#DoorGrowShow - Property Management Growth

DGS 123: Automating Accounting Functions & Creating Capacity in the Workday with Kyle Redding 0

Transcript

Jason: How dialed in is your business now that if you walked out the door and left for a month, would it fall apart? Would there be a problem? Would it still operate? Maybe then, if the answer is, “Yeah, it would be totally fine,” maybe then it’s time to open up a new location because that means you have things really dialed in, you’ve got the right people.

Welcome, DoorGrow Hackers, to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker.

DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income.

At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show.

I’m hanging out here with someone else from DoorGrow, Jon Ray.

Jon: Thanks for having me, we’re a part of the DoorGrow growth hacker team.

Jason: We were sitting and I’m thinking, “What can we talk about?” The topic that I wanted to talk about is a common problem that I see come up. I coined a phrase for it and I don’t know that anybody else has ever talked about this phrase, but this is just what I felt like calling it. Our topic today is premature expansion in property management.

Jon: Premature expansion, tell us about it, Jason. I’ll preface it by saying I’ve been talking to a lot of our seed hackers, a lot of property managers that are a part of the Facebook group. Ultimately, everybody is trying to figure out what is the best way to seek consistent, comfortable growth. One of the things that has come up on a recurring basis on these calls is that as people are thinking about the various strategies that are available to them for growth—especially at some kind of an accelerated pace over what they’re doing—oftentimes there is a consideration if not an outward movement towards moving into another market.

As you and I were talking about that that can sometimes be a great strategy, but sometimes it can be an absolute failing strategy. Premature expansion is basically your term and how you’re packaging that concept of when that kind of expansion into another market may not be the best strategy. Can you talk about in more detail on how somebody should be thinking about whether or not they should move into another marketplace?

Jason: There’s a lot that goes into deciding whether to move into a new marketplace, or premature expansion could be even buying a new business, or a new location. It's any sort of expansion. Usually, the motivation behind it is they want to grow, they want to make more money. Their challenge is that sometimes it’s not all that it’s cracked up to be. The most common scenario—one of the most—is somebody will come in and they’ll say, “Hey, we want to buy another property management company in another market,” or “We’re going to open up a new office in another new market.”

Usually, when I ask them why, they feel like they’ve hit a plateau in their growth in their current market. This is usually what’s fueling this. They feel stuck. They were doing something that was working, they usually get to maybe the 200-400 door range and what I call the second sandtrap. Once they get into that space, they think, “Well, we got this far in this location. We’re hitting a limit or a plateau. Let’s just go duplicate that effort and do it somewhere else.”

It makes sense on the surface. It sounds so easy like, “We did it here. Maybe we tap this out. Maybe now it’s time to go to a new market.” I think there’s a lot of myths that drive that. One myth is that it’s going to be easier in another market, in the second market it will be easier. That’s almost never, ever, ever the case. The second location is always more difficult. It’s more difficult to manage, it’s more difficult to maintain. If you have a second office, you’re going to need a second set of staff. It’s just harder. It might mean that you’re doing double the amount of work as an entrepreneur trying to run two locations. Also, they think, “What worked here,” I think that’s a myth, “What worked in our first location to get us to this point might work there.”

If they’ve been in business for maybe 10 years, and they played this pay-per-click game in the beginning, or they were doing all property management leads in the beginning, and that stuff has shifted, and it's not as easy. Things have shifted and changed, but they're thinking, “Well, we got this far. Let's just go do what we're doing now over here. Maybe it will grow just as fast.” They run into some problems because fundamentally, what used to work may not be working.

Another myth is that it's some sort of shortcut to growth, and it's not really a shortcut. There's a lot of challenges and difficulties. What's easier than opening up a new location, and then trying to add more doors, and to build out basically a whole another company, essentially, is to grow where you're at. That's far easier.

A lot of times, when I ask them, here's the golden question to ask yourself if you're a person listening to this thinking, “I want to expand. Let's open up and go into a new city.” First of all, you need to ask yourself, do you really want to be there? Do you want to drive out there? Do you want your team to be taking trips out there? Does that feel comfortable to you? Because ultimately, you can build a business that you want to have. It doesn't have to be the business that you can do. That's a big temptation we make as entrepreneurs is we build the business we can’t. “Oh, well we can do this. I can add this service. We can do that.” Then we get scattered. We end up diluting our effectiveness.

In the case of premature expansion, they open up a second market. What inevitably I see happen—almost every time—is their first primary location starts to suffer and struggle, and they start to lose those doors, and customer service levels drop, and there are challenges, and they're having a more difficult time running both. Things have to be incredibly well dialed in in order to do that, to make that work.

Jon: Ultimately, what you're talking about here is this concept of duplication. We all wish that we could duplicate ourselves so that we could do twice as much work. In entrepreneurship—in order to successfully duplicate yourself—there are some certain things that have to happen. Otherwise, that duplication just looks like split energy, and then neither of the parts are getting as much as the first whole. Maybe you can talk a little bit about what it looks like to successfully duplicate yourself.

When I was running teams at Google, and when we were thinking about whether we were going to expand into a new marketplace, we wanted to make sure that we had maximized our efforts in the current city that we were in as much as humanly possible, and we wanted to make sure that we had templatized all of our processes so that the management wasn't directly involved in the success of the business. They were guiding strategy and vision, but they weren't operationally necessary other than that high-level guidance. Maybe you can talk a little bit about what that would look like in a property management business, and how somebody should think about that concept of duplication.

Jason: I love what you're saying about what they would do at Google. It makes a lot of sense. What I've seen is in my experience in helping hundreds—maybe even thousands of entrepreneurs—is there's always this myth that if I could just clone myself, all my hopes and dreams would come true. I know all this stuff, I can do all this stuff, and then all my hopes and dreams would come true.

Let me tell you from experience what it took to duplicate myself, because I pretty much got somebody to do every single role that I used to do in the business, and it takes probably about ten people. That's my experience. It takes about ten people to duplicate yourself. You're never going to find that one person that can do it all. If you do, they're going to become your new competitor, or they're going to go start their own business, or they're going to leave you after they realize that they can probably do stuff better than you, just like you probably figured out back when you were working for somebody. You’re like, “I could do this better.”

That's the e-myth—that's the entrepreneur myth. That's what everybody wants to do. They're like, “I could do this.” A lot of business owners that are running businesses now they used to work for somebody, and they're like. “I could do this.” Then they'd start learning that they need to become an accountant, and they need to become a graphic designer, and they need to become whatever. Whatever all the different roles are and the different hats that you wear.

Just like that in a property management business, if you're going to expand into any market, you have to realize which hats are you still wearing, which seats are you still sitting in on this bus that's the business? If you're managing, and you're acting as BDM, and you're acting as the property manager, or maintenance coordinator, or any of these operationally tactical, critical roles, then the challenge is you go into the market, your life's going to become twice as hard with another location. There's that momentum and that inertia in getting something new going.

Training one new person makes your life twice as hard. If you're going to build out a new team there, if you're going to build out maybe a satellite staff, it's still a lot more work to get that all built up. That's why if you don't have high leverage when it comes to systems, high leverage when it comes to the process—I think maybe that's a good question to ask yourself is: how dialed in is your business now that if you walked out the door and left for a month, would it fall apart? Would there be a problem? Would it still operate? Maybe then, if the answer is, “Yeah. It’d be totally fine,” maybe then it's time to open up a new location because that means you have things really well dialed in, you've got the right people.

The question is also connected to that: if you lost any single team member—think of who you think is the most critical person on your team—if they killed over and died—god forbid—or they left your business, or they went to work for a competitor, or they went to start their own property management business, how quickly would you be able to get back up to speed? Do you have all their processes defined? Do you know what they're doing? Do you know what they do on a day-to-day basis? Do you feel like somebody else could step into that role very easily because everything's documented? If not, opening up into a second location is dangerous because you're not going to have all those things dialed in.

Ultimately, overwhelm is going to set in. This is the big thing for us entrepreneurs. We operate, basically, at two speeds. It's like we're in momentum, we’re on fire, and we feel alive, or we're in a state of overwhelm feeling stuck, and frustrated, and stressed. If you're already feeling stressed, and stuck, and frustrated, that's probably not the time to go heap more on to your plate.

Jon: Just playing devil's advocate because I think a lot of the people that I talk to in the property management space that are considering this move are like, “Well, that may be accurate advice for most people, but I'm better than most people. I was able to bootstrap where I'm at now, and I was able to scrap it altogether, and I didn’t document all of these processes. Why can't I do the same thing for a second location?”

Maybe you can talk a little bit to me, and explain to me why it's different from the second location? Because it is true that you can figure things out when you're physically there in person, but as you start to satellite out, it's a different kind of mentality that you have to take, and the bootstrapping method doesn't work so well. Can you talk about why that is?

Jason: When you open up a business—just through sheer will of force and just personality—if somebody can sell, and somebody is driven, they can create a business. They can probably even get it up to about $1 million in revenue annually just through that. But beyond that, you have to have a team. In property management, you're going to probably need a team long before you hit that amount in revenue, and you need support. Otherwise, it's just not scalable. You're going to start to burn out really quickly. This is why we see so many people get stuck in the first sandtrap, which is about 50 or 60 units. It's the solopreneur. They'll get stuck there.

If you're at the place where you're at about 200-400 units you probably got some team members, you probably at least have a maintenance coordinator, maybe a property manager, somebody helping with showings. You got some pieces in place. You've gotten that off your plate. That doesn't mean now you could go up and open up a whole new location because still, tons of things are still relying on you. Just pay attention. If your team members are coming into your office, or texting you throughout the day, then you are a bottleneck in your business already. You will be even a bigger bottleneck.

My entire team, we're virtual. If you bring on people that are at a remote office, they're not going to be able to get their questions answered quickly, they're not going to have the support that they need, you need to live there for at least 90 days so everybody's on board with it, systems are in place, and be able to do that. That's possible to build that up, but that means you need everything really well dialed in so that stuff doesn't just gravitate towards chaos. There needs to be protections in place so that you can ensure that people are doing what needs to be done.

Jon: I want to unpack that word systems and really the phrase systems and processes because I think a lot of people—at least in the calls that I'm having with property managers—when I say systems and processes they're like, “Oh, yeah. Well, we're already on that folio. We already have a rent manager.” That's actually not what you're talking about. Can you unpack that a little bit?

Jason: When it comes to processes you need to have—here's the way I look at it, if somebody on your team quit, fired, or died, or whatever, that means somebody else could step in, they could read a process, they would know exactly how to do it, and they'd be able to figure it out. If all the processes exist in that person's head and your head, then I'll tell you what, there's a massive gap usually, or significant gaps between what you think they're doing, and what they think they should be doing. There always is because it's all just in their head.

We know internally at DoorGrow that this happens, and we have processes documented. There’s still a disconnect sometimes. One team member thinks, “Well, this is how I've been doing it. I think this is how it's supposed to be done.” We have it documented, which is it might even be a little bit different because sometimes people don't refer to the documentation all the time. Then there's what the visionary or the entrepreneur thinks should be done all the time, and the team's documented, or decided it's being done differently. These things are in constant negotiations that need to be brought together.

You can collapse time on that by having processes that people have to actually follow, like you have to actually mark it off and complete it. There's a checklist that they're signing off on that they're actually doing so that there's some accountability that they followed those steps. There needs to be accountability in place because most people—just like learning to drive a car, you maybe read a manual once, took a test, passed the test, maybe the first few times you drove you we're checking your mirrors all the time, and making sure nothing was going on around the car. Now you just get in and you just do it. You're probably skipping a bunch of steps you thought you needed to do in the beginning. Over time, maybe you start to skip other steps. Some drivers don't turn on their blinkers when they're changing lanes. They’re like, “People will figure it out around me.” They just don't do these things, so they're not following the process. They're breaking the law.

You have these things that you want to be followed because it keeps the business safe, it protects you from liability in the business, whatever. Your team members, they're going to gravitate towards skipping steps. They're going to gravitate towards what's easiest. If there aren't checks and balances, and accountability in place, what happens over time is everything's kind of gravitating towards some sort of ease, and some sort of chaos, and you're not really aware of it. Then somebody quits because usually when you look at what they were doing, you're like, “Oh my gosh.” It's usually the person that the entrepreneur thinks is the most critical and essential in the business.

Every time I've had that person on my team that I thought, “If they left, my whole world would fall apart. My business would crumble. It'd be the worst thing ever.” That was always the best person for me to lose. Why? Because what was happening was the reason you feel like they’re so critical is because you have so much uncertainty around what they do. You feel like they're the only one that knows how to do it, and it's their job security they love to maintain. But really, if it can be done by them, it can probably be done by just about anybody that has maybe the right demeanor, and the right personality type for that position, but you need to have those processes documented so they can step in. That’s how I gauge it.

Jon: I’ll chime in with as far as efficiency goes, you can keep all the same people, but there's so much mental anguish that happens when something isn't well-defined. Even at DoorGrow, and in many of the businesses that I've worked in, when you go and ask someone what they do in their day-to-day, they feel like that's a subjective question because they feel like they're doing something different, or at least slightly different in every single moment, in every single day. There's so much time and energy that gets wasted when you're constantly having to reanalyze the entire problem, and then make a decision on what the action should be.

When you actually start to document what each person is doing on a regular basis throughout the day, and you look at that from a macro perspective, even within that subjective lens of maybe some things are approached in a different way depending on the scenario, there are very clear processes, tasks, and activities that are being done on a regular basis. If those can be defined, and then clear expectations, and processes can be attached to each of those bullet points, it allows each of your employees to have a better reference point for how to handle certain engagements in the business.

One of the things that creates turnover in a business—in my experience—is that when that level of certainty on what somebody should be doing to be successful in their role is not there, resentment starts to build towards whoever the entrepreneur, or visionary, or guiding light in the business is. That resentment ultimately gets to a boiling point where it's no longer sustainable, and then that results in somebody quitting, or throwing a fit, or making a mistake, or having an accident.

Documenting these processes is one of the best things that you can do to create a level of certainty in each of your employees’ minds so that they can be more successful and more satisfied in their position, which means that retention-wise, you're going to keep your staff longer.

Jason: Let's talk about some systems that are required so that your expansion into another market or in general is not premature. Because if it is premature, your operational costs are going to go up significantly. I'll give you an example. I talked to a property management company, and they had 2000 doors. They’re on the East Coast, they had over 20 offices, but only about 2000 doors. It was split among 20 different offices. What their strategy for growth was going and buying up all these little mom-and-pop shops. They would keep those shops intact, they would keep the staff and everything. Their operational costs were ridiculous.

Then there's another client. He had 2000 doors, and he had three locations: two in Utah, one in Idaho. Eventually, became part of the HomeRiver Group. His operational costs were far lower. Same amount of doors, his market was probably even a lower rent market, but he was probably making more money because operationally among those doors, he didn't have 20 offices, 20 buildings to pay the lease, or whatever taxes on, or whatever. All the support staff that goes with each of these offices, all this duplicated stuff.

Here's what I think is essential to take a look at if you're thinking, “Hey, I want to expand into another location.” First thing you ask yourself, would I do it even if I were able to continue to grow here? If I were able to continue to have the doors in this area—where I want it—would I do it? The thing to keep in mind is, according to the Iceberg Report (the last I saw), it was 30% of rental properties are professionally managed, there's 70% in single-family residential at least, there's 70% available potential market share to be created. A lot of people think, “Well, it's impossible to do that,” but if you look at Australia, you've got 80% of single-family residential almost professionally managed. They, at some point, we're probably around where we are, and they've gotten it to 80%. We have so much opportunity there, there's so much blue ocean. Everybody's fighting in the bloody red water. We've talked about them on the show before.

The idea that we've run out of options is not always true. It is true if you're playing the game everyone else is playing: SEO, pay-per-click, content marketing, social media marketing, pay-per-lead service. If you're doing those things, it's super competitive because that's what everybody's doing. That is focused on that small existing amount of market share. The people that are already looking for you rather than reaching out and creating new market share, which is what we help our clients focus on. That's one thing to take a look at.

The systems that need to be in place. Here are some of the systems that we have in our own business at DoorGrow. One, you need a planning system. Most businesses don't have a plan, they have no planning system. That means you have annual targets, and you have quarterly goals as a company, things to implement, monthly goals. You're not just coming back from every property management conference with a list and chucking a grenade into the middle of the room after pulling the pin and saying, “Hey guys, I'm excited about this. We're going to do all these things.” Everybody goes, “How? We're already maxed out.”

You don't have a system for growth because you don't have a system of planning in the business. If you don't have a planning system, if you can't tell me a realistic annual goal that you're going to hit, if you've been operating in so you think you have a system, and if you've not hit your annual goal for the last year, or two, or three you have a b******* system. It's not real, you’re not hitting your targets.

Jon: I want to pause you there and unpack that statement that you made about coming back from the conference with all of these great ideas, and then chunking the grenade in the room, because I do think that happens in every industry but especially property management. Because one, there are so many conferences, and two, it's really easy to get excited about an idea, and then just chunk it on to your staff and say, “Implement this.” When you're talking about a planning system, the way that we do it here in DoorGrow—that I think is really effective—is you're talking about how do we reverse engineer everything on that list and put it in yearly, 6-month, 90-day, monthly, and weekly commitments so that we know all of the steps that are required to achieve each bullet point on that vision list that came from the conference.

Jason: If we take it even a step back further—and you're new to the team so you've gotten to see this happen—you'll remember, we go through and we take a look at the business as a whole. Every business has five core functions in the business—something I learned from one of my business coaches, Al Sharpen. This is basically the whole pipeline of the business. The goal of the business is to make money, that's how it is successful. Then it also needs some sort of purpose besides just making money.

Those things drive everything that we do. We take a look at these five core functions, and we look at each of them, and we figure out where are we deficient, where can we be stronger? It's impossible to be solid on all of them. That's impossible because for example, if you ramp up sales, then your fulfillment side’s going to hit constraints. You’re going to have difficulties as a team. If you're closing a bunch of doors your team's going to have difficulty onboarding all these new clients, for example, so that's going to go down.

Everything's always in flux. The thing to work on is the thing that's weakest. Generally, that's earliest in the sales pipeline. We take a look at that, and we figure out, “All right, what are the things, and what could we do? Then we decide what we will do as a team? Then we figure out what is possible for us to do over the next quarter.” These will all go back to our annual goal, which we have a couple of annual goals, and it's all broken down. We reverse-engineer it from what the business actually needs. If our goal is to focus on lead gen—if we're a property management company—we're not going to go and implement a maintenance coordination software that quarter if that's already going really well. That maybe we’d do that next quarter.

The problem is, businesses don't have a planning system, they don't know how to break this down, and business owners come back. If they do come up with goals they go to some Tony Robbins event, and they're adding extra zeros to the end of everything, and they’re getting super pumped up, and that demoralizes your team because your team, all they hear is, “This is impossible,” and they're losing. There's no way you're going to hit these goals because they're pie in the sky dreams.

We get excited about them as entrepreneurs, but that's not the same for our team. Our team wants to see that we're hitting our numbers every month, not that we, “Oh, well, we missed it this month.” That idea in setting goals that a lot of people will throw out there, which I don't believe is true, is that it's better as a team to aim for the stars than a pile of manure and hit. It's better as a team to aim for the pile of manure and have success. Your team can feel what it's like to win and have momentum.

Jon: I just want to make sure that we're making this actionable for people, and give people a clear way to assess whether they're prematurely expanding, or whether expansion maybe is the right step.

Jason: It’s a real simple question, do you have a planning system? Can you say with certainty that you have an annual goal that you are confident that your team is going to hit financially? Do you have a quarterly goal that you know what you're doing this quarter, and that you feel pretty confident that you're going to get these quarterly targets implemented? Do you feel confident that your team can hit the 30-day goals that are going to help create those quarterly targets? Does your team know what they're doing every single week relevant to those 30-day goals? If the answer isn't yes to all of that, then you're just operating with the shotgun approach, and your team feels confused, they're concerned, they don't know where the company is going, so they can't really help you get there.

Everybody at DoorGrow is aligned towards what's going in my goal of revenue, making a difference in the industry, all these things are very clear. We talk about them during every meeting: our whole planning system, what we're doing, even what we're doing on a weekly basis that we meet as a team like we did yesterday. To go over our weekly commitments we checked in, what did you do towards these commitments that you had for last week? Did you get these done? There's this high-level of accountability. That's a planning system. That's one system the business needs.

Jon: So far, to analyze whether it's too premature to expand, we’ve got: if you as the entrepreneur walked away from the business, would the business still continue to operate with success? Then we have if you could add the number of doors that you want to add in your existing marketplace without having to go to another locale would you prefer to just add them in your existing marketplace, or is there some other reason for you to want to be in another city. Then do you have a clear planning system where you've got annual, 6-month, 90-day, monthly, and weekly commitments that are all being reverse-engineered so your staff can be successful? Really, that's part of operating without you being directly involved in the operations. What else?

Jason: The other thing that's essential in the business before you can expand is—we've mentioned this already—you need process documentation. You need a system in the business for finding, and storing, and updating documentation. You need a process system or documentation system in the business that includes job descriptions, org charts. There needs to be clarity as to who's supposed to be doing what and how to do things. That's absolutely critical in a business especially if it's going to scale because once you have a team, there's turnover, there's hiring. These things can derail a business if they're critical roles if you don't have these things in place. Process documentation system is really important.

The software we use is Process Street. Everyone can check out the episode that I did with the founder and CEO of Process Street. We use that as an internal documentation system, and then we also have job descriptions, org charts, these kinds of things. We're going through a process because we've got a jumble routine. When you add a new team member it screws everything up, Jon. Now, my role changes. My job description is different. You're stealing things from me, which I love. Everybody else's job changes a bit too. We're making all these adjustments.

Ashley—my ex-wife—she works for me now, and works in the business, and she's great. She's over some of our operational pieces, you're taking on sales and marketing. These are all things that I used to do, they were my role. Like I said, I used to do every single thing in the business, every single thing. Now we have at least 10 people on the team, and they're all doing something that I used to do. Pretty much all of them are better at it than me. Everyone's better at these things than I am.

Jon: I just want to speak from the perspective of an employee because anytime I've gone into a new business, if it's chaotic, and nobody knows what they're doing, and nobody has clearly defined roles, it is so uncomfortable for a new person to step into that environment. That's why there's a lot of 90-day churn and turnover for new hires because when somebody says, “Yeah, I don't feel like it's a good fit.” What they mean is, “You didn't provide me with the level of certainty that I was looking for in this role.” When everything is clearly defined and documented the way that you've done at DoorGrow, it allows me as a new hire to come in with so much certainty, and I feel like everything is teed up for me to be successful in my position which makes me want to do more in the position.

Jason: You just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet, in the DoorGrow Club. Join your fellow DoorGrow Hackers at doorgrowclub.com.

Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead, content, social, direct mail, and they still struggle to grow. At DoorGrow, we solve your biggest challenge in getting deals and growing your business. Find out more at doorgrow.com.

Find any show notes or links from today’s episode on our blog at doorgrow.com. To get notified of future events and news, subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow hacking your business and your life.

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Mar 24, 2020

Do you like dealing with people or properties? Most real estate investors and property managers leave dealing with numbers to their accountants.

Today, I am talking to Kyle Redding, Head of Growth and Sales for Proper. The property management tool uses artificial intelligence (AI) and machine learning (ML) to provide accounting and bookkeeping services. As a former CPA, Kyle has extensive knowledge of accounting, bookkeeping, and customer experience.

You’ll Learn...

[05:12] Purpose of Proper: Partner with property management companies to set up accounting automation for back office.

[06:10] Proper Position: Works with, doesn’t replace other property management tools.

[10:00] Sophistication Fog: Property managers who need additional software and staff to optimize accounting automation.

[12:15] Proper Process: Property managers handle invoices via dedicated email inbox, training, and automated processing.

[17:45] Reminders: Rent is due! Rent is late! Proper’s frequency of property management invoices and statements.

[21:10] Proper Competition: Hire bookkeepers/accountants with qualifications, education, and experience to alleviate single point-of-failure.

[29:55] Proper Pricing: Affordable and sliding-fee scale based on price per unit.

Tweetables

Proper manages the books, you manage the properties.

Proper’s Primary Focus: Accounting automation for more scalability and less stress.

Proper’s accounting team is not your run-of-the-mill bookkeepers.

Leverage Growth: Partner with Proper to take property management to the next level.

Resources

DGS 101: Take Confusion Out of Property Management with the Proper App

DGS 122: Creating Systems in Your Property Management Business with Paul Kankowski 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.

Today’s guest is Kyle Redding of Proper. We’re going to be learning about what Proper is now. I think we’ve had you guys on the show before and it’s different. Kyle, welcome to the Door Grow Show, glad to have you. Let’s get into your background and maybe you could share with people your entrepreneurial journey, I think you have a cool story and I think it’d be fun to get into first.

Kyle: Yeah, thanks, Jason. This is exciting, thanks for having us. Up at baseball in college really all I wanted to do fell into accounting. That sounds a little crazy, but Accounting 101 was in all those classes that I took and got 100% in. Don’t ask me how, but it just happened. While playing baseball I was like, “Okay, I think I can do this.” You travel a bit, you miss a bunch of classes but still, somehow worked it out.

That revolved into an internship with Ernst & Young and then ultimately, a full-time job. I started up at EY in Orange County, California for about five years or so in the real estate group. A lot of my clients were public REITs or real estate developers. I ultimately then transferred out to Australia where I work at EY. Again with some real estate clients and some other industries.

Ultimately, I got out of the public accounting game and was attracted to start-up life. I found this little start-up in Australia that was looking for an accountant that could sell, and I thought I’d give this a crack. We are a little finance online payment company in the professional services, all of our clients were accounting firms and law firms. We got really deep into the accounting industry and the CPA world and how they run their business.

We grew that business and brought it to the US about four years ago. I took that company public in July last year. While that happened, I’ve always stayed in touch with one of my best friends, Matt, who is our COO and head of finance at Proper and Mark, an old college roommate from USC. We used to make surfboards and Matt and I worked at Ernst & Young together.

At that time, Proper was really trying to solve a lot of different challenges for a property managing company, mainly on the maintenance side, which I think he comes and talks about before. Mark, our COO, was just religious about user research and first principles, light up thinking, breaking down problems, and finding the best solution for those problems; which is how we ended up coming back to Matt and I’s core background from the CPA world and real estate and addressing that [...] maintenance side of things, which is a nice to have and people want that to be better.

The real true problem that we found was on the accounting side. A lot of property managers don’t necessarily get into this business because they like doing the accounting, or they do not do the accounting because (like you said) different from the real estate sales. It allows them to grab a hold of these owners and these properties, and develop other business opportunities but at the end of the month, the key deliverable that they all have is a financial package on that owner’s investment. That’s where we are today, helping a lot of property management companies solve that challenge and get better and focus on growth as opposed to running a call center and operations.

Jason: Cool, so let’s get into how would you describe Proper now to those that are listening? What does Proper do?

Kyle: Yep, sure. We partner with company management companies to help automate their back-office essentially, from everything, from AR to AP, to bank [...], to owner reporting. We use very high caliber accountants who have all got an accounting degree from big universities, that work in a big board accounting firm, that works at a Fortune 500 accounting firm. We power our team with machine learning, automation, and artificial intelligence to help make their job easier and allow our clients, the property managers, to scale a lot faster without having to worry about hiring more staff for training those people or maybe delaying, bringing on more portfolio because they need to do those things before they can get to that next step. We focus on accounting automation.

Jason: Help me understand then how that works. Most property management entrepreneurs and business owners that are listening to the show right now are probably thinking, “Well, I’ve already got AppFolio, I’ve already got Rent Manager, I’ve already got Buildium. I’ve got a property management back office or accounting solution.” Is Proper something that you guys are positioning yourself to replace these tools or is this something where work in conjunction? How does this work?

Kyle: Good question. We work alongside all of those tools. We’ve got a big mix, we don’t just work in AppFolio, we don’t just work in Propertyware. We’ve got clients that use Buildium, use Yardi, AppFolio, Propertyware, Rent Manager, you name it. We’ve even got clients who start out with QuickBooks and then as we help them grow, we transition into something more appropriate like a property management software.

Right now, we’re not looking to replace any of those tools. We help optimize them for our clients. We help them set up a foundation to better utilize those and then manage those as well. A big part of what we do is helping them set up the appropriate level of internal controls. Are they set up for growth? Is that foundation there to really pile on top of?

When we take on a new client, a lot of times it’s retooling the way they’ve set up AppFolio, Buildium, or Propertyware. It’s helping them get their [...] matrices set up. It’s all of those things to create efficiency, get them out of the weeds of the mundane repetitive low-level tasks that are [...] time set from their day, put that on to our plate, and get them back out to the field, so they can grow their business.

Jason: It’s not just accounting because you’re helping with some of the operational aspects as well.

Kyle: Correct. What we found is depending on a property manager and the company and the way they’re staffed, there’s a lot of leaving in and out of that accounting process. There’s a property manager who might spend 10%–15% of their day doing some accounting function that they probably shouldn’t be doing. The other side of that is you might be the owner or the broker-owner going, “I wish my PMs are out there losing these vacant apartments I’ve got, but they’re stuck doing this paperwork because there’s no one else to do it,” or it’s part of a process that they set up that hasn’t been revisited or fine-tuned. So, we help alleviate all those little bits of pieces there, then create more capacity for them to focus on what they want to focus on.

Jason: Is this difficult to get going, get set up, and is there a certain level that a property management business owner has to be at before it would make sense to work with you guys?

Kyle: Let me tackle that second question first which is do we have a minimum or a certain size. The short answer is no. We’ve got clients who have as little as six units. We’ve got clients who start with us at say 30 units and grow to 50–60 within three months. I’d probably say where it starts to make the most sense where they can move away from that one part-time admin or office staff handling some of these admin related tasks or accounting related tasks. Generally, to make it to that 30–40 unit mark and they’re starting to gain some momentum and get a little serious is where we can usually help them get to that next level.

Where we see a clear difference is with somebody’s property managers who we call in the sophistication fog. They’ve half thought on their AppFolio or Yardi to do some things for them, but they still have some low-level staff that may or may not have an accounting background. They’re essentially taking off things on the checklist on a daily basis to help get that job done but there really isn’t an optimization to that process yet, it hasn’t really been optimized. We can come in and create efficiencies for them and help them, ultimately, have them repurpose those people to maybe a more interesting role or a more revenue-generating role, and then start to use some automation and fine-tune their property management software to do more for them.

Jason: When it comes to automation and the technology side, do you guys have a homegrown software that’s running and doing the stuff? Are you using a certain software platform that you work within?

Kyle: We continue to optimize and build other tools mainly around AP. Our goal is to attack one of these functions at a time. We found by measuring our accountants’ time that on average it takes about 5 minutes and 59 seconds to process an invoice. We built a proprietary tool that allows us to take that 5 minutes and 59 seconds down to (say) 30 seconds. From a scaling perspective, that property manager then takes on another 200 units. There isn’t the fear of being able to handle that, and we don’t need to staff another five people on their account to get that work done. We can continue getting through that work at a very high accuracy rate by training our model over and over with the different touches and windows that we see.

Jason: How are the property managers feeding stuff into the system as if they’re feeding it into Proper?

Kyle: Just like maybe a more specific property manager we may have set up where, let’s say 70%–80% of their invoices from their [...] vendors are coming in by email. They might have a dedicated inbox, ap@xyzpm.com or billing@xyzpm.com. If they don’t already have something like that set-up, then we’ll help create something like that. We’ll work with their vendors and their team to start training those invoices to come through to that inbox, at which point we can then adjust them and start processing them through our automation tools.

Jason: What are some of the big questions that you’ve been getting? Everybody’s using their property management software, they probably have their systems and processes going to where they’re afraid to even mess with it a little bit, they feel comfortable. Then hearing you say, “Hey, we can help you make things faster. We can make it better, we can help you utilize things better, we work alongside,” and they’re probably thinking, “This is going to be really expensive, I don’t know if this makes sense. I’m going to have to do something different or something new.” What are some of the concerns and how are you addressing those? Maybe you can address them here so people listening, they’re popping up in their head.

Kyle: Sure. I’ll probably revisit one of the questions you asked earlier which I didn’t address, which was what does it look like to get started or to start working with us? What does that process [...]? Our onboarding process, usually depending on the size of the PM, say, between two and four weeks to where we’ve fully taken over the accounting work off of their plate.

When we start working with a new client we’ll basically do a deep dive walkthrough through every single one of their processes that they have. We’ll then document that process, so if they do continue to grow or they want these policies, procedures, and manuals for their own internal use, they’ll have those and we can use those to hire additional staff as they continue to grow.

That’s probably a big first step, is understanding what they do, how they do it, what is being done, who’s doing what, et cetera. During that onboarding process, if we see a glaring opportunity for an improvement or an optimization, we’ll help them execute it right there on the spot. In the first instance, we’re going to match what they do so there’s the least amount of distraction to their day. Then over time, the next 30-60 days, we’ll tweak that some more and optimize it a little bit further to where they’ve got a smooth running engine behind [...] essentially.

That’s a big question for a lot of prospects of clients that we take on is how do we get started, how does this work? That’s a very high level.

Jason: Let me recap that. Some of these direct out with accounting, they’re frustrated with some of their internal processes connected to these, their day-to-day, and in 2–4 weeks you feel like Proper can significantly lighten their load and allow them to breathe.

Kyle: Yeah. For example, just in the last month, 80% of our clients had increased their unit count on a month-to-month basis. Obviously, there are ebbs and flows, they might lose an owner (which drops the units), but generally speaking, once Proper gets in there, we alleviate and free up. We have one client, we freed up 35 hours a month of their time. This is a seasoned property manager who’s just, at the end of the day having to review work, or they were using another accounting partner.

Jason: Then roughly how many doors did they have that they were freeing up that much time?

Kyle: About 200, let’s say. Not a massive one but a decent-sized property managing company. Working with Proper, we generally saved in terms of card cost of headcount, up to 30% of their accounting staff wages over time. Maybe not on day one because if we’re not going to replace a team, that comes in phases, but over time, we generally see about a 30% cost reduction. We can fix this cost for them as opposed to them running a call center. They want to be making more money so let us fix this cost for you. Keep the quality at a very high level so that financial output and what you’re delivering to your owners.

We also see a significant reduction in the number of questions or queries that our clients get from owners every single month because now our accountants are coming in and doing things may be the way they should’ve been done before or at a slightly better cadence or faster cadence which helps them keep their relationships.

Jason: What are you seeing in all the property management businesses that you’re working with? How often are they sending out statements? Rent is sometimes trickling in. Rent [...] coming [...] a month. Sometimes it’s late, rent is really late. In these situations, what are you seeing as a frequency for invoices going out?

Kyle: Definitely ranges depending on who it is that we’re taking on board but ultimately during that onboarding and stabilization period, generally it’s within 60 days or so. We have them all recording on the 10th of the following month and that’s a pretty standard cadence across the industry, but we make sure it’s consistent. There isn’t that, “We’d like to get it done by the 10th. Sometimes it’s the 15th or sometimes it’s the 20th.” We try and help standardize that across all of their owners. That might even come down to giving them some advice around, “Hey, you don’t have this clause in your owner agreement negotiated property, let’s help you fix that real quick.” That way you have some consistency. There are fewer exemptions and less, “Oh, this one requires that and this one requires that.” Again, building for scale, they can make those tweaks and continue to pile on top of what they’ve already built.

Jason: One of the questions that pop up in my head hearing about this and owners giving some of their subs, they’re concerned about checks and balances. How am I going to make sure everything between my management software reconciles with my trust accounts, banking accounts, and everything is going in and out? How do I make sure everything is legit and stable? If I’m going to hand it off to somebody, I want to feel safe that these checks and balances are in place otherwise I’m going to have to check everything. Isn’t that true?

Kyle: Yeah. A big way that we approach that is through those onboarding walkthroughs. When we do a deep dive into each process, whether it’s collecting rent or AP, or with the owner recording if there are only [...] there, we go into extreme detail, we document and create a manual for that process. Then there is a consistent agreed way of doing it, whether we try to make recommendations to improve it, or we say, “Hey, you guys have got some great process here.” We just formalize it in that way there’s a clear line of, “This is how it’s going to work.”

Then we use tools to keep people accountable. Set reminders for (say) someone on the PM side, they haven’t approved an invoice for us yet, we need to garnish their approval. We use tools that allow us to keep those people accountable, so we can keep them [...].

Jason: Short callers and text messages?

Kyle: We communicate daily pretty much with all of our clients from Google Hangouts, workflow collaboration tools, things like that, so there’s clear visibility.

Jason: What are some of the other frequently asked questions that people give you when they’re going through the sales prospects sort of process with you?

Kyle: What are our qualifications, what makes us qualified to do this sort of thing. As I said, Matt and I—Matt is our head of operations—we’re both CPAs with extensive real estate experience at Ernst & Young. All of our accounting team—I think I mentioned this before—got an accounting degree from college, they’ve worked at a Fortune 500 company, or [...] accounting firms. Our staff is not your run-of-the-mill bookkeepers. They’re highly trained, they’ve got extensive experience, we require our team to do at least 10 hours of CP in real estate accounting every year, that generally gives them some confidence.

Then we’ve got some clients out of their really sticky situation with back books and unreconciled accounts for a long period of time and if we can come in and clean that up in a very short amount of time. We have one client who had nine months of unreconciled accounts, and we helped clean that up in about 3½ weeks. When we can show our clients that we can do this for them and help them get to a part where they can sell all their managing company and their portfolio, that speaks volumes for the rest of the people that we talk to.

Jason: Let’s throw stones at some of the competition.

Kyle: Sure.

Jason: One of the main competitors is going to be the property management that’s like, “I’m just going to go higher because the alternative will be I’m going to go higher than somebody. She’ll help me with my bookkeeping or my accounting, or data entry with checks and invoices and all this kind of stuff.” They bring in somebody, they’re probably one of the lowest-paying members of their team, and they’re trying to teach them how they do it and it gets really messy. I don’t know if you want to say anything else, maybe I already threw stones at it.

Kyle: No, that’s good. It’s definitely a challenge that we come across, where they’re weighing up, “Do we do this in-house or do we bring on a partner like you guys?” What we often see or hear from people who maybe have gone down that road and then maybe come back to someone like Proper is that it's a single point of failure. It’s one person who’s a real accountant. They go on vacation, things get missed or they get tired if they’re growing quickly, and they’re not organized. All of those things are risks that a team like Proper doesn’t let happen because we have more than one person while working on your portfolio. We could do that and your pricing is still fixed. That’s one of the ways that we help alleviate those sorts of risks from that setup but that might be the right set up for some people.

Jason: Yeah, I’m sure every property manager that’s brought anybody else in to touch anything financial in their business has noticed some really ugly mistakes that they’re having to clean up. They’re having to reissue their statements, they’re having to undo or apologize for a notice to quit or something that went out to the tenant that shouldn’t have.

Let’s compare this now to just going and getting an accountant, like somebody maybe, “I’m going to go hire a local accountant. They know my area, they’ll get to know my business. Steve down the street, this guy, CPA.” Let’s throw stones at that now.

Kyle: The biggest downside to that scenario is that they’re often doing things in arrears. The accountant isn’t there, the CPA isn’t there every day to do and process invoices or reconcile the bank account. They usually come in the first week of the next month to catch up on everything. The client isn’t super organized, they’re going to have to be digging through things, distracting their clients, asking them questions about stuff that happened three or four weeks ago. Which can be a big challenge. You might be able to navigate through that and create some processes, but that can be burdensome. Even more at a time sucks especially if people on the go are not doing things the way they should be along the way.

With our team, we’re reconciling bank accounts on a daily basis as transactions go through. We’re processing invoices instantaneously as they come through. There are benefits of us essentially being an extension of your team, just maybe not sitting in your office, but having the same people every day in and out doing that work for you as you go.

The other thing about the traditional CPA firm is they’d rather do the higher margin advisory work, tax consulting. It’s expensive for them to do the low-level bookkeeping. They’ll do it for a relationship, but they don’t necessarily like doing it. We actually get a lot of referrals from CPA firms who have clients who need property accounting done at an affordable price.

Jason: You go get an accountant, they’re looking at things after the fact, they’re pointing out things you need to clean up, they’re disrupting your day. You’re having to communicate with them, you’re trying to find the problem they’re pointing out rather than these things being taken care of on a day-to-day basis. If you guys fix something that’s messed up within a day or even two, it’s dealt with. Thirty days later, some stuff to undo your mess.

Kyle: Correct.

Jason: What are some other alternatives to going without Proper? I guess doing it themselves.

Kyle: Yeah, doing it themselves but again you’re constantly fighting that growth battle. How do I get to the next stage, whether it’s right? We all look for leverage to put us into that next zone. We get a lot of clients coming to us who want to grow. They get to the point of, “I can’t do anymore. I need a partner to get to the next stage.”

We get people who’ve been burned by other accounting partners who maybe just don’t have the same quality control so now they’re looking for a new partner that isn’t going to mess things up that they don’t have to keep an eye on.

I think because we focus exclusively on property managing companies, we’re not doing restaurants, we’re not doing eCommerce businesses. We’re 100% real estate accounting. That gives a bit of confidence in partnering with someone like us.

Jason: Got it. If you’re working with some sort of accounting bookkeeping firm, you’re having to force the system, and you’re having to explain to them what you do and that rent’s going to come in, and certain amounts are going to be taken out, and all of those kinds of mess, and they just don’t get it. You’re having to use every time, like change the account rep that’s working with you this company has turned over. That can be a mess, you can guess it.

Any other frequently asked questions that people come in to look at your firm would maybe want to hear on this podcast?

Kyle: How quickly we can get started with people or whether we can help them retool their software stack. Another one we get quite a bit and gotten quite a bit recently is “Can you handle our overflow accounting?” As in they might already have a full accounting team with that capacity that they’re hungry to grow, and they want to buy four portfolios in the next quarter 400–500 units each. “Can we engage you guys to help do the mapping and the chart of accounts to our chart of accounts and the monthly accounting into a ready to transition them from whatever software they are on now to ours?”

We handle a bit of our work as well or even maybe some ad hoc research of which one would outgrow this solution, what else should we look to do. We can scope in that sort of work and continue to partner with them on their growth.

Jason: Okay, pricing. If we can really give any numbers here but if you can help people understand how do you price this out, how affordable this is, how does this work?

Kyle: Great question. Our pricing scale is part of our client’s scale. As in the price per unit drops, the number of units continues to rise. We might start out someone with $12.99 per unit, we might have 100 units. Then if they get up to 2000 plus, we could get as low as $6.99 per unit. We calculate on a monthly basis and as the unit count fluctuates we adjust the pricing, so it’s a fixed note cost for them each month based on their unit count. If we don’t have to work on 100 units that they lost last month then cool, their fees are going to reflect that. So, between $12.99 a unit and $6.99 per unit per month for a full suite service.

Jason: Got it. Well no matter how you work the numbers, doing that here at my screen, it’s going to be a lot cheaper than even a part-time employee generally would be. That’s handling the stuff, that’s a single weak link in the chain, that can be a bottleneck, that might get sick, go on vacation, or whatever, or yourself holding the entire company back because maybe this is not your area of genius or your life’s purpose to handle all this stuff.

Kyle: Yup, exactly. We don’t necessarily provide à la carte services or our different functions of the accounting process other than accounts payable. We know that AP typically takes up about 60% of the time across the entire accounting function. We can get scale on AP pretty quickly especially with automation.

If we’ve got someone who’s looking to maybe test us out, try before they buy sort of thing, we might take on just AP for them or maybe 60% of their workload at an appropriate price point for them to handle just AP, then move that into taking on the rest of their accounting services. Otherwise, we get people who just say, “We need this, let’s get started right now.” We’ll work with their team, get up to speed in a very short period of time, and then take everything off their plate.

Jason: It’s just crazy to imagine that some of the property managers are going to listen to this. You’re dealing with some of the stuff, you’re running into headaches, you’re frustrated, this could be dealt with based on what Kyle’s saying here in like a month. It could be literally off your plate and your life could be infinitely easier.

Kyle: That’s very true. We do start taking stuff off their plate in the first week or two but that first 2–4 weeks we like to really just make sure we’ve got a good understanding of what’s going on so that mistakes don’t happen, so that by week 4, we’re fully optimizing, we’re ready to roll.

Jason: Cool. Well, I’ve gotten too deep with you and some of the members of your team and I know you guys are sharp. This sounds even better than what I thought we were going to be talking about today, so it sounds pretty exciting. I’m sure you’ll get some people reaching out that are running into some difficulties [...] off the top of my head that has been complaining about some of the stuff so it should be interesting to see the attraction you get on this episode.

Kyle: The main thing, Jason, that we wanted to do is really give our clients their time back and give them the confidence and reliance on this financial that every month they got to deliver to their owners without having to worry, want it to be consistent, and want it to be high quality. We want them to not have to fear about getting right or spending time checking things. We want to be their partner in growth. We look for clients who want to grow and are like-minded with us to really help transform their business.

Jason: I think those types of clients are my type of clients. These are the people that are focused on growth, so awesome. This is the Door Grow Show so hopefully, the people listening are that type of people. How do people get in touch with Proper? How do they get started? What’s the next step for those who might be listening that might be interested?

Kyle: My email is kyle@proper.ai. You can check out our site proper.ai. Shoot us a note. We’d love to do a free consultation for you, show you a little bit about how we work. We’re happy to be in touch with any of our customers as well if you want to reference check us. Please reach out, and we’d love to work with anyone who’s interested.

Jason: Awesome. Kyle, thanks for being on the DoorGrow Show.

Kyle: Thanks for having us, Jason. I appreciate it.

Download this Episode

Mar 17, 2020

Are you a property manager who loves or hates creating systems by leveraging technology? Do you enjoy or dislike doing inspections, dealing with tenant issues, and handling renewals? Have you considered putting processes and people in place to automate your business?

Today, I am talking to Paul Kankowski, a real estate investor with more than 200 doors. Paul increased systems to build a better property management business. He describes how he created computer-based processes for his employees to do everything his way, the same way, the right way.

You’ll Learn...

[03:10] One-man Show: Learn how to get the job done right and then do what you want.

[04:41] Paul prefers to create processes and systems to solve problems.

[05:29] No Secret Sauce: NARPM speaker/expert on automated processes/systems.

[07:29] Paradise is Possible: People make more money, if they have good systems.

[08:39] Fines: Do I charge? Do I not charge? Decision made by process, not employee.

[09:25] Everything that doesn't have a process, Paul deals with until he creates one.

[10:52] Manuals and How To Videos: From simple checklists to 195+ steps to follow.

[13:37] First Process: Tackle the one that's losing you the most money.

[16:40] Make or Break and Placing Blame: Mistakes are made by processes or people.

[25:40] People as Process: Property management will never be completely automated.

[29:30] Retention vs. Growth: Give good customer service and don't let doors leave.

[36:20] Stay in Your Space: Identify what energizes or drains you, then offload them.

Tweetables

Mistakes are made when processes are broken or employees skip steps.

Be involved in your systems. Know how they're running for your business to run right.

Processes are not a secret sauce that everyone has to have a different one.

Why people like systems: They make more money, if they have a good system.

Resources

PM Systems Conference (Aug. 10-13, 2020, in Las Vegas)

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

DGS 76: Outsourcing Rules for Small, Medium and Large Companies with Todd Breen of VirtuallyinCredible

DGS 69: HireSmart Virtual Assistants with Anne Lackey

DGS 121: Property Management SEO Tips - Part 2 0

Transcript

Today I am hanging out with Paul Kankowski. Welcome to the show, Paul. I'm excited to have you on. I told you in the green room that I was really excited to have you because this is a topic I think everybody would be interested in. Everybody loves this idea of creating systems in the property management business, figuring out how to leverage technology. Before we get into this topic, qualify yourself. Tell everybody about you. You’ve done some really cool things in the property management space connected to this. Introduce yourself.

Pau: Hi, my name is Paul Kankowski. I'm out here in Temecula, California, this is Southern California. I have over 200 doors right now. We're not huge, but we have increased our systems in order to make ourselves better. I actually started in education. I was a school principal and a math teacher for 18 years, and I was a real estate investor. I've been a real estate investor for over 20 years. I bought a lot of properties and when the crash happened, I became a flipper. I bought a lot of rental properties and people were doing a really crappy job in my area. Now I actually know a lot of property managers in my area, but back then I didn't.

At the time, I just didn't have anyone that could do the job right, so I started taking some NARPM classes and I started using that to manage my own properties. I only cared about managing my own properties and family for the first two or three years, and then I went into that to turn it into a business.

Since I've turned into a business, now, I don't want to manage everyday things. I don't want to be doing inspections. I don't want to be doing all the stuff that you have to do as a one-person show. We have eight employees and I've created processes and systems so that they do everything that is done by computer and everything in the same way, I can work on higher-level things, more networking, and doing stuff that is more enjoyable in the industry.

Jason: More enjoyable for you, right? Because some entrepreneurs hate that stuff.

Paul: Yes. More enjoyable, in the sense, that I don't like doing inspections. I don't do them anymore. I don't like dealing with some tenant issues. I don't like dealing with renewals, but I like everything being done my way. I like it being done well. I like it to be done the same type every way.

Before (as you know) I have to get my hands on everything to make sure things are being done, so we are giving the best customer service. Now, we have systems in place, so I know that things are being done the way we state it and ought to just hope that my employees are doing it the right way.

Jason: Right. What's cool about Paul, for those watching, is Paul's built this business around himself and what he wants to spend his time doing, versus what most business owners think they should or have to do. You get to do things you enjoy doing on a daily basis, which really is different for every single entrepreneur.

Paul: Yeah, it's great. I like doing the processes and systems are working on them, but I can't. I was a math teacher for 12 years, so systems and stuff are like math problems. If you have a problem, how are you going to solve it and how do you solve them the same way each time? It also (I think) a great way for people to hire people that can do it for them, to get it done right, but you have to be involved in your systems. I don't care if you don't like the math portion of it. It's just very important that you know how they're running so that your business will run right.

Jason: Right. You can't just stick your head in the sand and throw it at somebody and expect that it's going to be done well.

Paul: I agree.

Jason: Let's take a step back. Everybody listening to this, I want to point this out, too. You’ve run some conferences related to automation and technology. You've got some things going related to that, you didn't mention that. You're an expert at this. You’ve spoken at NARPM, the Broker-Owner, I think, related to this, or the national conference or something like that.

Paul: I spoke at the national conference in San Diego. It was something similar to this. I have had four conferences on systems and I have a systems conference. My next one's in August, that will be our 5th one. This has been really good.

It's a small conference, they only allow 50 property managers to go do it. It's a workshop, not a conference, I always like to say, because it's not a bunch of speakers speaking. It's a lot of time you getting down and dirty, actually doing the processes, having fun with property managers, and really getting in conversations. “How is your move out? What's your move out different?” Sitting there and discussing with other people what they're doing and then creating the process on people that have already paved the path to do good process.

I find that when you sit there and you work with five or six other people, you learn where your inefficiencies are, what's great about someone else's processes that you can copy. Processes are not this secret sauce that everyone has to have a different one. You can take a good process and you can adapt it to your business. That's what our workshops are about. It's a really great time. They usually sell out in about three to four weeks. I usually have a long waiting list afterward, just because we do keep it small. I don't want to get so big where people can't actually sit and have a conversation with each other.

