action towards it, because now reality sets in. Reality is never going to be at that level that the fantasy was, but it's better because it's real. I usually use the example of my friend in high school that wanted to be a rock star, which sounds like you. You had to eventually give up the fantasy of being a rock star or you have to choose into it fully. He had this fantasy of being a rock star and he would buy expensive guitars and amplifiers, and he wouldn't take guitar lessons.

He won’t love the fantasy of having this fantasy of being a rock star and as long as he can buy cool guitars and keep imagining this future that would never happen, he was happy, but he didn't want to go sleep in his car and do gigs, tour round, work his butt off, and practice nine hours a day. He didn’t want to do any of that. That's reality. Reality means some work.

Initially, if you're listening to this and you’re like, “This is great. Jason and Steve have these companies and making all this money, they've got their assistants. It must be so nice for them.” They're probably listening and going, “I don't get it. I'm not there.” You may have to be the person listening that you right now, it's time for you to double down. It's time for you to hustle. It's time for you to do stuff that scares you. It's time for you to get off of the fantasy of whatever you're hoping of doing or hoping of starting to really get out there and do the work, the hard work to make it happen and you listen to that voice, you get to that place. You get to that place eventually where you're now are able to focus on your team. You're able to be a coach and a mentor to people around you instead of the person trying to figure out how to get everybody to do everything.

I think that transition really involves taking those scary leaps. I think every coach that I've hired was a leap. None of them were cheap. Every coach I've hired, every program or training I bought into, some of them I couldn't even afford at the time. They were risks, but I knew deep down it was a yes. I just knew it was a yes and it terrified me.

I think for those that are really analytical and logical, they're like, “I don't get it Jason,” but for anybody else listening. If you have that voice deep down inside that is saying, “Hey, this is what's next for you. You've known it. You've been avoiding it and you're trying to figure out how to make it all feel safe, take the leap, and jump and do it. Worst case scenario, you're going to learn some powerful lessons.” I had lessons where I spent a lot of money and it didn't work out. A lot of money. I've probably lots of money making some bad choices, but I wouldn't trade those lessons and I've learned from them.

Steve: Yeah, and money is just one side of it. Making a decision to be a different person, or to take more time off, or to go into a completely different field, that's probably the easiest one to do is scratch a check for something. Sometimes our way of being is probably what gets in the way of most of our issues because you can't solve the problem with the same mind that created it.

Creating some space and getting clear always helps, getting clear on what you're trying to do and the life you're trying to live. At the end of the day, we’re the writer, director, producer of our own store and I love how you said, you kill off the fantasy because that's true. It's scary.

I think that's why a lot of people don't delegate it or it takes so long to delegate because it's scary. If you give that up, what are you going to do? Then you actually might have to sit with yourself and figure out what's next and nobody wants to be alone with themselves. That's a scary place. It's through the work, it's through conquering those demons slowly over time that I've seen good results, so it's a process. Take it easy on yourself and do what's doable. I beat myself up a lot over the years and it's I think we're all pretty ambitious. Don't kill yourself. Life's too short. Just have fun with. Do what’s doable.

Jason: Well, Steve, it’s been awesome having on the show. I'm sure we could jam over and over and over again about all kinds of cool things. I appreciate you being here. Fun having you and I think there's a lot of really good takeaways for people that are going to listen to this or relisten to this and thanks again for coming on.

Steve: Yeah, thanks for having me, Jason.

Jason: You're welcome. How can people get in touch with you or some of the stuff that you're doing?

Steve: If you have any questions you can always email me steve@goodlifemgmt.com. Then check out the podcast, Good Life Property Management Podcast, we love that, and then Tribe Mastermind Podcast with me and Jordan Muela. Those are two podcasts that are we have a lot of fun with, that are around business, mindset, and all that good stuff.

Jason: Cool. All right. Great. Thanks Steve. I appreciate you.

Steve: Thanks so much for having me, Jason.

Jason: All right. That was fun. If you are property management entrepreneur and you don't have a coach, I recommend that you find somebody. Find somebody, find the best that you feel you can afford at where you're at right now. Get some input from somebody else. Find a mentor, find another property manager in your state. If you need to, find somebody that you feel you can lean on as a resource.

Nobody has to be alone in business and I think one of the biggest pitfalls that I had early on I think most entrepreneurs have is that we feel alone. We feel we're weird, we’re different. We are, we're different than a lot of the world, but there's plenty of people us out there and so make sure you have somebody that you can look up to, that you can lean on, that can give value to you and it's never just one person. Keep going. Keep doing this. Keep feeding into yourself. That's always an investment that's going to pay off.

If we can help in any way with that, I would be honored. You can reach out to us at doorgrow.com and we would be glad to support you in the beginning of that journey towards your growth. As always, to our mutual growth. Until next time. Bye everybody.

Download this Episode

Sep 10, 2019

Property management is hard enough. As your business becomes successful, don’t always say “yes” or “no” to everything. Owners are coming to you to solve a problem. Step into potential opportunities without being pulled in multiple directions.

Today, I am talking to Marc Cunningham, President of Grace Property Management, who identifies five characteristics that define successful property management companies.

You’ll Learn...

[02:42] Entrepreneurial Footsteps: Marc grew up in real estate property management world working for his dad, who founded Grace Property Management in 1978.

[04:02] Doors in Denver: Grow slow and steady; from 110 to 1,000 doors.

[04:32] Mantra: Follow the opportunity.

[07:15] However you define success, companies follow some of these five standards.

[07:56] #1. Filter and Qualify Owners: Don’t take every owner that comes along.

[20:04] #2. Know your numbers to know how well your business is doing.

[31:43] #3. Focus on profit, not door count. People are willing to pay for additional value.

[37:20] #4. Have systems and processes in place, and follow them.

[43:50] #5. Recruit, develop, and retain talent.

[52:28] Marc’s Extra: #6. Hold weekly one-on-one meetings with each team member.

[53:15] DoorGrow Extra: #7. Invest consistently in your own development.

[56:27] DoorGrow Extra: #8. Get coaching to help grow your business.

Tweetables

The more successful you get, the more opportunities come your way.

Cycle of Suck: Taking on bad owners, you get bad properties, tenants, and reputation.

You won’t regret firing difficult clients, despite emotional and operational costs.

Track metrics regularly because numbers make a difference.

Resources

Grace Property Management

Marc Cunningham's Email

Business Health Check-up Form

DGS 25: Why Every Property Manager Should Implement Profit First

DGS 80: Automating Your Business with Process Street with Vinay Patankar

DoorGrown Cold Leads Calculator

DGS 94: Lead Gen and Growth with Robin Reed of Concept 360 Property Management 0

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.