Jason: I like the idea. Let's talk about your business. Let's paint a picture of what's possible or what you see other business owners do that had been in these conferences, some of the people that are plugged in, they've got technology, they're leveraging it. I want to paint a picture of paradise or a possibility for those that are listening because I think a lot of people listening are going, “It sounds so complicated. It's probably not possible. I'm sure what I'm doing is nearly just as good.” What are you noticing in your own business? Maybe in terms of margins, systemization, and staff?

Paul: This is the biggest thing and this is why people like systems. You'll make more money if you have a good system. I'll look at HOA. HOA was an issue a year ago. We tackled; we were not doing as good of a job. We were handling every HOA issue as its own individual thing. We weren't getting emails to owners. We were dealing with the HOAs, but we weren't letting the owners know, “Hey, we're dealing with it every week.” I lost a big owner because they thought we weren't dealing with the HOA issue, even though we were, but I lost it because of perception.

The perception was they were getting email weekly, so we create a process where the owners get updated every week on the condition of the HOA when the things are going to be resolved. The other things that would make more money, first off, we have owners that are happy.

Second, the fines that we’re giving to tenants, they were happening 100% of the time. When it’s not in a set process, a lot of times I'm like, “I'm not going to charge that because it wasn't that big a deal. He left the trash can out.” Well no, it is a big deal and it's a $25 charge. You're going to get a charge no matter what now because it's in the steps. The employee who's doing it doesn't have to make that decision, “Do I charge? Do I not charge? Is this one of those things?” That's a step that might have been missed.

We've noticed our revenue—when we have processes—doing really well, it goes up dramatically. I would say HOA fines, we might have a couple of $100 in HOA fines the year before and now, it's thousands of dollars. That's a huge difference because we were not being consistent on the fine. That's a huge thing about the process.

The other thing is everything that doesn't have a process, I have to deal with. Here's one that we have not created yet, owners leaving us, and we have to exit them. That’s the next process we’re making in the next two months. Right now, when an owner leaves, I have to do all the work because I don't have a process. I'm afraid that my employees might do it their way. They might make a mistake. They might not take them out of the property mill.

I'm going to be paying $2 a month for that door that’s not even active because it's not been deactivated or up fully own and that it's $1.50 a month. All these little things that you think, “It's only $2, only $1.50.” You have 20 doors that you're being charged $2 a month, that’s $40. Over a year, you're looking at $480.

You have to have good processes so you don't skip minor steps. You say, “Well, I don’t skip.” If it's not written down, you make mistakes. You might not make mistakes but your employees are going to. They're not bleeding the business day-to-day that they're not going to sleep thinking about the business like you are as the property owner. If you write it down and you have every detail there, not only you're going to make more money, you're also not going to lose money from having money just shot through.

Jason: Okay. You were just talking about a process that you haven't yet created, that you're working on right now. When you get into this process of creating a new process, how involved are these? Are these like insane, and they have lots of different steps? You're thinking of every nuance and every detail or are a lot of your processes simple?

Paul: When I started, they were really simple. When I started, I was Asana, it was a checklist. It was a checklist and everything was the same and it was fine. It was better than nothing, but it wasn't good. Now, my utilities processes are 195 steps.

Jason: Your utilities process.

Paul: Are 195 steps. When someone does utility, it's about eight steps for them to finish it because one of the things is every utility is listed and so you put SDG&E, or you put Edison, a different step is going to come up for every single utility. It asks you questions and then Neil, my person has to go through 195 steps, they go through nine steps. They go through SDG&E, then it tells them the phone number to call, who they have to talk to. Sometimes, one of our processes for a little water company we deal with it says, “Talk to Susan,” because Susan's the one in the office that they have to talk to in order to pay this bill because this is [...] water district, and they're just kind of backward, I believe that's the one.

It says every detail. There are videos there. If I get a new person on, they can watch a video and the video shows them step-by-step how we do, how we put the invoice in AppFolio, how we do everything. It's a training tool for my new employees. I just had a new employee last week. The first thing we tell them is, “You need to go through Process Street. You need to watch these processes and you need to go through this 20 times,” and then I want you to try it, without me even instructing you and see if you know how to do the process. I'm going to watch you do it. If you know how to do it, then I created a good process.

If you watch these videos and go through it 20 times and you still don't have a clue how to do your job, then my process isn't good enough at this stage I'm at right now. You can be as small as just wanting a checklist and having people skip steps, which is fine, but there's more chance for mistakes to being so detailed that it's a training manual for every person that comes on.

Jason: I love it. For those listening, you're currently using Process Street. We had Process Street founder, CEO on the show before. It was a great episode. Make sure you go back and listen to that episode where we're talking about Process Street. We use it internally here at DoorGrow. I think it's a great software.

Now, if somebody is looking to get started with this, or they're showing up at your conference for the first time, they're one of these 50 people, they've got the deer in the headlights, eyeballs going on, and they're like looking around, they're feeling really inseminated, what is the first process that usually people should tackle?

Paul: The one that's losing you the most money. The one that's a hemorrhage point. It’s usually either moving, leasing, those are usually two of the big ones, move out. It's funny, right now, we've changed our compass around a little bit. I'm doing a pre-session on the first day, so we're doing it for four hours, where I'm going to work with a small group (10 people), and we're going to break down your process and build it together for the first four hours. You're right, I have people at all stages of my conference now, I have people that have been to every single one of mine. This August, it will be their 5th time going and I have people that's their first time going.

We want to give the difference between those that are first-timers and those that have been to four of them. When I started this systems conference two years ago, it was two years ago last September, I started it because I thought my processes sucked. I hired a speaker to come and speak to us, and he was pretty expensive. This is how this conference has started. I put on Facebook, “Anybody wants to share on the speaker cost, we’ll just meet in Vegas.” We had 10-12 companies there and it just started because 12 of us got together, we split the cost of the speaker, and we went together and hung out.

We had such a great time, we found that it was so great just talking with other property managers, that we kind of tweaked it a little bit, and then we’re like, “Okay, we are kind of the speakers because we are in the industry. We know what each other needs.” Now it's all about helping each other. If you go to this, you're going to the four hours (in the beginning where you're going to get that), and then just go and sit with other property managers, see what they're doing, write little notes, and get your checklist. Start as basic as you can.

I have one guy that will only use Google. Everything is Google sheets, but he has his steps written down and it works for him. Other people are Asana, other people Process Street. Other people like Wolfgang Croskey, have Podio everything automated. All his emails are sent automatically. Everybody that goes, they're using different software, they're using different things, but their whole goal is to help each other and to make it so that your process will be good.

Jason: Yeah. I would imagine one of the best things about being there, talking with other people, seeing and hearing how they do things, you're just going to get ideas, and there's a lot of ways to implement that idea. A process is software-agnostic in general. It's a process. You need certain steps to be done, it can be done by humans, it could be done by technology like Podio, it could be done by whatever, but it needs to be done. You need to know what the vision is so that you can create it.

Sometimes, this just comes from getting ideas from other people. “Oh my gosh, that’s a great idea,” and you're doing that in your business. “We should do that too,” and then, “How can we do that with the tools and resources that we're currently using?”

Paul: Jason, I would say, to start a good process, the first thing you do is you get every employee that's working on a process on the table. You get a big white sheet of paper and you write down, “What are you doing?” This is our creation of the process. Our process is to get them right. It’ll take about two months. It sounds like a long time, but it's really not because of the process we do to get our processes. We start out by getting all the people involved in the process, and we write down, “What steps are you doing? What do you do?” We don't skip anything.

After we get all of the steps down, I send it to someone in my office named David who will sit there and put it into a Process Street with all the bells and whistles, all the changes, and when this is going to happen. We sit there, and we go through it, and I try to break it. I go through every single step and I see where it ran into a problem. That's the very first month. I only work for an hour here and an hour there. I work on for an hour and say, “Hey, this is tweaked,” and “Are we clear?” He fixes that. I look at it and say, “Okay, this is good.”

After that, we give it to the person who’s actually going to be doing the job. Their job for the first month is to try to find where the process doesn't work and to either, doing the process to be like, “Oh my gosh, we forgot to put the charge into the tenant,” or whatever it is. If they find something wrong with the process, then I'm going to praise them beyond belief because they broke my process. Breaking my process is a good thing.

Throughout the entire year or whenever we have a process, whenever a problem occurs in my company—an HOA gets missed, and we have some major issues with some HOA—we look through the process, and we say, Was it a mistake by the employee, or the mistake by the process?”

If it’s a mistake by the process, we fix the process right then, right there and get it right again. If the mistake is by the employee, we show them, “Look here are the steps, what happened? Why did you skip it?” “Oh, I'm sorry. I just skipped this step,” now they know that it was them. It's really easy. In the past when you just have, “ Hey, here's what you do with an employee, you're always blaming the employee,” a lot of times, it is not the employee’s fault, it's your process.

Jason: Yeah, that makes sense. A broken process ensures you're going to have a bad employee a lot of times.

Paul: I agree.

Jason: I'm going to recap, this is what I wrote down. It takes about two months. You're going to first document it, sit down as a team, then you're going to build it, then you're going to break it, then you're going to fix it, then you're going to test it. It sounds like over time, you're going to optimize it based on what feedback you're getting from your team, and what feedback you're getting from clients, tenants, owners, and problems that are coming out.

Paul: Exactly and that process is never done because the second something goes wrong in our company, you look at what the process is. If you have a move-in and the move-in is a disaster, it's either the employee or process, and you have to check and find out. It's so easy when you have a good process, to find out where the breakdown occurred.

Jason: I think this is an interesting thing to point out because I get a lot of people that come to me, and they're like, “I need the perfect magic owner's manual. Where can I buy that?” or “I need this,” and I tell them, “Every single property management business is so unique, so different. How you want things done is going to be different and no business is ever perfect,” it's never just done. I think a lot of property managers think, “Well, I just need this one thing that I could just strap onto my business and it'll finally be perfect, it’ll finally be done, and I won't have to ever mess with it again.” I think that's just not reality. You’ve got things really well dialed in and you're still working on stuff.

Paul: I bought multiple different companies through NARPM that I'm glad I bought them because I did look at them. I can tell you right now, there are some things I bought that I never looked at, we never really did, and it says, “Blank your property manager company name,” it is very, very detailed and stuff like that, but until you sit down, if you buy something, it gives you a basis to start working on your thing, don't think, “Oh, I spent $1000 on this. Now, I can just implement it in my company,” you have a framework. By the time you're done rewriting that, it's going to be 50%-60% different (I think) than what you bought.

It's still going to help you. It's still going to help you pay Mark Cunningham, or any of these people, or Landlord Source for something that they have, is going to help you in getting your brain thinking about what you need to do for that role or position, but how Mark Cunningham or Landlord Source do their business is not the same way. I don't do my business the same way as anyone and I get a lot of their information. I look at them and I'm like, “Oh my gosh, it’s really cool how they did that,” but then we might have a different law in California, a different ruling, a different way of doing what we have to. You can't assume that what someone else do you can just implement in your company on day one.

Jason: Yeah. For a lot of us, it's easier to create something. Especially, for starting from scratch. If you're a startup, or you're a new property manager, you never documented your processes, sometimes it's helpful to have some resources to look at. It might not even be that great. Sometimes the bad processes with the bad ideas are even better because you can look at that and the contrast from what you know you're doing and what you're reading about, you're like, “Okay, we don't want to do anything like this, and I want to make sure that we avoid these things.” I like the idea that you intensely try to break your processes.

Paul: Yeah. The other thing I want to add is, I think automation is amazing, but this is my fear of automation. I will automate a lot of my processes, and they’ll be better automated than it is something that we're going to work on. But any bad process that’s automated, you're not going to see that's a bad process. If you have an email that’s automated going out and says, “Dear tenant’s last name.” Putting the tenant’s last name because you're not actually having any human do it at the beginning, then you're going to be automating that for 70-80 emails that are going to be sending “Dear tenant’s last name.”

I think you need to do a process for a while by hand. You need to have an actual human being doing the process, checking the boxes, and making sure it's right, so they could find things that are wrong. When you get a process really good, then your next step is to automate, because yes, it's great to save time and have an email every week go out that tells them about their HOA violation or tells them about the moving processes.

I still look at emails every once in a while and I'm like, “Oh my gosh, we forgot to change the wording from this move-in email to this move-in email saying the second week.” If it's automated, it’s going to be automated. Something automated bad is going to be badly automated forever.

All I'm saying is that a lot of people want to go from no process to everything being automated, and them not being involved. I don't think that's possible. Wolfgang Croskey, he’s automated, and he does an amazing job, but I don't think he went from not having a process to everything running on its own, and him not involved in it.

Jason: No. There was a coaching plan for a good while and I know he didn't start at Podio. I think he was using Process Street and even before that, he was working on stuff. I love the idea. You got to do it manually. A lot of property managers are already doing a lot of things manually. They're doing it that way first. They now need to document it, then they need to figure out, how can we start to systemize this? How can we create consistency? How can we automate this? How can we make sure it's being done the same way every single time and there are checks and balances?

That's one of the reasons I like Process Street because you can build a process and that’s one step, and you just paste it in a Word document if you have to. Really, really low level and maybe that's the best you've got. Eventually, you can break it into some multiple steps. Then you can get it into something crazy like you're 100 plus step thing that's got context-sensitive options based on what you pick, and it's going to give you different tasks to do depending on what options you're selecting, and you can get really crazy (if that makes sense).

The cool thing about having a process though is you can continually improve it. It can get better over time. That means that you're lowering operational costs, you're lowering drag, you're improving your team member’s ability to accomplish things and win, and get things done. Now, what do you think about the challenge of people as a process?

What I mean is, everybody has team members that they need in order to think. If somebody is making decisions, they're planning, they're coming up with ideas. Then you have team members that really are operating like a computer. Their job is just to follow the process. How do you balance this in your own company and determine, is this just anybody on the planet that could just follow this checklist, or they need some customer service skills, and they need to be able to communicate? How do you balance the discrepancy that people have that are fearful of processes because they're like, “I want my clients to be taken care of really well.”

Paul: You still have to think. You still have to go through it. You still look and see what's going on. How many of us property owners, managers, et cetera, spend nights thinking about everything we have to do the next day? You write steps down on a sheet of paper before you go to bed and then you try to get it out of your mind so the next day you don't forget it. You're not doing that because you don't want to care about your business or you don’t what I think about it, you're doing it because you don't want to be staying up at 1:00 in the morning, sitting there and trying to think what you need to do.

Everything we do in life, if something tells us how to do it, then we can start thinking about things that are higher level. You can take your employees. If you could take a lease renewal process and you can make it so that every single time it's done correctly, it's done right, no one wants to think about it, then there's no stress on these renewals. Now, when something does come up that’s stressful, people that are higher level can think about the things that are higher level. You have a maintenance issue where someone falls off the roof and you're getting sued. You're not going to process for that.

Now, instead of you thinking about lease renewals and wasting your time on something that can be automated, something that can be just automatic, you can spend your time on high-level items, and you're going to have employees that need to spend their time with high-level items, so you could spend your time on other high-level items. Probably the management will never be completely automated.

There are companies that say, “Oh, we could just automate everything,” no, you can automate a lot of stuff so you can spend your time on the 10% of the stuff that really, really matters, that’s really stressful, and that can't be automated.

Jason: We talked about this on the show I think probably several times with different companies, but ultimately, the goal (in my opinion) when it comes to technology, when it comes automation, when it comes to systems, is to take off the plate of yourself and your team members, the stuff that's really redundant, the stuff that could be systemized so that you can focus more on depth. I think that's where property managers are going to be able to compete with the big conglomerates, the big companies that are super tech-based, is that it's going to be about relationships.

Property management is a high touch relationship type of business. If process and systems allow you to create a more personal touch, to go deeper, to spend more time communicating more intimately with more depth with tenants, residents, owners, then I think you're creating a business that is going to have significant value, and it's going to have longevity because it’s built on relationships. Ultimately, it's people that are giving you the money. As people, we tend to like humanity, and we tend to like people.

Paul: If you're spending, as a business owner, 20 hours a month on something that can be automated or something that can be done by someone at a less level, you have to think of your time as value. When I had 30 doors, I did everything. When I had 50 doors, I was still doing everything. You have to figure out where you value your time.

I have five remote employees and I have two employees in my office. People are like, “Oh my gosh, that's a ridiculous amount of employees you have for the number of doors you have.” We’re profitable, and we’re profitable because we're in California, we price ourselves well. It's the customer service level we give our competition. Some of them are missing the mark. They are not giving that customer service, so we are giving it. Someone is not going to leave because of some deep discount or just giving really bad customer service where retention is so huge.

I'm seeing so many property managers talk about retention being better than growth because if you are losing 20% or 30% of your doors, all your time and ability is going to just stay even. People are spending $500–$1000 a door to get a new lead, but there are others that walk out the door. My thing is to give really good customer service and don't let those doors leave you. They are going to leave you because they are selling, but don't let them leave you because you are not doing the job right.

Jason: I find that with clients. A lot of times, the issue with retention. I agree, retention is a significant thing. The issue with retention is often created during the sales and onboarding so if you can really systemize, automate, and build a really solid process during the sales and onboarding, you've got a really solid sales and onboarding process that really develops a strong relationship, that would carry you for years with some clients.

Paul: I agree.

Jason: And the trust level is higher even if the communication (later on) is really low. If you created them in the beginning, they are going to trust you and it's going to be a lot stronger. If that's not done effectively during onboarding and sales and isn't created well, there's going to be a lot of uncertainty, a lot of fear. They are going to be questioning everything that you do. You might end up a lot more operational costs related to that, and they are probably not going to stay with you as well.

Paul: I agree. We have one person whose new onboarding is their main priority. It's making sure that new owners have a good experience and are treated well, and the onboarding experience is great. Never lose a customer. I think one of the podcasts I heard about that, I read the book. It was a great book. It's about customer service and taking it to the next level.

The thing is people will spend so much money on different things and then don’t answer the phone. If you can have your people working on the process, working on other things, then you answer your phone, you are not going to let that lead that. You just play when it clicks, $30, $20 get away. Processes are huge for your business to me, they are the number one building block.

I don't think everyone on all the boards is always, "How can I grow? How can I grow? How can I grow?" I think growth is important, but if you grow and all of a sudden, you add 100 doors in one year and it was just you, you don't have a process and everything is in your head, then you are going to lose all those doors because you are not going to be able to give. When you had 30 doors, and you go from 30 to 130 and you’re at the customer service, you gave those 30 people. You are not going to be able to give 130 because all of a sudden, then you are hiring someone. They are going to be like, "Well, how do I do it?"

"Well, you just got to listen to my head." No one can read your head. So, even if you are a single person that's by themself, if you want to give a task away, then start working on the process for it as soon you have to give that away. If you are at 50, 60, 70 doors, I would tell those people it's more important for you to start working your processes right now unless you plan just staying at 50 or 60 and never want to grow.

Jason: This is one of the greatest secrets that I coach entrepreneurs when they come into our program. One of the very first things to start them with is helping them get clarity on where they can get leverage the quickest first. It's usually different for everybody. There are some similarities but the way to identify that is usually done through getting clear on where you are actually going.

I have them do a time study, then I have them identify which things are energizing them and which things are draining them, then which things are strategic versus tactical. The strategic stuff grows your business, tactical stuff just keeps it going. Most of the process would work by its tactical work. The strategic work is what you are talking about doing in creating a new process. You are like, "We are going to work for this new process for the next two months when we get this dialed-in." That's what grows companies.

If you get to stay in your area of genius, the things you really enjoy doing as a business owner, and you've identified what does are because you are clear on which things are causing you grief and energizing you versus draining you, then you know exactly what to offload. You know what to give to your assistant and different people. We've had different great companies here talking about [...], hire smart VAs, great assistants. We've had companies talking about virtual team members and whatnot. Those are great episodes if you want to listen to those on the DoorGrow Show. We touched a lot on those different ideas.

Ultimately, one takeaway you want everybody to get is that everybody can have the property management business that they enjoy, that they love having, and if we built around you and what your unique strengths are, maybe you love the accounting side, maybe you love doing the phone calls, the customer service, connection with people. Maybe you’re a people person, maybe you geek out on systems and process, but you can do whatever you want to do in your business if that's your intention. I think we get stuck sometimes having the business that we think that we need to do like the job that we need to do in the business instead of the business that we want.

Paul: I would agree with that 100%. Last year, we grew 80 doors so that's probably the average of what our average. We are averaging between 5 and 10 doors a month. We haven't really started spending money on marketing because I really wanted to first get everything correct and right.

One of my property management friends (who is my mastermind guru) calls me once a month and asks me, "Hey, Paul. Did you talk to a tenant this month?" and I'm not allowed to talk to tenants because it was taking time away that I could be doing other high-level things and I need to trust my team to deal with my tenants.

Now, if it gets to a certain level and I have to talk to a tenant, then that's a different call, but I have to make sure that I am actually thinking about when I talk to a tenant. When a tenant calls because they are pissed-off about the fact that we paid the utility bill and make every charge, I have to trust my team’s going to handle it, my team's going to do it, and that I am not going to get involved in it because I find when I get involved in it, then I might do something that wasn't like the process we agreed upon as a team. I even had to, as an owner, that's $25. You are talking for 10 minutes, not worth my time for $25.

I have to be out of it because I will be like, “Yeah, just waive the $25. I don't want to talk to them anymore.” It's really important that no matter who you are, that you follow what you tell your team to follow. A lot of times, you can do it yourself, you made your own decision, but once you make a decision on how you are going to run your process or what your rules are, you have to stick to it company-wide.

I laugh because it's usually us, as the owner, are the worst culprits of not following what we are going to do. The employees do it because a lot of times my employees’ bonuses are based on serving certain goals so if I don't accept anything, they are like, "Man, you are hitting on my bonus. Don't be messing with my goals."

That's something I've learned is just find what you like. Find what you are good at and get a group of property managers around you that can be like a mastermind group that can keep you focused because you need other owners to tell you, "Stop doing that," because your employees won't always tell you exactly what you need to do, what you need to hear.

The other thing is when systems aren't working right. Now, there's a system in there where my employees can say, "Well, you didn't follow the system here." Every person is accountable for checking off what they have to do in the system. When I don't check it off at the end of the week, an email goes out to every person who missed any steps of the system. I have an employee that's checking that. My name is on there. I miss a part of my system and it will list. I never want to be there with three or four items that I missed because that would look really bad.

That's another thing, the accountability, I'm not doing the accountability part. I have an employee on Saturday that answers the phones and her job on Saturday if it’s not very busy, is to go through every single process in [...] and write down who hasn't met their deadlines for that process.

Jason: Yeah, accountability.

Paul: It works really well. None of us wants to see our name on that list, so everybody is getting their stuff done and it's not because I'm going to yell at them, it's because we don't want to be mass emailed to the whole team that you didn't do your job.

Jason: It creates a lot of pressure which is a positive thing. That means you don't have to come down on them all the time. There's this lateral pressure, this internal peer pressure in which most employees and team members are recognition-based. That's how they are most motivated rather than financially, so they want to be seen as doing a good job, and they want to be recognized. That's the opposite. There's that pressure, so they want to make sure they avoid that.

Paul: Exactly.

Jason: It makes sense.

Paul: And we also do our bonuses based on not being recognized. Even my bonuses. Everything is based on getting your job done. What I saw in the past, we didn't have someone that was going through it weekly. We had some process where they’d be open three or four weeks and not being completed yet. Now, it's very rare for the process.

It will definitely not be there if you are listed on that one week. If you are listed in the second week for the same one, then you are going to have a conversation with me, then you’re going to me. Our processes are never missed for more than 5–7days, which is huge.

The only thing that I'm still trying to figure out is maintenance because I use Property Meld and I'm still trying to figure out how I can make sure my maintenance team doesn’t get missed. Property Meld does good ways of doing that. That's something I'm currently working on is how on a weekly basis, we can check to make sure none of that's missed.

Everything that you do, you got to find using the software systems that will work to check on the system.

Jason: All right. Paul, I think it has been really fascinating. I think everybody listening got a lot of value out of this. I loved your tips about where to start. Anything else that you throw out there and want to say to anybody before we wrap this up about creating systems in the business?

Paul: I just tell them the dates. Our website is pmsystemsconference.com and the dates of our conference will be August 10th through 13th. It's in Las Vegas and it will be in Rio. It is not up yet, we should have it up next week or two. We are still working on it. We just got the rooms and booked everything yesterday. We just booked for August, but it's a really good time. Last time in January, we went ziplining on one of the nights. We also try new fun stuff because if you are working all day, you also want to have fun. There was a time we went bowling one night which is a great time to get together with a small number of property managers and get to know them. I enjoyed it.

People always ask me how long I am going to do it, I'm going to do it until I stop getting fun. When it becomes a job, then I'll stop doing that workshop, but now I go there and it's like seeing a bunch of old friends.

Jason: Cool, love it. All right, Paul, thanks for coming to the DoorGrow show. I appreciate you.

Paul: Thank you so much, Jason. You have a wonderful day.

Jason: All right, so check out his website. Check that out. Thanks everybody for tuning in. If you have a moment, make sure to like and subscribe. If you are watching this on YouTube, be sure to like and subscribe. If you are listening to this on a podcast on iTunes, then please leave us a review. We would love it. That would be great.

If you are a property management entrepreneur, you are struggling, you are frustrated, you are not sure what you need to do in order to grow, there's a lot of different ways you can approach growth depending on what challenges you are dealing with now. We have solutions for various things here at DoorGrow that we can help you with, please reach out. You can check us out at doorgrow.com, and we will talk to you soon, everybody. Until next time, to our mutual growth. Bye, everyone.

You just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet, in the DoorGrow Club. Join your fellow DoorGrow Hackers at doorgrowclub.com.

Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead, content, social, direct mail, and they still struggle to grow. At DoorGrow, we solve your biggest challenge getting deals and growing your business. Find out more at doorgrow.com.

Download this Episode

Mar 10, 2020

Why is your business remarkable? What are you doing differently that gives you a competitive advantage? Why should customers trust you over someone else? These are foundational elements that every entrepreneur should consider.

Today, I am talking to John Ray, formerly of Inspect & Cloud and now part of the DoorGrow team. John is a Search Engine Optimization (SEO) expert who helps property management entrepreneurs grow revenue and attract new customers.

You’ll Learn...

[01:27] Internet Marketing: Seeking clarity, relevance, and truth through so much noise.

[01:57] Seed Program: Training purpose of DoorGrowSecrets, not SEO.

[03:38] Keywords and Rankings: Transparency and truth, not tricks, deliver value.

[05:29] Can authority and expertise be effectively and successfully outsourced?

[07:35] Deliverables and Outcomes: Steps in purpose-driven SEO content process.

[10:00] Who are we in-service to? Don’t write directly to a search engine.

[11:25] Micromanagement Culture: Solopreneur businesses get stuck at 200-400 doors.

[14:20] SEO’s Place in Property Management: Communicate authority in community to make conversions.

[18:00] Does SEO make sense, right now? Do the right things at the right time.

Tweetables

The higher the level of trust, the lower the level of price sensitivity.

The worst thing that you can do for SEO is write directly to Google.

SEO has a place in property management, as a way to communicate authority and make conversions.

Do you need SEO to grow and be great?

Resources

DGS 27: Inspect & Cloud: Inspection Software For Property Managers

Inspect & Cloud

DoorGrow Seed Program

DGS 120: Property Management SEO Tips - Part 1 0

Transcript

DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not, because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income.

At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change the perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show.

I've got a very special guest today. He's been on the show before, Jon Ray. John, welcome.

Jon: Hey, thanks for having me.

Jason: Yeah. I think we're getting to a point now in terms of internet marketing and the internet where there's so much noise. People are looking for clarity, they're looking for things to be succinct. They're not looking for paragraphs and paragraphs of keyword targeted content. They're looking for relevancy. They're looking for the truth. That's a great way to stand out.

Going back before, you talked about a business having a higher purpose. This is one of the things we focus on expressly in the seed program. We have a training called Purpose Secrets. I think it is the most important training in the program but it's not what people come to us for. They don't say, "Hey, I really like this." Once they get into it or want this, that's one of the most impactful things they can do—have a clear set of values, have a clear set of purpose behind what they do, and be able to relate that. It creates trust. That's ultimately what the website's job is to do, to create trust. Trust is what closes deals. Not tricking people.

We also have city keyword landing pages and neighborhood keyword landing pages that will help the client I'm with input into the site to capture those longer tail keywords instead of just trying to focus on the main one market big, giant keyword. These are all things that we've thought about in our program to build out into, to prime the pond and get them started with all of these. It all helps with SEO but the program was never designed just for SEO. It's designed to create trust. It's designed to please people.

The side effect is that some of our clients get rankings on some of these pages. Ultimately, for me, the most important thing was always if somebody lands on the page–whether it's through them doing prospecting, or going to real estate meetup group, or they handout a card, word of mouth, or whatever that is. If somebody goes to that page, it sells people on trusting them, and them being trustworthy rather than trying to manipulate Google and trick them into showing people the page.

Jon: Right. There's a level of transparency, honesty, and alignment with truth that comes to actually delivering value versus just writing articles to hack the system. That means that in the customer's mind, maybe you're cutting corners on other things. To a certain extent, especially if someone knows the techniques that you're using and knows that you're just trying to manipulate the system, it leaves a bad taste in their mouth.

One of the things that you can do to deliver real value and to understand both what your customer wants and what Google is looking for, what the search engine's are looking for, is type in the keyword phrase that you want to rank for. Then search the web the way that your prospects are searching the web. Open all 10 of those websites and actually read the content on all 10 of those websites. Then take all that content in your mind, or have whoever's writing your content look at those 10 posts.

For instance, for the neighborhood-specific pages that I was talking about, let's say you want to rank for property management Far West to Austin. You would write an article. First, you would type in "property management Far West, Austin '' into Google. You would see what Google thinks the experts and authority in that particular keyword phrase look like. You read all of the pages on page one of Google, you take notes at the type of things that are in those posts.

Then, you approach your article and you say, "How can I summarize everything that I felt was valuable in these articles?" Then, you go above and beyond to deliver value. If you can effectively do that for every single keyword, then Google will start to see you as the authority but it takes more time. It means that you just can't outsource this to somebody in another country. You have to have somebody who actually understands that neighborhood, who actually understands what’s valuable to property owners in that neighborhood, and who knows how to properly amalgamate all of that content that your competition is putting out, then rewrite it in a way that provides even more value while still answering all the same questions.

Jason: I love it.

Jon: The foundational elements are always asking yourself why is my business remarkable? What are we doing that's different? What are our competitive advantages? Why should people trust me over the other 10 people on page one of Google? Most of the time, when you click through the top 10 results for any search term, the website is not aligned with any kind of value structure. They don't really have a competitive advantage statement that they're clearly communicating. That leaves a huge advantage for anyone who is purpose-driven, is showing up in the community in an interesting way to differentiate, and to be able to charge more money.

The interesting thing about aligning yourself with integrity is that when you're aligned with integrity, people will pay more money for your services.

Jason: The higher the level of trust, the lower the level of price sensitivity. It's been proven. As a property manager, if you're listening to this, if you're constantly butting up against people that are price sensitive, you have a trust problem or you're targeting the wrong audience. You're targeting the worst list price—the most price sensitive people which are probably the people that you're getting through cold leads that don't trust you. You get a word of mouth, high trust, referral, they're way less price sensitive.

Jon: It's such a vague statement to say, “Yeah, you need to be purpose-driven." Maybe we could talk a little bit about what that looks like in practicality, and some steps maybe someone could take without giving away all the Purpose Secrets in the DoorGrow seed program. I do think that it's important for somebody to be able to unpack that word "purpose" and understand what does that actually mean.

Jason: Some of the deliverables and outcomes that our clients end up with—they may not make sense to people just listening to this call—they end up with a personal why statement which is where they're getting really clear on why they're doing what they're doing. That's a really difficult thing for people to figure out.

I have some really cool processes that I take people through. I came to that conclusion for myself. Then we figure out what the purpose is for their business so that they have a very succinct mission statement that people can actually remember which means it's not some b*llsh*t piece of document that is like huge paragraphs of stuff that nobody ever looks at and never uses. Nobody on the team, if you ask them, "What's our mission statement?" Nobody will be able to say it. We want something real that is memorable.

Then, we get into creating a client-centric mission where you're getting really clear on your target audience—who you want. You don't want every client. If you're in the space right now where you’re trying to take on anybody, and anybody you talk to you think you need to try and get them on, you're in a very uncomfortable, probably negative, space running your business right now. You probably have operational costs that are far higher than they should be because you're taking on people that you probably shouldn't be taking on.

That's another thing. We get them really clear on who they want to serve and how they want to serve them. This keeps the business focused, aligned. As they're doing planning, they can challenge it against this measuring stick, so to speak. Whether they're still in alignment with their values.

Jon: I want to pause you real quick there. You're moving quickly through this. I really want to focus on something that you said. Whether you're running a PPC campaign or pay per click campaign, whether you're doing SEO or whether you're just trying to determine how to make your business remarkable, which is then going to add fuel to whatever fire you're trying to soak.

The one question that I think is important to answer is who are we in service to? That is going to help align all of your content. You don't own a right to a search engine. The worst thing that you can do for a SEO is write directly to Google. Google doesn't care about your business, Google isn't your customer. What you want to do, and this could be a tangible exercise that somebody could take away from this podcast, is at the top of a sheet of paper, write, "Who are we in service to?" Then answer that question as many times as you can.

Now, hang that over your computer or give it to the person who is creating your content. You should write all of your SEO articles, or any article or marketing or advertising campaign that you should write should be written as a love letter to the people that you wrote—that you put on that list. If you will do that and just make that small shift in perspective where all your content is targeted towards the people you're in service to, your campaigns will convert better.

Jason: Yeah, I like it.

Some of the other things we get into than finding the values of the company, everything to create the right culture. One of the challenges I see—and I guess we're gravitating out of SEO here—is that property managers, businesses, tend to fall apart when they get to about 200-400 doors. This is a really painful category for property management business owners because they are operating still as a solopreneur, mindset-wise. They now have a team usually that they built around them without culture, without clarity and purpose, and without clarity and vision.

That means they haven't attracted the leaders that support them and make their lives easier. They basically got a pile of people that they need to micromanage and tell what to do. They're trying to force trust through the veins of their company. It's a painful place to be in. It gets more and more challenging. As they approach 400-500 units, most property management business owners are massively stressed out. That's silly because if you build a team the right way, your life and your day to day should get easier and easier with every person that you add. You're just doing it wrong.

When we talk about the seed program being the ultimate foundation, it not only is a foundation to be able to eventually do SEO type work properly. It's a foundation for culture for their business so that they don't get stuck in that second sandtrap of 200-400 doors. They're unable to grow because they built the wrong team and they don't have culture. They're held back and they can't expand.

Jon: Yeah. I'll bring that back to SEO. What you're talking about is being able to build a little space between the business and the visionary. The visionary entrepreneur should be able to focus on developing thought leadership and authority in the community with a powerful team full of integrity that can take any assignments that are put in there. At some point, some of that thought leadership and authority has to be extracted so that the team has it for use.

One exercise that you can do as a delegation management tool so that you're not having to optimize your website yourself is find somebody in your office who can help you compile the most important questions that your prospects—those people that you’re in service to—have. Just informally have someone in your office interview you as the authority and thought leader, ask you those questions, and record it. This video does not have to go online because I know a lot of people are afraid of video, they're afraid of putting themselves out there. This audio is just going to be internal unless you want it to be a public piece.

The value of this is that now, this person in your office has a recorded response of how you would guide a prospect or someone you're in service to through a particular question. They can transcribe that and use that as the foundational basis for creating a really compelling piece of content.

I think that SEO definitely has a place in the property management industry. It's definitely a way to communicate your thought leadership and your expertise and to show up in your local community with authority which will then allow you to convert at a much higher level whether you're doing PPC, SEO, or just bringing in organic leads because you're remarkable.

The exercises, I guess, that I would send somebody home with is one, any keyword that you want to rank for, any keyword phrase that you want to rank for, go and type it into Google right now. Open the 10 pages that are on page one of Google. See what kind of content Google thinks is valuable around that searchphrase. Then think about how you can essentially summarize all of the key points that Google thinks that are important in your own words, adding your own level of expertise, and authority. Then go above and beyond delivering even more value. That's a really good way to think about creating content.

Two, at the top of the sheet of a paper, write, "Who am I inservice to?" Make a list of all the people that you want to be in service to. All of your content should be written as a love letter to those people because if you're speaking to them and just pick one on the list and write it as a personal letter to that one person, it's really difficult to write content to a group of people. But if you can identify customer avatars, someone on that list of people that you want to be in service to, act like you're writing a letter to them. Your content will be digested so much better. It will resonate at a more emotional level.

Then three, think about some of the longer tail keywords. Instead of thinking that the only thing you need to be writing content for is this top level city name, then property management. Instead, think about some of the longertail things, the neighborhoods that you can rank for, the value that you can deliver on a page by talking about some of the landmarks, businesses, problems that you know are happening in that neighborhood, and how you're going to show up as the authority in that neighborhood.

If you can do those three things, that alone will put you lightyears ahead of where most people are creating their SEO from. If you are working with an SEO professional, make sure that before they start doing the competitive analysis on what the other people who are ranking on page one are doing. If one of your competitors has 65,000 inbound links and really, really, solid content, it's going to be very difficult to knock them out of the number one spot no matter how much money you spend on content creation. Before you even start paying someone to write articles, they need to do a competitive analysis to see if it even makes sense for you to invest in SEO.

There are some local markets that somebody over the last three years may have spent $40,000 on content creation. That likely means that you're going to have to make a similar investment in order to rank number one. That $40,000 might be better spent somewhere else and provide more value if you invest it into making your business remarkable.

Jason: Love it. To go back to the original question, am I anti-SEO? I'm not. We built our business on SEO. We have good rankings for different things. We get customers all the time that find us on Google. I'm a fan of people doing what works. I feel like everybody should do the right things at the right time in their business, not doing the wrong things prematurely with hopes of an outcome that is not achievable.

If you are at a place where you think SEO might make sense, I encourage you to reach out to our team, have a conversation with Jon, that is something we can help you with. If you feel like you want to grow and your main goal is to add doors, we’ll have a conversation with you on DoorGrow, and figure out what's going to make the most sense for you where your business is at right now.

Jon: Yeah. I've had a lot of calls with property managers over the last two months about whether SEO is right for them. Almost all of them, I talked them out of SEO because it wasn't the highest priority thing that they needed to focus on. It wasn't going to deliver enough return on investment. What I can promise is that if you book time with me and have a conversation with me, I'll be very transparent. I will be very honest. I will give you a clear indication of what kind of investment you're going to have to make and how quickly you're going to have to make that investment to make any dent in your search ranking. You will have all the information you need to decide if that's an investment that's worthwhile or if that money's better spent somewhere else.

Jason: I think that's something we have a lot of clarity at DoorGrow. We know what types of clients we want to work with. We know who we want to serve, who we want to help. We know our avatar. We know what types of clients would not be a good fit for various programs. We make clients qualify. Our main seed program, we make people apply to be part of it. We're even talking about stepping up the requirements for that application to filter out even more people.

I think that's the secret in having clients you love working with that get great results, that build a good reputation in the market regardless of what business you have. You are really clear on who you want to serve and you’re picky about who you take on.

Reach out and have a conversation. If you're somebody that's listening to this and you're like, "I really want to grow." Or, "I think I need SEO." Or, "Somebody's saying I need it." Or, "I didn't ever think I needed it." Maybe you do. Reach out and have a conversation with us. Is there anything else you think, Jon, before we go?

Jon: Yeah. I'll just say one final thing. Tagging on to what you just said, what I see in 15+ years of entrepreneurial consulting is that the entrepreneurs who are successful are the ones who are showing up in a big way in their business and actively seeking out how they can be remarkable. Almost always, when people historically call me for PPC or SEO, it's because they're not in integrity with themselves. They want to be able to set it and forget it. They want to be able to pay for something that's going to grow their business without actually having to show up. It is a way for them to opt out of doing the real work that is required to be great.

What I'm interested in is working with people who want to be great and are willing to show up in that way.

Jason: Amen. On that note, Jon, I'm so glad to have you as part of the team. I'm really grateful that you're part of DoorGrow. It's super cool that we're both now in Austin and able to get together. I really appreciate you being on the team and the energy that you bring to it. You just fit our culture so nicely. I just want to throw that out there publicly.

For anybody that's listening, if you have comments about SEO, if you think we said something that was off, you're confused, you have questions, feel free to challenge us. Feel free to ask us questions. Throw these out inside of our Facebook community, it's a free group. We're very careful about who we let in. You'll have to apply to get in. You can go to the doorgrowclub.com to check out the DoorGrow Club and get into this group.

We only let property management business owners or entrepreneurs or those that are seriously considering starting a property management business into this group which keeps it clean, which keeps it very un-noisy. It's got really high quality people. We got over 2000 property management entrepreneurs in there. It's a fantastic group and resource. If you ever get stuck, you don't have to be stuck. There's lots of people who are willing to support you and help you in that group.

On that note, until next time. To our mutual growth. Bye, everyone.

Jon: Bye.

Download this Episode

Mar 3, 2020

How can you utilize the Internet with your blog and website content to attract prospects and grow your property management business?

Today, I am talking to John Ray, formerly of Inspect & Cloud. John decided to join the DoorGrow team to help entrepreneurs align with a higher purpose through transparency to grow revenue and attract new customers.

You’ll Learn...

[02:45] Bromance: Similar passion, vision, and success for property management.

[08:50] Anti-SEO? Merging of minds and skill sets to increase customer base.

[11:16] What is property management? Lack of name recognition and understanding.

[12:15] Lead Gen: What clients want vs. what they actually need from marketers.

[15:13] Digital Marketing: Ancillary to foundational basics of a business.

[15:35] Purpose of Seed Program: Clients not quite ready for digital marketing solutions.

[18:17] SEO and Pay-Per-Click (PPC): Getting the cart before the horse.

[18:24] What makes marketing work? Storytelling. Do or say something interesting.

[19:07] Hook, Line, and Resonance: Shifting away from SEO the right way.

[21:48] Blue Ocean Concept: Opportunities for professional property management.

[27:35] FAQs: How do you respond? Are you a property management expert/authority?

[30:02] Quality vs. Quantity: Add value, not noise. Google’s goal is to please people.

Tweetables

Every marketer sells what’s easy.

Digital Marketing: Ancillary to foundational basics of a business.

Forget cold calls; trust is what closes deals.

SEO and PPC: Putting the cart before the horse.

Resources

DGS 27: Inspect & Cloud: Inspection Software For Property Managers

Inspect & Cloud

DoorGrow Seed Program

DGS 119: The Ins and Outs of Cost Segregation 0

Transcript

DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not, because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income.

At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change the perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show.

I've got a very special guest today. He's been on the show before. Jon Ray. Jon, welcome.

Jon: Hey, thanks for having me. We're finally doing a DoorGrow Jon Ray-Jason podcast again. I'm really excited to share some of the things that we're going to talk about on how to best utilize the internet, content on your blog, in your website, and some of the things that you can really do to dial in the way that you're attracting prospects on your website using SEO. Also, just to talk about how fun it has been working for DoorGrow and joining the team.

Jason: All right. Let's take a step back. I had you on the podcast, and we hit it off right away. We were joking before, we're having fun afterwards. We have little conversations here and there. We talk about random crazy stuff. Then, for a little while, we started meeting just as entrepreneurial friends hanging out like on Fridays or something. We were just setting a time to chat.

You've joined the team here at DoorGrow, but you came to me and reached out at one point. I was thinking about something at the back of my head. I was thinking, "Man, it'd be so cool if Jon and I work together. It'll be so awesome to have him on the team." Then you reached out. Why don't you tell your side?

Jon: Yeah. Part of my purpose is helping entrepreneurs figure out how to align themselves with higher purpose and use transparency in their business as a way to grow their revenue and attract more customers. My why and my purpose was really aligned with your why and your purpose. To connect some of the dots of my history, I've been an entrepreneurial consultant in the digital marketing space for over 15 years now. I went and worked for Google for a few years. I was helping run their global field marketing team.

A business partner friend of mine started a SaaS product in the property management space called Inspect & Cloud, which is a digital inspection tool that helps you determine how much security deposit to give back and make sure that your maintenance team and your property owners have clear communication with you. That was birth out of this marriage.

In my early 20s, I was a realtor and property manager. I was one of the people who had to go out and file eviction on people. This was over 15 years ago. When I had to go and file eviction on somebody, that meant that I have to drive up to the storage unit. I had to go through hundreds of file cabinets and files and hope that we had an inventory movement condition form, that we still had a copy of their lease, that wasn't just stained in coffee and doughnut crumbs. Sometimes I meant moving like six or seven file cabinets out-of-the-way, so I can get to the one that actually had the information I needed, so that I can go and file eviction on somebody who had been in the property for three or four years. We just didn't have good access to those records.

When I left the real estate space to go work for Google, I still was in contact with a lot of these people. One of these people is Gilbert Quinones who was my business partner in Inspect & Cloud. He's still successfully running Inspect & Cloud (inspectandcloud.com, if you want to check that out). The idea with Inspect & Cloud was we've got to solve the frustration of milling this status of a property and being able to effectively get that information when we need it. I married everything that I have learned at Google, doing digital marketing with the experience that I've had in the property management world. Those things joined together to become Inspect & Cloud.

We were very successful in growing that. I met a lot of property managers and really got inside the head of trajectory that property management was going. There were so many opportunities for property managers to dominate their local market because nobody was doing anything that I felt was remarkable. When I decided to walk away as an active owner-operator in Inspect & Cloud, to explore some personal things that I was interested—mostly coaching at a more philosophical and spiritual level. Really aligning businesses with purpose is what I wanted.

I was looking for methods that would pair traditional marketing and digital marketing with some kind of unique purpose that made a business remarkable. Ever since we've done our interview, it was so obvious to me that you were super passionate about what you're doing. You're seeing a lot of success with your seed program, growing people's businesses, and helping them align with purpose, given so much overlapping our wheelhouses, and in the way we wanted to consult with businesses.

I'm a builder. I'm somebody who can build businesses, run a team, handle operations, implement marketing, and jump on sales calls. I do my best work when I'm aligned with a visionary and with somebody who's helping create the intellectual property that then I could go and distribute. I kept seeing what you were doing, tuning into your podcast in the background. We started meeting on Zoom. It just seems like our two historical paths were meeting at this point that was better suited with us working together because I think we compliment each other really well.

Without going into more about this bromance, I thought that the most effective way that you and I could continue to deliver value to property managers and conscious entrepreneurs was for us to partner and capitalize on each other's strengths. We could really grow DoorGrow to a whole new level. I think we're doing that. It's been really fun to talk to a lot of seed hackers, to be on the sales calls, to go through the seed program myself, and really have a whole understanding for the first time.

I was always somebody out here looking in and being, "Well, how much more value could this program really have?" Then I got to actually go through it. I was like, "Oh, this is so much more aligned than I ever even thought." I think that has helped me in my genius zone since I've been working with you because I'm able to draw all of these other experiences that I've had working with entrepreneurs over the last 15 years and channel it through the lens of what you've created in the seed program. A big part of that was me bringing some of my skill set in, which as I was working for Google and in this past 15 years of digital marketing consulting, I've become an expert on Search Engine Optimization, and building really solid content campaigns that drive revenue, increase attention, and increase your customer base.

I think that for property managers, SEO's is an interesting strategy that they can implement. I think that a lot of people think that you're anti-SEO. I thought that would be interesting for us to have a conversation and talk about each of our perspectives—why I'm really bullish on SEO and why you're (at least publicly) seemed to be more bearish on SEO. Maybe we can come to a merging of the minds on that.

Jason: Yeah, we'll chat about that. I'm not really a builder. I help other people build their companies, but it's through my innovation that I [...]. I'm an innovator. I love sitting down, being the mad professor. I didn't want to be the guy who's been doing videos or in the foreground. I have business coaches who were like, "Jason, if you're not going to do it, nobody's going to do it. You got to do it." They pushed me into that space and I've gotten a lot more comfortable on that.

Even still, it's really nice to have somebody coming on the team that I trust to understand the vision behind what I want to do, and allow me the space to innovate and create new stuff. Now that I have you on the team, I'm really excited about the new stuff that DoorGrow's going to be doing to solve property management problems here in the future. I've got some cool ideas and now I can start to focus on those, work on those, and we get along really well. We just have so much fun together.

A lot of people do think I'm anti-SEO. In the past, I love throwing stones at different things that I think are causing challenges in the industry. Because we were focused on SEO—we did pay-per-click management, and we're focused on the search engines in the beginning—the challenge was, this is an industry (I saw) that has very little name recognition. It's an industry that has very little understanding in public opinion as to what property management is or what a property manager does. Random people that have rental properties just weren't looking for property management. It's what seemed to be the situation.

The challenge was we just had clients that would play that game, and they found the trap of some of the marketing agencies. Every marketer sells what's easy. It's very easy if people still come to us. It's very easy if somebody comes to us and says, "Hey, I want SEO, I want pay-per-click, I want content marketing, I want social media marketing." This is what everybody says you're supposed to be doing online. "I want pay-per-leads."

These are the things people were looking for. Sometimes the confusion people have about DoorGrow is like, "What do you guys do if it's not those things?" That's all people know what to do, is what marketers are telling them. Why? Because that's what marketers sell. They're selling it. They're not doing it because they're evil. They're doing it because that's what customers are asking them for. Maybe they're in some ways smarter than me. This is what the client is saying, "I want." Even though my perception is, "It's not working. It's not working for a lot of these companies."

The challenge I saw is that if the companies weren't at least 200–400 doors, it didn't even make sense to be running ad campaigns, getting all these cold leads, and trying to take the time to do it. Really, there should be part-time sales people that only have 10–15 hours a week to focus on leads. If they're getting these leads that are colder, they weren't even answering their phones. The lead's only good for maybe 5–10 minutes a lot of times. Then the close rate or conversion rate dropped significantly. The challenge was when we're running ad campaigns and doing these things for clients, they weren't capitalizing on the leads. And because they didn't have the bandwidth, they weren't answering the phone calls.

Usually, companies have to be about 200–400 doors minimum, they needed a full-time BDM, they needed that just to do pay-per-click on the SEO side. If they're in a big city market and it's super competitive, maybe there's more search volume, even still property management's very little search line. No matter how big the market is, there are very few people looking.

It felt dishonest or disingenuous to sell it to clients just because we can make money. All the time I started realizing, it's not effective. I started because I've talked to thousands of property managers. We literally have hundreds of clients right now that are active. I get to see inside their business. They come and ask me for help, and they ask me for coaching. I would occasionally run into a client doing something unique. They come to me and say, "Oh, yeah. We've been in business for three years. We're at 300 doors." "That's amazing. How did you do that?"

Every now and then I would notice an exception. I will pay attention to these things. I will get super curious and I'll ask questions. Over time, I suddenly noticed things that were working, and it wasn't the digital marketing stuff that they were doing. Now, that doesn't mean that if you don't do the foundational basics, that it wouldn't make sense to then shift and start doing more. The analogy I would typically use with clients once I understood this, I would say, it's just like in bodybuilding. You can go get creatine, glutamine, supplements, protein powders and whatever, but if you're not getting sleep and you're not eating food, even though you're working out, you're not going to get great results because those things are ancillary.