This guest that we have today is a fantastic gentleman named Marc Cunningham. Marc, you're not a stranger to most people probably listening to the show. Welcome to the show.

Marc: Thank you for having me, Jason.

Jason: I'm really excited to have you here. It's strange that you haven’t been on here yet. At the beginning of the show, I was like, “Have you been on here? You're like, “No.” I said, “It's long overdue.”

Marc: I’ve just been waiting for the invitation.

Jason: Okay, well I'm glad we finally got you invited. I’m glad you're here and today's topic is going to be the five characteristics of successful PM companies. Before we get into that, I want you to share a little bit of your background to qualify yourself to the audience, help them understand how you got into property management and what your connection is to these five characteristics of a successful company.

Marc: Absolutely. Let me start by asking you a question. What were you doing in 1978 Jason?

Jason: 1978?

Marc: Yeah.

Jason: I was probably pooping in a diaper and drinking breast milk.

Marc: Okay. That image there.

Jason: I was born in 1977.

Marc: Okay, so you’re one. I wasn't much older than that, but in 1978 my dad decided that he was going to quit teaching—he was a middle school teacher—and he was going to follow his entrepreneurial real estate dream. We opened up a real estate property management company Grace Property Management 1978 in Denver. I was employee number one because I was pre child labor, so my dad would have me doing all the things that kids probably shouldn’t do. He would have me showing properties, mowing lawns, collecting rents, and filling out lease, just anything that needed to be done. I grew up in that world, so it really gave me a unique view into real estate, into property management, and just in the business because that's all I knew. That’s all we did.

As I got older, I’d take my summers, I’d worked for him in the summers, and again just doing whatever needed done. If I get really lucky, if it gets too hot out, I’d work in the office. When it got over 110 degrees, the deal is I get to come into the office, otherwise I’m mowing lawns. I did that for many, many years. I went to Colorado State University, I studied finance and real estate there, and I was working in Cheyenne, Wyoming doing accounting work there. My dad called me one day and he said, “Hey, I need to hire a property manager, are you interested?” Well Cheyenne Wyoming, with all due respect, isn't the most fun place to live, so I jumped to that opportunity and that was about 20 years ago, 20 some odd years ago.

I joined the firm permanently at that point in time. At that time, we were relatively small, I think we had 110–120 doors and we have grown slowly and steadily over the years. Today, we do both residential and commercial. We've got just under a thousand doors that we manage. We do real estate sales, we do property management, we’re investors ourselves—I own some stuff—we flip. Our mantra is follow the opportunity. If there's an opportunity to real estate, we want to look at that, whatever that is. So, that's how we've gotten to where we are today.

Jason: I was just down in Vegas speaking to a group of property managers and they were bringing up like, “How do I avoid all this distraction and move the business forward?” What I said to them is opportunity is I've noticed is what kills entrepreneurs. How do you keep following the opportunity at all times but also keeping your focus narrow enough that you're actually moving forward.

Marc: That's a great question. That's a really good question and that's hard. It is really hard because we found that the bigger we get, the more successful we get, the more opportunities that are out there. At this point, we're of the belief that you've got to say no to almost everything. I think it was Steve Jobs that said, “The difference between successful people and really successful people are the really successful people say no to just about everything.”

Jason: Following the opportunity as a mantra doesn't mean saying yes to every opportunity.

Marc: It does not mean saying yes to everything. You need to consider everything. What I don’t like is people say, “No, we don't do that.” For many, many years, for example, we didn't do real estate sales. “Hey, will you help me sell my house?” “No, we don’t do that. We only do property management.” We didn't consider. Well then, one day we thought, “Maybe we should consider it,” and as we considered it, we realized, this is a really good opportunity that we should capitalize on.

Where when an owner says, “Gosh, I want to sell my house. Would you guys be interested in buying it?” “No, we don't do that.” Well, stop saying, “No, we don't do that.” At least think about it, consider it, and I think that's the way to step into some potential opportunities. But yes, you have to be cautious or else it will get you pulled to many directions.

Jason: Relevant to that, how many of these units are now in your own portfolio, are yours or your company's?

Marc: I don't have a real big portfolio. I'm a pretty conservative guy, so I'm a buy-it-pay-it-off kind of guy. I've got 10–12 rental properties in my portfolio.

Jason: Let's get into these five characteristics that you feel define a successful company, and you're obviously a successful company. You've helped keep it successful, right? Second generation, so let's get in number one.

Marc: Yeah. I don't pretend to be a guru. I can't stand the guys that stand there, beat their chest, and say, “Do it like me, I know what I’m doing.” This is just from our perspective. We worked with a lot of companies and I didn't get this, but I do a lot of PM coaching in business stuff on the side with PM companies helping them get better, basically. We know a lot of PM companies, we've worked a lot of PM companies and there seem to be some standards, some things companies that are successful, however you define success, are going to follow some of these aspects. This is not meant to be an exhaustive list by any means, but it's the way that we gauge ourselves.

Jason: This will be cool because I probably come from a very different perspective. You're in the industry, you do this in Denver and I don't have any rental properties. I don't manage. I'm not a property manager. I have largely been this nerdy fly on the wall that's been able to see inside of hundreds of companies. My perspective might be a little bit different, but I'm sure there's some alignment. Let's get into number one.

Marc: Number one is successful companies don't take every owner. They don't take every owner that comes along. So you agree with that one?

Jason: Totally. If anyone's heard my show, they've heard me talk about the cycle of suck, which is it starts with filtering owners. Like if take in bad owners, you have bad properties. It doesn't matter how amazing they are. If you have bad properties, you have bad tenants. It doesn't matter how much tenant screening you do. If you have bad tenants, you have a bad reputation because you have bad owners and bad tenants. Nobody's happy and this is where I think the entire industry as a whole in aggregate sits right now. It has a bad reputation because they're taking on any owner.

Marc: Yeah, I would agree. The concept is this. Any PM company knows that if a tenant, a prospective tenant walks in the door, an applicant comes in and says, “Hey, I want to rent your property,” every property manager is a little bit skeptical. They raise their eyebrow. They say, “Okay, well maybe. I’m going to qualify you.” We know industry-wide that whatever the number is, call it 25%-30%, depending on the market you're in, the 25%-30% of the applicants are not going to make good tenants. Everybody would agree upon that. Well, we really believe that probably that same percentage 25%, 30%, 35% of prospective owner-clients are not going to make good owner-clients. The challenge comes, how do we filter them? Because if it's an applicant to rent a property, we have them fill out a rental application. We go in deep.