That's how I view a lot of digital marketing. It's ancillary to the foundational basics that are involved in a business. The sales pipeline and word-of-mouth is significantly impacted by your brand, your website, your reputation, your sales process, all these things that we focus on in seed programs. That's why I built the seed program to shore up these leaks.

The ironic thing is I originally built the seed program because clients weren't ready for the digital marketing stuff that I wanted to sell. They weren't ready. I was like, "Let's get them ready. I'll create a program that once they do it, they'll be ready for all this digital marketing stuff. They'll want to do cold lead advertising and marketing with us. Then we'll make more money." If there weren't enough companies that can capitalize on it and if they're going to try doing it and fail and quit, I'm going to create a program that gets them ready to have this stuff. So, I built out my first iteration called the SeedPackage of the seed program. I created this and clients get these amazing results.

The crazy side effect of it was when they went through, and we shored up all these trust leaks that existed in their sales pipeline because trust is what closes deals, they didn't need or want cold leads anymore. It didn't do what I wanted to do. It didn't get us more marketing clients to actually prevent them from meeting it at all. Even though they were the ones that most likely to be able to use it now. But they didn't need it because they're getting so many warm leads and warm leads the closer is so much higher.

Then I started putting up this message like, "SEO won't save you." A lot of people view SEO as savior. They thought, "If I could just get the top spot on Google, all my hopes and dreams for my property management business would come true." It's just like playing the lottery or gambling. If I just get that one jackpot, I'll have everything that I need financially. It really is. It's like the SEO lottery. They would play the lottery and I kept getting stories of losers coming to me from other property management marketing companies.

They were sad, they were upset, they've done a one-year contract of doing uncomfortable videos, doing SEO, doing content marketing stuff, and they didn't have doors to show for it. They were really, really frustrated. They didn't trust me. There was a distrust in all marketing in general because they've been burned. I think a lot of property managers have been burned because it's very easy for people to sell what people don't need if they're asking for it. I felt like it was unethical.

Jon: Yeah. It's definitely a space where there's a spectrum of charlatans and all the way to people who are in integrity and really good at SEO. I think everything that you're saying is right in many ways. SEO and pay-per-click is getting the cart before the horse.

From a fundamental level, what makes marketing work is really great storytelling. You have to be doing and saying something that is interesting or remarkable for any amplification of that message to convert. What people think they need to do is just hire somebody to write four articles a month, and eventually they're going to be on page one of Google. That's the lie of digital marketing and SEO.

I'm going to give some really practical tips and advice for any property manager that wants to start doing an effective in-house SEO campaign. I promise that before the end of this podcast, we'll give you some action items that you can walk away, so that you can start shifting away SEO in the right way. What happens is when you first start, especially if you're in new business or never done any type of optimization on your website, you're likely showing up on page 8, 9, or 10, or not even being indexed by Google. The way that people search the web is they type in "property management Austin Texas."

Then they open the first 10 links on page one of Google in 10 different tabs. Then they quickly scan each of those pages looking for something that feels like resonance to them. They're looking for some kind of a hook that says, "That's the person I want to work with."

If you haven't effectively created that hook for your business, then no SEO is going to convert for you even if you're in page 1 because the page 10 spot is going to convert better than the page 1 spot if the page 10 spot has a better story and is creating more interesting trust indicators on the website. What that comes down to is making sure that you have a really solid reputation in your local community—that has a lot to do in online reviews—then making sure you're showing up as a thought leader and an authority in your local space. That means that you actually have to be an authority or bring an authority onto your team. You have to learn how to effectively communicate that authority.

SEO can be a really good delivery mechanism for thought leadership and authority but only if you already have those things and are showing up in your community as that. One of the things that I always resonated with the way that you approach digital marketing and SEO—it's the things I always have reached in my own consulting practice—is that you have to learn how to tell an effective brand story before you spend any money on any type of amplification of that.

Jason: You're right. SEO and [...] Google's [...]. It's really hard to dethrone somebody that's been there for 10–20 years. It can be really expensive, it can be really time costly, and a lot of these property managers starting out, that maybe not the game they should play. You're right. There are companies with the top spot in Google right now, due to the way the market is right now, they’re losing more doors than they're getting on due to the sell off.

It's really difficult to outpace the market when the market shifts with marketing. Yet, there's this huge blue ocean of potential property management clients that are not aware of property management yet, of real estate investors, people that run rental properties. We see only in the single family residential only maybe 30% are professionally managed versus Australia which is 80%.

There are all these opportunities, yet people are fighting over the scraps that fall off my client's table. They're not focused on the word-of-mouth. They're not focused on networking. They're not focused on community marketing, going out, connecting with that blue ocean, establishing rapports, building trust, and being an authority. They're focused on, "I'm just going to pay a company to just shotgun for leads and hope I get something," then you're getting the coldest, most price-sensitive worst stuff, that are what’s leftover at the end of the sell cycle, after word-of-mouth capture the good stuff.

Jon: Yeah. When you talk about the blue ocean, I want to unpack that a little bit. I think that's an important concept because when you're paying for leads or when you're trying to SEO your website to be able to compete for search terms, you're only competing for a very small sliver of the overall pie that is available. Only maybe 10%–15%, depending on your local market of property owners that are open to finding a manager, are actively searching at any given moment. That means that 85%–90% of the potential market place isn't actively searching. You wouldn't be able to track those people through PPC or SEO anyway.

I think there's a misconception that if you rank on page one of Google that you're going to have access to all of the available leads out there. Actually, the larger slice of the pie that's available in the property management industry, and really in any industry is the 85%-90% of people who would be open to some kind of service or some kind of value add, but they don't have enough pain to be actively searching for it. However, if someone they trust said, "Hey. You know, this person works with people like you or businesses like you. They're showing up in the community in a really interesting way right now. Maybe you should talk to them," that's a much easier handoff to somebody to make. That's why having a really strong community-driven purpose is an interesting foundational element to create that will then benefit you when you start to do an active SEO campaign or pay-per-click campaign.

If you don't have that powerful story that is going to create a resonance and the competitive advantage over the other 10 people that are in the 9 of their tabs that somebody has opened in their Internet Explorer or Google Chrome, then no amount of investment in the pay-per-click or SEO is going to be able to convert at a ratio that will make it valuable for you. That's why at DoorGrow and the advice I've always given when people come to me for SEO advice is, what's your story? How are you aligned with your community? How are you aligned with some purpose above and beyond just making money?

That comes back to good business planning. In the property management space and in a lot of service-based industries, people start as a solopreneur. They're not always thinking about the big picture. "Where is this business going up in the next 5–10 years?" They're just kind of nickel-and-diming trying to make enough where they can pay for their families' expenses. That puts them in the weeds and fires of the business, which doesn't allow them to show up as a visionary or even develop their authority in the community. They have no real competitive advantage. Because they're operating in the place of solopreneur scarcity, they're not closing at a conversion ratio that would warrant spending money on advertising or SEO.

One of the things that SEO can be really good at doing is helping you create that community authority. You have to look at what you are actually an expert at. What a lot of people do, they hire somebody in another country, or they hire somebody who's just a generic content creator, who's good at writing but knows nothing about the property management industry. What does that person do? They pull up property management on Wikipedia. They rewrite some of those articles so that you have the right keyword density in your article. Ultimately, it's a big nothing burger because when somebody comes to that page, it creates no emotional resonance. Yeah, maybe you captured the click-through from Google, but they're going to immediately click back. That actually hurts your ranking.

You always want to make sure that the SEO post that you are writing is providing genuine value to the person who lands on the page. Google will actually penalize you if you have content that ranks on page 1 of Google and somebody clicks through it, then it's not the answer to the question or it doesn't hold them on the page for longer than 90 seconds, if they click back, you're going to be penalized for that.

The thing to think about as a property manager, when you're meeting with prospects, what are the most frequently asked questions that you get? How do you answer those questions in person? Sometimes I'll have people record the way that they answer certain objections or questions, and then transcribe those. That could be a good basis for a solid SEO article that starts to give the prospect value and sets you apart as an expert and an authority.

Another really good piece of content is neighborhood-specific content. Everybody's focused on these macro keywords. If I'm in Austin, Texas, then the keyword that every property manager in Austin, Texas thinks that they want is "property management Austin." All the articles are targeted towards that macro keyword phrase. There's actually all kinds of what we call long tail phrases which would be like neighborhood phrases.

In Austin, there's a neighborhood called Brentwood. You could write a post all about why Brentwood is an interesting place to live as a tenant, but as a property owner, how you serve the Brentwood community. That is going to be an easier term for you to rank for. You're going to be able to provide some actual expertise about how you manage properties in that specific neighborhood. You're going to be able to reference landmarks, grocery stores, and local venues that makes the property owner feel like you know what their property needs because you're familiar with the neighborhood.

What that does is "property management Brentwood Austin '' is an easier keyword to rank for. It gives you SEO juice that then points up to the main keyword phrase that you want—that macro phrase of "property management Austin." You build out 50 neighborhood pages and those all start ranking well, you're going to rank for this macro phrase. But most people do it in reverse order. All their articles are these boring regurgitations of Wikipedia trying to rank for a macro term. They're providing no value. They're not ranking for any long tail keywords. Ultimately, their SEO investment nets them nothing because they're not tuned into how competitive the marketplace is.

Jason: And it's just that noise instead of value. It's not having real value. One of the things I always said to clients for over a decade, my philosophy when it comes to Google is, "Google's goal is to please people. That's how it's able to sell ads." If your goal is to please people and help people, you're always in alignment with that. Now, what most people do is their goal is not to please people. It's to manipulate the search engine and the robots. If that's your goal, eventually, you're going to be penalized for that. That's going to be viewed as black hat.

You might find the hack, somebody who has the hack that they're doing, where they're doing SEO on videos, and they've got 20 different company accounts. They're making them all, liking comments on each other's stuff. Google's smart. It's going to figure out that you've got a game going on.

I had one property management company out in Atlanta. He had paid these guys in India to do backlinks. Any backlink was considered relevant. A backlink, for those listening, is a link to your website. So they would go out, scour the web, and find any website they could, directory they could, and they would put links to his website in Atlanta. Then Google realized people were playing that game, trying to manipulate the search engines again.

What they did is they started adding a quality score. They started gauging websites that are not reputable or not relevant and which ones are. Then they release an update. His site wasn't just down-ranked. It was removed from Google rankings all together because he had so many shady, [...] backlinks. Google said, "This site must be bad. It's dangerous to people." They pulled it down. It was like a sandbox.

Jon: Yeah. One of the things on any consulting call that I have was somebody about SEO, very often that comes up. "What if I invest all this money in SEO and then Google decides to remove my site from search?" They're only going to do that if you're working against their terms of service and if you're not providing real value. Ultimately, like you said, they want Google to be the search engine that immediately takes you to the content that is most relevant to you. Their algorithm is always shifting to determine what the most valuable content is. That's why everything, even as they're moving to artificial intelligence, everything more and more, is being catered towards who is the thought leader and who's the authority in this local market place around this topic.

The way that you identify yourself as that person is by having a stellar reputation with a lot of five star reviews, and then making sure that every single article that you write is providing value where if you were your customer, and you read that article, would you actually read it? Or would you immediately be like, "This is an SEO article"? That's a dead ringer. If you go to a website and the first word is bolded out, there's all these links linking to other pages, it's all keywords that are linked, and you're not actually answering the question that is in the user's head, then you're going to be devalued in the eyes of Google because if that person bounces off your website which means they clicked on Google to your website, they didn't see what they wanted, so then they clicked back to Google to go to a different website, that ultimately is not going to serve you.

You can spend a ton of money on SEO, and if it's not the right content, it can actually hurt your business and hurt your website. It's better to add one really high quality piece of content a month than it is to add 30 super low value pieces of content that don't help the user in some way.

Download this Episode

Feb 25, 2020

What is cost segregation, and how does it work? If you're knowledgeable of the tax code and understand what you’re able to do, you will put money in your pocket.

Today, I am talking to Kim Lochridge, Executive Vice-President at Engineered Tax Services. The company started with about six employees and has grown to 130 to do 150-200 cost segregation studies a month. Kim loves talking about taxes. She’s here to help make sense of it all!

You’ll Learn...

[03:10] Investment Depreciation Concept: What you get when you have an investment property. It's a tax deduction.

[05:15] Depreciation is everything and anything, including buildings, carpet, walls, paint, countertops, and cabinets that depreciate over 27.5 years (unrealistic).

[07:17] Cost Segregation Metamorphosis: IRS allows building professional/engineer that understands property and tax laws to segment each component of a building.

[10:30] Does Kim use cost segregation? No matter how big or small, she doesn’t do a deal without cost seg.

[11:53] Cost Segregation Studies: How long are you going to own the property? What are you going to be doing with the property?

[12:03] Justify Numbers: Don’t do a cost seg study unless it makes sense financially to pay less in taxes for more money to reinvest.

[15:10] Audit Defense: Engineered Tax Services covers questions from IRS about cost seg performed by internal engineers.

[16:00] Tax Strategy: Know how to use it and when to use it. Too many people don't understand taxes and let their professionals handle it.

[16:21] Motto: We do believe that everyone should pay tax, but there's nothing in the code that says you have to leave a tip.

[16:55] When and when not to do cost seg? Ask questions. If something doesn't make sense, make it make sense.

[21:35] Bonus Depreciation: Too good to be true? Or, leaving money on the table by not doing cost seg? Probaby 80-90% of real estate agents are missing out.

[29:30] Depreciating Bonus Depreciation: Do it now before it decreases from 100% to 20% in 2026.

Tweetables

Engineered Tax Services’s Motto: Everyone should pay tax, but there's nothing in the code that says you have to leave a tip.

Depreciation: What you get when you have an investment property. It's a tax deduction.

Don't do a deal without cost seg. It doesn't matter how big or how small.

Bonus Depreciation: It’s a big deal, not a scam, to spark the economy.

Resources

Kim Lochridge’s Email

Engineered Tax Services

Schedule E

W-2

Form 1099

Tax Cuts and Jobs Act (TCJA)

Opportunity Zones

DGS 118: Investing in the United States 0

Transcript

DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not, because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income.

At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change the perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show.

My guest today is Kim Lochridge. Kim, welcome to the show.

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

Jason: Kim is here with Engineered Tax Services. We're going to be chatting a little bit today about cost segregation and how it works. Those of you that don't really geek out on accounting, that's okay because I pay people to help me with that stuff. I don't either, so I'm going to ask all the questions. We're going to figure this out and make sure it'll all make sense.

Kim, give us a little bit of background on you, and how you got started with Engineered Tax Services.

Kim: Thank you for the internal question. I've been with Engineered Tax Services. I'm the Executive Vice-President, and I've been with them for about 10 years. I started out as an associate. I was on the board of a manufacturing company, and they were looking into some energy-efficient tax credits. It was just a brand new program that came out and tax rules. I found this company because they were doing that early on. That was really my beginning and how I met them. I just thought I came on board.

We've been growing the company since we started about five or six employees. Now we have about 130 across the country. We're doing about 150-200 studies a month across the country. It's pretty impressive.

Jason: All right. We will get into what those studies are in just a minute. Let's get into the subject at hand. Maybe we start in the preshow, in the Green Room, we were chatting for just a little bit. It was like, "When is this stuff?" "Maybe I should explain it a little bit to you, Jason." You did which is very gracious of you.

Why don't we start with the concept of depreciation on an investment? Just to make sure those that are not yet investors, or they're just new in the space, and they're starting to deal with real estate investors, understand this concept.

Kim: Okay. Depreciation is something that you get when you have an investment property. It's a tax deduction, essentially. On top of the mortgage interest or any of that expenditures that you spend on that property, you also get depreciation.

Depreciation is calculated depending on the type of property that you have. If it's a single family home or some type of residence like a multifamily and then in capacity, you're required to depreciate that property over 27½ years. If it's any other type of property like an office, retail, or anything commercial, that is 39 years. For today, I think almost everybody in the audience is more of a single family-owned, we’ll target more at 27½. Just know that that's interchangeable with 39 if it's commercial.

Essentially, if you have (say) a $300,000 single family home, you're going to be able to depreciate according to the IRS. You're going to divide that by 27½ and you end up getting $10,909 every year, that you can help use that to offset the income that you made on that property and then not pay tax on it.

Sometimes, if it's a smaller home, that might cover it, that and any expenses, and you won't have to pay any tax on the income (which is nice). But sometimes, if your cash flow's pretty good, once you're high right now, mortgage rates are low, you might've owned it for a while, then this could be something that could help you. If you have that, your income is more than the depreciation, then you're going to want to make sure to do something else. This is where cost segregation comes in.

Also, if you end up having multiple properties, and one is cash flowing much more than another, then you can basically take that cash flow, and you can do from one to another if it's in the excess. We'll go over some of those details a little bit more.

Essentially, the depreciation is just that. You have depreciation. You're required to depreciate a building if it's on a Schedule E or if it's a rental income. If it’s a second home, you're not going to depreciate it. It has to be a Schedule E or some sort of an income revenue-generating project.

Jason: The idea with depreciation is that everything in the property is going to depreciate at the same way?

Kim: Yeah, everything. It contains the whole building, whatever you bought. That means carpet, walls, paint, countertops, cabinets, anything that you bought in that purchase is going to be depreciated over 27½ years.

Jason: [...] lasts about 27½ years, right?

Kim: That's what the IRS says.

Jason: Okay, that's not reality. How do we solve this problem there?

Kim: Yeah, it's not reality. For decades since the 40s, cost segregation as a whole, what we're going to talk about today, has been around since the 40s when it began in court cases. That's because property owners went and argued the fact that, "This is what I'm doing. This isn't really fair because assets that I'm depreciating over 27½ years or 39 years are not going to last that long. I'm replacing them, in some cases, multiple times over the course of ownership. I want different rules. I want to be able to depreciate those separately."

It made it very difficult for a CPA to say how much is the carpet or how much is the building when you just bought up a building. You didn't put it in. You don't have receipts. You don't know how much the roof, the HVAC, the water heater and all that were. They can't break it down. The CPA doesn't have the ability to do that.

The IRS came back and over years of morphing cost segregation, they said, "We're going to give you the ability to do cost segregation, which means you have to have a building professional or an engineer, somebody who understands property and tax laws to come into the building, and segment (hence, the segregation) out each of the component of your building."

As a result of segmenting those out, you can depreciate them in different time zones, or different buckets. For instance—these are just some examples, depending on the purpose on some of those components—carpeting is always going to land in a five-year bucket. You're going to be able to depreciate all of your carpet in five years, not 27½.

Things like all of your landscaping, your driveways, curbing, gutter, landscape bushes, trees, all of Rockwell expenses, all of that stuff, gets to be depreciated over 15 years. That's more realistic. Things are going to be overgrown. You're going to have to rip things out. You're going to have to replace fences, all those types of things. They'll give you that bucket as well.

The law also says that you can break down certain components like mechanical, electrical, and plumbing, as long as it's for specific purpose for the building, and not necessarily for the building itself. It has to be for the business.

It gets pretty complicated and these rules have morphed since the 40s. There have been massive amounts of court cases that give us these rules today. As an example, something traditional out of today, if you have that same $300,000 single family home, percentage-wise, we're going to be able to take (conservatively) about 40% of the cost of that building or $120,000, and we're going to be able to shift that into faster class lives for you. You won't have to depreciate all of it over 27½ years, but we can break it out.

Essentially with that, that would be $180,000 gets depreciated over 27½ years, and about $120,000 gets split up between five and 15 years. Those are the good rules of thumb numbers to use. Following so far?

Jason: I'm with you.

Kim: I have to tell you, I love tax. I know it's really geeky, but it's okay. I can help you through it.

Jason: That's why people hire you. You're weird.

Kim: I get excited about it. Just to kind of give you an idea, I'm also a real estate investor myself. I have my day job, but I'm also an investor. I have invested in about 800 doors in multifamily in Texas. We have cannabis warehouses, we have a mobile home park, just my husband and I. We manage them all ourselves (which is pretty incredible) plus a full-time job.

Jason: Do you use this? Do you use cost segregation?

Kim: Of course. I don't do a deal without cost seg. It doesn't matter how big or how small.

Jason: That's the cool phrase for it, it's cost seg.

Kim: Yes, short for cost segregation.

Jason: Guys, get yourselves some cost seg. Pretty dope. Explain how your company helps with this. Obviously, accountants can do these. The property manager isn't doing this. The investor doesn't know when they will buy this property. How do we solve this problem?

Kim: Engineered Tax Services, this is our specialty. This is one of the main service lines that we offer as cost segregation. This is where I was saying that we do about 150-200 studies per month across the country, whether it's a single family residence all the way up to something like the AI Building in Chicago—big, high-rise, office buildings. We do cost segregations. We're very good at it. It's cost effective.

Most CPAs, if it's not over $2,000,000 then it's going to be too expensive. We have single family home rates. We have different levels of studies that we can do according to how long you are going to own the property, what you are going to be doing with the property and those types of things. Maybe we should go in and talk about some numbers, Jason, just to tell everybody (the listeners and the viewers) what it would mean for them.

Jason: Yeah. I don't know if this is where you're headed but if you're saying that a lot of people say, "Oh, that's for the big properties. That's too expensive to do for my clients on this single family home or my investment property." Help them justify the cost of doing this study. Nobody would ever do it with you ever unless it made sense financially.

Kim: I haven't since a project that isn't at minimum like a 50-to-1 return. It's going to be better than any improvement you can do in the house, any tenant change over, addition, or whatever you're going to do, your returns on this are going to be [...].

Jason: By doing this, by getting the cost seg study, working with you guys, and with their accountant to make this all happen, what has this allowed the investor then to do that they wouldn't have been able to do otherwise?

Kim: They're going to be able to depreciate more in the first years rather than just the $10,900 on the $300,000 property that we talked about.

Jason: Which means they're just reducing their tax liability? Paying less taxes? Which maybe means they have more money to reinvest?

Kim: Exactly. I want to preface this with the fact that there's a lot of investors that this is passive income for them. If you don't know whether your income from your investment property is passive or active, you want to talk to your CPA because sometimes this gets locked up. We're only talking about if you're a non-real estate professional, how to offset the income from the property so you're not going to have to pay tax on that.

This isn't a loophole. This is nothing that is illegal. This has been around for decades. This isn't something that I’m going to get in trouble if I do this. This is simply just a different method of accounting and it requires a professional to come in. Just like an inspector or an appraiser would come in to tell you more specific about a building that you're building. This is basically more of a professional coming in to explain more of the accounting side of it.

Jason: Okay. What do you call these experts that come out to the property to do a cost seg?

Kim: They're engineers.

Jason: Engineers?

Kim: Yeah. Engineers come out. They're either structural professionals or mechanical engineers that understand building mechanics. They understand how to break down different components in the building. They're our own employees across the country. They come out to do those studies to document everything.

Just keep in mind that the IRS says that if you have the building professional onsite, then that is required by the IRS. A CPA can do some sort of cost seg if they're knowledgeable about it, but many of them aren't going to be able to tell you how much the [...] costs. If they do, they're just going to do it from a square foot allocation. It's not going to be able to stand up in the event of an audit.

We offer audit defense, so if the IRS does come back and question this, we're going to cover all of that for you. We're going to defend that for you. Our reports are going to be solid. We're going to be here and that's what this covers. We're going to stay behind the product.

Jason: Okay. What else should people know about cost segregation or about your company that they may ask?

Kim: I think we need to talk about tax strategy because I think this is really important for people to understand. So many people (and I think in my opinion, too many people) don't understand taxes, and they let their professional handle it. That’s exactly what you said in the very beginning, Jason.

Jason: Yeah, that's what I do.

Kim: Yeah. We have a motto at Engineered Tax Services. The motto is we do believe that everyone should pay tax, but there's nothing in the code that says you have to leave a tip.

Jason: I love it.

Kim: If you're knowledgeable of that tax code and you understand what you are able to do, you will literally put money in your pocket. That's what this strategy does. That's what these studies do for you. You have to know how to use it and when to use it. That's what I can help with.

We help with realizing when is the good time to do cost seg and when it may not be a good time. When it would not be a good time to do a cost seg study is if you just flip. You're going to buy and you're going to renovate it. You're going to get rid of it. You will probably not want to accelerate depreciation. It's just not smart because you're essentially taking more depreciation upfront because you're going to hold on to those assets like the carpet, and you’re depreciating it over five years. You're not going to get all that money and keep it if you sell the building.

Jason: Right. You don't want to pay for the future owner of the place’s carpet.

Kim: Right. Unless you're doing substantial rehab—that's a different story—and if you're actually going to depreciate the property on a flip, you usually don't depreciate it because you're never placing it in service, if that makes sense. You're never really putting in service because it's all going to be under renovation. You're not going to depreciate it.

This does not include flippers, but it does include people who are renting their property. If you have this passive income, let's just take our $300,000 example from the beginning, you're giving the $10,900 in the depreciation every year. If your cash flow is bigger than that, more than that, and you're still paying some tax on that income, you might have to figure that out because you might have a job in your W-2, and you're not really sure what part of this is what you owed in tax because of the house and the income, and what's on your W2.

It's really important for you to see where this is coming from. "How much of my paying tax is from my rental property?" Ask those questions to your CPA, or we can work with you on that. We're looking at tax returns and can help you there. That's the first thing. Just ask some questions. If it doesn't make sense, let's make it make sense. Let's make sure that the common sense is there. At least, you trigger certain things in the brain.

When you get into that and you start realizing that you are paying tax on the income, that $10,000 isn't enough, then you're going to want to do some sort of cost segregation, so you can accelerate the depreciation faster especially if you're going to do renovations.

Many times we buy property, and then we're doing renovations, either immediately or very soon after or even just repairs and maintenance, and we have to capitalize that in many cases. Now, you're actually depreciating two assets. Let's say you bought a building that had a roof, then the roof gets replaced in five years, now you can't write off the roof. You have to capitalize it which means you have to depreciate it. You don't just get an expense for the cost of the roof. You have to capitalize it and depreciate it. Now you have two roofs. You're depreciating one in the purchase and you're depreciating one you just bought. That's where we really want to come back from that and say, "I don't want to depreciate two roofs. When I sell this property, I'm going to get killed in the accumulated depreciation on both of those assets. I only have one in the building. Why am I depreciating two?"

If you do a cost seg study on the original purchase, then you replace the roof, not only do you have to capitalize the new roof, but you can write off the remaining depreciation of the old roof. Traditionally, CPAs can't do that because they don't know how to value the roof if you don't have a cost segregation study.

Not only are we going to help you with your depreciation, but you're now going to have a very detailed fixed asset report that's going to outline every single aspect, every component of that building, and it's going to have a number attached to it. Every light switch plate cover on the wall, every baseboard, every layer of the roof, HVACs, and hot water heater. Now, you have this really great report that every time you do any improvement, it has to be capitalized. You're going to write off the remaining depreciation of the old.

Let's think about this for a minute. Let's say you buy a property. You have it for three years and the hot water heater goes out. It's a significant dollar amount, you have to replace it. You can now take that hot water heater if it's not expensable. You capitalize it and write off the old hot water heater. If you have it in a straight-line depreciation, that water is being depreciated over 27½ years. That means you're going to have 24½ years left of depreciation on the old one. Now, you're depreciating two of them. Why not get that money right now and help cover the cost of the new water heater? That's the beauty of cost segregation.

Jason: Nice. You mentioned real estate agents. Are they not allowed to do cost segregation on their properties if they're an agent?

Kim: No. It actually gets better for them. If you're a real estate professional, this is a whole different conversation.

Jason: A lot of our listeners, they're property management business owners, but they're also brokers, real estate agents, and are licensed, most of them.

Kim: Yeah. That's where we really want to get into. This is part of the tax strategy that I was talking about. If you are a real estate professional in any capacity, whether you're self-proclaimed real estate professional and you're managing your own property, or if you're actually a real estate professional, an agent, or a manager.

If you are paying tax, if you are a W-2 employee or if it's a 1099, if you're paying tax, and you're a real estate professional, you have had some misinformation. This industry right now, we have a real estate president, like him or hate him, it doesn't matter. He's a real estate president. He walked in and just literally handed the real estate industry a gift with a big red bow. It's called bonus depreciation.

Remember what when we said the $300,000, you'd have over 27½ years. You'd have $10,900. Then if we did a cost segregation, we would be able to accelerate the depreciation. That would be a lot better, actually. Now, with the Tax Cuts and Jobs Act of 2018, President Trump passed the bill for bonus depreciation. Let me go back a little bit in history. Bonus depreciation has been around since 2006. It was 50% bonus depreciation (and I'll cover what that 50% of what in a minute) on new construction or renovations. You're essentially able to really expense a lot of stuff to a certain point—at least half of it—for a long time from 2006 until through 2017.

In 2018, President Trump passed this Tax Cuts and Jobs Act. Not only increasing the bonus depreciation to 100% from 50%, they also expanded it to allow purchases not just new construction. What this means is that, say you're a real estate professional. Let's say you're making $200,000 a year. Maybe it's tons more, but let's just call it that. Let's say you're making $200,000 a year, and at that level you're probably paying 33% tax rate or something like that. Maybe a little bit less. Let's call it 35% just to be generous.

Each year you're paying about $70,000 in income taxes. If you are a real estate professional and you go buy a property, let's just say you go buy this $300,000 house, and you're going to start renting it out. We have the cash flow, we have the income from that which is also a factor, but let's just talk about the tax for a minute. When and if you do buy a $300,000 property and you're a real estate professional, then you do a cost seg study on that building. Essentially, we're going to be able to write off about 40% of it. That's $120,000. Normally, if you're not a real estate professional, that's locked up in your passive income and it cannot offset your W-2 wages. It has to just stick with the income from the property or other properties that you owned.

If it goes in your Schedule E, if you own 10 properties, then that $120,000 will house all the other properties. But it is still stuck on the passive side because it's passive income. When you're a real estate professional, it's an active income. This is active depreciation, which also covers all of your regular W-2 or 1099 income when you're in the real estate industry.

Remember when I said that the $120,000 will be shifted over five or 15 years. We have to prorate that all out over these buckets. What's really cool about bonus depreciation, that means 100%, not 50% anymore on purchases, but 100% of your purchase price that is allocated to a class life less than 20 years. You heard me talk about the 5-year buckets and the 15-year buckets. Anything in a cost seg study that you reclassify that's less than 20 years which would be about 40% of this building, you're going to take as a writeoff in year one.

Now you get this $120,000 in the year that you purchase it. You can go buy a property on December 31st and it closes before the end of the year. You can offset your taxes by the amount of your results of cost seg study. In this case, $120,000 that you get to offset, all of your $200,000. You've made $200,000, you're going to depreciate $120,000. Now you're only paying tax on $80,000. But if you buy two houses, you basically just wrote it off, and you can pocket that $70,000 that you would've paid in taxes.

Let's just run the numbers real quick. If you have $300,000 and you're saying you're going to put 30% down, that's $90,000. Let's just say the $120,000 times the tax rate of 33%, so $40,000. Basically, what the $120,000 would equate to is about $40,000 in cash. Instead of coming up with your down payment of 30%, if you have to come up with 30%, you've got to come up with the $90,000 down payment to buy that $300,000 house. But you're going to get $40,000 back in your pocket. Immediately. As soon you file your tax return. You get to write that off. Buy two properties and you just write off your entire tax liability for the year.

Jason: Okay. This sounds almost too good to be true. Help me understand. How many agents do you think are doing this type of stuff, that they're not doing cost seg, and they're just leaving tens or hundreds of thousands of dollars on the table.

Kim: Probaby 80%-90%.

Jason: This is a pretty big problem.

Kim: That’s why I’m on the show because I want to raise awareness. I will tell you personally, I'm an executive, my husband's an executive, we have high incomes, and when they came out with this bill, the first thing that I told my husband was, "We have to go and buy some properties." I am a real estate professional by trade because of what I do anyway, so I'm a professional. We are under contract to buy a mobile home park. We're closing on December 31st. We have good income and I bought it, but I actually am going to have about $400,000-$500,000 write-off this year for my taxes.

Jason: Nice. Is there anything else that people need to know about this? That was a really good point. Any other major things that we should be aware of?

Kim: Yeah. Bonus depreciation goes through 2026.

Jason: Okay, then what happens?

Kim: Then it starts to phase out starting in 2023. It goes from 100% to 80%. Then 2024, it goes down to 60%. Then 2025, it goes to 40%. Then in 2026, there's only a 20% bonus depreciation. It doesn't mean cost seg is not beneficial. It's still beneficial to do that just like it would've been without bonus depreciation, but there's a greater incentive to do it now. This is all brand new tax rules that just came out in 2018. If you're saying to yourself, "Hey, why haven't I heard of this? This has got to be a scam." It's not. This is a big deal. It's huge for President Trump [...].

Jason: It's a big deal. Was this done to basically spark the economy? Is that why they're throwing this out there? Such a big [...], so to speak, then they're depreciating their bonus depreciation over time? They're going to be taking it down, but is that the mindset of why was it put out there?

Kim: Yeah. I'm in the tax community for the real estate roundtable in Washington, DC. When the Tax Cuts and Jobs Act was being formulated, we had long discussions about how to deal with depreciation and what to do. Everyone was worried about the real estate being in the 7th or 8th inning as far as the cycle goes. “Hey, we’re a little bit worried about this. How can I continue to be sustainable at this rate?”

The big talk of this Tax Cuts and Jobs Act on President Trump's docket was solely to raise the GDP and just really get the economy going a little bit better. What they did to incentivize that is to offer this bonus depreciation. This was part of that incentive to buy property, exchange property. They also, in this package, were part of the opportunity zone, which I know a lot about. If you don't know about that, we can do a whole another show on that, about purchasing property in an opportunity zone, and having essentially no tax liability on that after you held it for 10 years (as long as you do some improvements). That's a whole another show that we can do.

All of these are part of the Tax Cuts and Jobs Act. It's very powerful, and in my opinion, I think we probably, at that time, went from a 7th or 8th inning in real estate back down to a 5th or 6th inning. That's where it really continued to boost and postpone any kind of real estate downturn.

Jason: Who is aware of this and is capitalizing on this? Obviously, your company and your clients. Who's been taking advantage of this?

Kim: We do a really good job educating CPAs across the country. We try. There are a lot of CPAs out there. We cannot touch them all. We've got 120 people and there's literally hundreds and thousands of CPAs. We do the best we can. We love CPAs. We want to educate them. We want to connect with them. If you are not doing this and you want to do this, it would be great for us to work together. I really want to talk to your CPA because he has more of use out there that I want to make sure he’s or she's aware and give him or her resources to be able to let other people know that we do this. We do this very economically.

I work with a lot of property management companies, investors, and funds. I work with a lot of family offices. I work with a lot of individuals. The word is now starting to get out there. There's a lot more individuals that are starting. We do a lot of shows like this to bring what really the wealthy has done for a long time down into mainstream. That's really what we've been doing.

Jason: Random seg question, if property managers came to you, and they've got lots of investors, is there some sort of service that they could work with on you that they can add as a new revenue stream to push their investors towards you?

Kim: Yeah. Absolutely have them call us. We can do some sort of [...] share or something like that, or just the finder's fee or something like that. Property managers, historically, have been difficult. Property managers do the property management. They usually don't get involved in the taxes. It's hard for them to have those discussions because a lot of times with the owners they'll say, "Hey, you should really do cost seg," they're going to go, "Oh, it's taxes. My CPA handles that." Now you're dealing with two different layers.

Just like you said in the beginning, "If it has anything to do with taxes, I'll let my CPA do it." Those people have that mentality like, "Oh. I'm sure my CPA's already doing this if it's that big." I'm telling you, please listen to me, most CPAs are not doing this. I'm telling you that right now. Most of them aren't. Be proactive. Take your own taxes and your knowledge into your own hands and ask the appropriate question.

I will leave you with a kind of case study of a project I've been working on right now. This is incredible. I literally have a client that I was referred to from a CPA. The CPA brought me the client—a very good CPA client of mine. He owns tons of property all over the country. His family owns property and I've done all their cost seg for about five or six years. We finished the project.

I was in my closing call with them, explaining those studies in the last report and everything. He says to me, "I'm part owner in this mobile home park. I think we should probably do this. Do you think it will be worth it?" I said, "Absolutely. Mobile home parks are killer. They're amazing." They do way better than single family homes or multifamily with that matter.

They said, "Yes. It's absolutely worth it. Get me the depreciation schedule, and we'll go over it." He put his partner on the phone with me, and we talked about it. Then, they finally sent me the depreciation schedule. The mobile home park was put on their depreciation schedule as land, $3.5 million as land. I looked at that and I almost gasped, that I called, and I was like, "That's not good. You're not depreciating this at all. Land is not depreciable. It looks like you just bought a raw piece of land." He goes, "Well, that's just all there is. We don't own any of the parks." I go, "Yeah. But you own the pads, the electrical post, you own a laundry facility and there's a house there, there's fencing and there are all kinds of stuff. They are land improvements. That's all 15 year depreciation. You have to pull out the land first then depreciate what's left." He goes, "Oh, man."

Long story short, we get on the phone with the CPA. They're like, "Why didn’t you depreciate this? Why is it all on land?" He's like, "Oh, well. I didn't know." The CPAs don't know this stuff. Make sure that you're asking questions. If you have even just the inkling, reach out to me. I try to be very responsive to my emails, text messages, and whatnot. Email me. It's klochridge@engineeredtaxservices.com. Shoot me an email. Give me some synopsis on what's going on. Send me your depreciation schedule and I'll be able to tell you real quick if we can do something or not.

Most CPAs are not doing this because we don't have the resources. They don't even know. How was a CPA to know how much the electrical post we're going to depreciate? How was he supposed to know how much the pads are? They don't. You have to have a professional to go out there.

Appraisers can't do it because they're going to tell you what's in there and what's the total value is. They're not going to break it down. Inspectors are going to tell you what's wrong. Nobody's going to tell you what the cost of every component is in that building. That's where the power comes.

Jason: Awesome. This is really interesting to me. I appreciate you coming on the show, Kim. You gave out your email address, which we will have in the show notes as well, and on the website. How else can they get in touch with your company?

Kim: Our website is engineeredtaxservices.com. I'm also on the back page with our team. Just pick my profile and shoot me an email from there as well. I'm happy to help you. I have an assistant that can handle all the influx of emails that might come. We'll be able to work through them all. I'd love to hear it from you and please just reach out, so we can at least talk about tax.

Jason: Perfect. Kim, thanks for coming out and hanging out with me here on the DoorGrow Show.

Kim: Anytime.

Jason: All right. We'll let you go. Bye.

Kim: Okay. I’ll talk to you soon. Bye, Jason.

Jason: All right. There you have it. Really interesting topic. I didn't know about that. It's really fascinating. I'm sure it might be new to a lot of you. If that was helpful, make sure to reach out to them. If you are watching this on YouTube, make sure to subscribe, and catch these videos as they come out. If you are paying attention to us on iTunes and listening, make sure to subscribe on iTunes. If you can give us a little review, like this video, whatever you can do to help us about, it means a lot.

We're putting out a lot of free content. We would love it if you would reciprocate just a little bit and help us out. It helps us get the message out. It helps us get greater awareness and help more property managers change this industry.

I'm Jason Hull of DoorGrow. This is right towards the end of the year. This may come out in 2020 on iTunes and other places. To everybody, happy holidays. I hope you have a fantastic 2020.

If you're looking to grow your business, you're wanting a vision for 2020, you want 20/20 vision, you have a plan, and you want to do something different, reach out to DoorGrow. I'll say this real quick, if you didn’t get the results you wanted in 2019 or the result you wanted in 2018 or in 2017, you know exactly where you're going to be at the end of 2020. You're going to be at the same level of results you had every year so far. That's your default future.

If you want to have a creative future that's dramatically different, then I would love and be honored to help you create that. We've helped hundreds of companies do that. Those that listened to me, followed, do what I tell them to do, and show up to our coaching calls, they get those results. They get it. I would love that to be you.

That's it. Bye, everyone. Until next time, to our mutual growth.

Download this Episode

Feb 18, 2020

What do you want to do with your life? Sit on the sidelines in a cubicle or travel the world? Take control of your life instead of watching it pass you by. Consider investing, start your own business, and enter the world of entrepreneurship.

Today, I am talking to Reed Goossens, Lead Asset Manager/Chief Operations Officer of Wildhorn Capital, about investing in the United States. After spending two years abroad, having a great time, and meeting the girl of his dreams, Reed returned to Australia to sit in a cubicle as a civil structural engineer and wonder how he could get paid to travel.

You’ll Learn...

[03:17] Real Estate Investing: Rich Dad Poor Dad ignited Reed’s interest in being an entrepreneur.

[03:45] Reed’s Journey: Leaving the safety of his cubicle in Australia to moving to America without a job for the love of his future wife.

[03:58] No job, no network, no problem: Took just six months for Reed to find a job in the United States and purchase his first investment property.

[04:29] Investing in the U.S. and 10,000 Miles to the American Dream: Reed went from reading Rich Dad Poor Dad to writing his own books on real estate investing.

[04:51] Structural Engineering: Prepared Reed for his future in America when it comes to construction. He’s built about half-a-billion dollars worth of infrastructure worldwide.

[06:21] Do you want financial freedom? How to get started in real estate investing.

[07:37] Benefits: Real estate investing creates cash flow, appreciation, and amortization.

[08:07] Rental properties aren’t turnkey, but property management is key to success.

[10:00] How to find a good property manager? Business culture with growth opportunity.

[14:10] Ok Boomer: It’s not just about doing work whether you’re miserable or not. People want meaning and purpose.

[15:27] Invest in Yourself: Self-educate by reading books, listening to podcasts, joining local meetup groups, and expressing a willingness to learn.

Tweetables

Structural Engineer: Scheduling, foundation and soil issues, you name it, throw it.

You make money when you buy, you lose it through bad property management.

Culture: Critical and pivotal to foundation of business and why clients can trust them.

Change and grow. People want meaning and purpose. Get out of your own way.

Resources

Reed Goossens

Email Reed Goossens

Rich Dad Poor Dad by Robert Kiyosaki

DGS 117: Brand Standards and Rising Expectations in the Market 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.

Reed: Good day, Jason. Thanks for having me on the show, mate.

Jason: All right. You’ve got a really cool accent. Tell everybody where you’re from.

Reed: From deep West Texas, mate, down below New Zealand and Australia.

Jason: Very deep Texas. Got it.

Reed: I’m originally from Australia. Grew up an Aussie, I went to school there, and moved to the United States back in 2012 when I moved here for two loves. One love was for my then girlfriend and now wife, and the other love was for the Big Apple. That’s really how it got me to the United States.

Jason: All right. Those women man, they get us to move. They just do it. Awesome. We’re going to be talking about investing in the US but before we get into that, tell us a little about how you got into this and then lead us right into this topic.

Reed: Sure. Let’s do it. My background is in structural engineering. I went to university for structural engineering, graduated in 2007, went abroad which means going overseas, and worked in the London 2012 Olympic games for about a year back in 2008. Then, I moved to the south of France, had an incredible life journey down there and that’s actually where I met my American wife or at the time, girlfriend. We fell in love and after galavanting around the south of France, I crossed the Atlantic Ocean. I worked for some Russian billionaires on some super yacht (it’s a whole story in itself). I found myself back in Australia in 2010 in a cubicle working as a civil structural engineer.

The whole idea of I spent these two years abroad, having a great time, meeting the girl of my dreams, and I’m now sitting in this cubicle going, “Geez, what the hell?” I want someone to pay me to live this life of travel. Really, the thing that came up to me was investing, but I didn’t know what entrepreneurship was. I didn’t even really understand real estate investing. I picked up the book Rich Dad Poor Dad, and that’s back in 2009, a decade ago. That was the spark that got it all started.

From there, I took the blinkers off a little bit. I definitely felt like a star athlete sitting on the sidelines, watching my life go by, and I really wanted to take control of that life. Over many years of self-education, I ended up moving to the United States. I quit my safe engineering job in Australia and moved in early 2012 to chase Erica, my wife.

I moved here without a job. I didn’t have any network here and over a short period of time I was able to find a job. I think within six months of moving to the United States, I had my first property purchased, a triplex. The various [...] here in the United States for those people who are not aware are very, very low compared to Australia. The whole thing about Rich Dad Poor Dad says, “Get started by putting cash in your pocket and having assets.” That’s really where it got started.

Jason: All right, and you’ve written some books.

Reed: Yes I have. I’ve written two books, Investing in the US which is the podcast form, now in book form. I’ve written a second book with a couple of other Aussie entrepreneurs called The 10,000 miles to the American Dream. We’ve all moved out here and successfully invested in real estate, inside of real estate businesses, and now we’re sharing our story with the world.

Jason: Structural engineering, how do you feel that prepared you for the stuff that you’re doing now.

Reed: It hugely prepared me. I probably can walk into a room and run rings around most people in terms of when it comes to construction. As a project manager in a career, I had built about half a billion dollars worth of infrastructure, multi-family retail across the globe. Scheduling, understanding foundation issues, and soil issues, you name it, throw it at me, and we can go bat if you want to go bat. It also got me into a role that I worked for a developer in Long Beach for many years and learned the business side of the real estate game through them as well.

Jason: Where are you located now?

Reed: I’m in LA. I was in New York for a couple of years back in 2012–2013, then moved back out to sunny California because it was just too cold in New York.

Jason: I get it. I’m just north of you. I’m in Los Angeles county, in Santa Clarita.

Reed: Nice. We have to go meet up and go surfing some time because I love the beach.

Jason: Yeah. The beach is cold, though.

Reed: Let’s see, mate. Let’s see.

Jason: Yeah. Reed, really cool to connect with you. Let’s get into this topic of investing in the US For those that are listening across the pond or those that are in the US, let’s make this relevant for both of them.

Reed: Sure. Let’s do it. What do you want to know? I’m an open book.

Jason: Where should we start? How does somebody start investing if they have no clue? You’ve been there at one point and if somebody has never done real estate investing, they haven’t invested themselves whether they’re here or not, how would they get started?

Reed: Well, I think the whole idea is about what you want to achieve in your life. Do you want financial freedom? A lot of people get started in real estate investing to achieve some sort of financial freedom.

Per my story in the beginning of the show, I felt stuck. I felt trapped in a cubicle. I wanted more to do with my life. The whole thing that drives me, Jason, is the fact that I have a fear of regret. If I wake up when I’m 65 years of age going, “Geez, I wish I’d given that a go,” I’ll have regrets. The whole thing that gets me driving, gets me up in the morning is going out and pushing my boundaries and being uncomfortable.

The whole thing about real estate investing is you’ve got to ask yourself, “What do you want to do it for?” Is it to create financial freedom for your family? Is it to create a little bit of extra income? You love your job, but you just want to put your money to work and not sit in a bank? Whatever that might be, real estate investing is really big compared to the stock market investing. It’s one of the best investment vehicles in the world because it has all the benefits.

There’s the four benefits as cash flow, there’s appreciation, there’s amortization, and it has appreciation of a long-term in terms of market appreciation. There are many benefits that you can have through investing in real estate compared to other stock investing or bond investing that make it a really quite a safe haven. It really goes back to, “What do you want to grow for your family or for yourself personally?” Once you answer that question, we can get off into the details of how you go do it.

Jason: One of the challenges that you’ll see in the real estate industry is that a lot of people will make these claims. You see these gearers that are like, “Hey, just get into real estate investing. Buy this matching program and then it’s going to be easy.” And then they end up with these rental properties that are really difficult and they realize it’s not so turnkey. They’ve got tenants. They’ve got renters. Property management, maybe more than anything, is kind of the gateway to this because property management played a role in the properties that you tend to be involved in or the real estate investment that you do.

Reed: Yeah, 100%. In property management, you make money when you buy, you lose it through bad property management. If you don’t have the right property managers on board, you can be royally screwed. We’ve experienced it. We have the daily grind of running a real estate investment firm at Wildhorn Capital, we have a constant struggle with trying to find good bums and seats to make sure that when they’re running our $40–$50 million assets, that they know what they’re doing, and they’re competent.

You might be in certain markets which might not attract the right type of property managers. You really got to be really careful at how you select the people who sit at the helm of the ship of any property that you buy. We happen to buy large multi-families, so we have 200–300 units at any one property. There is a lot going on, a lot of moving pieces. Making sure that you have those right people in those positions, to make sure that they’re steering the ship in the right direction and you’re not going to lose money, and the deal’s going to continue to perform for the investors, is really important.

My job within Wildhorn Capital is to make sure as a Lead Asset Manager, Chief Operations Officer, is really to make sure that those individual property managers, those individual sites are doing what they’re supposed to be doing. The original point, property management is the key to success.

Jason: Love it. I get asked this question all the time when I go on other people’s podcast. They’re always asking me, “How do you find a good property manager? How do you identify them?” I want to put this on somebody else for a change. What do you look for when you’re looking for either a good property management company you’re going to partner with, in situations where you need that, or when you’re doing hiring to find a good property manager?

Reed: Let’s answer the first question. To give some context, we have 1700 units across 8 assets in Austin, Texas. We have a third party property manager. I live in Los Angeles. My business partner lives in Austin, but we stood third party better.

Probably, what a lot of people would do whether you start with a single family or you’re buying 150 units, you’re probably going to go out at the beginning to a third party. How do you identify those third parties? We just recently went through a transition. We had to fire our original property management company and it really boiled down to a couple of things.

One was culture. Business culture is really, really important. If you’re going to be attracting someone to earn, sitting at an asset, $50,000–$60,000 a year, managing a $45 million asset, you better bloody have a good business culture. You need to have room for them to grow, and they want to grow into more than just being a property manager. Maybe they want to be regional. Maybe they want to get into the executive office.

If you don’t have that growth opportunity, combined with somewhat a decent pay, and then also the training wheels (I’ll call it), the training services and programs within the company, within the organization, to help those people blossom, really, what we as owners employ these property managers for is to go out into the market and find the best “eggs on the shelf” and form those eggs into great, successful, property managers so our assets can be successful.

We look for a couple of things. When we do interview asset managers, we look at how many properties are they currently managing. How many units do they have on the contract? How long are they doing this for? We go and get references from other owners. How have working with ABC property company been? Have you enjoyed their reporting systems? Have you enjoyed their business culture or are they really transparent with you?

There’s a lot of things out there that you need to be aware of when you’re hiring and sitting down and “dating” a property manager because you need to go and understand all the rigmaroles that go on with asset managing it. I hope that answered your question.

Jason: Yeah. I would agree. I think one of the first things when a property management company comes to me that’s struggling to grow and to figure out how to grow the business, that I will tackle with them is helping them get clarity on that cultural piece. It’s never the thing that they think they need but it’s so critical and pivotal to the foundation of their business. It’s why clients can or cannot trust them.

Helping them get clear on their personal why and then helping them get clear on the why their business exists, and to feed that personal why. One of my goals is to create this golden thread all the way from them, the business owner, the property management company, their why, through to the business why, through to the person with the rental property wants. If I can help them create that connection with each potential client, sales happen really quickly. Deals happen very easily because there’s a golden thread of trust between what the person wants and what the business owner wants, the property manager wants. They can see that. It’s transparent.

That’s so critical and we have to have culture. It has to exist in order for that to happen. If your team can sense that and can see that, then you’re able to attract A-players. B-players are not going to stay in a company without good culture. Especially millennials and Gen Z, they’re not going to work in a situation in which they’re just getting paid to do something that keeps them miserable. They want purpose. They want meaning.