That's the hardest part of the business is qualifying those folks. So, how do you qualify an owner? That’s where the challenge lies. If you called our office today as a prospective owner-client and you are talking to our new account specialist or one of our PM's, they would have a dock in front of them, a piece of paper, and a lot of this is just basic questionnaires—what's your email address, what’s the property address, tell me about the property—but at the end of that questionnaire, they have four questions. Yes or no questions that they have to check the box on yes or no. They have to discern this information during the conversation with you because it helps us qualify these owners.

For example, the first one says, “Is the owner financially stable?” If during this conversation you as my prospective owner say to me, “Hey Marc, if you can’t get this property rented next week, I can’t make my mortgage payment. I've got to get this thing ready quickly.” Well, you're not financially stable, right? That's going to be a no on that box, that's the first question.

Jason: “So, are you current on all your house payments?” One of my clients said that was a favorite question they would ask. If they say no, it's instant disqualification.

Marc: Absolutely. Then the second question we have to ask ourselves is, is the client emotionally stable? That can be a hard one to discern. I always tell people, “Don't ask them the question verbatim, okay?” It will get you in trouble.

Jason: “Are you sane?” Yeah.

Marc: Exactly, but we need to be able to discern that information from the conversation. Is this somebody who's going to be stable when things go bad because at some point in time it will.

Jason: Right. Sometimes, people will reveal their emotional instability pretty quickly, right?

Marc: Yes. I tell my PMs, “Look. Two quick keys. If they cry on the first conversation or if they own more than two cats, they are not emotionally stable. Run away from them.”

Jason: Might be a little biased against cat owners. What’s cat owners like?

Marc: I know. You just lost half of your audience because of my personal bias.

Jason: No, they’re cool.

Marc: I am as well. Then the third question we ask is, “Can I control the situation and the client? Are they willing to give me control?” Not in a puppet master, I'm going to be the mean guy, but they have to give me control. They have to be willing to do so. Then question number four is, are they realistic in expectations? Do they think that we should be able to get $2000 a month for property that's only going for $1000? Or do they think that we should call them before we ever spend a dime on maintenance? That's just not realistic. That’s not going to happen. If we can't check the yes box on all four of those, then my PM does not have permission to work with that client.

Jason: I love the idea of figuring out if they're willing to relinquish control. That's such a big thing because they're coming to you to solve a problem. I've noticed with clients that they're not willing to be strong enough of a fence for people to push against to elicit trust enough for people to relinquish that control. I think a lot of people will push. They might look like bad owners, they're trying to test the fence, and it's like in dating how girls will crap test the guy. They just want to see if they can handle them or if they're willing to be strong enough. I think a lot of times property managers will try to be nice and maybe don't have enough bite or drive and they’re really looking for somebody they can feel safe with, so they test us.

I think clients will test us and then they're willing to relinquish control at times. It’s just something I've noticed during the sales process because I deal with entrepreneurs. They’re driven people and I need the same thing. They need to be willing to relinquish a certain amount of control because I'm asking to do crazy stuff, like fire doors or change your business name.

I love that idea, and then are they realistic in their expectations. If somebody says, “Hey, I want to add 500 doors in the next quarter,'' then that's probably not going to be realistic. I want to make sure they're in touch with a reality that I feel I can give them or lead them towards and it's the same with our property management clients.

Marc: Yup, and if we set those filters on the front-end, that's just going to make things so much easier on bringing good clients on because our business is hard enough without having difficult owner-clients. I think there’s the second aspect of that is, “Well, gosh. That's great. I wish I would have heard that before I took on Mr. Crazy,” so, what do you do then? I think the other part of that—you alluded to this—is sometimes you do need to let those clients go, and sometimes that's the best thing, because we're talking about what successful companies do. Successful companies realize that, “Hey, if we made a mistake, we brought on a bad client, we need to let that client go, whatever that looks like.”

Jason: There's always going to be those mistakes. We cannot always know and perceive every person coming in and know that they are emotionally stable, or that you can control them, or that they will be realistic, but when they start to reveal those colors, we have to be willing to let them go.

I've made bad decisions in bringing people in as clients and I have had to let them go. Some of them were just really like verbally abusive to my team. You’d be really amazed at some of the types of people that that can somehow leak through even if you have pretty good qualifications at the beginning. I love what you're getting at here because really anybody that studies sales in any capacity knows that qualifying a prospect is at the outset. It's really mind boggling that people would not qualify their prospects in any regard.

Marc: I’m curious. You said you had to let clients go. How have you overcome the internal thought of, “Ooh, but that's money. That's a big chunk.” When do you decide? How do you decide? Is that an internal struggle for you?

Jason: Sometimes. There's always a negotiation and it's a balance. It's a balance between the money aspect and the cost with the team. Ultimately, my team I want to keep forever. I want to keep them long-term. If I keep that client on, I’m saying to my team, your feelings don't matter. I don't care about you. That sends a really painful message and I've noticed this in property management companies.

People wonder why there's so much turnover with their staff and I think one key reason is because you're allowing your staff, you're forcing your staff to tolerate too much. There are some of these owners that should be let go, and I've said many times to clients, “The hallmark of a seasoned property manager is that they fired some clients.” Some businesses have hundreds of doors and they've never fired a client. I know if they've never fired a client, they have some bad things in their portfolio. There's some pain in there and that's a difficult place to work. They’re not willing to let go of painful situations and there's always going to be painful situations.

Marc: Yeah, and I've never talk to a PM who did let a client go who regretted it.

Jason: Never.

Marc: It's hard, it's scary. We face that. I remember very vividly when we were small and we had 125 doors, maybe. We had a client and had like 12 properties. I remember the guy, could see the guys face. He wasn't a bad guy, but he was just difficult and it had to be his way. He would contact us all the time. He just drove us crazy. We finally decided we needed to let the guy go. Well that was like 10% of our portfolio. That was hard. We thought about it, we don’t know what to do, and even after we did it we thought, “Oh, is that the right decision or not?” But we quickly realized it's like a load that’s been lifted. When you get rid of those people that sucked that time and energy and life out of you, it is a positive thing.

Jason: The operational costs, the emotional cost when all of that falls by the wayside. I've never had a client fire something. I had one person fire half their portfolios like one big property. I had one person do that and they were terrified, but they did it. Two things happen almost every time. One, they replace the income really quickly. It always, it creates some vacuum in the universe, I don't know what you want to call it, but they always seem to replace the income really quickly with better doors. That always seems to happen. They just need to trust that's going to happen. The other thing is, is they always say to me, “I can't believe I didn’t do it sooner,” like they wished they had done it sooner. They were so afraid of doing it and then once they do it, they realize it wasn't so bad and they wish they were like, “Why didn't I do this sooner?”