You’ll see a lot of dinosaurs in the industry get really frustrated because they’re saying in business… Then there’s this trend of the “OK Boomer.” But the Boomers are like, “Well, we pay you, so just do the work. Do the freaking work.” That’s not how people want to live nowadays. It’s not just about hunkering down and doing work whether you’re miserable or not. People want purpose.

Reed: You bring up a good point. This comes not [...] also rent a business culture, but how you run the business with OK Boomers and a historical way of smacking someone over the back of the head if they’d done it wrong. They’re the old school dinosaur ways of the ways managers work. We’ve come a long way and as much as we—I’m a Millennial, I’m on the early end of it—get criticized for not working and all that sort of stuff. Look at my track record. I come from Australia.

For most people, I don’t want to swear on this podcast but you know what I’m going to say. Millennials also have created a lot of changes and disruptions in the way that we approach things and change through our thinking around it. That is really important. If you’re not willing to change and grow, then you’re going to be stagnant and someone’s going to eat you.

Jason: [...] Xennial which is kind of Gen X and kind of Millennial, and sort of bridges the gap. I remember dialing phones with the rotary dial.

Reed: I was born in 1986, so I still remember that. I remember my first mobile phone in Australia was actually when I was 18 years of age. It was the Nokia 3310 and it’s funny.

Jason: I had the Blackberry and I’ve had just about every version of iPhone that’s existed.

Reed: Exactly.

Jason: I think there’s a big shift in culture. I think that if business owners of larger property management companies, the most successful companies, they all have culture. They all bring up culture. I think a lot of smaller property managers hear them talk about it and go, “I don’t get it. That doesn’t make sense.” Then you’ll see a lot of property managers get to maybe about 200–400 door category and this is where if they don’t have culture, they get stuck.

I taught the second sand trap in property management. It’s because they don’t have culture, they’re not able to maintain and retain good staff, and they don’t have a clear vision, clear purpose, clear values, a clear mission statement or whatever you want to call it. There’s a disconnect, and they’re wondering, “Why can’t I just find good managers?”

One of my business coaches said this, “If you don’t have the business that you dream of, you’re not yet the person that can run it yet.” I think that a lot of times, we as business owners externalize everything. “Oh, it’s the Millennials. Oh, it’s my marketing. Oh, it’s my website.” Really, I found that if I could get the business owner to see that it’s them and make changes, everything else changes by default.

Reed: I have a similar business coach. You have to be a key person of influence in your industry. Whatever industry that is, if it’s property management, if it’s being a real estate investor/entrepreneur. I’m trying to attract investors to me, so I’m putting all the content out there. I’m sitting on this podcast right now, talking about the ins and outs of building business culture.

It’s easy as humans to blame something else. It’s someone else’s fault. It’s this one’s fault. But that’s why as humans, we can’t stop learning. If you stop learning, you stop growing. If you stop growing, you’re dead. It’s really about that embracing of change. Ignorance isn’t an excuse anymore. If you don’t know something, go ahead and freaking learn it. If you don’t want to go do that, well then you’re dead in the water.

That’s this whole mindset of changing the way in which we were historically taught to learn, grow, do business, manage people, expectations, and blah-blah-blah. We can get all into it, but it boils down to, you were right, you have to be a key person of influence in yourself. Your business is you. You are a business and you’ve got to start there. From that, people would want to feed off you, be around you, and then want to grow with you. If you don’t have that growth opportunity, you can’t attract better employees, better clients, and have better outputs for your company. I like this a lot.

Jason: It certainly makes a lot of people uncomfortable, too. I get a lot of flack in it in this industry just for being a change bringer. Some people don’t like it. They don’t like that I’m not a property manager, I’m from outside, and I’m bringing change to this industry.

Reed: “You don’t grow, you don’t know.”

Jason: Yeah, and for a while, I was kind of fearful of that fact. I thought, “Well, I’ll just stay in the background.” My business coach has consistently pushed me to get more and more uncomfortable as we were talking about earlier.

Side question. You’ve got all this business in Austin which is so favorable and friendly to business because I’m legitimately looking to move to Austin. I’m seriously considering it. Why are you still in LA?

Reed: Two things. The beach and my wife’s family are from here.

Jason: Oh, yeah.

Reed: But it’s insane. I set up my company to be a life by design company. It’s me and my business partner and I’ve got a couple of other small employees. I still outsource the general contracting. I still outsource the property management. As we grow, we have 17,000 units now but a 150 million under management with our investors.

We want to keep it lean. I’m Australian. I just got back from a 2½ week vacation. It wasn’t really a vacation, I was working every day, but I went to the Rugby World Cup in Japan. I was in Australia. If I have Internet, I want to work and my business partner’s completely aligned with me. We’ve always joked that if we ever need to get HR within the house, we’re done growing.

Part of the business of owning multi-family real estate is what can I control? The engineer within me wants to control everything. It’s the business systems, it’s the ecosystems that you create that can truly create true wealth, but like property management, do I want to go off and create a property management company?

I know how much property management is a thankless job. I was literally sitting in my property management company’s head office in Austin the other day, beating him over the head about budgets in 2020. Literally beating him over the head. And having clashes with upper management, that they’re saying stuff in these meetings that should have been prepared, so I’ve just literally experienced it with, and that’s got nothing to do with property management. That has got to do with how you manage your people.

Some people come into the meeting not prepared for budget review. I literally flew in from LA. What else are we going to do? The expectation is I’m sitting here ready to review budgets with you and you don’t know if these are baked yet.

There are all these things that go on with any corporation, that you got to make sure you have your systems in place the hierarchy, and to your point before that, the old dinosaurs, there’s a couple of old dinosaurs in that organization that we have to get a bit of feathers ruffled, but you got at those honest conversations because I am the client and I do expect things to be presented in a certain way. And that’s regardless of the fact that there’s a property management company.

Jason: Okay. What did you notice difference-wise between the Australian market? I would imagine you’re still connected to that. We get a lot of Aussies coming over here, where property management is very well-seasoned in Australia. We talk about a property manager as a household word, like a realtor is here, like people know what property management is over there is not as common here. Stats like 80% of single family residential rentals there are professionally managed by property managers. The US is nothing like that yet.

What is your perception on the differences between the US market and the Australian market when it comes to real estate investing, rentals, and property management?

Reed: I’m going to answer your first question first. This is because I’ve got a different lens on. Yes, you’re correct. My dad has an investment property and he has a property manager. When they say property manager, they’re really a real estate brokerage company that does sales for new homes. To keep the ecosystem going and the lights on when the market’s crap, they do single family rentals or vacation rentals, something like that. So that’s definitely well-baked.

What isn’t well-baked? In Australia, we don’t have the per the construction way of financing set up in Australia. We don’t have large multi-family. I moved to the United States and I, as a 29-year old, bought a 150-unit complex. I would never have had the opportunity to do that in Australia because the way in which the financing is set up is that, it’s a condo market. Before it goes into construction, they need to pre-sell X amount of units before it goes under construction. We have all this condominium market.

Within the condominiums, you might get ABC property manager to manage one of the units and you have someone completely different managing the other unit. Unlike here in the States where if I go to Texas, there’s a leasing center and I walk into the leasing center because one entity owns the entire thing.

One thing really missing from the Australian market is in [...] the commercial property management game. I just mentioned the other day in the corporate office of my PM firm, is like, “Guys, there’s an opportunity to go to Australia and start this out as multi-family starts to have more traction.” I see this as the opposite, that in the commercial multi-family space, America has it dialed in. It’s a true business. I know universities offering degrees in property management now, whereas in Australia, because we don’t have that commercial multi-family space, you haven’t driven that professionalism that I’ve come to expect here.

Again, I’m not in the single family world as much you plug in both here or in Australia, so I can’t comment as much on that, but just from the large multi-family commercial space, Australia is very mid-90s, like the Internet was in the mid-90s. No one really understood what it was, so that change. Does that answer your question?

Jason: Yeah, very much. That’s very interesting. I love hearing about the contrast, because contrast gives us perspective here in the US.

As far as investing in the US, what are some of the most common questions that people ask you when they hear about what you do, they’re curious, and they’re interested (maybe) getting into this?

Reed: From a high level, it doesn’t break down what the United States is. I’m going to compare to other western countries, so Australia, Europe, and Canada to some extent. I’m just going to break it down to Australia because I’m from Australia. You guys have 300 million people who live in this country. You are the king of capitalism. You guys have this financing options up the wazoo. You’ve got thousands and thousands of financing options.

With a large population, you have forced and you can inhabit north, south, east, west. You can pretty much inhabit the entire land mass. You force these what I call secondary markets. You have the New Yorks, the LAs, the San Franciscos, the Chicagos of the world, where people want destination cities. But then, because of the population and where jobs are being driven to, you have these secondary and tertiary markets. Through secondary and tertiary markets, you have more affordability. And that’s purely driven from a population point of view because you just got so many people.

Compare that to Australia, we got the same land mass as America (excluding Alaska, we roughly got the same land mass), but we only have 25 or 26 million people. We have not even one-tenth of the population of what you guys have. America has this really weird, awesomeness of having so much population, so much affordability, it drives cash flow. But there’s also appreciation, it’s got a ton of pro-business, all these things and you compare it to other first world countries.

We don’t have the cap rates that you guys have. You look at Charlotte, North Carolina or Austin. Historically was a seven- or eight-cap market. It’s now transition into these very low digit sort of four-fives. You compare that to Sydney, Brisbane, London, or Hong Kong where commercial real estate and real estate in general where cap rates have been like 1% and 2% because the supply and demand is forced to go that low.

So, there’s these still pockets of growth in America where, because you can inhabit all these different parts of the country and through job growth, that you guys have these awesome opportunities for investing, and that’s where a lot of people have heard about it, where you’re cash flowing in the States. You got appreciation and all these great financing options. It’s also the US dollar, like where do I come? Where do I sign up?

A lot of people hear about it internationally, and they come and want to invest here. That’s why I started investing in the US, and it was more of an idea of my journey, about how I’ve got started because when I first moved here, I had no idea what a credit score was. I had no idea what an LLC was. I had to learn all that stuff.

Jason: All right. I think there’s an advantage of doing that. There’s an advantage in coming into an industry or into a market with no experience in it because your eyes are wide open. Nothing’s assumed, you have to learn everything from the ground up.

That’s been my experience coming into the property management industry. There were so many things that I looked at and said why is everyone doing it that way? Why are people doing it like that? That doesn’t make sense to me. And why is pay rent the largest called action on their website when they want more owners and that’s the primary goal with this website?

There’s this disconnect and I think that’s the advantage of coming in with this outside perspective. You coming into this, what do you think Americans are missing? That they just assume? That has given you this advantage? Because you’re doing obviously quite well.

Reed: And thanks to America, I have been doing quite well. Let’s not get any wrong here like I haven’t made money in Australia. People ask me, “How do you make money in real estate?” I’ve never purchased anything in Australia. I got my fishing lines in the water out there, but until I actually go and do something, my whole portfolio is here in the United States.

You are correct. Perspective is the difference between what gives me an advantage over someone else. A lot of the American ethos is being around, “I got to go to school, I get this huge debt, I can’t go traveling after university because I got this debt, and then I will get no job. Once I’m in a job, I can’t leave, I’ve got a 401(k).” All of a sudden, you’re 65 and like, “What the hell just happened?”

As Australians, it’s in our DNA to go traveling. I didn’t come out of university with six figures of debt. It was absolutely more socialistic society back down in Australia, but that it allowed me to travel the world in open and give me that perspective so I can, when I move here, I can see an opportunity to go invest in America, I’m going to take those with two hands because I can see the opportunities compared to where I come from, how cash flow is so much more prevalent here. The barriers to entry into the United States market from a real estate investing perspective are so much lower than Australia. I can see a lot of people like that, a lot of international folks like that.

The message I have for the American folks is realize what’s in your backyard. Don’t be ignorant. I’m telling you this for a reason. Perspective is good. Listen to what I’m saying. Go out and educate yourself on what is in your backyard, what is in the state across from you, or in an affordable market where you can start buying and investing.

Ignorance isn’t an excuse anymore. I’ve said that earlier in the show. It’s really true that if you stop learning, you stop growing, and I think that’s what people get in there. Not just Americans. I’ve got Aussie mates back in my hometown, they’ve not left. They’re in that same blinkers on type of scenario. Not that that’s an issue, which is that if you want to understand the benefits of real estate investing, then get out of your own way sometimes and just start going out and educating yourself on what’s in your backyard.

Jason: What would be a good place to start with getting education towards this?

Reed: Well, sitting here right now talking about it, listening to your show. I still remember when I moved to the United States, I was going to real estate investment seminars made up in Aussie, and I remember being pitched to pay $10,000–$20,000 for a guru to help me teach everything. Then, when I got to the States, particularly in New York, the Big Apple, the firehose of information, it was all readily available at my fingertips. Websites, podcasts, books, meet-up events.

You don’t have to spend a lot of money, but at the end of the day, you do have to spend time. If you don’t want to spend the money investing in yourself or the time, then you’re never going to go anywhere. You got to understand that this is an investment in yourself.

So, I would start by listening to podcasts. They’re free. Picking up a couple of books that can start educating you on whatever niche you want to get involved with, with real estate. Maybe just financial education and literacy that you need to be sharper on.

Join a local meet-up group for real estate. I encourage everyone listening to the show, if you don’t have any experience, if you go to two meet-ups a month for the next six months, that’s 12 meet-ups. I bet your bottom dollar and I bet you $100 that they will know, or they would have created a circle around them, more knowledgeable than they were listening to the show today.

It’s about getting out there, being willing to pick-up a book, being willing to say, “Hey, it’s okay that I don’t know what this is about, but I’m willing to learn.” I’m an example of that. I’m self-taught, I went to university with structural engineering, and now I run a multi-million dollar investment firm.

You can change. The real advice is that we are in the digital age. It’s all at our fingertips. Go out, start investing yourself from an education perspective, and you will see change.

Jason: Reed, it’s been a pleasure having you on the show. How can people get more information from you as to what you’re up to or get plugged into whatever you’ve got going on?

Reed: Simplest way, go to my website. It’s reedgoossens.com. I live in Los Angeles. If anyone wants to hit me up for a beer, coffee, or lunch, just shoot me an email at info@reedgoossens.com. You can check it out all there. Find the podcast, find the books, find the videos. It’s all there, so have fun.

Jason: All right. Hey, thanks for coming on the show, and like Reed said, start getting involved in investing. Just start, right? There’s this power in just getting started. Set that intention, start going to some meet-up groups. You can check out meetup.com. You can check out Facebook groups, there are all kinds of resources available, and maybe you’ll find your passion the way Reed has.

Reed, I appreciate you.

Reed: Thank you so much for having me on the show, Jason. I really appreciate it.

Jason: It’s been a pleasure.

All right, so if you are a property management entrepreneur and you’re wanting doors, then reach out. We’ve got some cool programs that we’re adding to our lineup of what we’re doing. We’re really excited about something new that we’re launching, the DoorGrow Referral Amplifier that Jay Berube and I are doing, so make sure you check that out.

He is an amazing entrepreneur, one of my clients that was able to close and acquire over 300 doors into this property management portfolio from ground zero in Florida in about two years. He did it largely through outbound, reach out to agents for referrals, and he systemized this. He’s now even got VAs helping do this for him. He runs his company remotely from another state now, and it’s still growing.

So, reach out and check us out if you’re interested in this. By the time this airs on iTunes, it will probably already be filled. We’ve only got 20 seats, so if you’re watching this live, then get in. We’ve already sold about half the seats already, and we haven’t even announced it publicly. I’m just throwing it out there now. Get in before we close out the remaining 10 seats. Bye everyone.

Download this Episode

Feb 11, 2020

Not tech-savvy? Afraid to use technology to meet elevated brand standards at scale? Are you willing to manage and centralize chaos by leveraging automation and mobile functionality for those maintaining and caring for your properties?

Today, I am talking to Tucker Cohen of Breezeway, which brings operations and service optimization software to the property management space. By combining deep-learning technology, robust property data, smart messaging, and mobile-first task management, Breezeway makes it easy for managers to deliver the best experience for guests, tenants, and owners.

You’ll Learn...

[03:05] Problems Solved: Breezeway helps property management business owners when short- or long-term tenants move out to determine condition of property.

[05:15] Breezeway Bio: Created by FlipKey founder and acquired by TripAdvisor. Breezeway uses 75+ years of industry experience to build the future of property care.

[07:00] Systemize business to be more effective and save time for brand standards and rising expectations in the market.

[10:23] Conferences and Companies: What does a conference need? Everything a business needs. Company growth and expansion doesn’t always make things easier.

[14:45] What are brand standards and rising expectations? People and perceptions are extensions of your brand. Trust and transparency meet standards and expectations.

[21:25] Dating Analogy: Am I the person that the person I want to attract into my life or into my business, would they be interested in me? Come down to their level or level up.

[23:05] Running a Business: If something isn’t working, it's your fault. Take ownership, don’t blame your team that is following your lead.

[27:20] Expectations tend to rise, but sometimes expectations are artificially wrong, unrealistic, unmanageable, and express entitlement.

[29:22] Situational Sayings: If nothing changes, then nothing changes. If you want dramatically different results, dramatic changes are required.

[30:59] Status Quo Challenge: Some people aren't ready for change. Ultimately, everyone moves toward an operations tool, like Breezeway.

[36:00] Platform Integrations: Breezeway strives to be a connected system, but wants to work with Rent Manager and others.

[38:35] Three-Legged Stool: Cleaning, inspection, and maintenance of property care and operations.

Tweetables

Everything looks shiny and pretty, but business is tough, being an entrepreneur is tough, and the inside of companies can be tough.

The main thing must stay the main thing in the business. Keeping focus is power.

Expectations tend to rise, but some expectations are unrealistic and unmanageable.

The sooner you can automate, the better. As you scale, you have that process in place.

Resources

Breezeway

Tucker Cohen’s Email

Tucker Cohen on Twitter

Tucker Cohen on LinkedIn

FlipKey

TripAdvisor

Todd Breen

Extreme Ownership by Jocko Willink

DGS 116: Automated Income Verification in the Property Management Industry with Stephen Arifin 0

Transcript

DoorGrow hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not, because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income.

At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change the perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show.

Today, I am hanging out here with Tucker Cohen. Tucker, welcome to the show.

Tucker: Thanks a lot, Jason. That was fantastic. For some reason, I thought that was recorded. I didn’t know you did that a lot.

Jason: I just say it each time. Sometimes, I screw it up even though I wrote it.

Tucker: It’s perfect, you nailed it.

Jason: I'm reading it. I think I haven't memorized, I probably do, but I read it because even I get nervous doing my own show sometimes. Tucker, we're going to get into Breezeway and our topic today is brand standards and rising expectations in the market. Give us a little bit of background before we get into the topic at hand. Tell us a little bit about what is Breezeway and maybe we can dig in more into that as we move through the topic.

Tucker: Absolutely. First of all, thank you so much for having me. I'm glad that we're able to reconnect since Orlando, probably like a month ago now. I’m super excited to be here. It's interesting. The topics are largely in line with what we're up to. I doubt that's much of a coincidence, but what Breezeway aims to do is allow property managers, like the ones you're talking about, the ones who aren't afraid to adopt technology, go out on a limb, and do something first, to meet those elevated brand standards at scale.

The way we're doing that is through leveraging automation, through leveraging mobile functionality for folks in the field who are helping maintain and care for your properties. Without getting too much into it, I'd say that we're really in line with that brand standard piece you mentioned.

Jason: Cool. I want to touch on this before we could move on, but what problems does Breezeway really solve? Property management business owners are struggling with what? They would be really interested in having a conversation with you.

Tucker: I think there's a number of different ways to answer that with regards to the folks who I think are probably tuned in now. It's going to be more aligned along the lines of when someone moves out or when someone checks out of one of your properties, be it long-term or short-term, you don't necessarily know the condition that the property was in when they got there.

With Breezeway, we have a system of record for every single detail down to the serial number of your appliance when someone checked in and every item into a certain room or a certain part of the house that often goes unnoticed or you have an owner coming in to check-in, I think it’s just managing the chaos would probably be the best way to describe what we're helping folks with.

Jason: Now, my initial gut reaction hearing this is that sounds like a lot of work, of data entry and getting all these things, just to go around to each unit and feed all this stuff in. How do you deal with that objection that people are probably, I'm sure it's come up. That sounds like a lot of time.

Tucker: Totally. With any of this type of stuff, you get what you put into it. If you're willing to go through the due diligence upfront, make sure that everything is set up right, and you have all your property information in the system, then it pays dividends down the line where you don't have to go digging through a Google Drive with hundreds of different files about your serial number on the microwave, that property number 150. That stuff is all there anyway. The only difference is that it's just buried somewhere, whether it's an email thread, a text chain with a cleaner, an inspector at your property, or a maintenance guy. You have most of this information anyway. What we're doing is we're centralizing everything in there under one hood.

Jason: Got it. Now I'm going to read a little bit of that bio that we received when getting ready for the show because I think it makes you guys sound pretty credible and I want you guys to look really good. Breezeway brings operations and service optimization software to the property management space, combining deep-learning technology, robust property data, smart messaging, and mobile-first task management.

We make it easy for managers to deliver the best experience of guests, tenants, and owners. We are serving a global customer base across a broad set of verticals, including short-term vacation managers, residential property managers, cleaning and maintenance providers, hospitality operators. This was created by the founder of FlipKey which was acquired by TripAdvisor. The Breezeway team is using 75-plus years of industry experience to build the future of property care.

What you're working on is you are directly with the sales team. You're building the sales team inside that. This says, “Having skilled companies from series A to unicorn status in the past.” What does that mean? Explain that to me.

Tucker: That's, of course, like privately-held software company jargon right there, but basically, what that means is a company that's pre-Series A, like us here at Breezeway, means we've raised a very small round of money. In the future, we may raise a Series A, which is more of an initial investment, proper venture capital raise, and then all the way up to unicorn status, which is commonly referred to in Silicon Valley as a billion-dollar valuation for the company.

Jason: Okay. Let's get into the top of your hand. Brand standards and rising expectations in the market. This sounds like you guys are primed for growth. It sounds like you guys have a really cool technology in place that's going to do some stuff for property managers to help them systemize their business.

I think you could answer my question better in saying that it's going to help them save time in the long run, right? It’s the bottom of the line. There's some time that it takes to get this stuff set up initially, but it's going to save you the hassle of all this time in the long run. Overall, it's not costing you time.

Tucker: Yeah, you got it.

Jason: There you go.

Tucker: Most folks are already doing a lot of this stuff anyway.

Jason: They're just doing it poorly.

Tucker: Again, you said it, not me.

Jason: Most things in most businesses. I get to see on the inside of hundreds of companies and everything's shiny on the outside. It could be shinier. We can help you with that, by the way, property managers. It could be shinier on the outside, but the challenges on the inside, that's like the whited sepulcher they talked about in the Bible like, “How's everything going?” “Oh, it's great,” but they're drowning. That's businesses on Instagram. Everything looks pretty and is great but really business is tough, being an entrepreneur is tough, and the inside of companies can be tough.

A smart entrepreneur I’d spoken with today on a sales call said, “What's your internal organization like? How do you run your own business?” I just started telling him because us, entrepreneurs, we know what it's like to run a company. It feels like herding cats sometimes, it feels like chaos, wrapping some constraints around that and moving the business forward towards scaling towards growth takes work. You help manage some of the herding of the cats information-wise.

Tucker: There you go. Absolutely. To that point, it's such an interesting timing. I actually just started listening to this other podcast called Under The Waterline. Have you heard of that one?

Jason: No, but Under The Waterline? Like drowning?

Tucker: It's pretty straightforward, but all about what you're saying. Everybody tells the story. When a company goes well, all you hear is the above the waterline, which is clean, beautiful, and nothing ever went wrong. I'm drawing a blank on the host. I only listened to a couple of episodes far, worth checking out.

He digs and he interviews with entrepreneurs, and talks about “Tell me the honest take. What happened here? How did you do this? Was it good? Was it bad? Was it ugly?” really digging in on that under the waterline grit that it takes to successfully build a company like you're talking about.

Jason: Yeah. I've made all kinds of mistakes. I jokingly tell people that DoorGrow has been built on thousands of failures, I mean really. I did a conference back in November and some of the listeners were probably at this conference. We had 150 attendees. This was our inaugural event. It was phenomenal. We had amazing food. We had great speakers.

Here's the dirty secret about doing that conference. People were like, “Why aren't you doing it again this year?” I thought it'd be this great thing, our business is healthy, we're doing about $1 million in revenue, we've had 300% growth, then like, “Let's do a conference this year.”

Tucker: Why not?

Jason: The thing about starting a conference, property managers can compare this to—if they're in residential going into commercial, or deciding to start in a new market, deciding to do associations, or whatever it might be—some expansion and they think this will be easy. There’ll be just this other thing. This other thing was like starting a whole new company because what does a conference need? Everything a business needs: sales, marketing, branding positioning, lots and lots of organization, everything that a business needs. It was like starting another company.

Guess how much growth we had the year that we were doing a conference? No growth. We had no growth for a year. We were healthy-ish but we weren't growing ironically. Our company is called DoorGrow, but it was because we were distracted because everything had to go towards this conference. Once you decide to do a conference, you're all in. You're on the hook with the hotel, you've got vendors, people sold tickets, there's no going back.

There are lots of companies that have gone bankrupt just for doing a conference. I was like, “How was that possible? No.” We're [...] than that. Not me, no. That's every business owner starting company. “I'll be better than all those other property management businesses. They all suck but that won't be me.” I hear that all the time. “I'm starting a property management business because all the other companies in my market suck.” I hear that every week and they won't be that one.

Tucker: What you're talking about, too, Jason is just like spending your time efficiently and effectively. If you are a small shop, you can't really afford to necessarily make mistakes like that with where you're allocating your time. In your case, it was a conference that did it. You did it, you pulled it off but someone who, like you're saying—

Jason: Yeah, everybody loved it, everyone's like, “It was so great,” and I didn't love it. It was super stressful because I'm somewhat introverted. I'm an ambivert but that situation was incredibly uncomfortable for me because it was just so much pressure. But it went off well, everybody had great feedback but it cost me $2 million in opportunity cost easily.

Tucker: No ROI there.

Jason: I could do a conference that cost tons of money, broke even sort of thing. The conference probably cost $120,000 just to throw because we did everything great but the opportunity cost, the fact that my team were all focused on it, and everything else instead of on the main thing. I think as entrepreneurs, we need to remember in our business, the main thing is the main thing. If your business needs sales and revenue, then that's what you need to focus on, otherwise, you end up with a sales slump and then you're scrambling.

The main thing has to stay the main thing in the business. That was a huge lesson that I got from that. I got to make sure the main thing always stays the main thing. Entrepreneurs, we’re always tempted by opportunity and there's always a distraction, there are always new options, opportunity, and distraction, whether it's expanding into a new market as a property manager or something. Keeping focused is power.

Tell me what are brand standards? Rising expectations? Let's get into this.

Tucker: I have a hot take on brand standards. I think it's a pretty lukewarm take, I think it's pretty straightforward, but it’s really like, “This is what your expectation is.” There's this sociological theory, which is that there are three versions of you. There's you as you see yourself, there's you as other people see you, and there's a version of you that you think other people see as you. It's your projection of what people's perception is. It's one thing from a personal standpoint, but from a business standpoint, you actually can control that in a lot of ways.

That's what we're talking about with brand standards. You have expectations as an entrepreneur, as the CEO of your own company, you expect things to be done a certain way. How do you make sure that the people who you're trusting to impact your business, whether it's someone taking photos of your property for a posting, for listing, cleaning your property, or inspecting your property before someone checks in or moves in? Those people are extensions of your brand. You're effectively trusting them to meet those standards. A lot of times, you don't necessarily have insight into that but maybe that was a hot take.

Jason: Yeah. I'll add to that. Branding is one of the main things that we have property management businesses with. I consider myself a branding expert. This is something that I dealt with in helping clean up the branding for hundreds of property management companies. We've helped some vendors even recently.

We helped clean up Virtually Incredible’s branding. We helped clean up their new logo. It was designed by my team. I had some great conversation with Todd Breen on helping him focus on the main gateway that was feeding his business and recognize that other things were back-end products that came later in the sales cycle, instead of putting out the message that he did everything, which one feeds the business. I think property managers need to recognize that, too.

Property management is often the front-end gateway product even if they also do real estate. It works more effectively usually that way. I think they need to focus on that, but a lot of property management businesses in the branding are real estate companies, which scares off the people that want a specialist. They want a specialist that manage their biggest investment ever. I've helped double some property management businesses’ real estate revenue commissions by eliminating real estate from their branding, ironically, because once the property management side is healthy, it's what's feeding them the majority of the revenue that’s coming into that.

It goes back again to focus. We can tie this back in, but it goes back again to focus that in order to deal with people's expectations and in order to manage the perception of your business, I think the key is that you need to align it towards what starts the process, not towards everything that you do.

I'm dating now. Imagine that you're in the process of dating, you're going out, and you just vomit everything about yourself and what you do. You can't do that. You got to start with where's their interest level at. Start in that space first. “Oh, you're into music? Me too.” You have to start somewhere. There has to be a beginning.

The same thing with our businesses, there has to be a beginning because you [...] what you're doing. You're trying to create a relationship and you can parallel this to dating, but you're not going to show up and try to make out with them on the front porch as soon as you meet them. That's what people try to do in sales a lot of times. They just vomit everything right on their lap, they're in a state of overwhelm, and they're like, “Okay, that's a bit much, buddy.”

I think also with branding, transparency is so huge. You said something that I felt anxious just hearing you talk about the expectations with yourself, with others, and then what you think others are perceiving. That can be such a big head game that people get caught up in. They’re like, “Oh, my gosh, how are people perceiving me? Am I okay? Do they like me? Am I being right for them? Am I doing this?”

Ultimately, as we get older, we learn to just not give an F. You don't care as much because you become more confident, you love yourself, you like yourself. When your business is confident, when you're confident in your business, and you're confident your business can deliver, you come from a greater space in which you can be the prize that the client is trying to get instead of thinking that they're the prize.

This is called prizing in sales. I think it happens when you’re transparent because transparency creates safety, it creates trust, you don't have to try and be something. The problem is, a lot of times, the brand is not in alignment with what's on the back end, what's on the inside. It's not in alignment with the business owner.

Tucker: That brings up two great points. One is you say in your personal life, you grow up and you're just like, “Yeah, I don't really care. This is who I am, take it or leave it.” What we're talking about here, unfortunately, is a place where we don't have that luxury. We're talking about the rising expectations that are taking place across every element of property management and then the brand standards.

Jason: Due to increases in technology. People have iPhones. If they have iPhones, they expect more.

Tucker: It's one thing to say, “Yeah, this is who I am, take it or leave it,” but if it's your business, you say that, and you provide a bad experience, that's where I think branding really comes down to is the experience that your client ends up having when they engage with you, be it at the very beginning of your relationship or throughout the lion's share of it all the way to the end.

Jason: Yeah. Let's go back to the dating analogy. If I'm overweight, I'm not getting my hair cut, I'm not brushing my teeth, and I just grow my beard down to my ankles, and I just say, “Screw everybody else, this is how I am. Take it or leave it.” That's cool, I will only attract people that are interested in that. That might not be what I'm interested in.

Here's the thing. I love this question, “Am I the person—that the person I want to match with, or attract into my life, or into my business—they would be interested in? Am I at that level? If not, I even need to lower my expectations or I need to make some changes.”

Tucker: Right, either come down to their level or you level up. That's it.

Jason: Right. Either way, I need to get in touch with reality. I need to make some changes. A great question that I've had several coaches I've seen throw out or coaches I've worked with ask is, “Who do I have to become in order to be that person? Who do I have to become? What would it take? Who do you, as a property management business owner, have to become in order to have the type of business that you want?” Here's the thing. One of my coaches said, “If you don't have the business yet that you dream of, you're not yet the person that can run it yet.

Tucker: That's meta.

Jason: That's meta. Right, that's really simple. If you don't have the business that you dream of, you feel like it's not right, and you're frustrated with your team, you're not the person yet that can create that. But as entrepreneurs, it's so easy for us to externalize all of that. I get many people come to me and they want to focus on their website, they want to focus on lead gen, they want to blame their team. Everything is external.

The ironic thing that I found is if I can get them to focus on themselves, get clarity on who they are, what really makes them feel alive and in momentum as entrepreneur, they get really clear on their purpose, then we align the brand, the business, everything around that, everything changes. The website's going to end up changing, their messaging is going to end up changing, their sales process changes. They fire some of their team members. Their team members change.

Everything changes in a business once the business owner, the entrepreneur at the helm who is the sun at the center of the solar system changes. Everything has to change by default. But what's incredibly costly, time crazy, and painful is the folks trying to change everything externally without changing yourself which is really creating all that.

Tucker: Do you know Jocko Willink, the ex-Navy SEAL?

Jason: Yeah, he's written some good books.

Tucker: He's got the book Extreme Ownership. That’s his whole thing, it’s extreme ownership. If something's not working out, it's your fault. You got to take some ownership, it’s not the team's fault. The team is following your lead. You're the leader.

Jason: I'll share an example. I was talking with somebody and they were complaining about all these different people that had come into their life. They were complaining about this guy, that guy, and this. I said, “Hey, there's one common denominator among all of this. There's one commonality.” Because they were like, “I don't know [...]. All these people are so different.” I said, “There's one thing in common. You. That’s the one thing in common.”

The most dangerous thing in the world—property managers know this if they've been in the business a while—one of the biggest red flags for property manager is if somebody comes to them and says with an existing manager or they just fired their last manager and they're complaining about their previous managers. “Oh, this company was terrible.”

The dumb property manager would listen to all of that and they would say, “Oh, yeah, they're terrible. We'll be way better.” The correct property manager would say, “Okay, maybe it's this person so I better ask some really good questions before I take them on because I might be the next company that's on their [...] list that's getting attacked on online reviews and negative. I don't want to be that.”

That's a red flag. Another red flag is if somebody's referring a client to you. We can't really help them. I teach my clients to do that, to refer the clients they don't like to somebody else. I'm sharing this transparently, everybody. If somebody's referring a client to you, it could mean that they're a terrible client. Sometimes, though, it may just mean that they’re not a fit. One man's junk is another man's treasure when it comes to property management. Some people can deal with that difficult investor and others can't. Some difficult investors can exchange the good ones just by setting a real strong fence and a boundary that some managers aren't capable of doing. That's all they wanted in the beginning, they just wanted safety. That's another advantage you can create.

Tucker: The takeaway there, do your homework always. Larry David had a good episode on that. Don't get foisted.

Jason: Foisted? I don’t know that term.

Tucker: I'll send you a link. Curb Your Enthusiasm episode.

Jason: All right. I’ll avoid getting foisted after I launch this episode.

Tucker: Tough referral.

Jason: Perfect. Expectations do tend to rise but sometimes, expectations are artificially wrong. I saw a post from one of my buddies who's in the restaurant industry today. This girl wrote this note on a receipt saying, “I'm not giving you a tip because I'm only a few days away from my 21st birthday and you wouldn't allow me to have alcohol.” No tip for their whole party, from the whole party of food.

This just shows the entitlement that exists in some people. That's ridiculous. Sometimes some people's expectations are unrealistic. I don't think it's too much for somebody to provide good service but to break the law for somebody so that they can have alcohol because, “Hey, my birthday is only a few days away,” come on.

Tucker: That's an unrealistic expectation at its finest.

Jason: As long as it's in the past. Yes. Some expectations are not manageable and it's not possible for us to raise to that level of their expectation because it's without foundation, it's a pie in the sky, it's a pipe dream, it's not realistic. Now I think the challenge with property managers is there's some things that they think, “This is a status quo, this is how we’ve done it. This is how it is. It's just hard this way.”

They think everything else is pie in the sky or fluffy and not possible. They exclude themselves from making those changes. It’s like the guy that's like, “Oh, all girls are just difficult. I'm just going to sit on my couch and eat Cheetos all day. They only want a rich guy or they only want whatever. They just choose out.” In business is the same thing, we can just choose out.

Tucker: An all-encompassing saying for every situation you can think of is if nothing changes, then nothing changes.

Jason: Right. I've also heard it said if you want dramatically different results or if you want dramatic change, it requires dramatic change.

Tucker: There you go, case in point. Then, of course, another bit of jargon of rising tide lifts all ships. That’s it.

Jason: I think I touched on that one on this show before of rising tide can raise all ships if the tide is already high enough, but I think the challenge in property management is that the tide is all the way down in some areas. It's low. There are some property management businesses with holes in them like you wouldn't believe and they're sitting on gravel or sand. They're there.

A rising tide is going to sink some ships in this industry, no question, and they need to sink because it's going to help the entire industry. There are property owners businesses that should not be in business or they’re going to have them patch up some holes and make things work better.

Tucker: I think to that point, Jason, it's really the ones who are going to sit back and say, “This is the way we've always done it or this is status quo,” because frankly, at the end of the day, the customer has all the power. They're the ones that can make or break your business with one bad review at the end of the day. [...] natural selection, I think. You’re right.

Jason: Let's apply this to Breezeway. Breezeway, what are some of the challenges that you deal with in selling your services to property managers? Some of the things that you'll typically hear from them.

Tucker: That's a really straightforward one, is that status quo like, “This is where we've always done it.” It's not that big of a headache for us now. We don't think we would use it that much, or what we talked about before, it might be too much work upfront. It's okay. Some people aren't ready for change but we stand by the fact that ultimately, everyone will move towards an operations tool like Breezeway, if not Breezeway.

In most cases, when people say no, they come back. We believe that's going to continue to happen as this tide continues to rise and the expectations continue to rise. If you don't have high brand standards, you don't get to be a brand any more because (like you said) the ship sinks. If you can't meet the customers expectations, you're probably not going to have any customers for much longer, so the status quo.

Like we said, this isn't stuff that people aren't doing already in a lot of cases. They're just running around and managing chaos in order to effectively do it. What Breezeway allows them to do is both automate as well as ensure that it's actually happening in a way that they hope it will, meeting those brand standards.

Jason: You've got customers, right?

Tucker: Yeah, we have some.

Jason: Okay, good, me too. Can you share an example, a case study, or maybe even some typical situation that you've seen where they've gone from not doing it, struggling, not using Breezeway, to implementing your services, and what results they've been able to achieve?

Tucker: Without naming any specific clients, another big piece of pushback that we receive is, “I don't know if my service providers will actually use this,” which is fair, generally considering the fact that service providers aren't tech-savvy, what have you. But one of our clients down south were able to effectively roll this out to their service network. Each one of those service providers now uses our app to download all of their checklists offline.

Before, there was no good way for them to do that until they can download the apps all offline. They had pulled them and said, “Hey, would you want to go back to the old way?” which was email, paper and pen, checklist, they’re coming into the office, “Hey, here's your assignment for the day,” or emailing them out to some of the further ones, then they had to submit them all back manually with all the photos attached, and they're like, “Absolutely not. Of course, why would I ever want to go back to the old way?”

A bit of an anecdotal story there about some of those challenges that we're seeing at the onset of conversations all being overcome and Breezeway being in a spot where they know no other way now.

Jason: There are a lot of tools that a lot of property managers probably shouldn't even touch until they’re maybe about 50 to 100 units, they can't even entertain the idea. They don't have cash flow, they're not ready to use a service, they're a solopreneur maybe, at what stage do you feel like Breezeway can be implemented in a business? Where do they need to be, roughly, in terms of door count, size, who do you guys generally work with?

Tucker: Good question. It is on a case-by-case basis to some extent because some entrepreneurs, like you're saying, have higher bandwidth for stress and they can deal with some of those chaotic nuances that go into managing a higher door count as opposed to someone like me who I like to ensure as much automation as possible so I don't let things slip through the cracks in the first place.

The sooner I can automate, the better. Then as I scale, I have that process in place. Typical door count, from a short-term perspective, we’ll work with folks in the 50 to 100 range but all the way down to 5 doors too. Again, [...] pay. They like to just automate as much as possible. In the longer-term world, we're talking about the same, range only on the higher scale. So, 50 all the way up to 500 and 1000 doors.

Jason: Okay. They can get started with you guys at any point. You guys don't have like 100-door minimum, 200-door minimum, or anything like this?

Tucker: No.

Jason: Okay.

Tucker: We're not turning people away just yet, Jason.

Jason: Okay. I do but I'm picky. I'm just kidding. Tucker, this is really cool, the future sounds like technology. Does Breezeway integrate with any platforms? There are so many different tools in property management, I think a lot of people listening to my show nowadays are like, “Oh, gosh, Jason just shared another stupid tool that I'm going to have to figure out how to plug into my business that I really want,” and they've got this to-do list of tools they want to add and implement. How difficult is it to get started with Breezeway and is there any concern about connection, integration, or any of this thing that is really significant?

Tucker: I understand why people get concerned with this type of thing. Of course, whenever you're introducing new technology, there's always a concern, especially because folks (like you said) have been burned in the past like, “Oh, another one of these things I have to do.” But at Breezeway, we really aim to be a connected system. From a long-term standpoint, we're working with the folks of the likes of Rent Manager and other folks like them.

Then short-term, all the 20-plus of the biggest PMS systems out there. But our goal by the end of this year and the coming year 2020, we're going to just be one of the most connected systems out there, whether it's your remote locks of the world all the way to your streamlines and your rent managers of the world as well.

Jason: Got it. People listening might get confused and think, “Is Breezeway a complementary tool to maintenance coordination tools or is it a replacement for these type of tools, where we have, maybe EZ Repair Hotline, Property Meld, and Latchel, these services?”

Tucker: Wow, that's a loaded question, Jason. I knew you’re going to come at me with that.

Jason: It’s an obvious question.

Tucker: It is an obvious question.

Jason: I’m just asking what I know my clients are going to be like, “What is this? How does it fit in the overall mix?”

Tucker: It's true. Listen, like I was saying before, we want to play nicely with anybody who's out there so we're not going to go ahead and say that we’re a direct competitor for these folks. The other thing is we do a handful of the same stuff. You'll be hard-pressed to be using one of them for maintenance, using Breezeway for cleaning and inspections, and not using us for maintenance.

There's a three-legged stool with regards to where Breezeway plays in the operations world and our aim is to supplement the PMS regardless of which one it is, we want to integrate with them. Then if they're using something else for maintenance, that's fine too.

Jason: Explain the three legs, what are they just for people that are a little bit lost.

Tucker: Yeah, sorry. I'm a big analogy guy.

Jason: Take the analogy into reality.

Tucker: Here’s the reality, you have your cleaning, inspection, and your maintenance. Those are the three legs we believe of property care and operations.

Jason: Got it. What other frequently asked questions do people have when they're approaching you for interest in Breezeway or just any other questions that we haven't covered?

Tucker: I don't know, it runs the gamut. We're creating a new category to speak of, property operation which is really something that people haven't heard of. We're excited about it. The main question is probably what is property operations. It's just what I'm talking about. It's really thinking about not just managing a property but actually caring for it and taking into consideration preventative maintenance and safety measures. All that stuff rolled into one in a way that you can do it as hands-off as possible.

Jason: Perfect. Okay. Tucker, I think we’ve talked about brand standards, we’ve talked about rising expectations in the industry, we've talked about Breezeway. How can people get in touch with Breezeway? How can they find out more if they want to get in touch and they're interested?

Tucker: We are at www.breezeway.io. If you would like to check out our integrations page, it's very simple /integrations. If you would like to meet with me, you can send me an email, tucker@breezeway.io, @CorpoTuck on Twitter, on Linkedin, Tucker F. C. I know a lot of folks are on Facebook, I'm thinking about getting on there, but that's about it. Happy to fill any questions now, it looks like we're getting some coming in on the chat.

Jason: We can touch on that. Is this available for homeowners or just landlords and property managers?

Tucker: Yeah. Listen, right now, it is primarily for landlords and property managers, but we do see a world where a longer term this will be used by homeowners and the connected home Internet of Things world of the future that we see everything sliding towards.

Jason: Someday, Breezeway may know whether my Roomba has done its job or not.

Tucker: Exactly. Your Roomba would be automatically scheduled by Breezeway.

Jason: All right. Tucker, it’s been great having you on. Everybody check out, it’s breezeway.io. I appreciate you coming on the DoorGrow Show.

Tucker: Yeah. Thanks so much, Jason. This is great. Glad we made it happen.

Jason: All right, I'll let you go. All right, there you have it, check out breezeway.io. I'm always curious to hear your feedback on this so make sure you guys are inside the DoorGrow Club Facebook group. This is our community for all those DoorGrow Hackers out there, property management, business owners, entrepreneurs. You can get to that by going to doorgrowclub.com and that will take you to the Facebook group. Answer all the questions and we'll let you in if you're a property management entrepreneur. Get inside that group.

As always, I'd love to hear feedback on what you think about different tools, different things that you're using, and ask questions to other people inside the Facebook group. We’ll give you some free gifts when you join that group, including a bible of fees that you can tack on your property management business. We have a list of really cool tools and vendors in there. You will get an email drip if you provided your email when you join the group. We will be giving you gifts to help you grow your property management business.

Eventually, you'll be able to learn a little bit more about what we do at DoorGrow. Make sure you get inside that group if you're not in our community. There are amazing people in there, they're helpful, and they align with my vision of creating collaboration over competition. That's what this industry needs right now. Until next time everybody, to our mutual growth. Bye everyone.

Download this Episode

Feb 4, 2020

Do you need a place to rent? But you can’t complete or submit your application because you don’t have the required information and documentation for the property manager? This is a common and frustrating problem.

Today, I am talking to Stephen Arifin of The Closing Docs, which offers automated income verification in the property management industry. The Closing Docs is a modern way to help applicants prove their net income, which is the best indicator of their ability to pay rent. The Closing Docs provides property managers with income information needed to make a decision that can be defended.

You’ll Learn...

[01:48] Early Entrepreneurship Experience: Stephen started solving problems using technology to make money from the time he was in kindergarten through college.

[02:50] First Job Out of School: Full-stack Web developer at Microsoft, where a small team taught Stephen the fundamentals of how to build a Web application from scratch.

[03:08] Missing Entrepreneurial Spirit: Stephen leaves Microsoft to pursue broken industries in need of technological innovation to save time and money.

[03:31] Mortgage Lenders: The Closing Docs was founded to fill in the gaps of loan application processes by automating income verification.

[05:21] How it Works: The Closing Docs receives permission from applicant to prove their net income, the money that goes into their account to pay their rent.

[07:00] The Closing Docs has developed integrations with property management software, including Buildium, AppFolio, On-Site, and Yardi.

[12:18] Why switch to The Closing Docs and not follow the status quo? Information collected directly from banks is better and trustworthy for an approval recommendation.

[13:38] Operational Cost Savings: People and software are expensive, so what can property managers/applicants expect to pay for The Closing Docs? $10 per screening.

Tweetables

Broken Industries: Paper-and-pencil processes are ripe for technological innovation.

Net income is the best indicator of applicant’s ability to pay rent.

The Closing Docs doesn’t ask or expect clients to change their software.

The Closing Docs’s standardized information helps people close more deals faster.

Resources

The Closing Docs

Automated Income Verification Process: How It Works

Stephen Arifin's Email

The Fair Credit Reporting Act (FCRA)

DGS 115: How to Be Successful In the Short Term Rental Market with Rob Stephens 0

Transcript

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 expand the industry, transform it, eliminate the BS, build awareness, change the perception of it, expand the market, and help the best property managers win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show.

I am hanging out with a special guest today. My guest is Stephen Arifin. He is with a company called The Closing Docs. Stephen, how are you today?

Stephen: Good, Jason. How are you?

Jason: I'm doing fantastic. Thanks for being here on the show. Stephen, before we get started, give us a little bit of background on you. Tell us a little bit about you, your entrepreneurial journey, your adventures here, and what led you to The Closing Docs.

Stephen: Sure. First thing, I'm a tech guy. I've always been around technology and computers growing up. My dad was a programmer and started his own banking software company. I was always around entrepreneurship and technology.

Even at a young age, I would always try to solve problems with technology. For example, in kindergarten, all my classmates were really upset when the school installed the website blocker that prevented them from playing their online games. I created my own website and hosted all of my classmates favorite games so that they can play at school. Of course, I took the nominal donation, and made a little cash.

I studied software engineering in college. I love building apps. I was in a fraternity and we were having some major issues collecting and organizing our finances. A buddy and I built a better invoicing system, launched the company into our fraternity, and help streamline their finances. That was probably my first real entrepreneurship experience.

My first job out of school was at Microsoft, where I worked as a full stack web developer. It was a small team and taught me a solid fundamentals of how to build a web application from scratch. I consider myself really lucky to be in a team with so many talented engineers, but at Microsoft, I really missed my entrepreneurial drive.

While I was working there, I've began investigating broker industries. I started with industries that has many paper and pencil process, and were ripe for technological innovation. An obvious contender was the mortgage industry. I started finding gaps where technology can save time and money.

After talking to a few dozen lenders, it was clear there was a breakdown in the [...] application process. Typically, their proof of income. Why were they taking screenshots of paystubs in W-2? In 2017 and even today, why are loan officers forced to review these data sources in so many different formats? It's cumbersome, it's time-consuming. It invites human error and judgment. Honestly, it's just downright painful. There had to be a better way.

Thus, The Closing Docs is born to provide automated income verification. I started in the lending industry. I really tried to help verify their applicant's income. But my lack of industry knowledge made it really difficult to sell. After speaking with folks in the real estate industry, I learned about similar problems in the property management space—a far less regulated industry and one that is even more disaggregated than the lending universe. At this time, it made sense for me to combine forces with someone familiar with the startup landscape, someone familiar with starting and operating businesses, and all their direct industry knowledge.

The Closing Docs other founder and my partner, Mark Fiebig, had started a handful of companies, successfully raised venture capital, and also happened to have deep real estate industry knowledge including owning a property management company himself. Together, along with my technical knowledge, we combined our assets and knowledge, and created what The Closing Docs is today.

Jason: Cool. Explain what is The Closing Docs today.

Stephen: We provide automated income verification. Essentially, a modern way to help applicants prove their net income. Here's how it works. With the applicants permission, we can obtain a years worth of deposit history directly from their banks, and share a report that illustrates an applicant's net income. Why are we reporting net income? It is the best indicator of an applicant's ability to pay rent going forward. The money going into the applicant bank account is the money that will be used to pay rent.

Our message to property managers is clear. We'll provide the info you need to make the decision you can defend instantly. So often, applicant provides incomplete information. Whatever info they do share, it comes from so many different formats from so many different sources. At the closing docs, we streamline the process significantly. Based on our client's usage data, we are seeing time spent from applicant screening fall by as much as 30%. That means that three hours screening timeline turns into two hours. We're saving our clients real money. If you do the math, that's one full-time employee for our property management firms seeing around 2000 property.

It's honestly fun for us to be on the phone with our customers and have them jumping for joy because they're super excited. We help them simplify and expedite their workloads. In essence, The Closing Docs is standardized information delivered right into your inbox or pushed directly into your property management software through our integration. We help people close more deals faster.

Jason: All right. That sounded very pitchy but it sounds cool. Tell me which software does your software integrate with, that some of my listeners might be familiar with? A lot of them are using AppFolio, they're using Propertyware, they're using Rent Manager, they're using Buildium, some of these tools as a back office.

Stephen: We've developed a number of integrations with Buildium, AppFolio, OnSite, Yardi. Those are many of the popular property management software systems out there. We're continuing to grow that list. We don't ask or expect our clients to change their software or stop using what they love or what they're used to.

We know that property managers pay multiple logins and switching between apps, so we made it as easy as possible for them to use our income screening. If they want, we also create an online rental application as well.

Jason: So, they're going through this process of using your application (probably) instead of maybe what's built into their software. This is helping to gather all the documentation or documents (The Closing Docs) that they might need in order to verify their net income. What happens next in this process? How easy is it for them to use the software and figure out whether somebody is a viable candidate for this particular property?

Stephen: There's two different entry points that property managers can use in our tools. One, if they are a firm with around 100 doors (usually), they can use our standalone web service. Essentially, they type in the applicant’s email and it sends the applicant an email to our site. The applicant authorizes their banks and they authorize us to pull all the information needed to aggregate metrics like net income—yearly net income, monthly net income.

We also count non-recurring deposits like bonuses, W-2 tax returns. Once that information comes in, the applicant gets the chance to review the information so that we remain FDR-compliant and they know the information that's being shared with their property manager, then they click a button. What we do is we print an income report. We deliver that directly to the property manager's email. That's the first way we do it.

The second way is for bigger property management firms around 1000 doors, we actually integrate our income verification directly into our online rental application. We have an online rental app and it has different controls. All the information that the property management firm requires, we can require it to the applicant so they don’t skip it, and the income verification is built into the rental app.

When the rental app is submitted, the property manager receives the rental application along with our income report. It's all in one combined package. That helps the back-and-forth issue that property managers so often get into, where the applicant doesn't submit all the necessary information and they have to go hound the applicant to, "Hey, can you submit this paystub? It's from two years ago." We save a lot of property managers time that way.

Jason: I imagine, even one piece of back-and-forth is costing probably, sometimes even a day. Sometimes, 10, 15, or 20 minutes minimum. If there's pieces that are over and over again that are missing, they're working a one application, this adds up. You have 5 properties that are vacant that you are working on right now, 10 properties vacant that you are working on right now. Your staff are going to be really busy. It feels like it's such an essential, critical thing that just has to be done to move these things forward to get things rented, but what you're saying is a lot of it can be automated.

Stephen: Right. When you’re trying to get more information about the applicant, that unit is in a limbo state. It's not really on the market. It's not really off the market. We're trying to prevent stuff like that.

Jason: And the renter gets frustrated. Everyone's been in a situation where you have a key providing more information. They keep asking for more information. It just starts to get frustrating. I'm sure there's instances where they just decide to move on to something that's easier.

Stephen: Right. One of the sites that want to [...] from starting this company, the property manager loves us, but their customers, their applicants, actually love us as well. They get approved faster, it's super easy, and they save a bunch of time. Really, everybody wins.

Jason: Ultimately, that's why every business exist. It's to create some win-win, maybe win. You're solving a problem. You're shortening the [...] the time. What are some of the other benefits why should property managers pay attention to this instead of just doing what they've been doing and following the status quo?

Stephen: We receive our information directly from the banks. We support about 15,000 banks which is about 99.9% of all of the banks in the United States. We get trustworthy data. We get better data. Since the information is digitized, we're also able to produce and approve a recommendation. We use 2.5 times the net income to rent ratio. If the applicant makes 2.5 times more, then the units rank and we give them a thumbs up. If they don't, we give them a thumbs down.

Property managers can make a decision really easily. Their applicants qualified. If it doesn't qualify, we'll give all the details of the transaction history and deposit history. They can drill down and see a little bit more detail where applicants [...].

Jason: All right. So, they’ll be able to have a little bit of information is to why they maybe didn't qualify, that sort of thing. I think another issue here that were a benefit to any piece of technology is that there's going to be an operational cost savings. If you have a staff member that's manually doing this, they're doing phone calls, they're texting, they're emailing saying, "Hey, we need this piece," they're trying to get stuff out of an email. They're trying to store documents in a certain way. They're asking people to send things, "Send me a picture of this," they will go into your bank, download these bank statements, and send them to us.

The challenge is, you're going to be paying somebody to spend the time to do this, somebody on your team. People are expensive. You're spending (for a decent team member) probably $15–$30 an hour. If you have hundreds of properties that you're dealing with, vacant properties, you're going to be spending hours and hours of money towards something that could easily be handled by technology.

Help those listening understand, if you will, maybe a little bit about the cost of the software. Just get them a ballpark or help them understand if this is something even feasible for them to be doing in their business.

Stephen: Our pricing is super simple, $10 per screening. There's no implementation cost. There's no sign-up cost. There's no minimum fees. It's just $10 per screening. The time that you save, especially when we have clients with a lot of doors and there's just a lot of applicants, especially during busy seasons like the summer season, applicants are just piling in by the truckload, each minute count. Each mental step that you actually even skip, it all adds up. It's really great. We have a lot of clients saying, "Man, we love your software."

Jason: This $10 application fee, they're probably passing on to the renters, I would imagine.

Stephen: We support both the property manager or the applicant. We have clients that do both workloads. It's a business that's usually up to your [...].

Jason: Okay. They can do it either way. They can build it in as a part of their application process. Most property managers are going to have some other steps besides just income verification as part of their application process that they need to take into anyway. This would be one piece of that puzzle. This would be the income verification portion. Just to make screening even more solid.

I would imagine that the financial aspect is probably one of the number one indicators as to whether they're going to be able to afford it and pay for it. They're going to be looking at things like credit. They're going to be looking at other things. Bottomline, if they don't have the funds available, it's okay. They're likelihood of making rent every month is going to be pretty slim.

What are some of the frequently asked questions that some of the people may ask when they're looking at your software? When they're looking at your solution? What are some of the most common questions that property managers would probably be curious to hear about here on the DoorGrow Show?

Stephen: Something with our income screening is that it requires the applicant's permission and the applicant's involvement. It's not like a hard inquiry on credit where you can just type in a social security number then they automatically pull credit without the applicant's involvement. We need the applicant to authorize their banks. That's how we remain FDR-compliant. Our data showed actually that we have around a 97% quiet rate which is honestly awesome. We do have some applicants in the older generation that is a little unfamiliar with technology. They get a little worried when authorizing the banks.

We're FDR-compliant, we have the same security protocols of banks, and we never see any of the sensitive credentials. But sometimes, applicants worry about that. Whenever we incorporate our income verification in an online rental app, we give the option to go the route that we've all come and known by uploading bank statements and pay stubs. We give that option. But like I said, 97% of the applicant go for the more streamlined option because it just saves so much time.

Jason: Okay. So, if they get a conspiracy theorist grandpa, that's been living in a basement, he's freaking out, wearing his tinfoil hat, he's worried about giving his password through your software tool, he can still do things the old school way if the property manager's willing to tolerate it.

Stephen: Right. If you think about it, they’re still uploading all the sensitive information. They're uploading their [...].

Jason: It's less secure. Let's be honest.

Stephen: It's a perception.

Jason: Yeah. If they're sending these stuff through email, that's even more ridiculous. Some emails open and passes through multiple servers. We understand that as nerds. That's okay. We need to help out our less technological brothers and sisters out there.

Stephen, it's exciting to hear about your tool. I hope people will check it out. How can people get in touch with you or with The Closing Docs and learn more?

Stephen: Our website, theclosingdocs.com, has got a lot of great information. It also has a contact form. You can get in contact with our team. You can also email me at stephen@theclosingdocs.com. If you sign up at theclosingdocs.com on our site, you'll get three free screenings to try out our tool.

We're pretty confident that you'll be hooked by the first screening. It'll give you a chance to try out this new workflow. In the end, it is a new workflow. As a business, you need to adjust your business processes to accommodate for new tools that you incorporate in your business.

Jason: All right, cool. Somebody was asking a question. They're asking, "How do you integrate with AppFolio since they don't have an API?"

Stephen: We use a Chrome extension, a browser extension. That allows people to create screenings directly from their browser no matter what website you're in. They're still using AppFolio, they're still using the tools that they love, but they can access our income screenings through our Chrome extension or a browser extension.

Jason: It's a clever solution to that. If anybody has any other questions, reach out to stephen@theclosingdocs.com. I appreciate you coming on the DoorGrow Show.

Stephen: Thanks, Jason. Thanks for inviting me on the show.

Jason: Yeah, you bet. Those of you that are watching, check out theclosingdocs.com. If you are watching us for the first time or maybe it's the 50th time, be sure to like and subscribe. Check us out on YouTube or leave us a comment on Facebook. I want to see people that are involved and see who's interested in the show. I love seeing that feedback. If you're on iTunes, do me a huge favor and leave us a review. I would appreciate it. We'd love some real feedback.

Be sure to test out your website. You can do that at doorgrow.com/quiz. If you're doing any cold lead marketing, advertising, go to doorgrow.com/coldleads. Go through that calculator. I want to give you a gift and show you some leaks in your business that you may not be seeing right now. I would love to help you out, so reach out to us at DoorGrow. Until next time. To our mutual growth. Bye, everybody.

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Jan 28, 2020

What do most skiers and snowboarders dream about? Owning mountain property. But most of them don’t have the necessary wealth or money to purchase a second home, especially in expensive real estate markets.

Today, I am talking to Rob Stephens of Avalara MyLodgeTax. As a Denver resident and lifelong skier, Rob was fortunate enough to buy a three-bedroom condo in Vail about 20 years ago. But even then, it took Rob, his wife, and wife's brother-in-law to make the dream a reality.

You’ll Learn...

[02:57] Short-term Rental Market Options:

Hire local property manager/real estate agent.
Post property online via VRBO, Airbnb, Expedia, etc.
Rent-by-Owner: Book guests, collect money, and provide on-site services.

[03:48] Complex Tasks: Apply technology and manage challenges for property owners, managers, and operators. Know what taxes to charge, collect, file, and pay to agencies.

[05:50] Lack of Awareness: Property owners trying to manage their short-term rentals have never dealt with these types of transactional taxes.

[06:20] It’s not rocket science, but multiple layers of government are involved. State and local tax rates and requirements are specific to rental property location and address.

[07:10] Avalara MyLodgeTax: Online hosted, Cloud service similar to TurboTax but for short-term rentals with vacation, occupancy, resort, and other taxes.

[09:27] Penalties to Avoid: Long-term, multifamily operators getting into short-term rental space need to understand rules and risks involved.

[11:40] One less thing to worry about. Partnerships with property management companies is when Avalara handles everything occupancy tax related.

[13:02] Common Questions and Concerns: Shortcuts and consolidation for creating awareness and understanding the mechanics of administrative work.

Tweetables

Increasing scrutiny and regulation on the short-term rental space, makes for more paperwork and forms to be filed.

Lack of Awareness: Property owners managing their short-term rentals have never dealt with some types of transactional taxes.

Short-term rentals involve multiple layers of government. State and local tax rates and requirements are specific to rental property address.

Resources

DGS 114: Everything You Need to Know About Federal Criminal Reports with Jason Waggoner 0

Transcript

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.

My guest today is Rob Stephens and his company is Avalara MyLodgeTax. Rob, before we get into talking about your business, I’d love to hear your background of how you're connected maybe to the real estate or property management industry. Maybe you could share with us just a little bit about your entrepreneurial journey just to qualify yourself to our listeners.

Rob: Sure, happy to. Thanks for having me. I love the intro, good stuff. My story, I live in Denver, Colorado, lifelong skier like a lot of us, lifelong skiers here in Colorado. One of our aspirations is to have a mountain property. As a relatively young professional, this is about 20 years ago, was fortunate enough to be able to purchase a three-bedroom condo in Vail, Colorado with my wife's brother-in-law. The three of us went in together.

At that point in time in my life, we wanted a second home in Vail, great skiing, be up in the mountains more, but part of that is when you make that financial investment—Vail is a very expensive real estate market—when we purchased it, we really needed income on that property to make the economics work. We certainly didn't have the wealth or money sitting around just to have a second home for our own personal use when we wanted it. We really needed to generate income.

This was in the short-term rental market. Back in the day, this is the late 90s, you really hire a local property manager or real estate agent that would get you bookings. At the time, somebody told us about a little website called Vrbo, it was pretty new back then. We tossed it on what's now Vrbo. It was frankly really amazing to see the bookings and we were immediately connected to travelers really across the globe. Through this one subscription would cost us about $120 a year, we're able to keep our property pretty booked and you're talking $30,000, $40,000 a year in rent.

Doing that, and I'm sure your audience will appreciate this, we were pretty clueless doing the rent-by-owner thing, there are all these other tasks to go along with it. You have to interact with guests, book guests, collect money, maybe have a rental agreement, you have to have on the site service, cleaning services.

My background is I’m a CPA, accounting and finance background, worked for some of the big accounting firms. But even as a CPA at the time, we just stumbled across the requirement to collect, remit sales, and occupancy taxes.

It was really through that experience, one being successfully doing this on the internet, managed my own property, and then coming across the complexity of managing these taxes even from my own little rental in Vail, we realized this is a powerful model. We think this online short-term rental, these sites have a lot of opportunities, but this tax is going to be a stumbling point.

A few years down the road, we started a company to really solve that problem for people. Our model was to apply technology and manage all these complexities for our customers, which would be registering with the different agencies, knowing what taxes to charge, and then once you know what taxes to charge and collect taxes, then automating the monthly, quarterly filing and payment of those taxes to the different agencies. Just to be clear, this is like a hotel occupancy tax, the same taxes that hotels pay to apply to short-term rentals.

That was our inspiration. We got started and we're able to form some partnerships originally with Vrbo and some of the other larger operators at the time, but the industry has certainly grown. Now you've got Airbnb, which I think really a ubiquitous household name, but the short-term rental industry, it's just everywhere now. We've been fortunate to be a little part of that on the back-end with our tax service, but about 4½ years ago, we sold our company to Avalara.

Now we're part of the Avalara family, but our whole mandate in life, Jason, is to really support, whether that's an owner, property manager, or a large operator like Expedia or Airbnb, help all these taxes, apply technology to make all these taxes simple and keep that back-office function as simple as possible.

Jason: Got it. In doing all of this, what are some of the complexities, some of the challenges that people are dealing with that have rental properties? Why is this a service that they might need?

Rob: I think there's a lot of confusion in this arena. I think in the smaller segments of the market, if you think about property owners trying to manage this themselves, they've just never dealt with these types of transactional taxes before. If you mentioned tax to a property owner, they're thinking income tax. There's just a great lack of awareness and the complexity comes in. This isn't necessarily rocket science, but wherever you're renting, like for my property in Vail, I have to deal with the state of Colorado, the Colorado Department of Revenue for sales tax and then the town of Vail has their own local room tax or lodging tax, so that's very common.

There are multiple layers of government involved, these are state and local taxes, and it's all specific to the rental property address. If you’re a manager and you have a portfolio, depending on how dispersed you are, each city, town, or county, and certainly, state, has their own tax rates and requirements. There are different forms and it can vary by city. That's the complexity. It's highly localized and each location has their own set of requirements.

Jason: Now, your service can cover any city anywhere in the US?

Rob: Yeah. We cover every location in the US. We don't do anything international yet, but that means we tell people the exact tax rate for all the properties they're managing or even if it's just one property, we register them. It's very common in this environment, you have to get a business license, short-term rental permit, or rental permits. There's increasing scrutiny and regulation on the short-term rental space so there are more paperwork and form.

We manage and do all that on behalf of our customers. Then on the back-end, these taxes need to be collected on all short-term transactions. Your software platform automates the monthly filing and paying of the taxes. I sometimes compare it to TurboTax. It’s kind of an online hosted in the cloud service where you can log in, put in your data, and the technology does the heavy lifting and calculation of filing. We're similar, just a different type of taxes with these hotel taxes.

Jason: Got it. What are some of the filings that have to occur that the typical homeowner would probably not be thinking about?

Rob: Again, the typical homeowner (like I said) thinks of these taxes in the context of income taxes. I'll go back to my Vail property as an example. Every quarter, I have to file a Colorado sales tax return with the state. I have to file—this is where it gets confusing—a Vail special marketing district return which is also paid to the state even though it's a Vail tax. Then there's a Vail sales tax that's paid directly to the town of Vail.

For my little example in Vail, I've got three different filings to two different agencies every quarter. That's pretty common. If you're in Florida, it's going to be a state sales tax filing and a county tourist tax filing. If you're in Texas, it's going to be a state hotel tax filing and then a city or county hotel tax filing based on your location. It’s multiple filings, it's always a sales tax or lodging tax, a very specific tax to providing accommodations.

Jason: If somebody's listening that has a property like this and they're like I haven't really been paying too much attention, I probably don't need to, what penalties could be coming down the line that they're just not aware of?

Rob: One of the things we're seeing is in the multifamily space. We're seeing a lot of operators that typically are in the residential long-term rental market, that are being pulled in at the short-term rental market because I think it's become so popular, it's become easy on these big platforms like Vrbo and Airbnb. The rent, the nightly or weekly rent can be very compelling, depending on your location of property relative to what you can do on a long-term lease. That's a huge trend we're seeing in the space is typical long-term or multifamily operators getting in the short-term space.

One of the issues for those folks is that now they’re doing short-term rentals, the short-term nature of their rental is what triggers the requirement to deal with all these taxes. To your point, there's a risk there. Certainly, the very larger multifamily operators are very sensitive to it. They want to have all that covered before they engage in short-term rentals. For smaller operators, I think sometimes they'll get it going and then figure out as they're doing it, seeing if a short-term model is going to work for them.

Again, there's increasing scrutiny on short-term rental operators, but the risk is that if you're audited or found not to be paying the tax, you can be assessed, not only back tax, which you would have typically just collected from your guest or renter—they're very accustomed to paying it—but then you've got penalties and interest on top of that. It's certainly something that can add up. We do see those cases and we do help people that are in that situation where they've got a back tax liability to figure that out. The penalties can be pretty significant. Tax, probably like everything in life, is better to do it proactively versus reactively.

We certainly encourage our customers and people we interact with to try to get out in front of it, make sure you understand the rules, are registered, and collecting the taxes, so you don't have that liability jump up and bite you as you're trying to manage your business.

Jason: For property managers that are listening to the show, they have investors as clients. Some of them may have short-term rentals. Do you typically work with property management companies and how might that work for those that listen?

Rob: We work with hundreds and hundreds of property managers across the US in the short-term rental space. We actually do work, like I said, in the multifamily space. We're seeing a lot of those operators and we work with companies that often have largely been in the long-term rental space, they're getting in the short-term rental space. Our largest segment is still the rent-by-owner or the Airbnb host crowd but we certainly work with a lot of managers and we're a solution for them. Everything tax, occupancy-tax related, our model is to really handle that from soup-to-nuts, A-Z, like I said, registration rates.

I think our property manager partners really value us as a way to take everything occupancy-tax related which includes licensing and registration, to hand that over to a trusted partner (which is us), and just make sure everything's done correctly, accurately, on time. It's just one less thing they have to deal with.

Jason: Perfect. What are the typical questions that a property manager or a homeowner listening to this would be curious about knowing about your service?

Rob: Good question. There are two different buckets. In the homeowner space, there's often generally just a lack of awareness of what they even need to do. It's more of a conversation about, “Oh yeah, if you are renting in Vail, here's what you need to do.” When owners understand that—and they often are very surprised about these requirements—they're often eager to outsource. Our service is $20 a month for that single user. Not to be cavalier, but we'd say it's a very affordable way, just to make sure you know the taxes are all getting paid on the right form, to the right agency, on the right date.

For the rent-by-owner crowd or host, they're just generally not aware. For the manager, generally there is awareness. The first question a manager would ask us if they're new to the space would be “Hey, do I have to file this for each of the properties I'm managing in our portfolio? How does that work?” Generally, for managers, we can aggregate their portfolio onto one set of filings. We can really do it much more efficiently.

There are some locations that require property level filings, but usually for managers, we can do things very efficiently, we can combine all their listings under one, what we call an umbrella account for the management company. Instead of filing 30, 50, or 100 returns for each property, we can file a couple for the management company that covers the 30, 50, or 100 properties they're managing in their portfolio.

Managers often have a lot of questions around the mechanics of those type of administrative mechanics about how it works, how can we do it, and do they have to do it by property, by owner, or can we do things more efficiently? The good news is in the manager segment, there are shortcuts and consolidations we can do to make things easier.

Jason: Right. Because usually, most of the properties are in similar geographic areas, you can bulk those together.

Rob: Exactly. Most of our managers are obviously concentrated in one area. Sometimes they span across two, three, four cities, or a couple of counties, so there are maybe a handful of different jurisdictions or filings that need to be managed. We do work with some of the national operators like Evolve or TurnKey Vacation Rentals, we work with the Saunders and the Lyrics. A lot of their [...] comes out of that multifamily space.

Certainly, the national operators have a much more complex set of tax requirements, so I think we can be a good partner. But you're right, most of these companies are localized within a certain area and they're dealing with a couple of tax agencies, not hundreds.

Jason: Basically, you have streamlined tax compliance for property managers. You're going to be able to group some of these filings together so that they're not having to do as many, and then you're focused on things at even the local level, state level, and just making sure that they're compliant all throughout all these different tax situations.

Anything else that those listening should know and how can they get in touch if they're interested in trying out your service?

Rob: The one thing I had passed along, we sometimes see reticence on the multifamily or long-term operators. They certainly know what's going on in the short-term rental space and they certainly know maybe there are a few homes or some of their portfolios that would really work there, but they're often intimidated by these taxes. I'm talking about even multi-billion-dollar multifamily operators that we work with, they're very concerned about managing these taxes correctly for the liability.

I think that's fair but I would encourage people if you want to get into it, experiment with it, or you think there's better revenue yield in the short-term space for some of your properties, I would encourage people to jump in. These large websites are very effective at generating your rent. Certainly, relative to the tax piece, we're applying technology to really just take that burden away from people and know that they can operate in this market, be fully taxed, and license-compliant. That's my advice.

In terms of reaching us, we're a hosted service. We're on the cloud. We like to do things through technology. The best way to reach us and get information is through our website, which is mylodgetax.com. Once you're on the website, there's information about tax, our services. If you want to send us an email or give us a call, we do have phone numbers published there. We're happy to pick up the phone and walk through people's specific situation like what are the requirements for their city, how doesn't work, what would it cost to use our service. We feel those types of inquiries and happy to talk about it all day long.

Jason: Perfect. All right. They can check out mylodgetax.com. I appreciate you coming on the show, Rob, and I wish you guys success.

Rob: All right. Thanks so much, Jason.

Jason: You bet. Bye-bye. All right, check out mylodgetax.com if you're concerned about the taxes, especially for your short-term rental properties, take a look at that.

If you are a property management entrepreneur that’s wanting to grow your business, add doors, it might be time to take a look at your website. Test your website out. Go to doorgrow.com/quiz, test your website out, and see how effective it is at making money because it's not just about having a pretty website. It's about having a website that's effective at creating conversions, capturing business, and creating trust. If your website isn't, you could be potentially losing out on one, two, three, four deals every single month, maybe more.

The typical deal for most property managers is probably worth about $6000 lifetime value. Say you can make $2000 a year per door and you can keep them on for maybe about three years on average, that's about $6000. If you're missing out on just a door a week or maybe about four doors a month, and if you're getting on about four doors a month, you're probably missing out on just about that many. That's about $24,000 in future ROI that you're missing out on every single month.

Websites are not that expensive. Making the changes are not that expensive. That's a leak that's easily shored up. Check out the DoorGrow Score Quiz and you can then easily schedule a call with our team. Nobody builds more effective property management websites than DoorGrow. Other people are trying to manipulate and focus on search engine optimization and rankings. You don't even have to have the top spot or even show up on the first page of Google in order to have a business that's crushing it with growth. We can show you how, so reach out to the DoorGrow.

That's it for today. Until next time, everybody, to our mutual growth. Bye, everyone.

Download this Episode

Jan 21, 2020

Before you accept a bunch of cash from applicants who drive up in a BMW to rent a property for a few years, check criminal background reports. Otherwise, you could end up with drug dealers with grow operations as tenants. You may be their next victim!

Today, I am talking to Jason Waggoner of ACUTRAQ, which offers accurate and reliable criminal background reports. He knows what property owners/managers deal with when it comes to tenants and how ACUTRAQ makes a difference in communities.

You’ll Learn...

[01:50] Who is Jason? Started out by fixing and customizing cars to selling vacuums.

[02:40] Buyer’s Remorse? Selling a vacuum to the right person led to ACUTRAQ job.

[05:00] Federal vs. Multi-state Databases: Criminal reports are important, but don’t capture all crimes and court activity.

[07:02] Federal vs. State Crimes: Federal reports include most heinous crimes.

[09:41] Don’t Ask, Don ‘t Tell? Avoid lawsuits and being liable for renting to criminals.

[13:45] Aliases: Know tenants by all their names via social trace for criminal history.

[15:41] Why use ACUTRAQ? What does it offer compared to others? ACUTRAQ specializes in where accurate information comes from and how it’s relayed to landlords.

Tweetables

ACUTRAQ: We love what we do. We love making a difference in the community.

Some state criminal background systems generate reports that have a lot of holes for criminals to crawl through.

If landlords don’t do background checks, it doesn't take long to destroy rental properties.

When you run a background check, know applicant’s past alias names...all of them.

Resources

ACUTRAQ

ACUTRAQ’s Email

ACUTRAQ’s Phone: 479- 439-9174

Office of Foreign Assets Control (OFAC)

FBI’s Most Wanted List

DEA’s Most Wanted List

50 State Sex Offender Search

Social Trace

National Crime Information Center (NCIC)

Multi-State Criminal Database

iCORI System

National Association of Residential Property Managers (NARPM)

DGS 113: Land Investing for Passive Income with Mark Podolsky 0

Transcript

Jason H: 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're 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.

My guest today is Jason Waggoner of ACUTRAQ. Jason, welcome.

Jason W: Good afternoon, Jason.

Jason H: I'm a little biased but I like your first name.

Jason W: It's a good one. We had some creativity going on in the 80s.

Jason H: Yeah. There's a lot of Jason, a lot of them. Let's get into this. First, I want to get in your background a little bit. How you got connected to the industry, how you got connected into doing ACUTRAQ. Give us a little bit of background for those listening on who is Jason.

Jason W: Very fun story there. I started when I was 18, I actually went to school for autobody to learn how to work on cars, fix wreck cars, customize cars, [...] did that, got out of that, winning the sales. Years later, I was actually in between jobs at the moment and besides, this was in 2006. For 20–25 days, I sell vacuums while I was putting in resumes and different things. Thought nothing of it, got another job in inside sales.

A month later, I went back to doing that. Two years later, Jeannie Baker, the owner of ACUTRAQ, calls me and ask me if I'm still doing sales and said that I had sold her a vacuum cleaner two years prior to this and wanted to go to lunch. We went to lunch, she had a great product, and believed in it. My father-in-law inherited a rental property. The things that he went through over the course of that first year, he ended up selling it and getting away from it. This was when I was young, 17–18-ish.

After seeing him go through that and seeing what products she had that could have prevented it, it just made a home seem like a lot more. That was in 2008. I've been with her ever since and since then, the company has grown. We used to just be in a few states, now we're all in the lower 48 states with offices throughout the country and a staff of about 12 in Arkansas. Just good, consistent growth over the years. We love what we do, we love making a difference in the community. That's how I get hooked up in ACUTRAQ. It's not the normal story you hear from people.

Jason H: You sold her a vacuum?

Jason W: Yeah.

Jason H: You sold her a vacuum and she was so impressed at how you sold her the vacuum. She didn't have buyer's remorse. She wanted to have more of you, she wanted you to work for her. This is great.

Jason W: She got up that morning and looked over the corner and thought, "I know who my salesman is."

Jason H: That vacuum was an anchor. Every time she saw that vacuum, she's like, "That guy sold me. I need somebody like that." It's interesting because as entrepreneurs, we're always looking for the person that's going to help us with the thing that we're weak at.

Jason W: Right.

Jason H: You filled a gap for her.

Jason W: Definitely, yeah. She had done it for 10 years by herself at that point and had grown where she physically can't do it by herself anymore. A lot of planning, a lot of sleepless nights, we've been somewhat successful in growing this business and creating something that she started back in 1998 and just continuing to watch it grow.

Jason H: The topic at hand, the title of this episode is Everything You Need to Know About Federal Criminal Reports. Let's talk about what we need to know.

Jason W: The federal criminal reports are important and a lot of people don't understand the difference between what most landlords run, meaning a multistate database and they sound similar. Multistate, federal, you think all the federal just covers all those different states. The reality of it is, the multistate database is what most landlords run. It has a lot of holes in it, it has States that don't even report to that database.

For instance, New York, they report to the Department of Corrections but not their County data. Massachusetts has its own system called the iCORI system. There are holes in it but those are derived from state repositories from the Department of Corrections from different places like that. Let's say I get in trouble. I'm in Houston, Texas. If I get in trouble here, I go to Harris County, they book me in and if I get convicted, if I do prison time, I'm going to do it in a Texas state prison.

The difference with the federal criminal report is it's a different set of courts. Let's say I do that same crime. Let's just use drugs, for instance. Let's say, I do drugs and I traffic those drugs, now, I go to Louisiana, to Alabama, to Mississippi. I went across state lines. That's a federal charge now. I've messed up not only in my state but federally and that would be trialed in a different set of courts.

Most landlords and even some employers do not get those federal court records because it's a smaller percentage. It's 8%–10% which is still a big chunk but the type of our crimes that are tried there are embezzlement, kidnapping, bank robbery, crimes against animals, child pornography, a lot of crimes. If a landlord knew that person had been convicted recently or maybe even in the past, it may change their decision on whether or not they would rent to that person. Most people don't know those records exist.

The reality is, most landlords have probably placed somebody that had previously robbed a bank or an ATM, or somebody that had previously been convicted of kidnapping or embezzlement, things of that nature. A lot of computer crimes regarding identity, identity theft, things of that nature. The thing about the federal crimes that there may not be as many but they're all the crazy ones. They're all the ones that if that person had committed that type of crime, it would definitely change the decision.

Jason H: They're the worst.

Jason W: Right. That's the difference in those federal criminal reports. We offer them as an upsell to our clients for an extra $5. Whoever people are using, it would be wise to go back to their provider and say, "Hey, am I getting this federal criminal report? Can you show me that we're pulling that report?” because there are a lot of heinous crimes that can be committed under the federal level.

Jason H: I just want to point this out because I thought this was really funny, that you're using an example of somebody committing crimes and you used yourself. You did this. You're like, "Let's say, I do this and I commit this crime." Most people do, "Let's say there's a guy named Fred."

Jason W: Allegedly.

Jason H: Allegedly. Here's what's funny. When I met you at the conference, you were this half criminal, half business suit costume like this thing. Sometimes, you even said you shaved half of your beard and you're like Dr. Jekyll and Mr. Hyde, or two-faced.

Jason W: Yes. At the Florida conference, the NARPM conference, the beard was just coming in. I couldn't quite get the half shaven down and make it look presentable. That piece, it really shed some light on what people come in looking like because we actually had applicants that showed up in BMW, with a briefcase full of money, and wanted to pay for the next two years in cash. Then, you look them up and they are known drug trafficker, they've been involved in grow operations and everything else, and you were going to be their next victim.

Without running that report, you never see the criminal side of what they're bringing into that rental property because somebody's not going to buy a house and then trash it, do that stuff, dig down to the electric pole, and tunnel in all the things that it takes. They're going to do that to a rental property and then hit the road as soon as they have everything they need.

Jason H: Do you think some property managers would just rather keep their heads in the sand, kind of don't know, don't ask, don't tell? You think there's some that are like, "I'd rather just not do this extra work. I'd rather just not know. If that happens, I did something and they just didn't show up on that so I'm absolved." What would you say to those that they're thinking about listening to this, "I don't want to do extra work."

Jason W: The thing about it is, let's say somebody moves in to that property and does something crazy, commits a crime. We've seen this before, it's the same way with our property managers. There's a lot of their stories that sound like sales pitches but they're really not. They're crazy stories that happened and they want to do whatever they can to help somebody avoid those again.

Let's say somebody does something heinous in a property. The first thing that the courts are going to do is go back to the person that leased that property and say, "Who put this person in there? What checks did you take to ensure the safety of the community around you?" Typically, they think that the homeowner has the deepest pockets. When something goes crazy, who's the first person they sue? The homeowner.

It may trickle down the line if there's a property management company involved, but the ones that are just out here doing it think maybe something is going on but like you said, they don't care enough to go to the motions. Whatever they do there is their business. It can be really scary, the things that we've seen. For the homeowner’s side, everything can be scary from the investment. You're looking at this company as an investment. So, if you get somebody that goes in and guts it down the studs, and puts all the stuff that they need in there to do, to set that house up for whatever they're setting it up for.

Just to give you an idea, the things that go on, I'm actually in Kingwood, Texas which is the Northeast tip of Houston, Texas. Suburbs, everybody pretty much deems it a safe community. We let our kids play in the street. Last week, there was 79 arrest made from a sex trafficking operation. 79 people. How big that operation must be to arrest 79 people that are involved in?

Jason H: They just said, "Let's pick a really safe community. We're going to fly under the radar there probably." Those property managers aren't using ACUTRAQ so we're going to get away with this.

Jason W: Right and even some of those. Those people are legit on paper and the career criminals know how to get by those background checks and we put everything in place in ours from identity alerts. We've tried to add a lot of things to try to catch these people when they're doing this. The reality of it is though, they're going to do it in rental property.

If you get a property manager, I'm not even a property manager, in most cases, they're doing background checks. Let's say you get a home-based landlord, they just have six rental properties and the first one finds out that they don't do background checks or anything, as soon as one of their properties come open, "Hey, let me know if you have anything open. I've got somebody I know needs to rent a house, too, and I love recommending you." It just goes that line.

Jason H: "I've got four other criminal friends that would love a place."

Jason W: Yeah. "Landlord Johnny here does no background checks. It doesn't take long for those properties, the value and everything.

Jason H: Let's drive this home to our target audience here. The property management business owners listening, they've got hundreds of rental properties. If somebody has figured out how to game their system, they don't really cover this check in this state. If we've done stuff in this state, we can fly under the radar. They're only running this light-level background. We get the pick of the litter. They got 20 properties available for lease, that just beat them up.

Jason W: Yeah, it can happen. That's the thing. For instance, when you run that background check—this is for anybody that's in this world—you need to know the people or the person's past alias names. If somebody's been married three times, you need to actually run the married name and all three married names to get an accurate representation of that person's criminal history. If they changed their lives name, they change their date of birth, that's the only way criminal history is ran for a tenant’s screen is by name and date of birth.

The career criminals, let’s say they say they know they have criminal history but it slides by, they automatically know that they either typo-ed something in it and it slid by, or they changed something on purpose and it got through. The next time they tell their people, "Make sure to change your data birth, your last names." If my last name's Waggoner, I may put it down on paper as Wagner. Even if they're looking at my license, if they're not matching it up right beside each other, it looks close enough that Jason Waggoner, Jason Wagner, it's all the same. That would cause a criminal hit to miss in most cases.

The best thing to do is there's a search called a social trace and we put everything we have just because of how important it is but if somebody's not getting it, ask your provider about the social trace because it provides all the past alias names that that person has used with their social. If you signed up for a cell phone and utility, anything you had to put your social down, it's actually stored with that name used and the address used. That helps a lot in finding the alias names when people are trying to tell you they don't have any.

This is the only name I've ever had. No, you've had two other ones and then, one nickname that you used as alias, too. Running those can make a difference. The career criminals, once they find the loophole, once they find the window or door opened, it's just like a house. They'll crawl through and they'll their other friends to come right behind them.

Jason H: It's party time.

Jason W: Yeah.

Jason H: Okay. There's a lot of different screening services out there. Help those listening. I'm sure a lot of them have something that maybe came with AppFolio or they got something with Rent Manager, something with Buildium, something with Propertyware. For those listening, why should they use ACUTRAQ? Help them understand what's the contrast between what they had typically and what you're going to do for them.

Jason W: You bet. In Rent Manager, we're actually an affiliate of, some other software, too. Typically, the reason somebody will go outside of their software to use us for these reasons. The background check is a no way an afterthought. Not only that, if your applicants have trouble, they call us if they have a dispute. That's one of the big things.

With tenant screening, it’s making sure your applicants have a way to dispute the information because you can have a Junior and a Senior. Senior's been arrested 10 times, been in prison his whole life. Junior didn't know him growing up.

Jason H: Junior's a good kid.

Jason W: Senior's criminal history still keeps showing up on Junior's report. Every time he gets an application for an apartment, he has to go through the whole process. "That was my dad. It's not my criminal history." Having a way to dispute that, it can mean them having housing or not having housing with those reports being accurate. If something like that does come up. Having that documented and being able to help him is one of the biggest things.

The support side of things, that's what we do, is background checks, there's nothing else on our plate. The biggest reason is to have a third party, unbiased source outside of your company, outside of your software, all these people do are background checks and if something goes wrong, you could bet that we'll have your back and search through it, anything at all. That's the difference of having somebody that does that and having that as just an ancillary service.

Jason H: It's probably fair to say if their intuition is saying something's off about somebody but everything comes back clean, maybe they should put you to the test and see if you come up with something that [...].

Jason W: We love the [...]. The other thing too is not a lot of companies can staff and have people to make the phone calls to the landlords and employers. With our full premium report, you'll get an employment verification plus the current landlord and the prior landlord.

You'd be surprised that the different reports we get from one landlord that’s trying to get rid of them currently and the one from a year ago that lays it all out and lets you know what's coming. With those added, it really just helps give a better representation of how that applicant's going to act in that property and how they're going to pay rent and all that good stuff, everything to do with their character.

Jason H: We talked a little bit about why they should use ACUTRAQ and what makes it a little bit different. What are some of the typical questions a property manager might ask you about ACUTRAQ went during the sales process? You're the sales guy, I'm sure you dealt with some objections. What are some of the typical questions that you get for those that are listening?

Jason W: We generally start with the application process. They want to know about that. Onboarding the applicants and how that process works. The biggest thing with the process is the application in our eyes because that's where it starts. That's the first thing that an applicant sees of your company, if you're a landlord, and whether they're doing it, the software's doing it, or a third party like ACUTRAQ. That's the first phase of the company. That needs to be a smooth process, the relationship, you get off on the right hand.

The other thing is they typically want to see an itemized list of everything that's going to be on that background report. You think we're getting a criminal report. What does all that include? There are a number of different things that should be included on that and I hope most everybody listening is getting these with their provider, but of course, it's the 50 State Sex Offender search. It's the social trace that we talked about that has the alias names.

The OFAC which is very important nowadays and that's the Office of Foreign Asset Control. They are the ones that have the terrorist database searches, the terrorist watchlist. Anything to do as far as that goes, that's where that information is going to come from and it's OFAC. A lot of people want to know about that one because everybody wants to make sure that we're not housing some terrorist cell in the middle of Houston or Atlanta Georgia, somewhere like that.

The FBI most wanted list. That's another thing that's included that we forget to talk about a lot of time or the FBI most wanted list, the DEA most wanted list. Something a lot of people don't know is every major city has their own list for those. Along with the Top 10, every major city has their Top 10. Searching for those, understanding where the data comes from, and what you're getting like we were talking about name and date of birth only. So many people think it's tied to a social or driver's license number, or something like that, but in reality, it's not.

The police officers and firemen are the only ones that have access to what we call the National Crime Information Center. Unfortunately, landlords don't have that luxury. Understanding where the information comes from, how important it is to make that decision can literally mean life and death from somebody on the block if you house a violent person in there, if you house a sex offender or something in that nature.

That's a lot of the questions that we get. Spanish speaking, that's getting to be more and more prevalent, so we did add that a year-and-a-half ago. We do have bilingual staff. A lot of different things like that. What we specialize in is where the information comes from, how do we relay that back to the landlord in an accurate manner.

Jason H: All right. So ACUTRAQ is your sole focus, is doing this screening, and you have these itemized lists, lots of different sources that you're going to be checking like OFAC. It goes well above and beyond what they're typically going to get. You integrate with some property manager software like Rent Manager.

Jason W: Yes.

Jason H: I think I gave a light summary there, some of the pluses. This sounds like a really cool thing. How can people get in touch with ACUTRAQ?

Jason W: acutraq.com. You can always reach us at info@acutraq.com, that goes to myself and the owners so we will reach back out to you directly. The website is the best way. If you want to call us, feel free to give us a call at (479) 439-9174. That would be the corporate office in Fayetteville, Arkansas and I'm out in the Houston, Texas office.

Jason H: You guys are making property management safer for the property managers that are the boots on the ground, you're making neighborhoods safer, and in general you're helping property management have a better reputation. I appreciate that.

Jason W: That's our goal.

Jason H: Awesome. Thanks for coming on the DoorGrow Show.

Jason W: Thank you.

Jason H: All right. You guys check it out, ACUTRAQ.

If you're a property management entrepreneur and you felt like your website might be a little bit leaky, you're just not seeing enough business come through, you think you need more lead, if you just had more leads, everything will be better, it's not leads. Leads are not your problem. You've got leaks in your sales pipeline. Leaks are at the very front end of the pipeline. If you've got leaks throughout it that are causing attrition and without even changing your lead sources, if you're shore up all those leaks, leaks of trust, you can have more business coming out.

You're getting some business now. It's not hard to double it just by reducing the friction that's happening at every stage in your sales pipeline. Reach out to us at DoorGrow, that's what we specialize in. We also can clean up your property management website, that's what we specialize in. I don't believe that anybody does better property management websites than DoorGrow. Our focus in not on trying to manipulate Google and with search volume is relatively low and it always has been for property management. Our goal is to facilitate greater trust which helps you close more deals and that's really what your website is for. It's a trust indicator.

People don't buy property management. What they really want to buy from you is safety and certainty. That's what they want to buy. You can create more of that through your website, through your branding, through your sales process, through your pricing strategy, through your reputation online. We'll help you get these things optimized so that your business can grow. Check the site site of doorgrow.com. Until next time, everybody, to our mutual growth.

Download this Episode

Jan 14, 2020

Do you work because you want to or have to? Have you ever considered investing in land to generate enough passive income that exceeds your fixed expenses?

Today, I am talking to Mark Podolsky of Frontier Equity Properties. Mark’s passion is investing in land, creating wealth efficiently, and helping others develop their inner geeky entrepreneurial spirit. He’s known as, “The Land Geek,” for buying and selling thousands of raw and undeveloped land deals. Also, he’s the author of Dirt Rich, a guide to building a passive income model in land investing.

You’ll Learn...

[02:40] Beat Friday Blues: How and why Mark became a land investor.

[05:40] Breaking Down Passive Income Model: No emotional attachment to land and distressed financially.

[07:26] Property Checklist: Due diligence to confirm ownership, back taxes, no title breaks, and no liens.

[08:25] Buy the property free and clear, and sell it in 30 days or less.

[08:40] Neighbors: Built-in best buyers to protect privacy, views, and expand holdings.

[09:09] Other Options: Sites with specialized buyers and sellers of raw and undeveloped land (i.e., Craigslist, Facebook, Land Flip, Land Moto).

[10:00] No renters, rehabs, renovations, and rodents; exempt from erroneous real estate legislation.

[10:48] Price Point of Fixed Expenses: Typically, $10,000 a month in passive income.

[12:05] Operating Entity: Spend a few hours a day on land investing business, and automated software/virtual assistants do the rest.

[14:35] How to get started? Everything is hard in the beginning. Embrace the suck.

[16:00] What Mark loves about land investing? No physical inventory, no competition, inefficient market, one-time sale, and passive income.

Tweetables

Core Business Philosophy: Happy customers guaranteed.

Raw land is the best passive income.

There’s nothing not to love about land investing for passive income.

True Wealth: Work where you want, when you want, and with whom you want.

Resources

The Land Geek

Dirt Rich by Mark Podolsky

Frontier Equity Properties

The Land Geek Podcast

Warren Buffett’s Margin of Safety

Land Moto

Land Flip

Dodd-Frank Financial Regulatory Reform Bill

Real Estate Settlement Procedures Act (RESPA)

DGS 112: Building a Billion Dollar Business with Pat Hiban 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.

Today, I am hanging out with Mark Podolsky. Mark, welcome to the show. I’m going to read your bio here because we want to qualify you and then we’ll let you brag a little bit because you got to do a little bit of starting out here.

Today’s topic (for those who are just tuning in) is land investing for passive income. We’re going to learn how to use land investing to create a passive income stream. Mark J. Podolsky (AKA The Land Geek), is widely considered the country’s most trusted and foremost authority on buying and selling raw, undeveloped land within the United States for almost two decades. Mark has been actively investing in real estate and raw land and has completed over 5000 unique transactions.

Mark’s company, Frontier Equity Properties, LLC, is an A+ rated Better Business Bureau real estate company. Mark has achieved this level of success largely due to his core business philosophy, happy customers guaranteed. Mark is the host of one of the top-rated podcasts in the Investing Category on iTunes, aptly titled The Best Passive Income Model and The Art of Passive Income. He is also the host of The Land Geek podcast: Work Smart. Earn More. Learn How.

Mark, there you go. Give us a little bit of background on you and how you got into this land investing.

Mark: Let’s rewind to 2000 and imagine me fighting traffic, 45 minutes in the car there and back, micromanaged, stressed out at an investment banking job, working with private equity groups specializing in mergers and acquisitions. Jason, it got so bad for me that I wouldn’t get the Sunday blues anticipating Monday coming around. I’d get the Friday blues anticipating the weekend going by really fast and heading back to work on Monday.

My firm hired this guy and he’s telling me that as a side hustle, he’s going to tax deed auctions, he’s buying up raw land pennies on the dollar, he’s flipping them online, and he’s making a 300% return on his investment. Jason, I’m looking at companies all day long and a great company has 15% EBITDA margins or free cash flow. Great company. Average company is 10%. I’m looking at companies all day long, less than 10%. Of course, I’ll believe him.

We go to New Mexico. I do exactly what he tells me to do. I’ve got $3000 saved up for car repairs so I can only buy $3000 worth of land. I buy 10 half-acre parcels, an average price of $300 each. I put them up all online and they all sell 30 days later from an average price of $1200 each. It worked. 300%. I took all that money, I went to another auction in Arizona (which is where I live) and again, it’s 2000. There’s no one in the room, there’s no competition, I’m buying up lots, I’m buying up acres for nothing. Over the next six months, I sold all that property and I made over $90,000 cash.

I go to my wife, and she’s pregnant. I said, “Honey, I’m going to quit my job. I’m going to become a full-time land investor.” She says, “Absolutely not.” So I worked land investing part-time and it took 18 months for the land investing income to exceed the investment banking income and then, I quit. I’ve been doing it full-time ever since.

Jason: It’s so easy, anybody can do it?

Mark: Yeah, I wish. I wish it was so easy. It’s a simple model but anything worth doing in life is not easy. What I could do is I could walk you through the model and then, odds are you’ll just stop the podcast and quit doing what you’re doing and start land investing with me, but that’s okay. That happens a lot. You want me to walk you through it?

Jason: Yeah.

Mark: Jason, where do you live?

Jason: I’m in Santa Clarita, California.

Mark: Okay. Let’s imagine that you own 10 acres of land in Texas. I go to the county treasurer and I get a list of people that owe back taxes. Sure enough, there’s Jason Hull in Santa Clarita, California, $200 in back taxes on this 10-acre parcel. Jason, you’re advertising two things to me. Number one, you have no emotional attachment to that raw land. You’re in California. The property is located in Texas. Number two, you’re distressed financially in some way. Because when we don’t pay for things, we don’t value them in the same way. And you haven’t paid your property taxes. As a result, the county treasure keeps sending you notices saying that, “Jason, if you don’t pay your taxes, you’re eventually going to lose your 10 acres to a tax deed or tax lien investor.

What I will do is I would look at the comparable sales on that 10-acre parcel. I’m going to take the lowest CUP and I’m going to divide by four. That’s going to get me what Warren Buffett calls a 300% margin of safety. I’m going to actually send you an offer of $2500 on that 10-acre parcel assuming that the lowest CUP is $10,000. I send you an offer for $2500. Now, you accept it because for you, $2500 is better than nothing and you haven’t gone out to look at the property. You just don’t care about it anymore. In reality, 3%-5% of people accept my “top dollar offer.”

Now that you’ve accepted the offer, I’ve got to go through due diligence or in-depth research. Number one, I got to confirm you still own the property. Number two, I have to confirm the back taxes are only $200. Number three, I have to make sure there have been no breaks in the chain of title. Number four, I have to make sure there are no liens or encumbrances.

I have this whole property checklist and it goes on and on and on. If it’s a property deal that’s worth less than $5000, I’ll actually close it directly with my team in the Philippines. We’re hooked up to an American title company. I pay $11 for due diligence. They’ll give me a whole property report. I’ll get the GIS maps, the plat maps, aerial maps. If it’s an area I don’t know, I’ll have somebody go out there, stamp on the property for me, take a video and shoot photos throughout the property checklist. What are the neighbors doing out there, what’s the road like, all these things.

Everything checks out and now, I buy the property from you for $2500. You get $2300 of it, $200 goes to the treasurer, and now I have that property free and clear. I’m going to sell this property 30 days or less. The reason I’m going to do this is I have a built-in best buyer. Do you know who it is?

Jason: No.

Mark: The neighbors. I’m going to sell that to the neighbour saying, “Hey, here’s your opportunity. Protect your privacy, protect your views, expand your holdings, know your neighbour.” Oftentimes, the neighbors will buy it. If they pass, I’ll go to my buyers list. If my buyers list passes, I’ll go to a little website you might not have heard of called Craigslist (10th most traffic website in the United States). I’ll go to an even smaller one. It’s called Facebook buy-and-sell group and marketplace. And then, I’ll go to these platforms that specialize in buying and selling raw land, landmodo.com, landandfarm.com, landsofamerica.com, landflip.com. It goes on and on.

Now, the way I’m going to sell it is I’m going to make it irresistible. I’m going to ask for a $2500 down payment. I get my money out on the down, within (let’s say) six months of that. I’m going to get a car payment, let’s say $449 a month, 9% interest over the next 84 months. Essentially, I’ve got a one-time sale, I have passive income of $449 a month, 9% interest over the next 84 months, no renters, no rehabs, no renovations, no rodents.

And because I’m not dealing with a tenant, I’m exempt from Dodd-Frank, RESPA, and the SAFE act (this onerous real estate legislation). The game that we play is can we create enough of this land notes where our passive income exceeds our fixed expenses and then we’re working because we want to, not because we have to. The beautiful part about all of this is 90% of it is automated with software virtual assistants. It’s great.

Jason: What is the price point of fixed expenses typically?

Mark: For most people, after you earn about $10,000 a month in passive income (that’s $120,000 a year), you’re in pretty good shape. Now, we have some clients who are doctors and lawyers. I have a client. He’s been working with us for 10 months. He’s at $15,000 a month passive and he just went from 5 days a week at his law firm to 2 days a week and he’s spending the rest of his time with his dad who needs help working with him and the other two days doing what he wants to do.