Marc: If one of your clients is talking to you and you're saying, “Hey, you need to fire this owner,” how do you recommend they do that like? What should they say? Should they say, “You’re fired”?

Jason: You’re interviewing me now.

Marc: Yeah.

Jason: There's a few ways you can let them go. There are some creative ways. One of the best is just raise the fees. If [...] make it worth, just make it more expensive. Say, “Hey this property is difficult. You're a bit more challenging person to deal with, to be honest. We are willing to keep doing it, but it's going to cost X.” So, you just raise the rate, and if they keep being annoying and you feel like it's still not worth it, you keep raising the rate until they self-select themselves out. That's one easy way.

Another way is to just refer them to somebody else, and if you're going to refer you might as well get a nice referral fee out of it. Go to one of your buddies and one man's junk is another man's treasure. I mean they might know how to deal with this type of person. They might be a better personality fit for this type of person than you. Don't just instantly assume that because you can't tolerate them or their difficult for you, that everybody else will. Give them to somebody else and let somebody else have a shot.

Marc: I like it. We will rarely fire an owner, but we will as you just suggested bump fees up and up until they decide to fire us. I’d much rather have them fire us and leave on their terms.

Jason: Right, they’ll self-select out. Are we complete on number one?

Marc: I think so. Number two is successful companies know their numbers. I see this so often with PM companies. We get really good at the logistical side of we know how to lease, we know how to talk to owners, know how to collect rents, but when it comes to the numbers, the financials, we just don't know what we’re doing often times. I really am a big believer in that concept that if you don't know your numbers, you don't know your business. You don't know how well your business is doing.

One question I’ll often ask of coaching clients that I work with on that side of things is also, “Okay. Now, if you, Jason own a PM company, at what point in time do you close the books for your company? Let’s say the month of June ends, right? We’re here almost until the end of June. When June closes for you, how quickly will you have your June books closed so that you know how much money your company made in the month of June?” The answers always surprise me. They're all over the board. “Well, I'm currently 90 days behind. I’m trying to catch up,” or, “I'm not much further behind in that,” or, “I might get it towards the end of the following month.”

Jason: Yeah, how can they make business decisions if they’re 90 days in the rear-view mirror? Imagine trying to drive a car like that.

Marc: Like I said, I've been doing this for many, many years. While we were small. like anybody else, I was everything. I was the janitor, I was the accountant, and I was everything. My favorite day of the month was always the first. Not because we collect rents, but because on the first day of the month, I go online and print out our company bank statements for the last month. I get our paper checkbook out and I’d reconcile. I’d get our ending balance and I enter it all into QuickBooks. I can look at that piece of paper and say, “Hey, how much money did we make last month?” I love that. I would wake up early to do that.

I'm weird, I know, but that's how you know how well you're doing, I wouldn’t wait until the second, the third, the fourth, the twentieth, that's crazy. You can do it on the first. So, I'm a big believer in as soon as possible, which in this day and age it can be pretty much immediate. You get your books balanced, you run some numbers, you see how your company is doing it, and you’ve tracked some metrics, some internal metrics for your company to know how you're doing.

Jason: I think the challenge is when property managers are holding on to something that's not in their particular wheelhouse or area of genius, but if this isn't your thing, if you're not like Marc and you don't love doing this and this isn’t like what makes you thrilled and excited is to get in your bank statements and numbers, have somebody else get everything ready for you. I've got a profit-first coach and accountant. She meets with me and goes over everything with me. I get not only my perspective, but she says, “This is what it looks like to me, Jason,” so yeah, I think it's usually helpful to do a review every month and look at your numbers.

Marc: Yup, and like you just said, most folks aren’t as weird as I am as it comes to that stuff, and that's fine. But you need to find someone weird like me. You need to find someone who can go get excited about running your numbers, make sure they do it, and then you review those and you track a couple key metrics.

For example, some of the metrics that we always track, are door counts proportional to owner count? Because that’s a sign of a healthy business. So for example, if your company has 100 doors, if you’ve got 100 owners for those 100 doors, that is the sign of a very healthy business because it means that you don't have any one owner with too much control versus the guy the guy called me a couple of weeks ago and he wanted to know if I was interested in buying his business. I go, “Tell me a little bit about it.” I think he had like 75 doors, “I’ve got 75 doors, I’m here in Denver and interested in selling.” One of the first questions I always ask is how many owner-clients do you have? He had 75 doors and 4. I was like, “You know what? I don’t need to know anything else. I'm not interested.” Why? Because if we took those doors on, that's four owners. That’s a lot of control.

Jason: If it’s two of them, then what are you getting?

Marc: It's something that you can't control, but you need to track it, that's one of the things you want to track on a regular basis. Another metric we really like to track is the percentage of our overall income that we spend on employees. Because in our industry, that again can just be all over the map on companies. Do you have a number on that that you recommend to your folks on what that number should be?

Jason: It varies so wildly especially by market, but I know an owner that has 65% profit margin in his business.

Marc: Wow.

Jason: I know it's ridiculous.

Marc: It’s a good thing I’m sitting down.

Jason: I know. He has a couple of hundred doors. It varies so wildly and it depends largely on the type of owners they're taking on, the type of property, because—I’m talking about this in the cycle of suck idea very often—if you take one bad owner or one bad door property, can have 10 times, maybe even 100 times the operational cost as a good door. So, that can vary so wildly.

I've had a company come to me that had 500–600 units under management and wasn't making a dime. I said, “How is this possible?” They’re like, “Well, we're doing $3 million a month in real estate,” so there was a brokerage with a cancerous tumor on the side called property management. He had twice as much staff as he needed, no technology in place. Fast forward, he fired half his team, he fired about 200 doors, maybe 300 doors, and it's now a very profitable company.

So, it's not all about doors and staffing is always going to be the highest cost. If you can replace even a fraction of that or create some leverage for your team using technology, outsourcing, whatever, those are some big wins financially. A lot of times everyone's looking at, I got to get more revenue in and they're not looking at their expenses. That's why I'm a big fan of the profit-first system which says, “You take out a portion for profit and then what's left over is your expenses.” Most people are like expenses. You’re just revenue minus expenses and then whatever's left over, there's nothing left over typically in that situation.

Marc: Absolutely. We have that profit is almost like an expense item that we know we’re going to take out every month and put into a savings account. We've been doing that for a long, long time from that aspect. But yes, I agree 100% with that aspect of what you're saying there. The number that we coach folks around is you don't want to go over 50% of your total revenue to staffing costs regardless of your size. The bigger you get, the more that number's going to probably creep towards that, just because you get more overhead, you get more managers, and you have more red tape, so that's a natural part of that. But if you go over 50%, that's a red alert. Something's wrong from that standpoint, so that an important to track for every company.

Jason: Yeah, as a company scale, they're able to create a bit more leverage, but yeah, I could see how when you're really small and you're doing everything, your employee costs are a bit less per door because assuming your free labor or maybe if you work for your dad. Or sometimes it’s a spouse. They’ll have their spouse as their business partner, and you'll see them get to maybe 70-80 units, they’re tapped out, and they can't afford to hire their first person. Nobody's getting paid. That makes sense. All right, I like it. Anything else on number two, knowing the numbers?

Marc: The other things I would just add that's worth tracking that I often find companies don't track this well enough is how many doors they’re adding and how many doors they’re losing. It’s always a surprise to me is when you ask them that, they'll say, “Well, I can dig it up, but I don't know.” A lot of the software don't track that. If we’re old school, we’ve got the spreadsheet. Every time we lose a door, we go to our spreadsheet for the year, we put it in, and it's going to keep that auto tracking. Every time we sign a new one up, put those on the spreadsheet so we can pull that up and instantly see, “Okay. As of right now, we've lost X number of doors per year and we've added X number of doors.” So, track that. Don't make that something that you've got to go dig in your software and try to pull a report. That needs to be one of those metrics that you're tracking at least on a monthly basis.

Jason: Yeah. It's a pretty difficult situation and it’s a common one where you’ll see somebody adding a door and losing a door just as often. They wonder why they're not getting growth. Sometimes, the problem aren’t getting enough [...], it’s obtaining doors. They could be the type of target audience that they're going after, it could be that they are lacking some awareness around how to retain these clients or whatever it might be, but yeah, that's an important thing I think to pay attention to.

Marc: Yeah, and to track the percentage of doors lost. That's all over the map as well. If you can keep your losses on an annual basis in the single digits from a percentage standpoint, that's pretty good. If you can keep it 10% or below on doors that are leaving you every year, you're in the pretty rare group of PMs.

Jason: I created something for property managers called our cold leads calculator. One of the things I noticed with a lot of companies—this is more relevant to what I do—a lot of property managers are not paying attention to the amount of money that they're spending on cold lead marketing—pay per click, SCO, APM leads—all these different places at social media marketing, content marketing, that they're paying to generate business. A bulk of where most people get their deals and leads from I find in the industry is often word-of-mouth, so they just group everything together. All their warm leads from word-of-mouth, referrals, other cold lead marketing, and they're not paying attention.

When you look at the numbers alone of the cold lead marketing, which everyone can check it out by going to doorgrow.com/coldleads, they can take this little questionnaire and go through it, but it'll help you calculate your cost for cold lead marketing. It also calculates and factors in the time. Time is worth money and it calculates and ask what that time is worth, like what's your hourly wage or whoever is following up on these, how much time does it take to follow up on these, to create a real aggregate or at least close aggregate cost of what one cold lead is costing you.

I’ve seen numbers. I just had one come through the other day. One cold lead was costing them $5000. I've seen $11,000, I've seen a $1700 per lead or per acquisition per deal and what I love to ask them when I get them on the phone, I say, “Hey, I saw you fill out this cold lead thing. How long does it take you to recoup $5000 on a contract?” and they’re like, “Well, that's probably three years of free management or two years whatever.” Then their perspective starts to shift and we have to uncouple that. The transparency in numbers helps you make decisions as a business owner.

Marc: Yup, and then review them regularly. Don't just leave it your accounts. If you're a successful PM company, you're looking at those numbers because those numbers make a difference.

Jason: All right. We’re on to number three.

Marc: Number three is a good lead-in as you were just talking about there. Number three will be successful companies focus on profit, not door count. You've already talked about this. This comes up so often in our industry, what's the first question any PM ask another PM? How many doors do you have? What’s your door count? How many doors are you managing? That's the measuring stick and it’s the wrong measuring stick because I know companies that are smaller, they're very profitable, and I know companies that are very large that are not profitable at all.

Door count is irrelevant. The profit is what matters. What that means is practically speaking, if you've got 50 doors, I would say, “Before you say I another 50—that's fine—but you know what? Let's maximize the profit of the existing group you have.” That doesn't mean just go out and nickel-and-dime everybody, but it means what other services can you provide? What other things can you put in place to make sure that you're maximizing that income and that’ll have a dual impact in that you're going to increase your income on that 50? Then when you pick up your next 50, now you've already got some structures in place to ensure that they are profitable as well. You've got to focus on the profits, on the revenue streams to be successful.

Jason: Absolutely, I don't think there's ever been a property management company that I’ve seen that is not leaving some money on the table. There's always additional services that you can offer, even if it's something little like filter easier petscreening.com. There's always some additional value that you can offer and there's always a way that you can monetize that. People are willing to pay for additional value.

Marc: On the flip side of that as well, I think we need to pay attention to those expenses because what the industry right now is more difficult than it has been a long time and folks that have not been in the industry for too long, they’ll recognize this because this is normal to them, but it's a tough industry. This is a tough market to be running a property management company. When things get tough, you've got to be tight on expenses, and it’s too easy not to get tough on expenses.

That's one thing we encourage folks, is to go through that profit of loss, line by line, and if there are expense items on there that are not directly relational to income coming in, you have to figure out how to cut them. You have to get rid of those wasteful expenses. That is such a good exercise to sit down and start going through that stuff and say, “Well, gosh, I’ve just been paying for the subscription service every month and I don't even know what it does. I signed up for it two years ago. All right, let's get that cancelled.”

Jason: Yeah, and you’re like, “Why am I still on this?”

Marc: Exactly. This is beneficial as getting on a new door, is cutting those expenses.

Jason: This is why I love having a profit-first coach, because this really is built into the system. Every month is like, “Hey, what about these services you said you're going to cancel and you said you don't need this anymore?” Yes, so I think it's helpful. If you’re not like accounting-minded, I highly recommend you go back and watch my episode with Mike Michalowicz, who is the author of Profit First and check out that episode. I think it was a fantastic episode. Really cool guy, came and spoke at our conference. It covers that system like cutting down expenses, putting profit first, making sure that expenses are fitting within your existing budget and you're still getting a profit. Yeah, makes sense.

Marc: What I had to do, I realized that the biggest expense item, the biggest overhead we had was my ego. The thing is that, that I wanted for me, the big desk, the big office, the nice car, and that's something everyone needs to start there because if you drive, especially in the real estate sale side, you go to any real estate sales event and what is the parking lot filled with? A lot of very expensed leased vehicles. I'm not against nice vehicles, but that’s just a suck on the income side of things.