We have so many clients that once they hit that point, they retire their spouse. They quit their job. They do what they really want to do in life because the whole idea of this is that we can always make more money but we can’t get more time. For me, true wealth means you wake up and you don’t have to be anywhere. You work where you want, when you want, and with whom you want. That’s really the goal of doing all this.

Jason: Love that. What else do people typically ask you about this? When you say it, it sounds really easy. It sounds like something that maybe anybody can do, but it’s like starting a part-time job if you start getting into this.

Mark: It is. It is an operating entity. We ask our clients to spend about an hour or two a day doing this. That will move the needle because with our virtual assistants and our software, it’s pretty automated. We actually have automation software for marketing. We can automate our craigslist and our Facebook postings with a posting automator.

The only two things that (as CEO of your land investing business) you, Jason, actually have to do, is county research because if you get that screwed up, that whole thing falls off the rails, so you have to pick a good county. From there, you’re going to make sure that you get your pricing right, so you might want to work with a VA, train them, and show them, “Hey, look. Here’s our lowest comps dividing by four. We need a response rate of 3%-5%. If it’s under 3%, our offer is too low. If it’s over 5%, let’s get nervous. Why are they selling us their property? We might have to renegotiate.” We have our metrics in there.

As far as the rest of the process, you can get virtual assistants to do our due diligence. You can get an intake manager that can actually talk to your sellers (because that’s a big time-suck as well). From there, you can close. We like to use Simplifile accountings, so that we can record our deeds online, so I don’t have to go and do a lot of whole paperwork that way.

Once we own it, again, we have an inexpensive virtual assistant getting us through GIS, all the neighbors information, uploading that to our software, sending out our neighbor letters. There’s an API with lob.com, which does our mailings. On the backend of it, we use a software called GeekPay.io that is a set-it-and-forget-it system on collecting our money.

We get our down payment via credit card and then we get our monthly payments via ACH. It does all the amortization. It does all the calculations. It charges fees but it does it through notifications. If that ACH bounces, it will charge the credit card on file. We went from an 8% default rate to a 4% default rate. I personally worked two hours a week in Frontier Properties, doing the kind of volume that we do.

Jason: Sounds great. That’s pretty incredible. How hard is it for somebody to get started with this that’s new?

Mark: It’s like anything in life. Everything is hard in the beginning. You know what’s really hard, Jason? Learning to read. We don’t remember it. We forgot how hard that was in the very beginning but you had a good teacher, they broke it down for you step-by-step, and you are with other people. It was just a thing, like everyone can do this and you’re just expected to do it. It’s the same kind of thing.

What happens is we’re so ingrained after all these years of schooling that you have to achieve what you achieve, to go back and embrace beginner’s mind and embrace the suck. It’s hard. If you can do that, if you can be comfortable being uncomfortable and you have some grit, you can be successful in anything in life, whether it’s my land investing niche or growing your doors. It doesn’t matter. Nothing worth doing is easy.

Jason: It sure is nothing worth doing is easy. The challenge is if somebody is going to choose into doing this, choose into doing property management, or choose into doing any business, they have to fall in love with this. They have to get excited about this. Help the listeners understand what do you love about doing this? Your clients that get involved in this, what do they love about it that’s different from other entrepreneurial ventures that they get into?

Mark: The main reason that people like this model is number one, there’s no physical inventory.

Number two, there’s little to no competition. If you go on HGTV or the DIY Network, you’re not going to ever see me on Flip This Land. The before pictures is raw land, the after pictures is raw land. It’s not going to be much fun to watch me in front of a computer. If you go to [...] meeting and there are 100 people in that room, 99 of them are house flippers, landlords, or wholesalers. You and I are the only land guys.

Number three, you have an inefficient market. I’ve got a hedge fund manager that loves this business because he’s like, “Mark, there are very few inefficient markets left out there. Nobody knows the value of raw land.” Now, that can be very frustrating in the beginning, but it’s also very exciting once you get your arms around it.

No physical inventory, no competition, inefficient, and then you have the fact that it’s a one-time sale and then the passive income versus let’s say I flip a house. I make $20,000 on a flip. I have a new problem. What do I do with my $20,000? I can’t put it in the bank. It’s not going to earn anything. I have to keep redeploying that capital.

Once we get to let’s say $10,000 a month of passive income, what our net worth? How long would it take you to have an investment of $120,000 a year at say 2% interest in the bank? That’s over $3 million you and I would have to save. How long, Jason, would it take for you to save $3 million? How long would it take anybody to save $3 million?

Jason: I probably would never do it.

Mark: Yeah. 12-36 months, you can have that kind of cash flow and then your bankers are really happy with you because your net worth is over $3 million. The fact that—I’m not proud of it—I can’t even screw in a light bulb. I tried to flip a house once. I am not interested in physical things so the subs come out there. I meet the subs. They don’t show up. Just the capital outlay, I started with $3000. My buddy, [...], started at $800. You’re not going to ever get knocked out of the game in this niche. The dollars are just too small.

If you go into multifamily housing, you do one bad deal and you’re done for 10 years. You’re BK or you’re just a pariah in the investment community because you lost all your investors money. This is not like that at all. You have an easy entry point, you have no physical inventory, you have no competition. You have a one-time sale on passive income. You have an inefficient market. There’s nothing not to like about it. I think what’s interesting is if you go to a party and you tell people you’re a land investor, they’ll yawn. It’s not sexy. Definitely not sexy. Maybe you lie and say you’re in multifamily housing.

Jason: I don’t know if that’s super sexy sometimes either, but yeah.

Mark: I mean it depends who you’re talking to.

Jason: How do people get started in this? It sounds interesting. My interest is piqued. I’m sure some people listening are interested. How do they get started with this because I’m sure there’s a fairly steep learning curve? There’s got to be a reason why everybody isn’t doing it. How saturated is this?

Mark: It’s not saturated at all because again, it’s just not sexy. It’s not conventional. The marketing budgets of the people that are in the house flipping world like Robert Kiyosaki or FortuneBuilders, that’s really where people thought to. Land investing, you have a mental hurdle for people where they think, “Well, I’ve never bought land.” We all know everyone needs a place to live. Nobody needs raw land. You don’t wake up today and say, “Boy, I really got to own 10 acres today.”

Jason: That land that nobody is using and nobody seems to want. That land.

Mark: Right. It’s a marketing business. You have to interrupt somebody’s day, pique their interest, and make it irresistible. I’ll tell you, after over 5200 deals, I’ve never been stuck with a piece of land. You buy any asset, 25–30 cents on the dollar, there’s someone else on the other end of that deal. Whether it be a piece of land, a car, a trinket, it doesn’t matter. The market is the market. So to get started, I would say you’ve got to learn from somebody who’s done in.

For example, let’s say you and I are going to go to Mount Everest together. We’re going to climb this big mountain.

Jason: We’re not just going to wing it.

Mark: Yeah. You’re going to someone who’s done it a million times and they can tell you the best routes quickly, efficiently, and safely to do it. That’s what you want to do. You can start with that. In fact, for the listeners, I would say that I have a $97 course that I’d love to offer them for free. If they just go to thelandgeek.com/launchkit, they can go ahead and get that course for free. Start there and then see if they like it or not.

Jason: Their time investment is 1-2 hours a day?

Mark: If that, yeah. It depends if they’re using tools or not. It also depends if they have a scarcity mentality or abundance mentality. A lot of people, when they start doing this, they think they can penny-pinch their way to wealth. They don’t want to use the tools that are out there.

Jason: “No, I’ll do it myself. I’ll watch 120 Youtube videos and figure out how to do it myself.”

Mark: Yeah, and you can do that. But again, my whole philosophy is that I can always make more money. I can’t get more time. So, anything that’ll save you time, I’ll invest in.

Jason: I say something very similar to my clients. That makes sense. Anything else anybody should know before we wrap this up and how can they get in touch with you?

Mark: If you have that mindset that Zig Ziglar says, “If you'll do for the next 3–5 years what other people won't do, you’ll be able to do for the rest of your life what other people can’t do.” You’ve got to get your reps in and you have to embrace the suck. Again, nothing worth doing in life is easy. It might be a simple model, but it’s not easy. You have to take action at some point

Again, the best way to get a hold of me is thelandgeek.com. I’ve got an audio book. I’ve got a book on Amazon called Dirt Rich if you want to just read about it and hear my story as well. It got really good reviews. People seem to like it. It’s not because I’m such a good writer. It’s just that they like it.

Jason: Nice. Perfect. Look for the book, Dirt Rich, or check out thelandgeek.com. Mark, this is interesting. I think it’s a new idea that people certainly haven’t heard of this before on the DoorGrow Show. I appreciate you coming on and hanging out here with me.

Mark: Jason, thank you so much. Again, I apologize if you’re just going to quit your business and go [...] with me.

Jason: I love what I do so.

Mark: See? There you go. You can do both.

Jason: Both. All right. Maybe I’ll get a few people from this show that are wanting to do both. There you go. Mark, thanks again for coming on the show. We’ll let you go.

Mark: Thanks, Jason. I appreciate it.

Jason: If you are a property management entrepreneur and you enjoy the show, be sure to like and subscribe. If you’re watching this on Youtube or on Facebook, be sure to share it if you would. We would appreciate that. If you’re in some property management groups, we’d love to see your comments. And if you’re on iTunes, give us a review. We would really love to get that feedback. We’re putting out this content for free. We would love a little reciprocity, people. That would be really sweet of you. I would appreciate it greatly. It helps us get the word out and make a difference in this industry.

If you are a property management entrepreneur that wants to grow your business, add doors, you’re struggling, you’re feeling that there’s a scarcity in the industry, there’s no scarcity in property management right now. 70% are self-managing. There’s plenty of opportunity. Reach out, talk to us, and let us help you see how you can align your business towards more warm leads and stop spending so much time trying to go with cold leads, time keepers, and time wasters.

The people that are at the very end of the sales cycle are the coldest, crappiest, most price-sensitive. Those are the people searching online. They’re the leftovers that fall off the word-of-mouth table. Come sit at the table with us. We’re DoorGrow. We’ll talk to you soon. Check us out at doorgrow.com. Bye everyone. Until next time, to our mutual growth.

Download this Episode

Jan 7, 2020

Have you ever played the board game, Monopoly? Were you successful at buying properties, and charging people rent? Did you go from buying and selling the little green houses to bigger houses? Did you dream about becoming a successful real estate agent, making billions, winning the game, and retiring at an early age? You’re not alone.

Today, I am talking to Pat Hiban, a real estate agent who got better over time to have an illustrious career in the real estate sales business. Pat practiced what he preached and like most agents, bought houses and then rented them out. At 46 years old, Pat retired from selling homes for commissions to living off the income he made from the real estate that he purchased.

You’ll Learn...

[02:45] Labeled as Learning-Disabled: How Pat overcame it, and didn’t let it bother him.

[03:35] Go Getter: Don’t reinvent the wheel. Listen and copy others to sell houses.

[04:09] Done is better than perfect: Things don’t need to be perfect, but need to get done. Hire others to make them perfect and fix problems.

[05:58] Building a Billion-Dollar Business: One sale at a time, one staff member at a time, one commission at a time. Get rich quick is a slow process and takes discipline.

[07:54] What holds people back from growing their business? Themselves. There's someone else that has the same goals, but there's no difference between them.

[11:00] What’s going to happen? You're going to quit affirming and focusing on your goals, or they’re going to come true.

[13:25] Unwilling to Give Up: Entrepreneurs tend to have tenacity and relentlessness.

[14:31] Are they not setting goals? Or, are they setting goals and failing? If they don't have any goals, they're never going to get anywhere.

[15:30] GoBundance: Find accountability partner for positive peer pressure to set goals, create affirmations for each goal, and make sure each goal and objective gets done.

[19:42] Why people fail to succeed? They give up too soon and don’t establish proper mastermind.

Tweetables

Stick with Superpower: Getting business, doing business, and making money.

Done is better than perfect.

To get rich quick is a slow process. Get rich slowly to succeed.

Your circumstances are a direct result of your goals and how often you review them.

Resources

Pat Hiban on Facebook

Pat Hiban on Instagram

GoBundance

Tribe of Millionaires

Think and Grow Rich by Napoleon Hill

Robert Kiyosaki

The Secret Movie

Jim Rohn

DGS 111: Automation to Increase Efficiency with ShowingHero 0

Transcript

Jason: Welcome, DoorGrow Hackers to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, 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 opportunity, 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 the residual income.

At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change the perception, expand the market and help the best property management entrepreneurs win. I'm your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let's get into the show.

And today's guest, I'm hanging out with Pat Hiban. Pat, welcome to the show.

Pat: Good to be here, Jason. Thanks, man. I appreciate it. I'm excited to be on DoorGrow.

Jason: Give everybody a little bit of background on you and how you got involved with real estate. Help them understand who Pat is.

Pat: That's a big question as far as who Pat is. It's easier to say how I got involved in real estate. I went to college and I got a degree in sociology. I was going to be a probation officer and I couldn't get a job. What happened was I became an agent, a real estate agent, a poor one in the beginning. I sold 10 house in my first year, made $13,000. Over time, I got better, and better, and better, and I went on to an illustrious career in the real estate sales business. I did practice what I preach and like most agents, I bought houses along the way and then I rented them out.

I played monopoly a little bit, sold the little greenhouses, bought bigger hotels, shopping center, lots of apartments, things like that. Then, at 46 years old, I retired from selling real estate homes for commissions, and just live off of the income from the real estate that I purchased currently.

Jason: One of the things in the bio that you've mentioned is you're labeled with a learning disability at the age of eight. Maybe you could share a little bit about that and how you overcame.

Pat: Basically, I was learning-disabled. It was all a label. At that point, just like anything, I didn't let it bother me. When you're 8 years old, or even 10, or even 16, you're not conscious of any of that. You're really unconscious of it until later in life when your parents tell you about it.

I got a 2.3 GPA in college. I didn't really think of myself as being really smart. I really saw myself more as a go getter. Someone who would actually be able to do whatever somebody told me to do. My office managers would tell me, "Pat, this is what you need to do to sell a house or to get a listing," I would actually listen where 99 of 100 other agents wanted to try it their own way or reinvent the wheel. That's how I grew everything in my life. It's just by copying off other people.

Jason: You've had a lot of success where a lot of other agents haven't been able to experience success or they eventually folded in and just gotten out because they just couldn't make it. What do you attribute to being different? Is it just that you would listen and learn? Or do you have a little bit more tenacity and bite than most people?

Pat: One of my favorite quotes is, "Perfect is the enemy of done." I never really had to have things perfect, but I always had to have things done. I think that served me in that I would get them done. If they weren't perfect and there was a problem, I would hire other people to make them perfect for me so that I could stay in my superpower, which would be getting business, doing business, making money.

It was like what Robert Kiyosaki always says, "The B students works for the C students." That's true with me, I think. I'll be able to get it done. I'll be able to come up with the idea and implement a copy of it to somebody and implement it, then just hire other people along the way to make it perfect or better.

Jason: I love that idea of, "Perfect is the enemy of done," which is funny because I say to my clients of a whole training video that talking about it and getting their websites launched. I say, "Done is better than perfect," because once it's done, it can make money. It can do its job. If you're waiting for perfect, it takes forever.

Let's get into the topic on hand, which is building a billion dollar business. How do you build a billion dollar business?

Pat: How do you build a billion dollar business? One bite at a time. That's like an elephant [...]. It's crazy. With me, it's just one sale at a time, one staff member at a time, one commission at a time. With regards to properties and property management, it's the same thing. One unit at a time, one door at a time. You're just building on that. That would be the answer to the question.

So many people today want to get rich quick. The truth to the matter is to get rich is a slow process. You got to know how to get rich slow. If you know how to do that, you're going to succeed.

About a decade ago, there's a movie out called The Secret. The whole half of the movie was talking about what you need to do to become a millionaire is to sit there and basically just tell yourself, "I am a millionaire. I am a millionaire. I am a millionaire."

There's a great quote by Jim Rohn. He says, "Affirmation without discipline is delusion." What Jim meant by affirmation without discipline is delusion is you can sit all day and be like, "I am a millionaire. I am a millionaire," but at the end of the day, if you don't earn a dollar and save a dollar, you're never going to have a million. It really should be, "I save $10 a day, I save $10 a day." Or, "I earn $20 a day and save half." Whatever it is, the point is, you need to add discipline.

Jason: For those listening, they're struggling in their business or they’re wanting to grow their business, what do they need to realize that it's maybe holding them back?

Pat: Themselves. The answer is themselves. There's someone else in another state, another country, that has the same goals, and aspirations as them, that's so far ahead of them already this year. There's no difference between them. As a matter of fact, that person somewhere else may be disadvantaged compared to them in some way. Meaning, they don't have the money, or they don't have the skills, or they don't have the degree, or they aren’t the right race, or the right sex, whatever the case maybe. They may be disadvantaged in many ways, but I guarantee you that there's tons of amount there that are way ahead of you with the same goals as you and there's no difference between you two.

Jason: Yeah. We could hold on to our story and excuses or we can get results. We're the one creating our own blindspots. If we're the ones that creating our own blindspots, we're the ones that's holding ourselves back, then how do we see that?

Pat: What you have to understand is how psychology and how people are raised, and how most people are raised. I'll speak for America or North America. The average two-year old boy hears a negative statement from his or her parents or people older than him 16 times for every one positive statement. They might tell that little boy, "Don't touch that." "You're doing it wrong." "Wipe your face, you're messy," anything that's negative. None of that is positive.

By the time you're 18 years old, your subconscious mind is conditioned to believe that you can’t do stuff because you're doing all these things wrong. The only way to reverse that effect on your subconscious mind is to work on your subconscious mind. That's where you basically take goal-setting to whole another level where you actually set goals which everybody's listening to this probably has goals set. You reduce those goals to ridiculous.

I just talked about earlier, whatever it is you want to do, let's say you want to buy a house once a year or buy a house a month, that means you need to look at 20 everyday. You set your goal to that. Then, you create an affirmation around it for your subconscious mind that says, "I analyzed 20 deals a day." If you analyzed 20 deals a day, your mind believes that you're supposed to be analyzing 20 deals a day, and your mind believes that you're supposed to be buying one house a month, then it's going to happen. You can't help it.

Either one of two things are going to happen. I guarantee it. Either you're going to quit, meaning you're going to quit affirming, you're going to quit reading your goals, you’re going to quit focusing on your goals. Or number two, it's going to come true. I believed that if you focus on that goal everyday, whatever it is, buying a house, and you focus on what you need to do to get into that goal everyday, it will happen. You will actualize it. I think that's how you overcome the subconscious mind of yours that’s not believing that you’re worthy, not believing that you ever will be a millionaire.

I never really had much of a doubt that I would do well, that I will be rich. I was lucky and I was naive enough. A lot of people struggle with that. They don't have that naivety. The way to work around that is reprogramming your subconscious mind but not just in glorious goals. Not just in big goals, but in how you're going to actually act to get to that big goal.

Jason: I like this idea. You're saying if you have a big goal, you have to break it down into the smallest action, the action that you're going to be taking on a daily, consistent basis. Then, you create an affirmation connected to this. That affirmation is just basically that you're completing this microcommitement, this action. Like, "I'm going to cold call this many owners to see if they're out of state. To see if I can get them on for business. I'm going to do whatever." It needs to be a daily, consistent, action. I'm going to go to this many real estate network. I'm going to commit to that.

Breaking down into the smallest action, "I'm going to take this many agents out for lunch and have a conversation with them. Hopefully, we meet the referrals." They need to start setting some micro commitment and creating affirmations that they're saying regarding these to affirm that they're doing it. Then they need to live with integrity and take action towards those affirmations.

Pat: Absolutely.

Jason: Say, somebody's doing the affirmations. They're believing in themselves. They're taking these micro commitments. Then you said they're either going to quit or it's going to come true. There's this tenacity that I sense in you, this relentlessness, that I think a lot of entrepreneurs carry, that they're just unwilling to give up. If you're unwilling to give up, eventually, the universe just got to cave to you because you're relentless. Eventually, you're going to get it.

Pat: And giving up is hard. You don't want to give up on the ultimate goal, but you’re going to have to change how you get there. Things are going to pop up on your way. You're going to have to go around them. Some people would say that would be quitting but it's not really quitting. You're just doing things in a different way all the time.

Jason: Right, like course correcting.

Pat: Course correcting, yeah.

Jason: You've worked with quite a few different entrepreneurs and business owners. What advice would you give to those listening that you would typically give out for those that are wanting to move towards goals and they're struggling to figure stuff out on their own? What would you recommend to them?

Pat: Are they not setting goals? Or are they setting goals and failing?

Jason: That's a good point. What if they're not setting goals? What if they don't have any goals right now?

Pat: Silly. Then they don't have any goals. They're never going to get anywhere. I have goals since day one. I can't imagine life without goals, even today. Most people don't have goals. That's why they're in a situation that they are. Your circumstances are a direct result of your goals and how many times you review your goals.

Jason: Got it. First off, they've got to set some goals, then they need to review these on a regular basis.

Pat: Daily. I would add something. Maybe have an accountability partner. One of the things we do at GoBundance, The Tribe of Millionaires is we have what we call peer partners which are people in the tribe that keep each other accountable. If they're goal is to call 20 out of state owners everyday, they text them, and say, "Did you call 20 today?" Then, we have GoBuds, which are about four to five GoBros that are in The Tribe of Millionaires that meet on a bi-weekly basis to talk about their goals, talk about where they're at, what they've done, and what they haven't done, that sort of thing, and it works.

The point missing would be the accountability aspect. Not only set goals, not only create a subconscious affirmation for each goal big and each goal small, meaning the act-oriented goals, the discipline-oriented goals, but bring accountability around those discipline-oriented goals to make sure that they get done.

Jason: Got it. They need to be accountable with somebody. If they're accountable to one, then the likelihood of them actually it is probably none.

Pat: [...] works so well.

Jason: It's probably because they have a coach, right?

Pat: Yeah. They have to go in and step on a scale every week or every day. They have to write down and track what they put in their mouth. If you do that and someone's looking at it, it works. But if no one's looking at it, you're not looking at it, you're not stepping on the scale, and you're not writing down what you eat, chances are you're not going to lose weight.

Jason: Yeah. I worked out with a trainer for a solid year to get in shape. He had me fill out a spreadsheet. Every time I showed up (like once a week), he was pinching me with things to measure my body fat. There was no hiding. He was like, "I could tell you didn't eat right this week," or, "I could tell you're not getting enough sleep because you're retaining water." He’s just tell these stuff. He's done these with so many people.

Same thing with working with any business coach that I've worked with. There's this level of accountability, that I'm checking in with them. I know I'm going to be talking into them and say they're going to ask me, "Did you keep your commitments? Did you do what you said you're going to do?"

I think there's that positive pressure. We're so good at applying negative pressure to ourselves. I think it's rare for us as entrepreneurs to apply pressure in a lateral or a positive way among our peers or among our people that their goal is to level us up. We firmly are really good at attracting people around us to tell us that we can't do things, that it's difficult, that maybe we should get a job. We've all heard these things as entrepreneurs. We really do need to have some sort of accountability. We need friends, we need partners, we need those that are in our corner. We need a coach, we need mentors. We need people that believe and can support us in our objectives.

Pat: I agree. That's why we created GoBundance. That's why we do what we do and why there are over 220 members now, why our retention is extremely high. It's just because of that accountability piece. Your life just amplifies when you put it out there in front of other people.

Jason: Got it. I love the idea of adding an accountability partner. It’s a simple buddy system.

Pat, I appreciate you coming here on the DoorGrow show. Is there any other advice you'd love to share related to how people can get out of their own way, start working towards building the legacy that they want, and building the finances that they want?

Pat: I'm sure everybody here has heard of the classic book, Think and Grow Rich.

Jason: You said, Think and Grow Rich by Napoleon Hill?

Pat: Yeah. What Napoleon Hill did is he just went around rich people. He asked them, "How did you get rich? What are your habits?" There was a newspaper article that said Napoleon Hill had to break it down into two things. He actually asked for one thing, "Why people fail to succeed?" He said, "I don't have one but I have two." He said, "The first thing is they give up too soon." They're about to hit the gold and they stop digging.

He said, "The second one is they fail to establish a proper mastermind." He was the one that came up with the mastermind concept. He had a mastermind with Harvey Firestone, Thomas Edison, Henry Ford. These are all big name people. They would hang out, grilled marshmallows at a fire, and share secrets.

That's how we came to write our latest book which is Tribe of Billionaires. I want to give everybody on the show an opportunity to get a copy of this if I could. You can get a free copy by going to tribeofmillionaires.com and all you've got to do is pay the shipping. It's a story of a guy who loses touch with his father. For 20 years, he doesn't see his dad. Then, his dad dies and he has to settle the estate. He sees the pallbearers of his dad's coffin. They're six guys. They're all billionaires and multimillionaires.

He scratches his head because he's like, "I thought my dad was a deadbeat. How are his pallbearers billionaires?" Then, he's lucky enough that in order to get his estate, his dad wants him to spend a week with all these rich guys. What ensues are lessons that he learned. He journals about these lessons after spending or during his weeklong time with these six pallbearers. That was what Tribe of Millionaires was all about.

You can get it on Amazon for $20. You're welcome to have it for $7 or free. All you're doing is paying $7 shipping. You just go to tribeofmillonaires.com.

Jason: Perfect. All right, I appreciate that. Check out tribeofmillionaires.com. It sounds like a really good story that teaches some lessons regarding money, finances, and growing your business.

I appreciate you sharing that, Pat. Any other words you want to share before we let you go?

Pat: Nope. I'm easy to find. Luckily, my last name is not really popular. Just type in Pat Hiban. You can find me in multiple places. Follow me on social media, Instagram, Facebook, everywhere.

Jason: Perfect. Pat, thanks for coming on the DoorGrow Show.

Pat: My pleasure.

Jason: There you have it. Check it out and get a free copy of the book. You said you can go to tribeofmillionaires.com.

If you're a property management entrepreneur that's wanting to grow your business, if you're looking to connect with other entrepreneurs, wanting some accountability from me as a coach, and some support, I recommend you reach out to DoorGrow. We would love to help you grow your business.

Until next time, to our mutual growth. Bye, everyone.

Download this Episode

Dec 31, 2019

In property management, eliminate no-shows and days on the market. Don’t waste time on administrative work. Make it more profitable. The ultimate goal is to get the place rented.

Today, I am talking to Zee Bhimji and Asif Hussain of ShowingHero, which is property management software built by property managers because they understand the challenges you face daily—dealing with tenants, leasing, and maintenance.

You’ll Learn...

[04:15] What is ShowingHero? Automation of entire leasing process—from lead to lease.

[07:42] How is ShowingHero different? Customization, full access to improve efficiency.

[08:40] Piecemeal Process and Missing Pieces: Some piecemeal solutions sometimes work, but they're not a one-stop solution.

[10:40] Showing Process: Contact, communicate, pre-screen, and schedule time.

[14:45] People and Technology: Most expensive operational cost for a business is staff. Reduce expense through automation.

[19:05] Customer Experience: Specific service level expected. Automation doesn’t take away personal touch.

[21:15] Good property management companies provide consistency, follow laws, and do things in a timely manner.

[23:10] Toilet Therapist: Focus on what’s important. Customer service is when it matters.

[27:50] Pain Points: Look at problems from property manager’s perspective.

[33:20] Little Things Make a Big Difference: Listen and understand to keep a business moving toward benefiting customers.

[36:50] Feature-centric Validation Process: Actionable data/insight to run your business the correct way.

Tweetables

ShowingHero: From lead to lease, it helps get everything done.

All you want to do is reduce the days in market and make it profitable.

The most expensive thing in business is staff. It's the most expensive operational cost. It is people.

The less tactical work you have, the better. Leverage tools, software, and systems.

Resources

DGS 110: 7 Options to Fund Your Business with Bruce Mack of Platinum Trust Group 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 the perception, expand the market, and help the best property management entrepreneurs win. I'm your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let's get into the show.

My guests today are Zee Bhimji and Asif Hussain. I got everyone's names right, right?

Zee: You really throw up my name though.

Jason: Perfect. Let everybody know who you are and what your role is. I want to get into your background and how you got connected to the property management industry. We'll start with you, Zee.

Zee: Yeah, absolutely. Zee Bhimji. I am the co-founder of ShowingHero. I have actually been in the industry for about 10 years now. I tell people this a lot of times. I couldn't spell property management where I started. I have a property management company also (Real Property Management) in the Chicagoland area. We've been around 10 years now.

Like I said, I still couldn't spell property management when I started. I'm a finance and accounting major. It was a process. That's where ShowingHero came around, where we saw that there is a void in the market.I decided to work with my very good friend here, Asif. We decided to take down this very big challenge and a very fun project.

Jason: Cool. Asif, why don't you tell everybody about yourself?

Asif: Yeah. My background a little unique. I'm not a property manager, but I was a landlord and do-it-yourself landlord. I have managed a few properties and doors on my own. I was familiar with some of the issues and some of the pain points in the property management world—dealing with tenants, leasing, maintenance, the whole nine yards.

My background is actually in marketing and finance. I worked for Discover Financial Services. I actually went ahead and got my Masters in Education in London. I went over to mentorship and educational leadership.

Zee and I had actually met together. We were talking about some of the struggles. I actually just went up to Zee to figure out, "Hey. Either some of the struggles that I'm having with my landlords and with my tenants, what are some things that we could do?"

In exchanging ideas and learning from each other, this is where the idea of ShowingHero came from. There wasn't a solution in the market that was available to us, so that's where that spirit and that’s where it started, the beginning of our journey actually from.

Jason: Got it. Gentlemen, why don't you explain to everyone what is ShowingHero?

Zee: ShowingHero is an automation of the entire leasing process. It's the easiest way to put it. What we would say is from lead to lease. One of the biggest challenges that I face as a property manager, we managed over a thousand doors, and it's a very good problem to have. Well it’s a problem and it's hard to do. We actually received an award from the Chicago Association of Realtors back in 2015 where we were the platinum leaders in the entire Chicago land market. It's definitely something we're very proud of.

That's the time we started realizing we're facing a lot of problems and there are no solutions for them. There are piecemeal solutions. You guys have seen that. Jason, you've seen so many piecemeal solutions. I've seen that you are putting together a full solution because everyone has noticed piecemeal solutions are hard to do and customers don't prefer that.

As a property manager, one of the biggest things that I had was I don't want my employees to go to five different software to get their work done. That's where ShowingHero comes in. ShowingHero comes in and helps from the time a lead comes in to closing out the entire lease. What you want to do is you want to eliminate days in market. You want to make it more profitable. You want to avoid all the redundant stuff, all the administrative stuff. That's where ShowingHero comes in.

It will contact the lead. It'll scheduled the showing. It will use artificial intelligence or machine learning to contact people that are interested in the property, get them to schedule a showing as quickly as possible. This is something that's really cool. You can get a price drop on your property. Instead of having to go and communicate this to so many people, five minutes after you drop your price, you have people scheduled showings. That's incredible when it comes to automation coming in and doing their job. That's where ShowingHero comes in. It helps get everything done.

We come into self showings, which I would like us to talk about because that's something I'm very, very excited about. We do it differently and we do it more encompassing. Asif, I'm going to let you take the stage.

Jason: Before you get into that, I wanted to touch on this. People are really looking for a result. They're not looking for pieces. When they're looking for pieces, they're hoping to magically put together a solution to get to a result. You really focus your tool on delivering front to end the result of automating the whole leasing process. You said from lead to lease.

Most people listening to this have some solution in place. They may be using Tenant Turner. They're using Rently. I've seen Knock rentals on their ShowMojo. There's all these different tools out there. Maybe for the listeners, I'd love to hear about your processes, what you guys do, maybe how you stand out, or how you're different. Everybody listening is wondering how do you guys fit in the marketplace.

Asif: I wanted to add one thing. One of the things that separates us from the market is that the idea of customizations and the full access on the platform. One of the things that Zee had mentioned is when you look at piecemeal solutions, you're looking at being able to solve something. People don't realize the amount of hours that are dedicated into doing that.

The example that Zee had mentioned in terms of price-reduced setting. You can manually go ahead and text or email, and say, "Hey look. That's a solution that works." People aren't realizing that for those smaller solutions that they're thinking that just works, they're not just being efficient. Not being efficient had the opportunity cost that you need to be able to understand that it's not necessarily in terms of dollars but its terms of hours. That adds up, which eventually does translate to dollars.

Jason: This piecemeal idea you've mentioned a few times. Give us an example of a piecemeal process that you feel like has these gaps or is broken. Just so people are really clear on this.

Asif: I've had clients that have said, "Look. I just use Calendly to schedule my showings. It works. I put out my show times there and I'll get notified." What they're not doing is, what does the reporting look like? Do you understand how many days your properties have been on the market? Are you getting the data that you need in terms of where the lead is coming from? What happens to the lead? Has a lead been able to provide you any feedback either if it's the assisted showing? Have they been able to provide you feedback on the agent or on the property? Are you able to see have they applied on? They clicked on the application link. What is the life cycle of that prospect? Are you able to understand those different points?

You could use Calendly. You might say, "Okay. I'm able to schedule," but you're missing out on those other solutions. You might say, "Hey, look. I'm using a lockbox and I'm allowing people to enter the property." But do you understand who's entering your property? When they've entered? If they've left the property? Are you able to follow-up on all of those different missing pieces?

Sometimes these piecemeal solutions work. I had one client who said that they just text message (mass text message) to confirm a showing, which is great, but that does take an amount of time for someone to go get all those text messages, send that, see who replied, see who that person is. Those solutions work but they're not a one-stop solution. That's where ShowingHero tries to differentiate itself and say, "Look. We want you to be efficient and running on all gears."

Jason: Cool. Explain the process of how the showing side work.

Zee: One of the things to add to what Asif was saying and to clarify, we have piecemeal. The idea of piecemeal is just simply the fact that when a lead is interested in a property (we call our property management terms one, two, three, example stream), the first thing we're doing is we're saying, "Let's contact the lead." It's as simple as that. We just need to respond to them. Communicate, speak to them, pre-screen them, try to schedule time.

Schedule time really takes three or four attempts. You're going back and forth. You're leaving voicemails, you're sending emails. From there, you're scheduling your time next week, Wednesday, 1:00 PM. Sounds good. Everything is great. From there, the next thing is a diligent agent or property manager is going to call in again and remind them about their showing the day before. Then, they're going to try and confirm the showing on the day about four hours prior.

Jason: The goal behind that is to eliminate no-shows, to not waste time, to make sure that you're doing your best to get these people engaged so they show up, so you can get the property lease as quick as possible. The whole goal is just to get the place rented.

Zee: Right. All you want to do is reduce the days in market and make it profitable. Yes, you can have ten agents for ten properties. You're not going to be profitable. That's what we had. We had four agents showing eighty properties. Yes, it worked for us. It made a lot of money but it was tough.

I had a call center with three people full-time taking calls all the time. All they're doing is taking calls. That was 8:30-5:30. That's all I was making available and it wasn't enough. We're still getting a lot of calls, a lot of voicemails, a lot of emails outside of business hours. We were making it work. It was working. We pre-screen them on the phone, schedule a showing. We tried to be a little smart about it. We tried to be a little efficient about it.

That's where ShowingHero comes in. ShowingHero takes 90% of all that administrative work. All you're doing is like going to your assistant and saying, "Hey. I want to show properties in the north side of town on Mondays, Wednesdays, and Fridays from 9:00-1:00. Can you please schedule a whole bunch of showings for me, but make sure that the people are pre-qualified? Then, make sure you follow-up with every single person to find out if they're going to show up on time. Remind them and confirm the showing." That's ShowingHero. ShowingHero is your personal assistant that is doing all those things but you don't have to remind them.

Jason: Okay. The situation you're describing sounds like pretty normal. The problem situation, it sounds pretty normal. Most management companies, if they're smaller, the property managers are the one handling this. They're leveraging maybe one or two tools to try and systemize things. They've got one system that's putting the properties out to the market and feed allowing the system that's handling some of the showing stuff.

That sounds pretty normal. They're going to have a handful of people that are going out or maybe themselves. They're trying to do this. At your level of scale, you started to see gaps and the problem. It sounds like for smaller guys, something like ShowingHero could allow them some freedom from the leasing side of the business that they're tied up in.

Zee: Yeah. I want to put up the 100 emoji right now because that's what it is. It's all about having a bold solution.

Jason: Okay. Let me point this out. My listeners have heard this multiple times. The most expensive thing in business is staff. It's the most expensive operational cost that we have. It is people. We're spending thousands, tens of thousands of dollars even on a team every month. If you can reduce that even slightly through some automation, through technology, through some process, through systems, through less communication needing to happen, then even eliminating phone calls being necessary between two people, or any step that is reduced adds up to a lot of cost savings. It scales once you get to 1000 doors like your size.

It's pretty obvious. It's really obvious. it's difficult for people that are at a smaller door account to pay attention to all these little leaks that exist in their business. The challenge ends up being they just feel like they're spinning their wheels and they're not moving forward. They feel like they're just living paycheck-to-paycheck. They feel like the business isn't progressing. It's because they're not dedicating time towards strategic time in working on the business. They're focused on all the tactical things they need to do in the business.

They have the business that they can do instead of the business that they should be doing, the business that they really want to have in which they're able to focus on strategic time, focus on planning on the future, on growth, on ideas. Instead they're handling leasing, maintenance, phone calls, their team, managing, trying to do accounting, and like all these kind of stuff.

The less tactical work they have on their plate, the better. If you can free up tactical work by leveraging a technology tool or system, you're going to dramatically reduce your cost. It doesn't matter if a tool is hundreds and hundreds of dollars a month. Team members are thousands of dollars a month. That's where people miss the boat.

I hear people so often they say, "Oh that software is so expensive." They're starting out and they're like, "I can't get the better property management accounting solution because it's hundreds of dollars a month." I'm like, "Are you kidding?" Your first team member is going to be thousands of dollars a month. Start with the solution you can live with forever because it's gonna be painful to switch. I wanted to point that out.

Asif: Absolutely. What you were mentioning is key. People don't realize that payroll is expensive. It's one of the largest expense items out there. Doing it manually and not looking at a software solution because you think, "Oh. This upfront cost might be too much," you're not realizing how much you're spending in paying someone to do that manual because the work has to get done. It's not that you're not reaching out to these individuals. It's not that you're not following-up if somebody’s doing this and you're not realizing the cost. The other thing that's also important to think about is the prospect experience. Most prospects that we've looked at are scheduling during weeknights or weekends.

Jason: Right. That's when they're not working.

Asif: Exactly. How are you able to respond to them? I just read a stat somewhere that said when most prospects are looking at homes, they're not only looking at your listings. They're looking at multiple listings in that area. If they don't get a response within a few minutes, a few hours, or a few days, and you don't get back to them, they're going to move on to the next one. They're not waiting for somebody in your office to respond back to them.

That's what's ShowingHero does. With our tenant portal, we create a richer experience. The moment that somebody is interested in a property, they get information about the property that the property management company puts out. There's the picture, the details, what schools are nearby, what's the walk score. What are the important factors that allow me to make a decision about this property and then be able to have a response to instantly say, "Hey, this is when I can schedule a showing and that am I qualified?" The pre-screening also allows us to gather more information and that creates a richer experience on both ends. Making sure that the prospect feels that they're getting responded to and that allows them to hopefully sign that lease and sign on the dotted line quicker.

Jason: You mentioned experience and you mentioned the service level that people expect. The customer experience is what I'm talking about. You get two camps of property managers. You get some that fear automation. They're like, "Oh. I can never use this AI tool or I can never use this automation because you're cutting out people." They pride themselves. It's like this badge of honor that they wear on their shirt sleeve that they're so personal. They do everything themselves. They think that that means they're providing a higher level of service.

"Oh well, I'm going to deal with every tenant directly. I want to see them, know them, taste them, and smell them. I'm doing the best thing for my owners. I'm so connected." They wear this badge of honor. It's not scalable. There's this myth that that means it's better that they're able to provide better experience.

Asif: It's not consistent. Automation doesn't take away the personal touch right. ShowingHero allows you to customize everything. I'm going to let Zee talk about how it helped his company grow with that because that was an issue that him and I discussed in detail and saying, "Are we taking away the human touch?"

Both of us thought that automation doesn't take it. It allows you to standardize and make that process simpler and more efficient. You're not going to know how your agent goes and respond to every message and email. You can't control that. You can create culture, obviously, and that takes time. But what about if I can be able to put that in an email or in a message or in my branding that then gets the same process goes out to every prospect every time?

Jason: [...]. I know that every renter that's rented at least a handful of times or even maybe once has had a bad experience in renting. They've had difficulties with showings. They've had people not calling them back. They've had difficulties and maintenance. They've all had bad experiences.

When I moved to a new area and I asked around, it's pretty obvious when you ask people. They know which management companies are good and bad. They talk about them. I don't think people realize that the tenants are screening management companies as well. A lot of them will look for a good management company because they dealt directly with an owner that was terrible, wasn't attentive, was busy working, not available, wasn't following laws, wasn't on the up-and-up on things, or was shady.

A good management company provide consistency. They follow the law. They do things in a timely fashion if they're healthy. They have good a good service experience. I know from my own experience, I appreciated not having to talk to a person in order to get things done that I wanted to do. I just wanted it done. I wanted it quick. I wanted to get in and see the property quickly. I wanted to get maintenance requests done quickly. I didn't need to talk to somebody, do all the niceties, and go through these. I just wanted stuff taken care of.

Sometimes we may focus a little bit too much on customer experience when really the experience they want is just to get [...] done fast. That's it. Get it done and let me get on with my day. "I don't need a friend right now. I need my toilet fixed. I need to see this probably because I need to find a place."

Zee: Jason, I especially agree with that because we have multiple things happening at the same time. One of the big items is if you can exaggerate something. Many people who wear this badge of honor are saying that we care about customer service. I fully agree. I don't call myself a property management company. ShowingHero doesn't call itself a tech company. We call ourselves a customer service company. It's where the customer service is required.

I'm not going to call you, Jason, and say, "Hey. I'm so sorry about your toilet not working. This is so upsetting. You want to talk about it?" No. That's not when you need a call. When you need a call is when you're frustrated. When the property owner is saying, "Hey, listen. I need to replace my sub-zero fridge. That's going to cost me $13,000. Can you guys give me a good option? Tell me something that's important." Not when it's $200, not when we need to schedule a showing. When you're trying to schedule a showing you want to automate that. Then you can focus on the things that really matter.

Customer service is where when it matters. That's what ShowingHero is allowing you to do. Just like you had mentioned, you want to scale. One thing that I got lucky (and I say this very many times) is that I was fortunate. I was able to hear from people like you, Jason, who said, "Zee, don't work in your business, work on it." That made a really big difference because at that time I was a fresh graduate. I just got out of school and I said, "I'm going to start a business."

I did really well in school and I was like, "You know what? I'm gonna try and listen to people because I know nothing about property management." I didn't come in with any of my old ways of doing things. I was like, "I just need a try." From day one.

I got to hear people like you, Jason, who said, "Listen, skill. Focus on growth. Don't focus on saving a few dollars by going and doing showings. One of the first things I did when nobody was doing it was I got epayments. I got esignatures for leasing. Many prospects would be confused and then they would call in. We would get reviews that, "Last time I signed a lease, I had to meet the person there, and we were there for three hours. This time it took 30 seconds." Now, esignatures are commonplace. Everyone is doing it.

But the guy who wears that badge that says, "Hey, listen. You know I want customer service. I want to sit there and explain the lease." No, that's not what you need. You need to be able to answer the questions that they have. Figure it out. Get the maintenance done in a timely manner. That's what's showing here does.

What we have done is also with cost. We've made it very customizable. One thing our clients do is they're saying that, “Hey. All the automation really helps us because then when we go to a showing we can focus and say, ‘Hey, which one?’ We have open houses. The prospect is going to go with it. We're going to get multiple prospects coined for one showing.” If you have six or seven people at the same time, you want to pick who is the correct person. That's where customer service comes in. I feel like that's where you should spend time.

Jason: Going back to my earlier question (because everybody listening is wondering), how does this compare or how is it different than Tenant Turner, ShowMojo, or Rently? These are the three tools that have been in the marketplace for a while. A lot of people are using it. I've heard the most about those. What do you feel is different about ShowingHero?

Asif: Zee, feel free to jump in. One of the things that I feel that we have, that is the most unique is building on our founders experience and those on our board. Zee, we also have Sean, who's also on the board, bring over almost two decades of property management experience.

Both of them have been very successful. Zee have been able to scale from where we were. I was in the beginning a few doors to 1000–1500 plus doors. I went in as part of the largest franchisee and has been able to establish himself. To be able to use that knowledge and expertise, we can all appreciate that that value is innumerable.

Using his experience allows us to understand the pain points for scalability. That's one of the leverages. Because of his network, we've been able to look at different integrations. We've been able to look at different features that we've launched and to really figure out what's the next trend. Luckily (or unluckily) for him, we also do a lot of testing on his property management company. We're like," Hey. We have this view feature. Let's push it out to him."

Jason: Zee's the guinea pig.

Zee: Yeah. In this scenario, it's a happy guinea pig because these are things that many people will come up to us and say, "Hey, we need to do this. Is this something that you guys can do?" We're looking at it and we say, "That sounds amazing." We can vet a proposal much faster because I'm looking and I'm like, "That makes perfect sense. I've dealt with that." Property managers deal with that every day. We're not fixing things. It's not a novelty solution. When we look at a problem, we're looking at it from the property manager’s eyes.

Many of our clients say that they appreciate the fact that we're a property management software that's built by property managers. We feel their pain. We understand their pain fully. I have been in the trenches (I'm still in the trenches). It makes a really big difference. One of the things that we have is the fact that we try to build a system that's customizable. We have vendor portals. We have very many features, Jason. A lot of our customers are ecstatic about the fact that we're feature-rich, but we're agile. We're an agile software which means that we can move quickly.

One of the things that I thought was a major disadvantage for us is it's obviously an advantage also but we were the new shiny product out there. How can people trust it if they have no one else that has tried it. That's where we got a little lucky. We got a little fortunate because my network of people were like, "Zee, you know what? If you've built something, we're happy to see what it's about."

Sean Kingman said, "Hey. Let's try this," and that's how it caught on fire. We just started. We're a 2017-2018 product. We've only been around for a very short time. The reason why we're many times being added to conversations is because our customers see it as client success is very important to us and we know property management. That's a very big differentiator. When it comes to features, Asif could talk for like six hours. Jason, you might get a little bored. You might think some of these things are really cool but six hours, I don't think we have.

Jason: Maybe we'll get into a few features that Asif thinks are really cool. Before we do that, I just want to touch on what you said that there's fundamentally the intention from the ground up of what a company is involved in significantly changes all of the outcomes and the product that they create. If people start a product because they think, "Hey. We're really nerdy and we're really cool tech people. Let's make something really nerdy and see if we can make some money off these property managers." That's very different than having an intention from the ground-up saying, "Hey, we need to solve this problem for ourselves. Let's see if we can do this towards scaling the business."

Your focus from the ground-up was, “How can we focus on scaling this? How can we lower operational costs? How can we systemize things and reduce time? How can we speed up the process? How can we focus on the customer service aspect so that we're getting a high level of positivity throughout the experience for the customer?” That's a very different focus than I'm just focusing on being really tech-savvy and making something really nerdy and cool, and throwing a bunch of features at it. The whole goal to grow in scale is significant.

Just like in DoorGrow, our intention, our fundamental mission (like client-centric mission statement) is that we want to change and transform this industry, and have an impact. We get to do that through hundreds of clients that we have and create that ripple effect. I really do believe that good property management can change the world.

You can have a significant impact on hundreds of thousands of families lives, home, money, property, and investments. This is fundamental to your owners and the tenants lives. That drives our mission and our vision, and we want to have a real impact with our clients. We've done things that, probably from a business standpoint, makes sense for us but it was towards our vision and our purpose. It's not always about the bottom line or about the dollar.

I'm sure with you guys, you've made little changes and little differences between what you do. Maybe some of the others isn't on squeezing a dollar out of a person or just implementing some cool piece of technology. It's just like driving down the road. It's the little adjustments that you make to the steering wheel. You end up in a very different place. You stay on the road. But if the steering was just slightly off from the very beginning and you don't adjust it or if you're flying an airplane, you will end up in a very different place. You'll be off the road. You'll be in a different city if you're flying. It's the little things that end up making a big difference especially later on down the road.

Vision and purpose is what keeps a business in alignment and keeps it moving towards benefiting the consumer and benefiting the target audience that you want to serve. You are your own target audience which is interesting.

Asif: That really does help. I was just going to add. Zee and I both agree with you on this point. one of the most important things that I've learned in this journey is to listen. To listen and understand.

Zee and I had a vision and said, "Okay, look. These are the problems that we're facing. Let's understand and how do we solve them." We've solved a solution and I said, "Look, I want to make sure that customer service is really important to me." Perhaps, it's a millennial thing. I want to get something, get it done fast, and I want to be treated well while doing it.

For Zee, it was customizations that were really important. He said, "Look. I need this but I know that someone in my network has a different profile and might not want this. I want to customize this for myself." Even though we have both of those pillars to guide us, we listen to each of our clients to understand, "What is it that you need?"

While we're driving to this destination in the car, for example, are we checking to make sure that we're headed towards that way? Are we checking our blind spots? Are we checking our biases to understand where that is? Then also, looking ahead 5-10 years, what are the integrations and technologies that we want to start implementing today to make sure that we collectively push property management to the next level?

Whether that's looking at virtual reality, whether that's looking at AI, looking at learning, looking at voice, what are these tools that we can start leveraging and using to help push property management to the next level while also understanding the realities of today? And then learning from the best practices. That's both from Zee and then from our clients. That's where that mixture has to happen and that's where that perfect blend is.

Jason: You also said you have two camps when it comes to software creation. You have those that are more of the camp of, "We're going to create things the best way and everybody else needs to do it our way. Our way is the way they need to fit their business into our model or we're just not a fit for you." Then you've got, "We're going to allow this to be flexible for their business and listen to our consumers and we're going to make adjustments for this."

I'm not saying either one is better than the other. They're just different. Somebody may create the ultimate solution and somebody may create something. It sounds like your focus is on customization. It's something that can be adapted to their business model. Can you explain some of the differences between some of your customers that might show up in your software, feature-wise?

Zee: One of the things that I could be able to say is just like you said. We have this idea of saying that we have a product it's going to help you in many ways. But we want to customize it. People run their businesses differently. We're still going to provide best practices.

We have our client success team. We have our senior consultants who are saying, "Here's how many of our customers are doing this but here are options." When we're doing customer check-ins our customers are like, "I'm thinking about doing something like this. How can you help me?"

I'll give you an example of a feature that really differentiates us but it makes us proud. I'll tell you this that many times our customers are saying, "You're giving me a lot of good data." Once you have over 300 listings, 300 properties under your portfolio, you need data to run your business, so getting a lot of data. But sometimes it's not actionable data. You want to say, "Okay. Yes, cool. I'm getting a lot of showings. I'm getting a lot of leads."

What we've started doing is because our customer came up to us, we did a beta across around 30 different customers, and said, "Is this something that you guys care for?" We were looking at and we said this is something important and it's simply performance alerts. Something that comes in, gives you actionable data, and says, "Don't tell me how many showings I have. Tell me how many properties are not getting showings."

"Instead of me going through 70 of my active listings, tell me what's actionable data." They tell me, "Here's where my problems are. This is a list of problems."