Jason: I think there's always this ratio between the amount of money that you’re going to take out of the business, and the amount of money that you're going to leave in to fund towards the growth. If we take out too much too quickly, the business growth is stagnated. I've seen some really aggressive companies put almost all of their money. I’ve seen owners try not to even take a paycheck. They’re really minimizing their take out of the business so that they could fund the growth, because they're delaying gratification for the future. They’re funding and creating a business that is growing and they’re putting their funds and their money towards that.

Sometimes, you have to double down as a business owner and to be willing to take a short-term hit because you want a long-term growth goal. And we can put too much towards growth to where it feels shaky, it feels unsafe. We're not holding anything back. There's no padding there. It really is this balance of how much I’m going to put towards growth be aggressive, how safe am I going to play it, and how stable and slow am I going to be at doing this. There's a balance there.

Marc: It is a balance, it’s an absolute balance because you need to leave some in, and you need to be pulling some out every month and putting it into that savings account so that you have opportunities. We’ve purchased several companies over the years and every one of those deals worked because we were able to in essence say, “We can write a check. We’ll write a check today. We’ll get this deal done.” Why? Because we have money put away. That savings account isn't just comforting, it's an opportunity fund for things when they come up in the future.

Jason: I like it. All right, is that three?

Marc: That's three.

Jason: All right, number four.

Marc: Number four is successful companies have systems and follow them. They have systems in place and they follow. In a word, system means different things to different people. Some people think, “Well, that's just so I need a good software. What’s the system?” I really believe that probably 75%-80% of what we do on a day-to-day basis in our industry can be systematized, meaning, simply documenting your process, documenting your routine, because it plays out in so many ways.

We learned this early on when we were growing and first there were two of us. My dad and I, we both did it all and we hired a third person, and then we all three did it all. Then we hired a fourth person, and by the time we hired that fourth person, we realized that, we can't all do it all. This isn't scalable, we can't all do everything. It works great at two people, it works great at three people, but when we had that number person and Mr. Tenant calls and says, “Hey, I called in with a maintenance request last week and I haven’t heard from anybody.” And I say, “Well do you know who you talked to?” “No, I don't remember.” “Well hold on, let me see if I can figure it out.” “Hey dad, did they talk to you?” “Hey, Bill did they talk to you?” “Sue did they talk to you?” “No.” “Well they talked to one of us, right?” That’s very ineffective.

You've got to start specializing in your processes. We realized at that point in time that if we're going to hire someone to be our leasing person, for example, we better have a documented process for them to follow. I mean specific detailed documented. Here's what time you get to the property before showing. You open the door, you turn on the lights. Here's where you stand when they come in. Here's how you greet them, here’s what you say, here’s what you don't say, here's how you process an application.

If we do that into our entire business and we break the business down into the smallest components, it simplifies things like nothing else because we’re in a complex business. If you think of a continuum in your mind, a long line going on both directions. On one side of the continuum, you have the words consistency and simplicity. On the other side, the far extreme opposite, you've got the words variation and complexity.

You have to ask yourself, where am I on that continuum? We're all different places, but we hopefully will always be moving forward towards consistency and simplicity. I don't think there's a better way of doing that than through documenting your process, your system and then following it, training on it, improving it, upgrading it. It's got to be written, it's got to be documented, and it is a process.

Jason: That needs to be used. People document it, they’ll give it to the team member, the team member will look at it at the first few times they do it, and then they're done. I have Process Street on as a guest once. We used Process Street internally, but it forces them to actually use the process on going. It's a checklist that has to be verified and completed.

Marc: Yes, checklists are huge. We couldn’t exist without the checklist. Its old school, but it works. We still have paper checklists on some things in our office here that people say, “That wouldn’t work.” I guess just too old school. I say, “Well , we’re pretty successful. It worked for a thousand doors; I can tell you that. Will it work beyond that? I don't know, but it works to get you to a thousand.”

Jason: There you go. I've noticed in businesses, I think there’s, at a minimum, probably seven systems that every business eventually has to have in a business. One, they have to have an internal communication system. For me and my team, it’s virtual, so we're using things like Basecamp, Voxer, stuff like that. But there needs to be an internal communication system that isn't just, “Hey Steve, did you do this?” So, internal communication.

There needs to be process documentation system. That could just be Google Sheets, Docs, and whatever, or it could be something more complicated or cooler like Process Street or whatever, but there needs to be a process documentation system.

There needs to be a billing system, of course. Property managers use maybe AppFolio or Rentec Direct, Buildium, but there needs to be some billing, accounting system.

Then there needs to be a support system. A lot of property managers are starting to gravitate towards setting up Help Scout, Intercom, Drift, or one of these, but internally we use Intercom. There needs to be a support system in the business so that you can track tickets and track things. Sometimes, you'll do that through your property management software a bit.

I find one system most property management businesses are lacking or missing is a planning system. You're hearing people move towards traction in some of this which I think has some fundamental flaws to be blunt, but it's a great system. It’s better than no system and there's a lot of systems out there for planning, but there needs to be a planning system in the business.

Another system that's necessary is a sales CRM. This is different than your existing customer database. This is for prospects. There needs to be a sales CRM in place. A lot of property managers use LeadSimple, for example.

If there were one other system you can throw in there probably be a phone system. We need some way to manage this big influx of calls or outbound calls with team members being able to be reached. These are some of the systems that I've paid attention to, that businesses need. Most businesses will have maybe two or three.

Marc: Yup, and we preach what we practice as well as preach to make on the systems for individual team members to make them position-specific. We have 20-some odd people our office and every role has a position-specific system manual, so our director of accounting has a director of accounting system manual. I'm the president of the organization. I have a president system manual. Why? Because I need to be replaceable. That's one of the benefits of it. That idea that now we become less dependent upon individuals and no individual can hold us hostage to be like, “They’ve got everything in their head. What are we going to do they leave? We can't lose them.” It's a terrible place to be. We don’t have to worry about that. You're going to lose everybody at some point in time. You’ll either lose them for a good reason or a bad reason, but they need to be replaceable. Now if you have a document, if you have documented their process, then they become replaceable.

I'm replaceable. If I get hit by the truck today, it’s alright. Hopefully, the company will take a little hit, hopefully they’ll need me a little bit, but we got a system manual, somebody can step in that role, and already says, “Hey, this is what Marc does.” Just do it and you'll be successful.

Jason: I like it. All right, so are we on to five?

Marc: Number five, the last one, successful companies recruit and develop talent. We just talked about systems and the concept that systems can make your people replaceable to some extent and they should. However, at the end of the day, the team with the best players usually wins. If you can go out there and if you can figure out how to recruit the best talent and then retain them, that is going to do more for your company than almost anything else out there. If I'm going to brag about something about our company, I’ll brag about that.

We get the best people around. We've gotten good at that. It makes it so much easier to do business. I don't work harder than my competitors, I'm not smarter than my competitors, I'm not technologically savvy more than my competitors, but what we do better than a lot of our competitors is we get really good people

Now that’s hard, and it’s hard to get really good people and that's why you got to recruit. It doesn't mean you put an ad on Craig's list and read a bunch of resumes of people that can't get jobs. I mean you go out and you find people that are really good at what they do and you got to get them, you have to recruit them. That's hard because successful people aren’t looking for jobs. They are already successful. If you want to be successful, you got to go out there.

I’ll tell a story and I'll give that the short version. We had to hire a leasing person not too long ago. Wwe were hiring, meaning we were just reviewing resumes and I thought this is ridiculous. We can't find anybody good. I better do what I tell myself what I should be doing. I got my car one day and I drove around to a lot of the multi-family class A properties in Denver, and I walked in as a prospect. “Hey, I’m Marc, I’m here. I just want to see what you have available. I’m looking for a buddy of mine to rent a property.” And I was usually met with the, “Okay, well here's a piece of paper. Tell your buddy to give us a call.” I say, “Okay” and left.

About the fourth place I came to, I came in and met a gal there behind the front and I said, “Hi, I’m Marc. I’m just looking for a place for a buddy of mine.” She said, “Well, me about your buddy. He’s looking for one bedroom. He’s tall dark and handsome, got a cat, probably crazy,” and she's like, “You know what? I know the perfect unit for your buddy. Do you have a couple minutes? I'd love to just have you tour this property.” “Yeah, sure. Okay.”

She tours me through and she's pointing out the feature benefits to offer. She was sharp. Her name is Lindsay. I said, “Lindsay, you are really good at your job. She goes, “I love leasing. I just love it. I love helping people. I love real estate. I love what I do.”

I said, “That's great. Coincidently, I happen to run a property management company and we're actually looking to hire a director of leasing for residential real estate. Have you thought about doing residential?” because she’s a multifamily. She was like, “Oh no. I could never leave. I'm not a job hopper. I'm really stable. Stability is a big deal for me once I get somewhere I like to stay.”

Now I'm drooling. I got to have her. I said, “Well is there anything you don't like about your job Lindsay? Well we work weekends.” I said, “Oh. That’s too bad. We don’t work weekends.” I said, “Tell you what. Why don't you come into my office sometime? Here’s my card. I'd love to just sit down and have a conversation with you. Who knows? Maybe something comes out of it, maybe something don’t, but I’d love to just connect and see if there's something there for the future.”

Well long story short, we got her. We got Lindsay. And we had to go after her, we had to get her because she didn't want to leave. She's been a rock star. She's been amazing. The things that she's helped our company to do, but we would not have found her if we were just hiring. We had to go recruit her, we had to go get her. That's what you have to do in every position in your company. You have to go find stuff.

I'm not saying go steal people away from your competitors, but you have to find those people out there that are successful and get them. Once you get them, you have to retain them. You have to train them well, you got to pay them well, which is one of the reasons you need to have good profit because good people aren’t cheap, but that's what's going to lead to a long-term success, and unless you take a step back out of the day-to-day stuff at the end of the day.

Jason: Yeah. I think it's important to point out what you're saying is not that people are easily replaceable, that you can pop somebody else in. You're not saying that at all, and I think every business owner knows that if you have a seasoned team member that you've invested in, that you've trained, that you've developed, there's nothing as good as that, like having somebody that's been with you for years. I have team members that has been on my team for maybe six years and he's a rock star.

I have a competitive advantage over most companies in that our teams are virtual, so I can source the best talent from anywhere pretty much in the world. But yeah, this can be challenging for property managers that are looking for somebody locally, they're looking for somebody nearby, they’re looking for a particular set of skills may be. But ultimately, if you find somebody good, you want to make sure you retain them and that you keep them happy. You can compare it to a wine, you can compare it to anything, but over time they just get better. If they’re good they get better, if they're not good, they get worse.

Marc: That's the other side of the coin. That's where just like we talked about earlier with owners. This is what we started this whole conversation with you get a bad owner, what do you do? You need to let them go. Well if you made a hiring mistake, you need to fix that and correct that as well and let that person go, because we're going to make hirings. We are very good at this, but we make a lot of hiring mistakes. We just do, it drives me crazy. But when we do that, we correct it quickly. We're going to move that person on very quickly when we make that mistake. Why? Because the longer they're sitting there, the longer the right person isn't there. You've got to make that correction when you made a hiring mistake.

Jason: I think it's amazing when you bring in a new team member, it changes the entire team. It either changes the entire team for the better or for the worse, especially if that team member that you just brought on is taking off of your plate everything. It changes your role as CEO. It changes your role as an entrepreneur, and it affects everything from you. It's pretty significant and it's important to make sure that they’re the right fit. We we're all going to make hiring mistakes. You have to kiss a few frogs and you have to suck a little bit at hiring in order to find the good people.

Marc: It's an art, and a skill set to hire someone in no way translates over to property management. It's not like, “I'm a good property manager. I’ll obviously be good at hiring.” No, there's no correlation there. It's completely different. The other unfortunate thing is, the smaller your company is, the more important it is to make that first good hire. Now we've got 20 people. If we make a bad hire, we got one in 20 then who's bad. They can fly under the radar a little bit, they're not going to stick to the company.

If we've got two people and then we make a bad hire for number three, so we never got 33% of our workforce that's a low performer. The smaller you are, the more important it is that you take the time to get the right person in. A lot of it is just time. You've got to slow down the hiring process. These ideas of we had a phone conversation and we interviewed him, it's not enough? Are you kidding me? No, you want to do multiple interviews. Anybody can come across as a positive person on that first interview. You want to have multiple interviews with multiple people. You have to dig, dig, dig on that before you make that job offer.

Jason: I think where I've made a lot of mistakes personally in the hiring process is I love to delegate and its delegating too quickly. Some people will micromanage, they’ll control too much, and I think some people will do the opposite. They'll bring somebody on and they won't give them all the training, all the tools, all the support they need to really be the rock star they could have been.

I've made both of those mistakes to be transparent. I think onboarding is a really important process to make sure you’re meeting with your new hires on a regular basis daily initially, then backing it up to weekly and so on, so that every day like where are you stuck? What do you need? What are you confused about? Often, they're not going to just volunteer all that information to you. But when you're meeting with them daily, they're going to feel supported, they're going to feel like they're invested in the team. I think onboarding is a really big deal. That's where I made mistakes.