You can ask that you receive this performance alerts on a weekly basis, on a daily basis, on a monthly basis. You're getting this information that says, "Here are all your listings that have less than X number of photos. Here are all your properties that have had less than five showings." This is such simple stuff and we looked at it and we're like, "This is a no-brainer but this helps a company."

Now, we get reviews. We get thank you emails. Asif was just showing me a thank you email yesterday. He was like, "This is a customer saying that this has made their life easy because the leasing manager in the office says, “Now I don't have to go in and look for the needle in the haystack. You guys are making the needle have a halo all around it."

Jason: Yeah. It's helping them see gaps. It's helping them see blind spots in these properties that they're leasing because the more properties you have, the more common those blind spots and leaks probably occur. "Oh, no. We didn't get enough photos on this one." "These small handful of properties are not renting very quickly over in this market." These challenges. It helps you make different business decisions. You may decide not to take on properties in a certain geographic area. They're just not leasing or whatever.

Zee: Actionable insight is very important. It helps you run your business the correct way. When we're looking at something like the number of leads, yeah the number of leads are great. On average, our customers receive around 2700 leads on a monthly basis. It just might be something that you know and it's very common, but many small customers don't know this. They don't know how many leads they receive on it together because they contact the 15 leads they receive during the day. But how about the leads that came in on the weekends? How about the leads that came in via voicemail? Or missed calls? 2700 leads is a lot of leads.

The problem is that even though you're getting 2700 leads, where's the actionable insight? How do I know which property is not getting the leads? I don't need to work on all the properties and getting a lot of leads. I want to know which property I should be focusing on. That's where ShowingHero comes in.

We have a tenant portal which makes a very big difference because like Asif and you were both talking about, you want a rich experience for the customer. We want to go get prospects to move through the lead pipeline faster and make it easy for them to do this. At the same time, you don't want to have too much work for your leasing staff, calling, making phone calls, asking.

We have the prospect scheduling your showing, going and seeing the property within an hour of scheduling the showing, of submitting a lead on Zillow. That's how quick our turnaround can be. They can just go to the property, validate themselves, securely validate themselves. They're not sending a picture of themselves. They're going through a validation process. This is something that our customers find very important. They're like, "Listen. I don't want to just send pictures. I don't want to receive pictures. How do I know whose picture I received? How is that going to help me?" That's one more step.

For us, what we're doing is we're going through the validation process. The prospect goes to see the property and once they're done with the showing we're going through more validation to go and say, "Did the person leave?"

If everything is working, you're good. If the person doesn't confirm that they have left the property, we inform someone. The most important thing for a large company is to provide actionable data, actionable insight, so that people can move when they need to move. Otherwise, they can focus on other things. That's something that you know helps our clients and is our mantra for us.

Jason: Instead of people having to dig and react—they're always having to go to the data and find, they have to question, ask things, and figure it out, then they're gonna react to these things—your tool will say, “This needs to be dealt with. Somebody checked in this property. They never checked out somebody should go figure this out.” It's letting them know actionable things that they need to be doing instead of expecting the leasing manager to just dig, dig, dig, dig, dig.

Asif: Right. There is data that you can pull and then there's data that's being pushed out. To be honest, we're continuously working on that. It's an ongoing journey for us in being able to understand which data is important, when should it be sent out, how much is too much data, and which one is the most valuable.

As Zee mentioned, 2,700 leads means nothing unless you put it into context. How many properties? Where are these leads coming from? How many are qualified? How many are actually showing up to the property? How many are following through? What are my percentage over application over leads that came in? Is it coming from Zillow? Is it coming from voicemail? Is it coming through another third-party site? Data without context doesn't help. That's what Zee was trying to infer to is providing those actionable items in a context that's valuable to the end-user.

Jason: Perfect. Maybe we should start wrapping this up. Are there any features and frequently asked questions that clients ask that you want to showcase here while we have you about ShowingHero?

Asif: One of the things I do want to mention is that we have a special promotion going on where you can test out the software. I left to look at the marketing team a bit and there's like three or five active listings.

Probably, property management companies that are thinking, "I might not be able to do this," or "I'm not sure this is what it is." I understand that a switch or trying something new is difficult. I understand that there are a hundred questions that you have until we've made it where our first package is entirely free, where you get to test out the software, all of its features, and be able to see that power in being able to make sure that it's the right fit for you.

That's one of the things that we pride ourselves and saying, "We're going to make sure that ShowingHero works for you. If not, we'll try to make sure that we can try to get it there and figure out a solution." There is always a solution to be had. Let's have that conversation to figure it out. That's one thing I wanted your listeners to know that there is a free understanding of that which is low risk for them.

Also, keep in touch with ShowingHero. We're going to be launching some really, really, cool features and integrations, looking at some technology in the AI and the voice space, looking at more creative self solutions that are out there, and all of this should hopefully come to us by the end of this, or Q4, or early Q1 next year. We're continuously trying to grow and listen to the market, and hopefully, we'll be able to respond with some really great integrations.

Jason: It sounds really cool. Someday we'll have to have you come back and [...] what some of these things are.

Zee: We have some cool announcements coming up. I'm gonna add one thing to what Asif was saying. A big thing our customers are saying, customers who have signed up with us around 90 days in, we try to get some feedback and say, "How are things going? What's going on?" One thing that we're hearing from a lot of our customers is that we wish we had pulled the trigger a little earlier and that's why Asif came up with this idea of saying, "Listen. Let's make it a little easier. Let's make it a no-brainer for them."

If a customer is having a hard time making a decision because they don't know the value right away, let them try it. That's where our free tier is. We're 100% okay with, "Hey, come on in." I don't mean to brag, Jason, but I will tell you that as the new shiny product—I say this is pride, I'm going to put up the humble brags hashtag, but I will say this—one thing we're seeing is that when we're bringing these shiny objects out, setting a little bit of a trend in the industry where some of the other people you've mentioned are also adding those, we're really proud of the fact that competition is making the current product base.

I have to put my property management hat on every once in a while and I have to say, "Just when a new product comes around, that means my other offerings become better because they need to compete." I'll give you a very, very simple example, very, very simple stuff. Our pricing model is being copied across many. I don't want to say copied, but I want to say that I feel that people are noticing that property managers respond to our pricing model. Maybe we should offer a similar pricing model.

We have our property pages. We're showing extra data that may not be very easy to pull but we're pulling in the walk score, the bike score, the neighborhood score, neighborhood schools. This is all important information to prospects. Maybe it's not very easy to pull but we're doing it because we feel it's important.

Now, I have noticed that others are also trying to pull a little more information. Maybe not getting as much information as we provide, but it's cool and I like the fact that maybe we're making a little bit of an impact to the industry.

Jason: Perfect. It is fun and it's nice to be able to see the impact. At DoorGrow, I feel like we get to have an impact. I get to have it through the podcast, I get to have it indirectly through my clients, and I can see the industry changing in ways that I didn't expect, but it was our goal. I didn't expect it to happen this soon. The momentum is building and it's really exciting to see your vision come to life. I'll take a tiny bit of credit to that and you can, too, so humble brag for both of us.

Zee: Jason, I'll say this. One of your customers had come by us on in Nashville. They were just crazy about you. They're crazy about [...]. I just have to put this out there that you guys are providing information and help that is very beneficial. I would tell you guys, everyone listening is probably already a customer of yours, but when they're not, they should start talking to you very soon.

Jason: I appreciate that a lot. We have thousands of listeners. I doubt that they're all customers. We have hundreds of customers but 1000. If you're listening, listen to Zee and come talk to me.

Zee: Talk to Jason.

Jason: I love it. Alright. I appreciate you plugging my business and coming on the show. Anyway, it sounds really cool you guys are doing. I resonate with your your ideology and your philosophy behind what you're doing. I'm excited to hear feedback from some of my customers and listeners on your tool. You people can check it out for free, which is bold of you guys.

If somebody has something they can say to their leasing coordinator or to themselves, they can say, "Let's just try out one or two doors. Let’s try a handful of properties on this. Let's just see how it differs. Let's see how it works." That's where maybe you'll start to see some brilliance and maybe get really excited about working with ShowingHero. I look forward to hearing some feedback.

Those of you who are you listening, make sure you're inside the DoorGrow Club Facebook group, our community for the podcast. You get to by going to doorgrowclub.com. People post really real and raw feedback in there about different services and tools. I'd love to hear it. Cool. I appreciate you guys coming on the show. How can people get in touch with ShowingHero and try this out?

Asif: We have a demo page that you can just request a demo out there and then I can share my information to you as well. They can get in touch with me directly in that way through our contact page. What I'm showing here, there's a couple of ways that you can get in touch with us. You can get through our chat box, emailing us, just checking out our website. There's a couple of mediums that you can look at.

Jason: And the website is showinghero.com?

Asif: Yup.

Jason: All right, real simple. Everybody check out showinghero.com. Asif and Zee, I appreciate you guys coming on the DoorGrow Show and contributing to our property management community.

Zee: Thank you for having us.

Asif: Thanks for the chat, appreciate it.

Jason: All right, we'll let you guys go.

There you go. Check out showinghero.com. If you guys are interested in growing your business, if you feel like you are doing it all on your own as an entrepreneur, you feel like you don't have support, you feel like nobody's in your corner, who's in your corner? Sometimes it's not even our spouse. Who's in your corner? Who do you feel is challenging you and helping you level up in what you're doing?

If you feel like you want some support like that, you want to be part of something, you are aligned with our vision of changing and transforming this industry, then connect with DoorGrow. Reach out. We would love to help you see some of the blind spots that may exist in your sales pipeline.

Our vision and purpose at DoorGrow, what we really do is we help align your business towards warm lead generation. We help align your business towards greater trust by shoring up the trust leaks that exist in your front end of your business, the sales pipeline. Because trust is what closes deals. Trust is what gets you contracts. People aren't looking to buy property management. What they buy is safety and certainty. What they're buying is trust.

We can help you showcase trust throughout your sales pipeline and we can eliminate the leaks that scare them off, or that create a lack of trust, or create less trust than maybe one of your competitors, then we can facilitate you growing and adding more doors without even changing your lead sources a lot of times.

Reach out to us. We would love to see if we could help you out show you some of the leaks that may exist in your business. If you reach out, we'll send you access to a 1 hour and 45 minute training called DoorGrow Secrets that will help you see the gaps and the problems that exist in your business. You can to that by going to doorgrow.com/opt-in. That will take you to a page, it gives you a bunch of case studies, testimonials, and it will allow you to get access to that training. Maybe you'll be a client of ours if you get really excited about what we have to offer.

Hopefully we'll be talking soon. Until next time, everybody. To our mutual growth. Bye, everyone.

Download this Episode

Dec 24, 2019

Entrepreneurs dream about starting their own business, but they can’t afford it. How can they reach their financial goals and objectives to fund and grow their business? Most of them borrow money from their friends, parents, and/or credit cards.

Today, I am talking to Bruce Mack of Platinum Trust Group. Bruce is an avid real estate investor and licensed financial advisor. He shares seven options to fund your business and take it to the next level.

You’ll Learn...

[03:54] Option 1: Revolving Lines of Credit Program is easy to qualify for with 700+ FICO score and more than one open lines of credit; no business plan, collateral needed.

[08:55] Option 2: Installment-based Lending Platform features 25 lenders offering $1,000 to $50,000 with lower FICO score, but provable income.

[12:25] Option 3: Business Directed Retirement Account (BDRA) is rollable IRA or 401(k) where funds from previous employers are accessible for specific transactions.

[18:28] Option 4: Transactional Funding for A2B, B2C transactions, such as funds for wholesale flips.

[20:07] Option 5: Platinum Trust Group/Division offers bulletproof asset protection and ability to save passive income money to repurpose.

[24:48] Option 6: Private and Hard Money Solutions with low annual percentage rates (APRs) and 1-2 points to cash out rental property income to deploy on new projects.

[26:42] Option 7: Plug-and-Play Scenario is relationship-oriented opportunity to connect and network with partners and sponsors.

[29:17] Where to start? Typically, it takes about $75,000 to get your business started.

[32:56] Funding Mindset: If you don’t want to go into debt to do anything, it may hold you back from growing your business and generating revenue.

[35:35] Constant Lawsuits: Property managers/management companies that aren’t real estate investors are in high-risk business.

Tweetables

Donuts to Dollars: Entrepreneurs start businesses thanks to friends, family, and credit cards.

Plug-and-Play Option: You never know, who you know. Get your project going.

You’re in the wrong business, if you don’t want to go into debt to grow your business and generate revenue.

Protect your assets! Property managers/management companies that aren’t real estate investors face constant lawsuits.

Resources

Platinum Trust Group

Platinum Financing Group

Real Estate Investor Association (REIA)

DGS 109: Scaling Operations for Property Managers with Tallyfy 0

Transcript

Jason: Welcome to 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 opportunity, 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 the residual income.

At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market and help the best property management entrepreneurs win. I'm your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let's get into the show.

Today's guest, who I'm hanging out with, is Bruce Mack of Platinum Trust Group. Bruce, welcome to the show.

Bruce: Thank you so much. I really appreciate it and you definitely are unbelievable at your opening.

Jason: Thank you. It's built around all the challenges that we've heard in the industry and what our client-centric mission is as a company. I wanted to fold all that into our intro and I appreciate you giving us some positive feedback on it. Bruce, I'm really interested in getting into this.

Today's topic is seven options to fund your business. This is a common challenge of people not being able to afford to do work with us, being able to afford to do the things they need to do to grow their business. This is a common challenge. There's a lot of entrepreneurs that are just trying to operate just paycheck to paycheck.

In order to get ahead and grow the business, they need to find some funding, or get some money, or figure out how to make it work, or save something in order to make that work. Before we get into that, could you give everybody a bit of a background? Let's qualify you, help them understand how you got into what you're doing? Tell us, who is Bruce?

Bruce: Well, in a couple of sentences or at least a short paragraph, I am an avid real estate investor, have been in a three-year period of time. I was able to buy rehab and flipped out over 160 properties. I've been involved with over $92 million worth of real estate transactions, SFR’s, as well as commercial. I'm a licensed financial advisor, prior owner and operator of a credit repair company that was also a licensed and bonded.

I've been around the block. I love working with real estate investors. I speak to them all over the world, as well as nationally and have been at countless events helping folks just like the folks that are on this podcast, to be able to reach their financial goals and objectives, through getting them the rudimentary financing that they need so they can take their business to the next level.

Jason: Okay, great. Let's get into the seven options. I guess we're starting with number one.

Bruce: Okay, let's start with number one. One of our premiere programs that we use on a daily basis is what I call our revolving lines of credit program. Now, the nice thing is with this particular program, is that there are a lot of no's, but these are no’s that you want to hear, not no’s that you don't want to hear.

Bruce: One of the no’s is that you don't have to have a business plan. Another no is that you don't have to have collateral pledged to be able to qualify for this, so if you don't have any collateral, i.e. properties, what have you, or other hard assets, there are no collateral pledges. Another no is that you don't have to have an income verification because it's a stated program. Without a business plan, without having a stated income, without having to go through a bunch of hoops, this makes it an easy qualify program.

The key qualifiers are having a FICO score, ideally north of 700 or 700 when we put you through the program, and having more than one (ideally) open lines of credit with a credit card that would be at least $6000, $7000, $7500 worth of credit limit, and at the time that we put you through, you're ideally at 30% or lower on your utilization.

Let's just say you have a $10,000 credit card. Let's say you have a $7000 balance currently, that would be at %70 utilization. What I'm saying is that we’d like to see that that $10,000 credit card has no more than %30 utilization or that you're not currently carrying more than a $30,000 balance. Now, if you are, because there's too much month, not enough money and therefore you have higher balances, we do have a solution. We do have another funding division that will likely take a look at those balances and work with you to actually pay them down for you, so that therefore your scores will skyrocket to where we need them to be, your utilization ratios will plummet to where we need them to be, so that we get the maximum results.

The maximum results is our average client on a first round funding gets $75,000 worth of revolving lines of credit as much as $150,000 on a first round fund. When done properly and if we have a client that comes to us with longevity of accounts, no derogatory, so on and so forth, of course, that's going to get us all a better net result for the client on the back-end. Again these lines of credit are all at 0% APR for up to 21 months.

Jason: Okay, but the cruz behind this is that they've got to have good credit in place in order to do this one.

Bruce: Well, there's a couple of other if’s, and’s, and but’s, so let's talk about them briefly. Number one, because of that high utilization, we have taken people with scores as low as 620 and just by paying down those balances, they've shot their scores up within a several week period of time to well over 700 and then we can put them through. Today's present credit score may qualify you even if you're not knocking on the 700 door or higher, we need to do a consultation and see if the net effect of paying down those cards is going to get you to where we need you to be.

Secondarily, we do have a secondary program, in as much as if the client can't qualify, but they have what we call a credit partner—maybe it's a partner in their business, maybe it's a relative, a friend—we can use a credit partner to get the same results, thus being able to put them through the program and that could be a win-win. There's a number of different ways we can literally skin the cat to get to the desired result, which is to get the client funded on that program.

Jason: All right. You’re going to help them the pay down process, they can use a credit partner, there's a couple of options there. That's number one, the revolving lines of credit program.

Bruce: Number two, one of our other core programs is we have 25 lenders. We have a platform for the 25 lenders and they are offering on the platform anywhere from $1000 to $50,000. We can stack those offers, so if you were to get two $50,000 offers, obviously you pony those up and parlay them into $100,000. Now, we can take more credit-challenged folks. We have gotten people some funding with FICO’s as low as 580. The key here is that there needs to be provable income, where the income on the revolving lines of credit is stated. These will need to be proved up through either showing the last couple of pay stubs and/or from their doing account validation by showing bank statements, 1099s, a year's tax return or what have you.

Jason: Okay.

Bruce: Very, very simple program, 12 questions asked and answered online, a soft pool with instantaneous pre-approvals and funding within usually a week or a week-and-a-half. This is a secondary program that can be used. We use it all the time and it's very, very effective.

Jason: With these 25 lenders, these would be people like maybe Fundbox and some of the services out there. Would it be like those kinds of companies?

Bruce: Could be, yes. We have our own lender pool that we work with. The nice thing is, there are a number of lenders that you can apply to on the net today, tomorrow, yesterday, what have you, but that's problematic. Every time you apply, you're going to be getting an inquiry. Every inquiry's going to be anywhere from two to several points and it starts to drag down your profile. Worse than that, other creditors that your applying with, see than you’ve been applying.

The way we do it is when you access our platform with one soft inquiry, so it doesn't even show on your report, you're getting one or multiple preapprovals from multiple lenders at multiple options in terms of length anywhere from 12 months out to as long as 60 months or five years. This is an ideal way where you have no FICO hit, no negatives, only positives and you can get the pre approvals before you even press the accept button and go into what we call the final underwriting or the hard underwriting.

Jason: Got it. Anything else to know about this second option? What would you call this second option? You're 25 lenders platform or?

Bruce: Our 25 letters platform or our installment-based lending platform.

Jason: Got it, installment-based. All right, so we’re on the number three now.

Bruce: Number three. Let's talk about what we call our BDRA. Our BDRA stands for Business Directed Retirement Account. Now, many of the people that are on the podcast have a rollable IRA or 401(k). Maybe, they're even working and are aware that they have a roll-able IRA or 401(k) amount. Let's just say that you're currently working at an employer. You may have $100,000 there and your employers told you, “Well, you can't touch that, it's not rollable.” They’re may be half correct, because prior to coming to the existing employer, you worked at another employer. When you're at that other employer, guess what? You had a $50,000 IRA, which you’ve been rolled over to your present employer.

Well, I'm here to tell you some really great news. You can do what's called a carve-out, so you can take those moneys and move them from your present employer, because those were moneys that came from a previous employer and you can automatically put them into what we call our BDRA. That BDRA is a wonderful opportunity for you to be able to access those funds to do what you want and what you want with them.

Jason: That’s called what again?

Bruce: Business Directed Retirement Account.

Jason: Okay, got it.

Bruce: Now, it's not a very, very different than a self-directed normal account. Some self-directed retirement accounts have the ability to give you checkbook capability, which is great. The BDRA coincidentally also does, but many of the self-directed accounts are accounts that once you moved on from your old employer, you've moved them into a self-directed environment so that you can tell your money what you want it to do. The problem with the traditional IRA or 401(k) in a self-directed environment (which many administrators that are out there and offer these types of accounts) is that you cannot use these but for very specific types of transactions.

Let's just take a typical real estate transaction, a house costs $200,000, you have $100,000 in the self-directed retirement account. You need to come up with $100,000. Now, unfortunately, you cannot obligate a self-directed retirement account, a traditional type, not ours, but a traditional type and you cannot take on a recourse loan, because one of the exemptions is you cannot sign and obligate your IRA or your 401(k) to an external obligation.

If you can't do that whole deal inside your IRA, you're pooched. You can't do the deal. Now, there is the possibility of taking on what's called a non recourse loan where you wouldn't sign. However, there are very few and far between. They never go more than 50% of LTV and they're usually a couple of points higher for all the right reasons. You’re only having a collateralized value of the loan. With a BDRA, I've got great news, you can take recourse loans on and it's not a violation of the BDRA precepts.

Secondarily, when you have a normal IRA or 401(k), unfortunately, you're exempt from being able to do what we call inter familiar transactions because they're called a prohibited transaction. Meaning, father-sister, mother-brother, siblings what have you, you plain and simple are not allowed to invest with them because it's prohibited. That is not the case with the self-directed that we have in the BDRA environment.

Third, you can put up to $53,000 of your annual salary into this tax deferred vehicle where you cannot with a traditional IRA or 401(k) that’s self-directed. Fourth, you can use the money for any business purpose. Now, you mentioned earlier that you've got coaching programs sometimes that are $10, $20, $30, $40, $50 whatever the amount is, it makes no difference, but the flexibility of the BDRA is a beautiful thing because BDRA funds can be used for any business purpose whatsoever.

When you talk about a traditional IRA or 401(k), they're very finite, they're very linear, real estate being one of them, stocks and bonds being another, and there's a couple of others, and pretty much after that, you're out of luck. The flexibility that the BDRA brings to the table is phenomenal, and it is a great way to resource funds for enhancing your real estate business not only from the buying of the doors perspective, but from doing rehabs, for potentially using it for marketing money, to expand your net. There's many, many different ways that these moneys can be used that are all in conformity.

Jason: Okay. Alright, BDRA is number three. Number four?

Bruce: We have transactional funding. With our transactional funding, I'm sure a number of folks that are on this podcast are engaged with wholesale flips, where you're doing an A to B and B to C transaction. Well, we have transactional funding. We have $1 million on the sidelines at all time. You let us know, give us a couple of days notice. I mean, give us more notice than that, but within a couple of days, we can get the funds prepared, move them electronically to your escrow so that you can close and not have to be out of pocket if you're the wholesaler, and get the job done.

The fee cost for that is the most reasonable that I've seen in the industry. The cost for funds is only 1.75% and a $495 transaction fee or our processing fee. Call it what you will. That’s another win-win strategy if you're a wholesaler, and you don't have the funds, and you're going to a traditional escrow. This is a perfect, perfect way to make everything come together so that you can get your property sold to that new buyer.

Jason: Is that everything about transactional funding?

Bruce: That's everything about transactional funding. Short and sweet.

Jason: All right, let's look at number five.

Bruce: Let's talk about number five. Now this is an esoteric way of getting funding, but saving the dollar obviously gives you $1 as I put it, redeploy or repurpose and I'm sure we all agree with that, and saving tens of thousands of dollars or more starts to become very, very interesting, let’s tell you how.

On the other side of our business, we have our trust division. It's called platinum trust group. Platinum trust group is dedicated to bulletproof asset protection. I'll touch on that in a moment, but let me talk about the money aspect where you can redeploy. Real estate investors by the nature of who they are and what they're [...] are involved with two types in multiple streams of what we call passive income. The passive income that we're talking about would either be long or short term capital gains and/or lease and/or rental income. That is the sum and substance of what it's all about. One or the other.

With our proprietary trust which we have 58 copyrights on, we've had the trust for over 20 years, we have over 31,000 clients on this program. As a real estate investor, when the properties are sold or the rents are collected, money goes into the corpus of the trust. However, the good news is, you can use the trust for any trust-related activities which would be anything other than what we call food, fun, or fashion. Now you're doing all your business out of the trust.

Don't get me wrong. That doesn't mean you can't buy properties, you can't buy cars, that doesn't mean that you can't act in a fiduciary capacity as a trustee to do everything you would normally be doing on a daily basis. The good news is, that moneys, that long- and short-term capital gains which could be 20%, 30% depending, and/or the income from the lease and rental income, the fact that it goes into corpus and stays in the corpus, and that it’s deferred in perpetuity means you're not going to have the tax bill at the end of the year.

Now, we have many investors who have tax bills in the $50,000, $100,000, $200,000 a year and are paying quarterlies that are enough to choke a horse. We're able to defer up to 97% of that annual tax liability, including the quarterlies, and deferred out in perpetuity, which means in 21 years, after the last of the beneficiary heir’s deceased, i.e., 100, 200, 300 years from now, we now have a vehicle that nobody in your family tree is going to have the tax consequence and certainly not you, and now we've got all of this additional liquidity that we can be using for investment purposes and is a huge win for our real estate investors.

That's only one piece of the coin because the other side of that coin is the bulletproof asset protection, because you can never have a lien or judgment executed against you. It can't happen, let alone your properties because your properties are in the titanium vault of the trust. This is huge and this is a great, great income opportunity and/or savings opportunity for you. I think we're at number six or are we in number five?

Jason: We’re at number six.

Bruce: All right.

Jason: That was number five. Basically. we will call that your trust division.

Bruce: Okay, number six. We have a number of private money solutions and hard money solutions. Solutions that start as low as 4.9% on the APR and 1-2 points. Solutions for clients who have rental income properties and they want to do some cash out. We had even a blanket loan program which is available in 43 states. Again, if you've got properties, we have a solution for you to be able to access a ton of money that you are currently not able to access so that you can redeploy it on new projects. This could be huge for you by our hard end or private money funding.

Should you have ground-up projects that you're looking to get underway, these are other ways that we can access funds for you depending upon what the project looks like. There's just so many different machinations without knowing more. We would really need to sit and talk, but not only can we get you the blanket loans, not only can we get you the cash out refis, we can do multifamily, we can do SFRs, ground-up projects. It just depends on what it is that you're looking for.

Jason: Okay, great and that's number six.

Bruce: That’s number six.

Jason: Private and hard money lending solutions. Let's get into number seven.

Bruce: Number seven is really a relationship-oriented proposition. Because I lecture on a nationwide basis and know so many people, I am constantly sourcing and/or resourcing and putting folks together. I speak. I meet sponsors. Sponsors are always looking for people to act as general partners for with other people who are newer and/or what I would call green peas and vice-versa. I have green peas that are looking for sponsors. Just by nature, the fact that I love to network, love to help people out, and if people are looking for a connection, I'll give you an example.

Yesterday, I had a guy come to me in the Seattle area. He is looking to do a conversion. He’s got 93 apartments that he wants to build in one structure. He’s looking for general partners and money partners and he's got everything ready to go. He’s got the water. He’s got the utilities. He’s got all the zoning. He’s looking for money partners and he's also looking for some management help. Well, we have the perfect fit for him because we have people who are right up in the Seattle area because I've spoken recently up in the Seattle area to 800 people at one event. That’s an easy plug-and-play scenario.

Oftentimes, you just never know. I don't know where you're calling in from on a nationwide basis because I know you have callers all over the place. I'm California-centric but I travel. I was just in Boston speaking to 1000 people. You never know who you know and tell me about the situation, and if there's a possibility that we can help, we certainly can try and plug to good ends into one another so that you can make a whole and get your project going, so you can take it to the next level.

Jason: Perfect. Looking at all these different methods, let’s say I get a client that comes to me and they want to hire staff. They want us folks on marketing, maybe they want to do some coaching stuff with us, they need to get office space, these typical things to get their business going. Which channel would you push them towards first? What would be the best situation for them first?

Bruce: Well, if the need is an average of, say, $75,000 roughly, somewhere between $50,000-$150,000. I’ll kind of use that $100,000 spread. invariably, our revolving line of credit program is the sweet spot and we utilize that at promoter events all the time for that $20,000, that $30,000, $40,000 to get them off the home plate, to get them the coaching program that they need to get them also the initial marketing moneys that they need so that they can really start to get traction and move forward in the marketplace. It's very easy and they don't need to have any collateral. Again, it's a state of program. If the person fits the parameters, it's by far and away, the easiest, fastest, most effective, and cost-effective solution.

Jason: Now, what if they just wanted something smaller? They're just getting started, they're bootstrapping. Maybe they're looking for maybe $3000-$20,000, something in there. They just need to get some additional funds to get some things going in the business. Would the recommendation still be the same vehicle?

Bruce: Depending. Let's just say today the need is $3000-$20,000. Let's just say they've got $100,000 locked up at the old employer that they used to work for, General Dynamics, let's just say. They're taking that money and they're turning it in the stock market, they're getting a horrible return, and they want to take control of it. I would move all of that to self-directed environment and then parse out where you've got total control over it. Then, I would parse out whatever that amount is that you need to deploy for whatever business purpose. If they only needed $3000, $7000, or $10,000 of that $100,000, they get immediately deployed because they have total discretionary use over the funds once it's in their dominion.

Likewise, another one of our programs might be for them to engage with the 25 lender platform. In a request, only request $3000 or only request $10,000, if that's what it is they're looking for. That could be another way to go.

We really need to have a discussion. It's my best suggestion to the folks that are listening because sometimes during the course of discussion, we find a $3000, $7000, or $10,000, may not actually be the sum and substance of what you're looking for depending upon where you are, and where you want to go. Maybe it is. We will come up with based upon your credit what you bring to the table, what's going to be the most cost effective way to get you there.

Jason: Let's address the mindset of funding. I'm sure there's people listening and they want to bootstrap everything. They're thinking, "I don't want to go into debt to do anything." What would you say to that? Maybe that mindset is holding them back from being able to grow their businesses quickly and generate more revenue as fast.

Bruce: I don't mean to be pragmatic but I would say they might be thinking about being in the wrong business if they don't want to go into debt. I bought houses utilizing credit cards before. If you go to any REIA, anywhere in the United States—if you're not familiar with the term REIA, that's Real Estate Investors Association meeting—if you go to any Real Estate Investors Association meeting anywhere in the United States and you interview, take them out for coffee, talk to them after the meeting, what have you, you ask them how do they get the funds to buy some of their first properties, I can guarantee you, dollars to donuts, that they borrowed money from a friend, borrowed money from their parents, or borrowed money from their credit cards, to get their first property. Or a combination of all three coupled together to make it happen. They didn't have the money and their checking account. It was a little devoid or little depleted at that time.

Guys, this is truly a leverage play, and an arbitrage play, when you're borrowing money at X because you can make lie times X equally that new number which is the ability to compound on the amount of money that you're using to be able to get you that much bigger amount of money at the backend.

I'm a firm believer in making the right decisions and not getting these moneys for a C shed or man cave. Forget it, you don't [...] it. If that's your ultimate goal, that's not leverage. That's just sheer stupidity, a waste of time, and a waste of money. If you're looking to get these moneys to be able to deploy them in an efficacious way and to utilize them to gain the leverage to be able to get a much bigger payday down the road when you exercise your exit strategy, let's go. Let's make it happen. We're here to help and get you to your financial goal.

Jason: Plant some of these things. I know there's some property managers listening that are like, "I'm not a real estate investor." Some property managers that are running property management companies are not real estate investors. I think many of them are involved but they're thinking, "What about my business? Maybe I need funding for the business." I think the same principle applies. The idea that I want to point out is mindset-wise, I think a business is probably one of the most effective (if you do this well) investments you can invest in a period. Very few things give a return on an investment that a business can. I don't think even real estate, I think a lot of things cannot yield as high of a return as a business that is profitable, and highly effective.

If the investment is moving the business towards those things, I would imagine that it's going to far outplay a 401(k) or any other sort of investment. They might be throwing them dollars towards in the long run. An effective business can yield a huge return especially once they sell it. Or it can just be an ATM machine feeding them once they systemize the business and they step out of being involved in it.

If you're going to that, I think it's wise to say, make sure it's going towards the right thing. It's going to yield the ROI you're looking to get.

Bruce: May I ask a brief question?

Jason: Go ahead.

Bruce: About your audience. I just heard or maybe I misheard, I heard you keying in on property management, and property management companies. Is there a broad segment of your listenership that are in that space?

Jason: Yes. Most of the listeners listening are people that run property management companies. They manage properties for and on behalf of investors.

Bruce: Okay. Let me just say this about that. I'm going to go back to, I think, it was number six. It might've been number five but it was right in there. We talked and drilled down a little bit about our proprietary trust. Guys, I'm going to say it just like it is, you are in an uber high risk business. Property managers and property management companies, they play it simple, they get sued. Facts are one in three Americans get sued. Two in three, 66% of all surgeons get sued. Property managers, I don't know what the numbers are, but everytime I talk to a property management company, they're constantly getting sued.

Just recently, we put on several property management companies who have gotten the trust. Their prime motivating reason was to have the trust be the owner of the property management company so that they would not have liens or judgments that could be affixed to the company. Guys, this is something you definitely want to explore further. It's very important for you because of the high risk nature of the business that you're in.

Jason: Yeah. I agree. I have an asset protection attorney. I think it's a wise choice for everybody who has some asset protection struff going on with things in the trust and make sure the business is protected. Very cool.

We've got several people that I've spoken to even recently. They're like, "I don't have the funds to work with, Jason, but I want to work with you. We're trying to get money." Or they're trying to get their business started. Or they know there's some things they need to do and they can't just afford to do it. How can they get in touch with you? How can they reach out? What's the best way to connect with you and what you've got going on?

Bruce: If you're looking for funding, I'm going to give you a web address. That web address would be platinumfinancinggroup.com. There's a calendar on there. We will get you a complimentary consult. Please, we'll ask you, make sure that you've mentioned that you came from Jason. We always want to know where clients came from.

Jason: Mention DoorGrow and the DoorGrow Show.

Bruce: Please. Please, please, please. That'll get you the complimentary consultation now for financing. When Jason's got great programs which I've heard nothing but fabulous things about, that can be the genesis, give you the capital to be able to move your business forward, and get his programs.

Secondarily, another way to access the programs, as I've said, from the savings from the tax deferral, from the trust program, and/or talking about the trust as well as an asset protection vehicle. Because if you get wiped out, you're done. You know that. This is one way to ensure that you're not going to get wiped out. I would go to platinumtrustgroup.com. We have another calendar there.

The difference between the two, other than the information that you're going to find and the calendars that you're going to find is that the calendar times that you're going to get blocked out for are quite different. If you go to platinumtrustgroup.com, we're going to block you out for an hour. We can talk about trust. Likewise, we can also talk about funding should you have an interest in both.

If you strictly go to platinumfinancinggroup.com, you'll be directed to a calendar for 15 minute blockout. Just be aware of that. When you make the choices to where's the best entry point to get in touch with us.

Jason: If they're really looking at everything and they want to get the full kit, the best place to probably to go the platinumtrustgroup.com. You can also help them with the financing side of things as well.

Bruce: Absolutely.

Jason: Perfect. Bruce, it's been fabulous having you on the show. Thanks for taking us through all the different options. I wasn't aware that there were so many different options for funding. I appreciate all the info that you're able to share with us today.

Bruce: I certainly appreciate you're allowing me to come on your show. It's been a pleasure. I look forward to chatting with you guys. We'll get you taken care of. We'll get you the funding so that you can take your business to the next level and protected as well at the same time.

Jason: Fantastic. One thing I just thought off. A lot of our listeners run property management companies. They're all connected to investors. Do you have a sort of program or a relationship that you can make with these entrepreneurs that are working and dealing with lots of investors trying to get them into multiple properties and new properties?

Bruce: Absolutely. Not only that, we need to talk because we have an affiliate program. Give me a call, let's have that discussion. That's a whole other discussion and another income stream, potentially, for you. I'm glad you mentioned that, Jason. That was a great heads up.

Jason: Perfect. Bruce, it's great to connect and I will let you go.

Bruce: Thank you so much for the opportunity again. Have a great day, have a great weekend.

Jason: If you're a property management entrepreneur, who wants to grow your business, who wants to add doors, you're looking, you're feeling a little bit stuck, you're dealing with some of the typical challenges, you're trying to do SEO, pay-per-click, content marketing, and social media marketing, you're just not getting the ROI, you're not adding the doors you're wanting to. There might be something different. There might be some things that you're missing. You might have some leaks in your business that you can't see. Reach out to DoorGrow. We'll help you shore those leaks up. We'll help you get on a trajectory of growth. I will be honored to be able to coach you through that stuff. We can certainly help you redesign your website.

If you need to go and test your shiny new website or your old website, go to doorgrow.com/quiz. See if it's got some leaks there. You could be losing tens or hundreds of thousand dollars in future ROI every month depending on how many leads or deals you are missing out on because your website isn’t upgraded. I want you to have an A+. Talk to DoorGrow and let's see if we can help you get that taken care of.

Until next time, everybody. To our mutual growth. Bye everyone.

Download this Episode

Dec 17, 2019

Wouldn’t it be wonderful to sleep at night, knowing things are done right and no tasks are falling through the cracks? Unfortunately, many businesses don't have the tools, know-how, or means to document and scale their workflows.

Today, I am talking to Amit Kothari, co-founder and CEO of Tallyfy. Small- and medium-sized property management businesses use Tallyfy to easily scale operations and document their standard operating procedures (SOPs) to improve workflow and mapping processes.

You’ll Learn...

[03:29] Purpose of Tallyfy: Pain point that had to be fixed. Tool was built to help companies document, scale, and run processes.

[05:32] Process vs. Project: A process isn’t a process unless it repeats. A project is unique every time.

[05:50] Do you have processes? What are they? Document them in a structured form.

[06:10] Collaboration for Continuous Improvement: Who looks at the processes? How are they updated? What needs to be done beyond creating a static document?

[08:10] Forget Flowcharts: Too complicated and too big. Switch to simple checklists focusing on next step in the process for specific team members.

[15:38] What’s next for Tallyfy? Chat-based interactions and plug-in for Slack.

[16:48] Property managers can sign up for a free 14-day trial. Tenant/landlord screening, onboarding, eviction, and maintenance workflow templates are available.

[18:05] Suggest Improvement/Idea: Tallyfy prompts and incentivizes documenting, reading, and making changes to improve processes.

[23:54] One interruption can cost 18 minutes of money and productivity.

Tweetables

Tallyfy: Sleep at night, knowing things are done right and no tasks are falling through the cracks.

Customer Experience: Awesome for everyone, including tenants and property managers.

To reliably and scalably grow your company, you need processes, not projects.

Functional is fine, but easy, fun, and engaging Tallyfy app makes workflow even better.

Resources

Tallyfy

Process Street

Slack

DGS 108: Reporting Rental Payments to Credit Bureaus with CredHub 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.

My guest today, I'm hanging out here with Amit of Tallyfy. Amit, welcome to the show.

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

Jason: Glad to have you. I'm going to share with the audience your intro here. Amit is the CEO of Tallyfy, a workflow software product that specializes in helping small- and medium-sized businesses scale their operations. Tallyfy enables anyone to document their process or SOP (standard operating procedures) and to launch/run it in a team of people while also being able to assign tasks to clients and people outside the company.

Amit founded Tallyfy after decades of experience and mapping processes as flowcharts and noticed that while everyone makes flowcharts, nobody actually follows them while they are working. Very true. Tallyfy is being used by various property management companies to run operations like on-boarding and off-boarding tenants and also handling complex, repeatable real estate sales processes. This sounds really cool, I had not yet heard of this. Our topic today is scaling operations for property managers. Amit, tell us how you got started with this, give us some background on you.

Amit: Yeah, sure. I'm British, first of all. I came to the US four or five years ago and I spent a while, basically, helping people improve workflows, mapping processes, things like that. It tended to be mid-sized companies, large companies. It turns out that many small companies don't really have the tools, or know-how, or the means to actually go and stop documenting and scaling all their workflows.

That's where I noticed the opportunity that what if the rest of us who were not large companies actually had a simple tool that let us go in and just document a process, scale it, run it, and basically sleep at night so that we know things are done right, none of the tasks are falling through the cracks, and the client experience, ultimately, is completely awesome for your tenants, for your clients, whatever you want. It was just that vision that it doesn't have to suck that much.

We founded Tallyfy five years ago and raised some funding from Silicon Valley so we went through a bunch of Silicon Valley accelerators, we're now based in St. Louis in Missouri and it's just growing crazy right now. It sounded like other people agreed with our vision that they want to document and scale their operations, too, so here we are. Now, we're still figuring things out but that's how we go here, that's a fairly simple story. There was a real pain, we had to fix it, so we built a product that fixed it.

Jason: Got it. Take us through how this is different than some of the other tools that might be on the market, what people are using. Let's get into the problem that exists which was mentioned in your intro, that you create these complicated processes, or maybe have none, or maybe it's just a Word doc, or you've got a flowchart, but people look at it once, maybe a few times when they first on-boarded, then they think they know it, and then they ignore it.

Amit: Let's start with the problem that's really the problem. The first problem is that you don't have any process whatsoever. That's not great. It's probably worse just sitting down for a minute and just saying, “What is it that I do? How do I do this thing? Does it vary a lot every time I do it?” because remember, a process isn’t a process unless it repeats, otherwise, it's just a project. A project is something that's just unique every time. To really grow your company reliably and scalably, what you need are processes, not projects.

The first step is, do you have processes and what are they? The problem is if you haven’t written them down, we're a great tool to begin to just start writing them down in a structured form. If you have a process which is either a Word document or a flowchart, say you have one and it looks like that, the problem is, again, like you said, who looks at it? How do you update it if you keep improving it? There are things like collaboration and so on which you need to do beyond just having a static document because the document is always changing.

For example, when I do a process, I might spot an idea like, “Hey, next time let's do it this way instead.” Now, if I don't remember that or put it down into my main process, when the next time comes around, it will be forgotten. There's this thing about documenting processes which is a problem, but there's also this problem around continuously improving and that's something that often people don’t do because once it's written, it just lies there like in a safe. It's like in a cabinet, it just sits there, dust gathers on top of it. and no one ever looks at it. Really, that's a wasted investment.

We needed you to do both, but now, here's where the problem gets really, really big. That stuff is a problem, that's great. If you're a property entrepreneur and you're on your own, you could start that way, but imagine you hired an intern, you went into business with another property entrepreneur, or you have a team of people who do things for you. Now, the problem compounds about tenfold because whatever's in your head has to be in a place, otherwise, someone else is not going to be able to read your mind, especially if they’re new.

It helps new employees see how you do things, which onboards them much faster. It makes sure that lots of people, as you hire more people and you grow or you partner with folks, they know how you do things successfully as well. The reason we don't like flowcharts is because they're just way too complicated. I've seen flowcharts that are so big that if you try to print them out, they would actually print on an A2 size paper. It's so big, it doesn't even fit on my screen right now.

Jason: I've seen some print out there of a property management flowchart processes and they had multiple sheets of paper and they taped them together.

Amit: I admire people who have the tenacity to document an amazing process like that. The trouble is are you really going to look at that seriously? If it doesn't fit on a picture frame, who's going to use it? Often, we found that just having like simple looking checklist-type things is a lot easier for people to follow. It works on phones because a lot of people are out there in the field. They're showing people houses or doing stuff like that, so it’s got to work on a phone or a tablet. A flowchart doesn't fit on a phone. It doesn't even fit on a piece of paper, so how is it going to fit on a phone?

Devices that are small require checklist and things like that. We were the first app initially that launched this. A bunch of other people came out, but we initially create the idea of conditional branching, so if-this-then-that. In other words, if the tenant is this kind of tenant, then show this task, otherwise, show this other task. You can automate all your decisions. too, which means that there's no guesswork that people are doing. It's just like, “Hey, here's a question, we hit the answer for the question,” and the next question pops up just like magic. It handles that real-time workflow for people who are bigger teams like 3 people, 5 people, and even 50 people. In fact, the more people that turn up, the more useful the app becomes.

Jason: Interesting. This is really popular right now in the property management industry, we've had Process Street on the show before, which sounds similar, there are some things that you guys have in common. What do you see is the difference between these two platforms or systems?

Amit: It's left up to whoever's listening to judge the difference there. We don't know how they work, we don't really know that much about them, to be honest. One thing we did start the company believing in and having real experience in is improving workflows and mapping workflows. I spent a decade in London just mapping workflows. That was my actual job, mapping workflows and this is not a get-rich-quick scheme. This is a pain I actually had for 10 years. I think having real experience in the area is probably a really beneficial thing if you're trying to build a tool for that. If you try to build a tool for property entrepreneurs but you've never been a property entrepreneur or a landlord, it's going to be really difficult. That's one thing the whole team has right now in the space.

Then, a real UX focus. I do think that functional is fine but an app that's like Slack—we love Slack because this is such an easy app to use and it's cool and it works—we love some of the UX pieces around making things easy and just making it fun. There are a lot of checklist apps, but they look really boring, so what things can we do that does make it engaging, fun to think about the design, the experience of somebody using the app. We’re thinking very hard about that and I'd like to think we're probably at the edge when it comes to really making that happen, making it an engaging experience, if you will.

Jason: One of the biggest challenges with software is adoption, getting people to use it. Me personally, I'm a visual guy, so if the software is ugly and gross, I don't want to use it. It's a thing for me because I'm going to be living in that software and working with that software, I want it to be aesthetically pleasing and intuitive. It's a big crux of user interface and user experience design and that’s something I pay attention to.

Amit: I'll give you one example of how it's different. We don't use checklists. In the actual user interface for Tallyfy, you won't see a checklist. You're probably wondering why like, “Does that make sense?” It does make sense because if you think about it, the first thing people see when they look at a checklist is a boring bunch of tasks that they're not going to think about, they're just going to mark them done even if they didn't do them. Seriously, I’m not kidding you, a lot of people just mark a task done even though they haven't done it.

Jason: Yeah, it happens a lot. Then you have to build in these weird checks and balances to make them prove that they've completed it, put in their names or put in details so that step that you’re just created.

Amit: Exactly. To answer your question what's different about our app, we've thought through these things because we've watched people do workflows for 10 years. One of the things we do is what we call a card. A card is a rectangular shaped thing and it invites collaboration. It's not just like, “Oh, I'll just mark stuff done,” but, “Maybe I have an idea to improve it. Maybe I need to chat to my friend, Jane, about something I don't understand about this task. Or maybe I have to collect some information of that task.” It encourages more engagement, we're seeing more engagement on our app with actually doing workflows.

Honestly, if you want a checklist, you wouldn't need an app. You could just use any to-do app. It's only when you're in a team when you need to track between people where these kinds of apps become really useful. It's little touches like that which honestly needs a lot of experience to think about, things like that, those experiences that make us a little bit different from some of the others. It's just like we experience in the field of watching people do this and design thinking. That's what makes Tallyfy different.

Jason: In Tallyfy, would you say that instead of seeing a checklist, they see what is the next step that they need to be focused on? Is that the focus design-wise?

Amit: Yeah. We often found that people don't want to see anything but the one thing that they need to do right now.

Jason: What do I need to do right now. Right, yeah, what's next?

Amit: What do I need right now, yeah. Imagine if you saw a list of 55 tasks, wouldn’t that be scary? That’s just like, “Oh, my God, it’s so boring, I'm just going to mark everything done even though I haven't done it.” It's things like that that are so important that no one really thinks hard about them. They think that they can just roll out some app and like, “Oh, everyone's going to use it.” How did you know everyone did what they said they would do? These things with other things that helped solve it.

There are some other things, too, which we're adding down the road which are seriously awesome, especially chat-based interactions which we’re adding with chat tool soon. So, instead of doing tasks, you're actually talking. You’re actually speaking to people on chat while also doing tasks at the same time.

Actually, I might as well announce on your show today, we just got approved by Slack, which is like a chat application that a lot of people use. We just launched our plugin for Slack two days ago. It works beautifully with Slack, with a whole bunch of chat tools. You don't want to see a boring line of checkboxes, I don't think that's going to work out for anyone. We try to think. We're trying to move across the realm of possibility here and make it engaging, make it better for people, so that people actually love doing those workflows.

Jason: Awesome. What else should property managers know about this app?

Amit: It's free to sign up to. We have a bunch of templates which we can help you with, but we often find that most property managers already have processes or things that they already have written down. It's super easy to just move them across to Tallyfy. We could help you with that, too, but there is a bunch of sample workflows that we can also provide. Things like tenant screening, tenant onboarding, tenant eviction, maybe screening landlords, or onboarding new landlords, or even just apartment building maintenance checklists or just things like that.

We have a bunch of samples we can help with, but the thing to really start doing is just go to tallyfy.com, hit the free sign up, it's free for 14 days, and then to reach out to us if you need help because maybe you’ll need help, maybe it's that simple. There's nothing to lose by just giving us a try and we're here to help you if you need it.

Jason: Now you had mentioned that one of the things that's important is to update processes, as somebody moves through a process inside of Tallyfy, is there some prompt? How do you incentivize them, making changes to improve the process?

Amit: Firstly, there’s collaboration. If who owns the process, say it's your manager that owns it, you can just notify them using @ replies saying, “Hey, here's an idea to improve it.” Now, we’re enhancing that around down the road. What we're doing is, as you're doing a process, even if you're not tracking it, you can hit a button that says “Suggest improvement,” (that's actually coming in a couple of months) a real simple button that just says, “I'm just reading this thing, I have an idea, here's the idea.” There's a proper thing that tracks the idea all the way through to the owner and that way, you can do continuous improvement because the person doing the process often has the best idea how to improve it as well. For them, it’s super simple.

Also, I feel like people ignore this question but the reason people have Word documents now is because they don't want to literally launch a process every time, they just want to read documentation like, “This is how I do things.”

Jason: Because it's fast.

Amit: Because it's fast. You don't have to actually track every task, that's just boring. We're launching a plan. By the way, people listening to the show, if you want to trial this plan, we're happy to talk to you about it. We're launching a very cheap plan that's literally less than half the price of all the competitors on the market right now, that literally lets you document and read a process but also improve it.

Take your Word document, which you might have already right now or your Google Doc. Now, think of all the features that you wished it had but it doesn't, like this improvement button, all sorts of other things which are not there right now. Package that in a simple thing that literally costs $5 a month per user. That's what we're launching soon, the ability to just document and read while also improving workflows at the same time. That's actually something no one has really seen so far because so far, all the apps out there make you start an actual process and make you mark every tasks done.

Jason: Yeah, I’ve noticed there's a really fine balance that needs to be achieved between making every single, little, tiny step have to be done, documented, and check marked and allowing the process to be out of the way, allowing the employee or team member to just get work done. I don't go through a huge checklist every time I drive my car but I probably did the very first time I drove it. I was a little nervous, I want to make sure I was doing it right, but once you know how to drive a car, you want to get in, go, and you want to make sure things are right. But you want to get things done and you don't want to hinder your team members’ ability to get work done quickly by making the process overly cumbersome more than it needs to be.

Amit: Yes, because you get that muscle memory, you get into the habit, and you already know how to do this stuff. The last thing you need is now to update some other place to say you've done it even though you know you've done it. I think no one's really addressing that, it's a real issue. We are launching this next month or so.