Marc: We still do one-on-one meetings every single week with every one of our team members. It doesn't matter how long they've been. I'm a huge believer in that, I guess if you wanted number six, there is number six, right? Have one-on-ones every single week, sitting down with them, even if it’s for 5 or 10 minutes, touch base, see what issues are going. Those have been critical for our people in their success.

Jason: We have a bonus, number six.

Marc: You got a bonus, number six, because you’re so good. What did I leave out? I’m curious. You talk to a lot of PM companies. What do you think are characteristics of success may be that we didn’t hit on?

Jason: I wasn’t even thinking this, I was so into yours. I think all these things are really fantastic. I think if I were to add a seventh here that I think is absolutely critical, so imagine you have an orchard, you’re at the top, and this is like a reservoir of hopefully money and or water or whatever you want to call it. There's outflow, you're paying your team, you're spending money, things like this, and investing your team.

I think where most companies are flawed is there's no inflow at the top of the orchard. There's nothing above the entrepreneur feeding into them. I think this is why it's critical. I probably spent at least six figures annually just on coaches and mentors. I have three coaches right now affecting different areas of my business. I think it's that inflow that I'm able to get that allows me to consistently have value to offer to the marketplace and to benefit my clients.

It comes out in ways that I don't even expect, like a client will ask me a question or be stuck on something mindset-wise or be challenged with something, and I'm like, “I had that issue and I worked that through with my coach,” or, “I have done that in that training that I had done,” or whatever it might be. I think as entrepreneurs, we need to invest in ourselves if we're expecting other people to invest in us. When you go to prospects or clients and you say, “Hey, invest in me, spend money with my company,” and you aren't willing to invest in yourself or in your company in a similar fashion, I think there's a little lack of integrity. Energetically, something's off.

If there were a seventh, I would say that's a big one is make sure that you're investing consistently in your own development, not just your team so that you have something to give. I think that's the inflow. You don't want to be a dead sea, there needs to be in flow and there needs to be outflow and that's where there's life. That's where it’s a healthy business.

Marc: For the person that would say, “Hey, that sounds great, but I'm working 70 hours a week. I don't have time to invest in me. I'm just give, give, give.” What would you say to them?

Jason: I would say they’re ineffective, they’re inefficient because if we're doing, doing, doing we moved out of the mode of being affected. That means most of our time is tactical instead of strategic. Any business that lacks, the business owner lacks strategic time, the business isn’t growing. There's a direct relationship between the amount of strategic time, planning, looking towards the future, coming up with ideas, or getting trained or learning new things, versus their growth. If all their time is tactical, they're dealing with maintenance, fires, leases, managing their team, emails, phone calls, if all their time is tactical, their business can’t grow.

It will stay basically where it is. I think what I do with clients is I start them with a time study and we create time. Everybody is spending time doing stuff that's unnecessary, or low dollar an hour work, or silly, and it's pretty simple to start getting clarity on that first and then that helps them see what they need next. My entire foundation, my company really has been built on time studies.

That's where I think fundamentally there's a huge difference between how I would coach operationally a business to run versus something like traction or a rocket fuel or these other systems where they’re saying, “Here's the magic org chart and here's the roles that you have to have.” Ultimately, a business should be built around the entrepreneur and what they actually need. The only way to really see that is to know where your time is going.

Marc: Good stuff.

Jason: That's my two cents.

Marc: I like it.

Jason: All right, so that's number eight maybe. I don't know.

Marc: It’s number eight.

Jason: We’d better stop before we add anymore.

Marc: We’d better. I know. You’re making me think of too many things.

Jason: Marc, it was really awesome hanging out here with you. This is really fun. You're welcome back anytime. Before we go, how can people get in touch with you if they're curious about some stuff that you offer for property managers or they want to learn more about your business or whatever?

Marc: The best way to reach me is through our website which is propertymanagementsystem.org and we got a handful things on there, a lot of video resource things. We've got our system manuals, we talked a little bit about that, our actual system manuals, we offer those. You can download samples of those and we got packages on those.

We do ancillary business training, some coaching stuff from that aspect. One thing I'm pretty excited about, we're just putting in place, we actually just put in place and I'm happy to share with any of your folks if they're interested, they can drop me an email. We put a business health checkup form where you answer some questions and it spits out a number to let you do that business health checkup. If anybody is interested in that, drop me an email, go on the website, reach out to me from there, will be happy to send it to them.

Jason: Cool. All right, Marc, thanks so much for coming on the DoorGrow Show and excited to see what you do in the future.

Marc: Jason, thank you, it was fun.

Jason: All right ,so if you are property management entrepreneur and you are struggling, you are feeling challenged in growth, be sure to connect with us over Door Grow. I would be honored to help you out. As I said during this call, I'm a firm believer in getting coached, getting coaches, and even if it's not me, somebody like Marc, there's lots of other [...] there that can coach you. Get somebody that can give you some value, help you grow your business, help you achieve your goals, and figure things out. Until next time, everybody, to our mutual growth. Bye everyone.

Download this Episode

Sep 3, 2019

Do you want to build wealth through real estate investing and property management? Then, put in the work, trust the process, be open-minded, and get results that change your life.

Today, I am talking to Robin Reed, CEO of Concept 360 Property Management and a licensed California real estate broker. She helps clients reposition assets to maximize their value by decreasing expenses and increasing income.

You’ll Learn...

[04:29] Challenging Coworkers: Let them go, and try not to grow the company.

[05:07] Learn to appreciate employees who handle day-to-day tasks and tenants.

[05:45] Feast or Famine: Flip from brokerage income to property management.

[07:27] Completely Commit to Changes: Follow DoorGrow, and do whatever it takes.

[12:00] Then vs. Now: No Jerks Allowed policy to make everyone happy.

[17:05] Desperation and Disrespect: You get it, or you don’t.

[17:25] Value of Property Management: If working for peanuts...get what you pay for.

[18:20] Walk Away: Not everything, everyone is a perfect market/product fit.

[22:00] Feeding Funnel: What do you do? What’s property management?

[25:50] Retention: What works? Sells? Results and relationships with real estate agents.

[26:05] Growing from 65 to 200 doors; adding 2-5 doors/properties each month.

[30:15] Second Sandtrap: New challenges ahead for processes, teams, trust, and more.

Tweetables

I like working on the business, and not in the business.

Feast or Famine: Rollercoaster of brokerage income.

Be willing to change, take action, and make a difference.

What sells, what people want to buy are results.

Resources

Concept 360 Property Management

National Association of Residential Property Managers (NARPM)

LeadSimple

GatherKudos

DoorGrow Case Studies and Website Secrets