We're very excited about that because it's also a lot cheaper, it's also a lot faster because you're not expecting people to literally go to their phones and go check, check, check, check, check. They're just reading stuff and as they read, if they need help, they can ask for help. Sometimes, you get stuck. In your example, you're going to start your car. But one day, your car doesn't start and you're like, “Oh, gee. I wonder why. I need help from my mechanic,” or something.

It's at that point when you need actual help because you're stuck at that task right now or you have an idea to improve it. Either one of those things. But that's the only time you have to interact. When you need help or you have an idea to improve it. That's what's coming. That is transformational because it means that you as a property manager or your staff don't sit there getting bored, seeing a boring checklist of things they have to do every day because honestly, some of your people are actually really experienced. You don't need to offend them by making them check a box every time they do some tiny thing.

Jason: Let’s connect it to money. A business owner also doesn't want to pay twice as much for a team member to do a bunch of tasks simply because they're slowing them down at half speed because they have to do something overly cumbersome.

Amit: Right, isn't that completely insane? You buy an app to speed you up and it's actually slowing you down.

Jason: Very possible.

Amit: That could be possible and if you misuse some of these apps including ours, by the way. You could actually have that scenario.

Jason: One of the biggest challenges I've noticed with slowing down team members in my own business in the past was interruptions. For example, we used Slack for a while but I found that Slack was causing so many interruptions with team members because everybody was messaging everybody constantly. The challenge also then becomes avoiding interruptions because one interruption, according to some, costs 18 minutes of productivity. If you have two team members interrupting each other, it's like 30 minutes of labor that is blowing out the door. If somebody's being interrupted once every 18 minutes, they almost feel they're spinning their wheels, so reducing interruptions is also important.

Amit: Right, and the average professional services hourly rate, fully-loaded in the US is $44 an hour. So, you've literally just thrown, was it $20, you say 30 minutes every hour, something like that?

Jason: If members interrupt each other every 18 minutes, yeah, that's almost about 30 minutes of work like you double that because [...] people, you're losing 18 minutes for each interruption. My business is built around eliminating interruptions. This is a focus that we have because the less interruptions, that means the team members need to be able to get the answers that quickly, we want to reduce them asking the same thing more than once, we want to make sure things are documented so that they don't have to keep coming back. If somebody has to say something and I have to tell them how to do it, I make sure they document it, I say, “Here's how to do it, document it, put that into our process.”

Amit: Yeah. Let me tell you one thing about chat, and then Slack, for example, is a chat tool. Chat tells you what has happened, chat doesn't tell you what's going to happen or what should be happening next, chat just tells you what's going on right now, not what's going to happen next or what should be happening next. They're two completely different worlds.

Tarryfy and processes, and Slack and chat, these are completely different things altogether. You could have the best of both worlds, we have an integration to Slack but we're doing it in a non-interrupted way the integration that I'm talking to you about. We're very conscious of that design experience because it is annoying, because everyone feels like checking their chat all day long like what messages they got and things like that.

Jason: I’ve got 20 notifications, am I going to read all of them?

Amit: Right, yeah. We don't use Slack to advertise Tallyfy, I want to put it that way. A lot of people build integrations, but they get those integrations to make people go back to their apps because they're like, “Oh, well just use Slack to make people come back to our app.” You just compounded the problem by interrupting someone every five minutes with some notification. We're definitely not going to do that.

What we're doing with Slack is quite different and chat in general. I'm really excited about our future. A lot of it is shaping up right now. If any of these interests you, especially if you're looking to get your operations into one place as a property manager, just be in touch. We're really excited to speak to you folks right now.

Jason: Very cool. I appreciate you coming on and sharing this with everybody. How can they get in touch with Tallyfy and learn more?

Amit: Visit tallyfy.com. The best thing to do is just sign-up. There's a big sign-up button on the home page. Just feel free to check it out, you have nothing to lose, it's free of cost. Once you're in and you get the basic picture of how things work, feel free to reach out, that's when we’ll be most useful to you personally. I'm the CEO and the founder and most times, I often take calls. It’s not like I’m hiding in a corner. I take calls with customers directly. It’s a pretty flat company, we love what we do, and we like being honest with you.

One thing you won't find about us is that we won't try and sell you. If we think this is not going to work for you, we'll just say it's not going to work for you. That’s the kind of fresh honesty many of these product vendors need to have. It's not just a case of pushing you a subscription plan to sell you stuff. It's got to work for you, it's got to deliver benefits, and that's what we’re interested in.

Jason: I agree. We're very similar. I had a phone call today and it was a startup property manager. I just asked, “Do you want me to convince you you should do property management or not?.” I said, “I can go either way, I'll explain to you either one,” [...] an accurate picture and don't jump into something that you’ll regret later.

I’ll wrap this up, I want to tell everybody I believe every business should have a [...]. This is one of the major systems that every business should have. They need a support system, they need an accounting system, they need several different systems. One of the systems they need is a process documentation system. You need some system to make sure the processes are also being done correctly. It's so simple. I recommend everybody check it out and I'm excited to hear feedback. Amit, I appreciate you coming on the show. I will let you go.

Amit: Yeah, thanks for the time, Jason. Much appreciated.

Jason: You just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet in the DoorGrow Club. Join your fellow DoorGrow hackers at doorgrowclub.com.

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Dec 10, 2019

Is there a way for property managers to reduce delinquent rent payments by more than 50 percent? How can residents positively or negatively impact their credit score by 20-70 points?

Today, I am talking to President Dave Haldi and CEO Steve Jarvis of CredHub, which helps property managers report on every resident, including those considered a credit risk. It reports the positive and negative, incentivising tenants to make paying on time their top priority.

You’ll Learn...

[01:47] CredHub: Name change, funding, continued growth, and creating transparency.

[02:06] CredHub’s Competition: Most companies only process and record positive payments, not negative payments on individual's credit score.

[02:28] Bolt-on Technology: CredHub connects and bolts onto rental software systems to validate positive and negative payments via rent roll system.

[02:52] How it works: Provides property managers access to an individual's credit score information reported to credit bureaus and pass-through revenue opportunity.

[03:27] RentCredit Plus includes identity theft resolution services and rental payment reporting to credit bureaus for $3.50 each month.

[04:20] Customer Support: Resolution Services as Customer Support: If there is a credit issue, CredHub takes on responsibility to work with credit bureaus.

[05:35] Doing Good Things: CredHub helps people get back their financial health and credit for payments.

[06:42] Recapitalization: Report all data at scale to achieve goal of growing CredHub.

[07:58] Lease vs. Mortgage: What’s the difference? Educate managers and residents.

[09:13] Audit Proof: Information given to credit bureaus via CreditHub must be correct.

[11:25] Collections: CredHub has credentials to create trade line for property managers.

[11:54] Implementation Process: After CredHub has signed agreement, implementation takes about six weeks.

Tweetables

Increase credit score by 20–70 points; make paying rent on time a top priority.

CredHub: Bolt-on, backend, rent roll, data pole cleansing and reporting at scale.

CredHub: Gets property managers out of credit business, and puts them in property management business.

CredHub reports the positive and negative, incentivizing tenants to pay on time.

Resources

CredHub

CredHub’s YouTube Channel

Fair Credit Reporting Act

DGS 107: Automating and Screening Rental Leads with Cliff Hayden of Show Me The Rental 0

Transcript

Dave: ...opportunity for property managers to help reduce their delinquency because we figured out a way to report the negative or late payments. The program can then help increase an individual's credit score 20–70 points on a positive perspective but it will also impact their score negatively and help reduce delinquency by over 50% encouraging an individual to pay on time and making rent their priority to pay.

It started four years ago, validated the idea, worked with some property management companies locally. We changed the name to CredHub a little about a year ago, got funded, we've had continued growth, and built an automated technology with a dashboard to create transparency of what we had learned from the marketplace. That's what created CredHub and that's where we are today.

Jason: Perfect. There's other companies in the space they that do this. Is that correct?

Dave: There are a few companies but we're a bolt-on technology. Most of the companies that we have come across are payment processors and they may process payments only allowing to record positive payments on an individual's credit score.

Our technology connects and bolts on to the back-end of rental software systems—Yardi, RealPage, Rent Manager, ResMan, et cetera. Therefore, we validate the payment that has been made because it comes out of the back-end of the rent roll system allowing us to report positive and negative.

It also gives the property manager, on-site resident manager transparency to see what information was reported to the credit bureaus once it's been uploaded and helps affect the individual's credit score. So, we're different. We also create a pass-through revenue opportunity for the property manager to make some additional revenue for their bottom line through our program.

Jason: Okay, explain how that works.

Dave: So, we have RentCredit Plus, which also includes an identity theft resolution services because identity theft is such an issue today, especially in larger properties with mail rooms, et cetera. With that, we charge $3.50 for this program that is identity theft resolution services as well as reporting the rental payments to the credit bureaus, both positive and negative, on a monthly basis.

It would be our best results or best practices or we make this program mandatory for all residents. We charge $3.50 per person on the lease including the co-signer and most of our clients charge $7. So, they make a 50% increase of what we charge for the product and for the services that we provide.

In addition to that, we also provide the resolution services, making sure that if they do have a credit issue, we take on all the responsibility to work with the credit bureaus to make sure if something was reported incorrectly, we will fix it. So, we provide that customer support from a third party's perspective, not eliminating the burden to the on-site resident manager and getting them out of the credit business because they're in the property management business.

Jason: Got it, okay. So, Steve, what's your role at CredHub then?

Steve: Yeah. So, I came in to the company about a year ago when we recapitalized the company as Dave said and renamed it to CredHub and that recapitalization was really meant to build this platform so that we could do this back-end, rent roll, data pole cleansing and reporting at scale.

My career was always in automation and travel. I worked for the likes of Expedia and built alaskaair.com for Alaska Airlines and had retired from travel, and was looking for an interesting new project that really had an element of doing good things for people that needed it which, I believe, we're doing it at CredHub. The folks that are now going to be able to get credit for their Rogers payment or are young folks that are credit-invisible or folks that need to get back in financial health back on their feet. It feels really good to be working in this market.

I'm CEO, so primarily looking at business development and strategy finance. The goal here is to really do this at scale nationally. You mentioned what makes us different and David had mentioned that the element of negative reporting of late and skipped payments and its impact on getting residents to pay on time for property managers. No one's really done that at scale.

Like Dave has said, others in the market that are doing reporting are doing almost entirely positive reporting which it's pretty easy. The hard part is this is what we do is getting all of the data reported and doing it at scale. I came in with the recapitalization, with an element to really growing this thing nationally and doing it in a big way.

Jason: Perfect. So, what questions do property managers typically want to know about CredHub?

Steve: Well, one of the things, for me, especially coming into the property management space having been to trade shows, travel, and technology, the core of what we do is really, really easy to understand, which is really compelling. When we talk to property managers, it's pretty easy to get what we do in 90 seconds. Like really, wow, you can report positive and negative to credit bureaus, reduce my delinquency, I can add a revenue stream, and my residents will like it because I'm helping them.

There aren't a lot of questions there. We do get some questions as we roll through closing clients on the legal side. We'll get a legal department and a property management company worrying about disputes from their residents but it's a fairly easy question to answer because the residents have a financial obligation. They have a contract called a lease. It's not that different than a mortgage. Property management companies who aren't being paid by the residents have every right to report that to the credit bureaus. There's an education process that I think we need to go through on that side of the sales process with property managers.

Oftentimes, we'll get questions on whether this is optional. Property management company may want to have this be an opt-in for their residents. That's not how we work. We report the entire file to the entire resident population to the credit bureaus which is what they want. Our program really only works for property managers if everybody's being reported including those that are credit risk.

Dave, do you have any other?

Dave: Yeah. I think a couple of analogies would be and it really creates this carrot with the stick, encouraging people to pay on time and because they require everybody, all of the residents to be reported the messaging is consistent for everyone. It also has helped us because of our platform being so audit-proof because the information that needs to go to the credit bureaus has to be right.

We found that we've really helped clean up the data that we're pulling out of the system because it has to be correct. We provide an error submission report and that report can go back so it's something that maybe the on-site resident manager or assistant manager can help clean up as they're going through their lease renewals or new residency. We found errors or mistakes when maybe a check has come in, it got incorrectly posted.

Because ours is third party, it helps to create checks and balances and the system is audit-proof. It provided an additional layer but easy for people to log into and make the changes. And we support them seven days a week, 24/7 if they have an issue.

I think the other questions that may come up is, "Well, how does this work?" One of the things for a property management firm who works with us, we create a trade line at the credit bureaus. We have credentials and privileges with TransUnion and Equifax so we credential them and create a trade line with the bureaus.

Therefore, if we are working with somebody and we pick a date that we report on the 10th of the month, rent is late at 30 days because we pay rent in advance. If an individual is delinquent or pays late after the 10th or they don't pay, Fair Credit Reporting Act says, "It can't be turned to collections until 90 days." If we report on the 10th, we're going to be 50 days ahead when that person can go to collections affecting their credit score, encouraging them to pay the property manager in full and not having to lose that income that could be the cost of going through collections.

That's a piece that becomes critical in what we do and a lot of questions get surrounded about that but we have all the credentials to create the trade line necessary for the property manager.

Jason: How difficult is this for a property management business owner to implement? Maybe you could talk a little bit about the process.

Dave: The process is we meet with them, we work with them on the pricing, and figure out when it would work for them to implement. Once we have a signed agreement, we try to implement it within six weeks if that works for them.

Once we've got credentials with the bureaus, then our data team connects with somebody in their office. It usually takes an hour, but once we pull the data to get it out of the system, then we go through some testing on our end making sure that the data is correct. Once we've confirmed that, we give them four weeks or a month. Let's just say, we signed a contract in August. We would give them the month of September, lay out a timeline that we work with them to educate their on-site resident managers, create a lease addendum because we know that our best practices if they sign, if they put the addendum in the lease, it gets explained to them helping that education of why it's important to pay your rent on time. Then, they sign the leases with the addendum. We have a template, but we can make changes to the addendum depending on how they want to implement it. And then we would begin reporting on the 10th of the following month or on a mutually-agreed date they want to pull it.

In some states like Washington, with just changing the 3-day evict or 14-day evict, we used to report some property management firms on the 15th but because of that change, they have asked us to report on the 5th. So, we can change the pull date and the report date helping encourage the protection of the property management company for these individuals who are playing the system or gaming the system and not paying their rent on time.

Jason: Okay. Cool. It sounds pretty simple, sounds like a really good idea, really good service. Now, can landlords listen to this, besides property managers, also implement this, or homeowner?

Dave: Yes. We work with any property type or size. If they don't have a rent roll system, we just create a spreadsheet for them, collect the necessary information, and then they can upload the spreadsheet themselves through our portal. We have a variety of ways we can connect and help very managed.

Jason: Very cool. All right. The CredHub sounds like a brilliant idea. It reports the positive, it also reports the negative, incentivizing the tenants to make sure they're paying on time. It gives them the benefit of building some credits so there's a carrot and a stick connected to this. You also have identity theft resolution they can be tied to this that can be a profit center. Ultimately, how much does this cost the homeowner or property manager? Or do they just make money doing this?

Steve: Pass-through revenue model, they make money doing this. We bolt onto their existing system, we help them do the lease addendum with the residents and they actually make money. We like to think of it as a win-win-win. It's good for the residents, it’s great for the property manager, and obviously, we're in business for profit as well.

Jason: Win, win, win. All right. Anything else that anybody should know? How can they get in touch with CredHub if somebody's listening to this and they wanted to get started, they wanted to check you guys out? How can they connect?

Steve: credhub.com would be the best place to go. We have a YouTube channel that has some really simple videos on it, you can link to those from the CredHub website. In fact, our animated “what we do” video is in the hero image right on the homepage. We have a Contact Us section and a there's a form there that property managers can sign up with the number of units they have and we'll follow-up. That's probably the best way to do it is just to come visit us at credhub.com.

Jason: Perfect. Sounds like a no-brainer, it makes sense. I think what you guys are doing is going to help out a lot of people which I resonate with and I appreciate you guys coming out on the DoorGrow Show.

Dave: Thanks for having us.

Jason: All right, we'll let you guys go. So, checkout CredHub at credhub.com. For those that are new to watching or listening to the DoorGrow Show, be sure to like and subscribe. Leave us a review somewhere that would really make a difference and check us out at doorgrow.com.

If you're wanting to grow your property management business, or you're in need of a new website, or you're just wanting to make sure that your business is growing as effectively as it could, reach out. We'd love to talk to you. Until next time, to our mutual growth. Bye everyone.

Download this Episode

Dec 3, 2019

Is pre-screening tenant leads the most time-consuming part of your business? What you need is an online system that advertises, generates and pre-screens leads, automates showings, and turns leads into applications at a reasonable price.

Today, I am talking to Cliff Hayden of ShowMeTheRental, a time-saving tool for automating and screening rental leads. ShowMeTheRental handles the B.S. part of management between prospective tenants and property managers/owners.

You’ll Learn...

[03:05] From Lineman to Realtor: Longest suspension in AT&T history to do real estate.

[04:00] Poor Priorities: Money was goal. Financial success wrecked family/homelife.

[05:15] ShowMeTheRental: System put in place to automate lead screening for tenants.

[06:12] Fulfilling Family Priorities: Money is a tool, now; not a goal.

[07:25] Happy vs. Frustrated Customers: Set expectations of what you expect from them and what they expect from you via questions that filter qualified leads.

[11:25] Where is ShowMeTheRental advertised? All major Websites, including Zillow, Facebook Marketplace, and HotPads.

[15:18] See something you like? Try ShowMeTheRental today to save time and money.

Tweetables

Working all the time costs you family and friends.

Money is a tool, not the goal.

You can buy time, but you can’t get your time back.

Resources

Cliff Hayden’s Email

Cliff Hayden’s Phone: 502-641-8781

ShowMeTheRental

Rich Dad, Poor Dad by Robert Kiyosaki

CASHFLOW Game

Kentuckiana Real Estate Investors Association (KREIA)

DGS 106: Streamlining Business Operations with Jo-Anne Oliveri of ireviloution 0

Transcript

Jason: Welcome, DoorGrow hackers to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors and expand your rent roll, 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.

At DoorGrow, we are on a mission to grow property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, expand the market, and help the best property managers win. So, if you enjoy this episode, do me a favor. Open up iTunes, find the DoorGrowShow, subscribe, and then give us a real review. Thank you for helping us with that vision. I’m your host, property management growth hacker, Jason Hull, the founder of OpenPotion, GatherKudos, ThunderLocal, and of course DoorGrow. Now, let’s get into the show.

My guest today is, Cliff Hayden. Cliff is from a tool called... what's your tool called, Cliff?

Cliff: showmetherental.com

Jason: ShowMeTheRental. All right Cliff, let's get into your background. Tell us a little bit about how you got into this so people get familiar with you a little bit.

Cliff: I got into ShowMeTheRental to save my marriage, actually, and my family life. I worked at AT&T, my real job, when I first started this business. I was an outside plant technician, which is a fancy word for a line man. [...] bucket trucks and put up telephone lines everywhere.

I always wanted something more, so,I got into real estate. You've heard of Robert Kiyosaki? Rich Dad, Poor Dad. My brother-in-law was in, and my sister came back from Iraq. They brought home a game called CASHFLOW. I can remember sitting at the dining room table playing CASHFLOW. I didn't understand that you can buy assets and buy rental houses, and people will pay you and you can make money off of it. That's how green I was when I first started. I knew absolutely nothing.

From playing that game, I actually signed up for a mentorship through Robert Kiyosaki. They helped me buy my first duplex. End up being a horrible deal, it was bad, but it all worked out because in that whole process of getting a loan on it and learning what I was doing, I found our local real estate club called Cria.

I started going to local meetings and I met a mentor, a guy named Mike Butler. He took me under his wing, showed me the road to real estate, and made sure I didn't fall on my face. He was a big part of my success. From there, I worked a full time job and started buying rentals on the side. Long story short, I just started making enough money to quit my job.

Now, cool story that I like to tell is, I do hold the longest suspension in AT&T history. I come from a lower middle class family. I didn't want to quit my job and do real estate full-time. It was a very high paying job for us and a very good job for my family. I just didn't want to up and quit, so got suspended on purpose.

As a lineman, you have to have a CDL license, and they random drug test you. They did pop me a random drug test. I decided I wouldn't take it, which is an automatic fail. Then they suspended me. I took that suspension and turned it into four-and-a-half months.

In the meantime, in the first month of my suspension, I made my whole salary at AT&T doing real estate full-time. I kind of drag it out and then I decided to quit my job and do real estate full-time, which was awesome, because I was my own boss. I had a lot of fun in the beginning, but my priorities were all mixed up. When I first started, my priority was money was the goal. The problems that I had was all I focused on was money, buying houses, and doing everything I could to get money because I thought that was going to make me happy.

What it did is, I became financially successful, but my home life was a wreck. I'm happily married with five children. I would work all day, come home, and continue to work. I couldn't turn it off and it's causing a lot of problems at home. The biggest problems at home is, when I would come home and eat dinner, I would get text messages, phone calls, emails, because at any given time we would have three or four empty rental houses.

All these leads would start coming in and my wife would just get, I call it superman vision. She had that look on me where she could shoot lasers out of her eyes. She would. It caused a lot of friction at home and a lot of problems. I decided there’s got to be a system I could start putting in place to make this more fun, to make this job smoother, and to get my life back, because I was just working all the time. I didn't see my family, I didn't see my friends, I didn't have anymore friends because I was doing nothing but working all the time.

I went out and started putting systems together. One of the systems I wanted was lead screening for tenants because it was our biggest headache. When we get empty houses in our town, nothing to get a hundred phone calls and emails a day. There's no possible way to keep up with those without a system in place. When I tried to find a system, I couldn't find anything I like or anything with a good price point that I like. That's where we created ShowMeTheRental.

What we did with ShowMeTheRental is we took all the problems we were having, created a system for it, and then automated it. What ShowMeTheRental does is, it's an online system that advertises, generates leads, prescreens those leads, automates the showings, and turns those leads into applications. We do all these automatically, with a few clicks of a button, and at a price point that I think is incredible. For $49, you can put it in our system and it's on there until it's rented.

That's how I got into real estate. Over the last six or seven years, I started changing my priorities to live a more abundant life. Now, money is a tool and not the goal. That's the biggest change I've had over the last several years. Now, I don’t miss any field trips. We switched our whole business around and put systems in place so I can be mobile.

That's our new goal now. With the technology that's out there now, and the systems in place, if you just take the time to do it, it's not very hard to do. Now, with all our kids, we travel every summer. This year we went to Colorado for a month, then stopped to St. Louis from Branson, Missouri, and we just get back from Pigeon Forge. We have systems in place now to run our company, so we can be mobile and I can do what's important, which is making sure my kids are good, happy, and productive citizens. That's my quick story.

Jason: Tell us more about ShowMeTheRental. It sounds like a lot of your clients are individual investors. A lot of investors can use this. They can put in their one property when they need to make sure it gets rented. It deals with all these tenant leads, help systemize the process so they're not overwhelmed in it, and filters out some of the riff-raff and time wasting.

Cliff: Correct.

Jason: Maybe you could explain the process of once somebody gets into your system, they sign up. Take us through what's going to happen.

Cliff: I'll tell you our situation. Our situation was, when we would have leads coming in, we would always find ourselves asking the same questions over and over, which were, “Are you on Section 8? Will you sign a three-year lease? How much money is in your bank account? How long have you been on your job?” Simple questions we wanted answered to qualify, to go see our houses, or to rent our houses.

What we did is, we generated a list of around 40 questions that we use and that we think other property managers like you all would use to kind of this thing about big funnel. Take a big funnel people and just get them down to that. Take that 100 or 200, get it down to that 15 or 20 really qualified leads that get access to view your house, so you're not wasting your time.

More importantly, what we learned is tenants get pretty upset going to look at houses they're not qualified to go see. They fall in love with the house, only to find out they don't qualify income-wise. “You don't take Section 8. They don't want to sign a three-year lease.” We set it up for them also, so they'll have a system where they know that if they don't lie on their question and tell the truth, they’ll have a great opportunity to get this house. It could be theirs. We mesh that together so everybody can be happy.

Jason: So really, it reverses the issue. A lot of times, what happens is tenants apply for a bunch of properties, renters will apply for a bunch of properties, and hope that they'll get one. They aren't taking a look at the income requirements. None of these things were filtered when you're looking at Zillow rentals or wherever they're looking to find a property. They're just going, “Oh, I like this one. This looks great.” They're not really aware of what they would qualify for. They're getting frustrated. They're wasting a lot of time. Really, it doesn't take a whole lot for somebody to get frustrated. You see, you go look at a couple of properties that you like, and find out you don't qualify. You'll start to get pretty upset and annoyed, I'm sure as a renter. It would be really challenging.

Cliff: Yes, and there are customers. I call them customers. Just like any business, you want your customers to be happy. You don't want to start them off on the wrong foot. I want to set the expectations upfront about our policies and procedures, so we go into what we expect from them and what they expect from us. It just streamed on that system so much better than what we did before. This way, we're not wasting our time and we're collecting all their information. We can go into that. It's hard to go over on a podcast, but we can.

For guests who want to check out showmetherental.com, it shows you we collect all the lead information and we actually have a cross-reference database, that if they don't qualify for my property but you're in our system, they qualify for your property, Jason, it will send them over to you. We have a system where, when properties pop in our system that they qualify for, it will automatically send it to them. I know based on their profile they filled out and the prescreening questions they answered, that they're qualified to go see that house.

I think that's important and the tenants really like it, because you said it best, it's just such a headache to go to 20 houses and know you're only qualified to rent two of them. I think a lot of people miss that because I think we need to take care of our customers because they're our business. If we don't take care of them, we don't really have a business. If we can get those good customers in there, spread that word of mouth, and get them to know about us, it makes our lives a lot easier.

Jason: What are some of the common questions that a homeowner, or an investor, or maybe even a property manager usually ask you about ShowMeTheRental?

Cliff: I don't know the common questions. The biggest one we get is what websites do we advertise on? We do all the major websites. Zillow, which is always number one, Facebook Marketplace, we just syndicated with Zumper, Trulia, HotPads, Rent Leads, all the major websites. We advertise on every major website.

How this system works is, when you put in on the website through our system, it goes into our system. Instead of them contacting you, they're going to contact our system. They can contact us via phone, via email, and via phone number. Each specific city has their own phone number and how will they contact us. Usually, 90% is through email.

When they go in Zillow and to your property, when they look at it, they'll inquire about it and then we will send them, through ShowMeTheRental, a link to your prescreening questions. From there, they'll answer those questions and if they answer those questions correctly, we will then send them showing instructions based on your preference.

We have five different ways to show the property. Once they looked at the property, we will send them a link for an online application. We provide one, but we recommend if you have your own, you can just put your own application link in our system and it will send them to your application. We use a software company called Buildium. I want everything in Buildium, so I'll have all the stuff already entered. From there, we have our screening service. We screen, we don't offer the service we have in our in-house. We then screen the tenant, get all the information we need from them, and we take it from there.

Jason: Okay. You're not just helping prescreening, but you're also fielding the phone calls. You really are this barrier between the prospective tenants and the homeowner property manager.

Cliff: To me, we're the BS part. We help fix the problem, the BS part of management which is prescreening and leads. I think that is the most cumbersome, time consuming part of our business.

Jason: Yeah. It's a huge time waste.

Cliff: Yes, A huge time waste.

Jason: It just cost a business money. It doesn't make an investor or property manager money. In general, it’s the garbage of phone calls. “How many square feet are on this property that I'm looking at right now?” where it says the square feet on the property. You know, these kind of calls. You guys will handle the phone calls?

Cliff: The system does, correct.

Jason: Or emails, or all that kind of stuff?

Cliff: Everything, yes. It's all automated.

Jason: Okay, cool. You do it on a per property basis. What bout a property manager that has a lot of properties, or an investor that has a lot of properties?

Cliff: What do you consider a lot? To me, a lot is a couple of hundred. If you have multiple properties, we’ll work out discount prices for you. I guess there's no grey area. There is no setup fee, but if you have multiple properties on there, multiple times we’ll work out deals with you. Most of the time it's people like me, who have 30 something properties. We have pretty nice properties. We sold off all our pain in the ass houses. We might have, out of those properties, every year we have two, maybe three turnovers.

I like it. This is more built towards smaller amount of pop we do. Of course, we do take on all the bigger ones, but it's more of, you got two or three rentals a year. If you do have multiple ones, then we'll work with you on prices and make sure everybody is happy. My big goal is to get people their time back. I know it changed my life when I started living life more and stopped worrying about all the money all the time and just started being home and being present with my family, with my kids, and being more involved. That's our big goal, is just to help. You can't get your time back. That's what I tell everybody.

Jason: Right. You can buy time thought.

Cliff: You can.

Jason: The residents experience going through this, what's their experience?

Cliff: What they'll do when they log on to the site, their view is a map of whatever city they're in, it will show different properties. What we try to do, when we market, when they go in, they got to sign up with their phone number, email, and name. Then, we're going to try to get them a profile filled out before they even go into a house. We're going to get a profile filled out of all the questions we have and then we're going to match it up the properties. If they don't go that route and say, they find it on Zillow like I said earlier, then from there, they'll just get on Zillow, find a house, inquire about, and they'll answer the prescreening questions from there. If they qualify, they get to see the house. If they don't, it just tells them they're not qualified to go see the house.

Jason: Got it. So just kind of kills it there.

Cliff: It kills it there so you don’t have to talk to them. You seem like a nice guy like I am. I don't know how many times you've been on the phone and you have to tell them, talk to them for 15 or 20 minutes and they go on for 15 or 20 minutes, and you don't want to hang up because you want to be nice. It’s just a headache. It takes care of that headache. Managers had that conversation, I know all of them have. All those conversations are gone, which is a big blessing.

Jason: One phone call is probably 10-15 minutes, because you have a nice intro on the call, you have to be cordial, they're going to have some questions, you want to answer those questions, and then you need to figure out how to end and get off this call in a nice fashion. Yeah, it eats up a huge chunk of time.

Cliff: Yeah, huge chunk.

Jason: If it's a nice property, it's in a nice area, and it's priced appropriately, you're going to get a lot of these phone calls. It can be pretty cumbersome and overwhelming if you're trying to just enjoy your day, have a day job, or do something. Besides, I have this part time business of managing a property.

Cliff: Yes, correct.

Jason: This one property. If you have multiple, it becomes even more crazy real quickly. This is something that maybe property managers could use. I mean really, it’s a piecemeal service. It's like “Hey, I need it for this property, maybe not for this one.” They can use it as needed, maybe something supplemental to the other stuff they have going on, like through Buildium or [...].

Cliff: Correct. Definitely.

Jason: Ok cool. Cliff, is there anything else people should know about ShowMeTheRental before I let you go? If not, tell us how everybody can get in touch with you and find out more.

Cliff: The only thing I ask is just give it a try. Check it out. Hopefully, you’ll like it. It's been a huge game changer for us. Like I said earlier, when I come home from work, I'm actually home now, I'm not working all the time, I'm not answering phone calls. I just say, give it a try to see if you'll like it. I think you will.

As far as contacting me, you can reach me anytime. My email is cliff@showmetherental.com and you call me if you have any questions, if I can help you. I do answer my phone only between 12:00 and 1:00, and 4:00 and 5:00. If you call outside of that, I’ll try to call you back the next day. You can reach me at (502) 641-8781.

Jason: Perfect. Cliff, I appreciate you coming on the DoorGrow Show, it's great to have you, and everybody, check out showmetherental.com

Cliff: Jason, I appreciate your help. Thank you, sir. Thanks for the opportunity.

Jason: Alright, cool. I appreciate Cliff coming on the show. If you are a property management entrepreneur that wants to grow your business, one thing you may want to take a look at, that I will mention a little bit is take a look at your website. If your website has been around for 2-3 years or longer, that's the typical lifespan of a website or a design. It maybe starting to look stale, which creates a perception about your business. Once it's get about 5 years old, it starts to get a little bit painful. It's a little bit embarrassing. It looks probably outdated.

The reality is, most of our competitors, when it comes to website design, a lot of their designs were designed 2-3 years ago. The challenge is, you're getting websites, sometimes out of the box, that's already design-wise, behind and outdated. So make sure to go and test out your website by going to doorgrow.com/quiz. You go to doorgrow.com/quiz, test your property management website, take the quiz. It will help you see how effective it is at creating leads, generating business, capturing and creating trust, and capturing and converting people that are visiting on the site. It's really all about trust, instead of just trying to manipulate Google and get to the top of Google.

I'll just point out that the reality that search volume for property management according to Google Trends—you can go to trends.google.com and put in property management, back date it, filter it for the US, back date it to 2004 to the present—is low. It's small. You can compare it to any other term and see this. It really hasn't grown since 2004. In fact, it slightly peaked in 2011, around July, the summer, when property management search volume peaks each summer, but it's been on a steady decline since 2011. There's less people searching. Not only that, but competition has gone through the roof since 2011. Competition has been increasing. Everybody’s pushing everyone to do. This was the game everybody’s playing. It's trying to manipulate SEO, Search Engine Marketing, Pay-per click, and Google Ads.

The reality is, search volume has been on a decline. It's going down, while competition is going up. It created this false scarcity in the industry. I'd love for you to escape that. There's no scarcity in property management, 70% are self-managing their own properties right now. There’s tons of blue ocean. They have problems, they have stress, but they're not looking on Google, in general. If you can identify them, capture them, you have a website that creates and builds trust, and your sales processes optimize for trust, you are going to be the company that they work with.

We want to help you optimize trust in your business, clean up, and short all the leaks in your sales pipeline. Reach out to DoorGrow. We can help you with the website and we can help you with your sales process, your pricing strategy, all the things that affects your ability to close deals. We can help you clean all that up and make your business far more effective at capturing business and going after that blue ocean where 70% are self-managing. Check us out at doorgrow.com. So, until next time everybody to our mutual growth. Bye everybody.

You've just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet in the DoorGrow Club. Join your fellow DoorGrow hackers at doorgrowclub.com.

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Nov 26, 2019

Whether you’re flying a plane or dealing with property management, manual processes based on your own way of interpreting a task doesn’t always represent your brand.

Today, I am talking to Jo-Anne Oliveri, founder and managing director of ireviloution. Jo is a leading authority on property management and author of Find Your Property Manager Now. In this episode, she describes how to streamline business operations.

You’ll Learn...

[05:00] Find your passion, and change your life.

[07:05] Crusade for Courage: Understand property management and real estate from investors’ point of view to pursue your dreams.

[08:15] Build business using deliberate methods, not desperate measures.

[10:35] Singing and Standing in Line: Businesses built on foundation of consistent processes and systems decrease frustration and anxiety.

[17:55] Scalability and Serviceability Platform: Streamline business operations by identifying tasks, each with its own timeline and priority plus corresponding tasks.

[21:28] Brand Culture, Business Vision: Brand relationship is greater than individuals.

[22:18] Selecting Process Software: Depends on your business, but needs to work for your budget, growth plans, and how you want to build your business.

[28:37] Streamlining System Components: Processes, resources, and training.

[33:51] Vision for Success: Every business needs to start with a plan.

[34:24] Default vs. Design: Desperate to make changes due to shiny object syndrome.

[35:20] Task Tracker: Require and verify accountability, responsibility, and transparency via consistency, compliance, and completion.

[40:03] Which is worse: Losing a client or team member?

[44:25] Step-by-Step Process: How to get started streamlining business operations.

Tweetables

How can you run a business when no one is doing a job the same way?

Career by Design: Empower owners with courage to take control of their businesses.

Passionate about crusade of creating positive change in property management.

Businesses built on processes create a foundation, not frustration.

Resources

ireviloution

Jo-Anne Oliveri on LinkedIn

Jo-Anne Oliveri’s Email

Jo-Anne Oliveri’s Phone: 917-969-4066

Jo-Anne Oliveri on Facebook

Find Your Property Manager Now: Hire the Right Agent and Make More Money

Awaken the Giant Within: How to Take Immediate Control of Your Mental, Emotional, Physical and Financial Destiny! by Tony Robbins

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

DGS 105: VIP Paradigm: Vision, Infrastructure, and Process with Mark Dolfini of Landlord Coach 0

Transcript

Today, I'm hanging out with lovely Jo Oliveri from the ireviloution.

Jo: Hi there.

Jason: Hi, welcome.

Jo: Thank you. Thanks for having me.

Jason: Glad to have you. We're going to get into your background first, but before we do that, I'm going to read your bio here for the audience, for the listeners, so they have a little bit of understanding. The topic we're going to be talking about is streamlining business operations, is that right?

Jo: Correct.

Jason: Okay. I'm sure everybody here, everyone listening—clients, friends, property managers—they all could use a little bit of streamlining in the business operations. That's something close to you and to my heart as well. Let me tell me people a little bit about you here. Do you go by Jo or Jo-Anne?

Jo: Jo.

Jason: Okay. Jo is the Founder and Managing Director of ireviloution and PM Leadership Summit Vice-President, First Team Property Management with over 20 years of real estate experience. I don't know what the CIPS or TRC are. What are those?

Jo: CIPS is a National Association of Realtors designations. It’s Certified International Property Specialist. The TRC is Transnational Referral Certification, the very handy ones we have specially in property management we're dealing with people from all around the world.

Jason: Okay. Jo is a leading authority on all things property management and an inspiring force within the industry. As Founder and Managing Director of ireviloution and the Property Management Leadership Summit and Vice-President of First Team Property Management based in the USA, she's an international real estate identity who has trained over 500 agencies, thousands of agency owners, and property managers worldwide. She is seen as a leading authority in all things property management and regularly speaks at the industry's top Australian and North American conferences.

She's also author of the real estate books, Find Your Property Manager Now: Hire the Right Agent and Make More Money. As well, she was selected as an Industry Thought Leader of the Year finalist for 2015, 2016, and 2017 Real Estate Business Awards, and is an Industry Influencer for the Elite Agent 2017 Awards.

Jo is a big deal. Jo, welcome to the show again. Tell me, how did you get into this property management stuff? For those who are watching, I'm hanging out in my son's room. It was the only quiet place today. I've got pug posters behind me for those that can't see. How cool is this kid here?

Jo: All the room.

Jason: Yeah. He likes pugs. Jo, tell everybody, how did you get into this?

Jo: Actually, I came from a business background. We had a family business in grocery stores and convenience stores. We were involved in the 80s down turning businesses. We had very high interest rates, we were paying for our business loan and our home loan, and we lost everything, we have bankrupted. What I discovered is the business I was working in was my husband's passion, it was not my passion. I wanted to find something I was passionate about.

I'm a mom, I had three small children, and I read this book by Anthony Robbins called Awaken The Giant Within. It's an excellent book, it changed my life. I did all of the exercises and at the end of that, it was steering me towards real estate. I was a tenant at the time because we've lost our property and property management is where I landed.

What was really interesting is because I came from a business background, I ended up getting a job with a company in Perth, Western Australia where I originally come from. I thought, "This is an awesome business." There were three other property managers and I was asking them, "What do I do?" They're all telling me different things. I thought, "How do you run a business like this where no one is doing the same job the same way?" They were talking to clients differently, giving different advice. It set me on a path of understanding the business of property management because I saw that there are enormous opportunities to grow a business through property management rather than grow a business through sales.

Hence, I started off on a journey of career by design and I thought, "One day, I want to be able to empower business owners with the courage to take control of their business." Have a business that represents their vision, their brand, and their personality, but for me to do that, I had to understand everything, not just property management but the business of real estate.

Hence, my journey started and I've worked in all areas of real estate with large franchise groups and small boutique agencies, wealth companies to understand how the investor feels. I've purposely invested in real estate myself to understand what it's like from an investor's point of view. It's all brought me to this point here today.

Like you, I'm passionate, I'm on a crusade to empower positive change in the property management industry by infusing business leaders with the courage to pursue their dream.

Jason: Love it. It's very similar to my why or our business why which is the transform property management businesses and their owners. Let's get in to this. Streamlining business operations. Maybe we should start with why this is important.

Jo: Well, this is very important because if you don't streamline business operations, you become what I call, a business built on desperate measures instead of deliberate methods. Everything becomes by default, every decision is by default, recruiting new staff is by default, service promises is by default. You start to become another “me too” property management company where we all start to look the same. You lose sight of your vision and your why. You start to offer property management services in the beginning.

When I was learning everything I could about what’s so good about property management business operations and what goes wrong, I started to see that streamlining systems was a major cause of why things go wrong in property management. That actually made me go on a search and discovery tour of other industries. They had systems and processes and it actually brought me here, to where I'm living right now in Orange County, California.

In 2007, I went to the Disney Institute to learn how Disney creates all their processes and streamlines everything that they do and discover why people will spend. If you're like me and had to travel from Australia to go to Disneyland, you can spend a few tens of thousands of dollars going there taking your family, all the privilege of standing in a line to get on a ride for up to two hours.

I discovered people don't complain. They actually stand in these lines and they whistle and they talk to each other. Yet people call a property management company and if they're not responded to within a matter of minutes they become very frustrated. My discovery was it's because they don't know the process either.

If a company is built on processes then you know everyone who work within the guidelines of those processes including the clients that you're dealing with. That becomes a very, very strong foundation in creating success in any property management business. It’s just critical.

If you look at the other businesses or other industries like Starbucks, it’s all built on processes, it's all built on how do we create maximum efficiency right down to measuring how long does it take for the barista to get the scoop of coffee beans out of the sack and put them into the machine that makes the coffee. If we move the coffee bag 2 inches closer, that's going to save over a period of time, 100 hours every month. It also reduces the loss of coffee beans spillage.

I started to understand the concept of time efficiency through processes and streamlining with systems and related it all back to how do we do it in property management.

Jason: I love it. I love the idea. I mean, essentially what you're saying is that processes just like the example you give with lines of Disney which I don't want to stand in those, by the way, but it disarms people by them knowing that there's process and I think it creates some safety for them.

They really have two choices at that point is to choose into the process that exists or not. But if a process isn't there then what naturally ends up happening is people try to implement or push their own agenda or their own process onto the property manager. "Hey I need this done by here. I need this done at this time. I need them to show up now or this time." They'll try to push their agenda and process onto the property manager because there isn't a clear one for them to see.

Jo: Exactly. Hence, the business starts to become a very reactive thing. You will hear the shock horror stories where a property manager says, "We just lost an owner. They terminated their management with us." We thought they're really happy because we never hear from them. You never hear from them and you never had that contact with them. They're thinking like, "What are they doing? Where's the value that I pay?" So, whatever you do it's got to be consistent across every client.

Again, I'll relate this back to Disney where the people who run the rides, I mean a lot of them are just young kids, they're college kids, and they don't start to get reactive when they can see that the line is two, three, four hours long on Independence Day for the Incredibles ride last year. Everyone stood in a hot sun for four hours. Their Disney cast, as they call them, they just did their job and kept smiling, just pushing the people through and offering alternatives with single rider and things like that. We can learn a lot from Disney.

Jason: I like the idea of what you were saying about just making sure that the process is visible. Something I noticed that you spark the memory. In the past, I had jobs working in IT. When you work in IT at a company, it doesn't matter how good of a job you do. You still are the lowest person on the totem pole when it comes to there being an emergency.

If there's a problem with the server, something goes down in the middle of the night you're on call, it doesn't matter if you're like one of the top executives in the business or you paint really well. If you do everything perfect, nobody would notice and never going to say, "Why do I even pay you?" If there's a problem, they notice and then, they would say, "Why do we even pay you?"

I'm a little bit smart, just a little bit. What I realize is if I was just noisy about what I was doing, my bosses or my superiors would now see that I was doing stuff. I'm like, "Hey, I just upgraded this. Hey, I just took care of this. Hey, there hasn't been any problems with this because I did this." I just started being noisy about the things that I was doing.

I worked at HP for a while as well and I had a boss in Texas while I was in Boise. It was the same thing. He was like, "What are you guys doing? Are you doing this?" He would ask each person on my team, "Is the other one doing their job?"

I just started updating my instant messenger status with what I was working on just so he could see, to reduce that anxiety that he had that we weren't doing anything. Then, he started thinking, "I was the only one on the team doing stuff." So, I think maybe there's the little secret and what you'd mentioned that the property managers need to be a little bit more visible in what they're doing to maintain these properties in letting people know that, "Hey, we did something here," and keeping the owners informed so that they go, "Okay. That's why I pay you."

Jo: Exactly. It's like evidence defeats doubt and you got to share the value to the clients and remind them, "Hey, over the past year, we've managed to increase your rent by 10% and it's 5% above the average in the area. This means [...] your asset value has increased this much. Now, we're here to help you to maximize returns and optimize growth. This is what we've done so far with you. What are your goals for the future? Perhaps you might consider buying another property because you've built equity in this property and you've built income in this property."

It's about planting the seeds of thought in your clients mind and always having that connection. Property management can be as frustrating for the rental property owners as it is for property managers but it need not be. It all comes down to your systems. When you've got systems, it then articulates your value and worth, and your service promise as well to the clients.

Jason: We're talking about streamlining business operations, we're talking about implementing systems, making sure there's processes. How would you how would you define streamlining business operations? What really is it? It sounds like a nebulous, all-encompassing sort of thing, I think.

Jo: It truly is. You're quite correct. A lot of people don't understand how do I streamline my processes. I've got different systems for this and different systems for that. We do a lot of I'm diagnostic reporting on business operations to see where things might be falling through the cracks or things are not working together. The thing with property management is we have a multitude of things going on at any given time. Every task that we do has its own timeline and has its own priority. For every task that we do, it has a plethora of tasks involved within that one task and it could have several team members involved in that one task as well.

For instance, if we’re bringing on a new management, then there is a lot of admin work involved in that. When we bring on a new management, that then moves on to leasing that property, finding a tenant for that property, and it's not always the same person involved. What you need is a business that's built on a platform of scalability and a business that's built on a platform of serviceability so that we can always service the client, scale our business growth. To do that means that we need to make sure we're streamlining systems.

Streamlining systems in property management is about identifying every task that we do in property management and almost seeing your business like it's a series of all these cogs that all work together. Those cogs need [...] or turn in perfect sync so that we're just moving on to the next task, next team member that needs to be done. There is nothing that creates what they call “the bushfire is starting” because something has fallen through the cracks or something as you know stopped another process from being completed.

Creating systems, to me, is something that needs to be engineered. You can't look at one system and say, "We're going to do this for onboarding new management." We're going to use this other system for looking after the property once we've got it occupied and things like that. All of those systems all have to work as one.

The only way to do this is to engineer, to architectural design how your systems work together so that as your business grows and you bring in new team members or new roles, you can seamlessly move one task to a new role and know that it's not going to fall through the cracks, or know that you don't have a team member who says," I got this relationship with the client. I'll just do it all and whilst they're focusing on that, other things are falling through the cracks.

Like a good point there is, whenever you've got team members who say, "I've got a relationship with the client." You've got a problem because the relationship is with your brand. Your team represent your brand and your vision. If you've infused your team with your brand culture, personality, promise and standards, then all the team are representing exactly what your vision is for your business.

Jason: I love that. The brand relationship is greater than the people, individual person relationship that should be in the company and everybody should have that mindset on your team.

You mentioned a lot about platform, systems, scalability. I know a lot of property managers out there are a little bit more nerdy than the average real estate person. They're listening to this and they're thinking, “What system should I be using? What is the ultimate software for doing all these processes and systemized in my business.” Do you have a favorite?

Jo: In my role, I do get to look at a lot of different software. I do due diligence. I think my best answer to that is it depends on your business. And it truly does. When you look at software, it's got to work for you. It's got to work for, (1) your budget, (2) your growth plans, and (3) how you got to build your business and what you want that software to represent about your business.

Currently, the company that I'm working for here in California is using rent manager and that's been very good. For us, we've got over 30 branches spread out from South LA to San Diego. That's a huge area that we cover and our home office is in the middle, it's somewhere in the middle, in Orange County. Through that, we've been able to customize that software so it suits our scalability and the way we service our clients and our agents. We've got over 3000 agents in first team, so we want to make sure that we have a way of measuring the referrals that our agents come in and keeping them connected to that client.

Rent manager works for this company. If there's other great ones like [...]. It's very, very good. That started out small- to medium-businesses and I think it fits really well in that marketplace, but I know that they've been doing a lot of work on how can they build a platform that is useful for bigger businesses as well .

And then, of course, there's appFolio and there's a lot of popular ones out there. I encourage people, when they're choosing software, choose software based on a due diligence that they do in accordance with what they're looking for in the software. The other thing to remember with software is it's not your system. Your software is the platform if you like that you store all your data and generate your reports. Your system is your manual operations.

A great analogy are pilots because pilots have these massive computer systems that fly the planes, but pilots have to go through a manual process of check-listing that everything is working, that three people agree that everything is working before that plane will take off. There is a manual process to flying a plane and property management is the same. It's these manual processes where a lot of companies are going wrong because everyone is doing it their own way, that they interpret a task, and it doesn't represent the brand.

Jason: Right. This is a problem with processes. For those listening, I'm a big fan of the software process tree. It allows you to have a process system that is outside of whatever accounting or back office you're using free property management company and you can really dial in. For those listening, check out the previous episode that I did with Process Street. I think you'd be really interested in hearing that.

I think the challenge with most process systems or systems out there where they have some process documentation in the business is that once a team member has read the process document and they've done it a couple times, they think they know it. It's in their head. They're not going to go back and check it. They're not checking against the process if the process gets documented, gets updated, or the process gets changed, or that person makes changes to the process, they're probably not updating that.

There's always this gap between what the process is and what's documented, if it even is at all. Think about all of us that drive cars. We don't check the manual for the car or read the DMV booklet on how to drive the car, all the rules of driving every time we get into the car. The first time, we probably checked every mirror and made sure everything was okay, but now we just drive it it's like an extension of our body. That's how team members feel. They may simplify things, they make short-cut, they may cut things out, they may forget about things, they maybe weren't onboarded properly, they weren't trained properly. I'm a big fan of having a process that they have to use each time where they have to check something off. There's some manual input that says I did this and I followed these steps.

Jo: Exactly. I totally agree. I was at a conference where one of the doctors from one of the busiest hospitals in Australia—he works in the emergency section—said, regardless of the level of emergency, they still have to follow a checklist where everything is ticked off. That's where we're going wrong in property management is because property managers keep it in their head and they make a slight change to a process which has sometimes devastating results to the overall business.

My own company, ireviloution, we've designed those manual processes which are architecturally designed, but every manual process you have, you've got to have a way of measuring so you've also got your management leadership that locks into that, so that we know that we're being efficient and compliant, consistent and complete everything that we're doing.

To me, when you have a system, there's three different components when it comes to streamlining. One is your processes. You've identified what all the processes are for every task that we do in property management that then we'd lock in and we can measure the efficiency, effectiveness, profitability, performance, productivity, everything shows that process. Then, what locks into that is your resources.

Jason: This is number two?

Jo: Yes. P plus R resources is that resources have to be designed. If there is a tweak in those resources, which we find a lot of property managers say, “But I want to put this step in,” that step might be somewhere else in the process. By tweaking it, it can actually break something down.

The third step which is really, really critical is T, P plus R plus T, equals training. Your training is a vital importance and what we discovered in property management is to become a property manager, we're really learning theory—the theory of property management. If you look at doctors to go through university and college for seven years learning how to be a doctor, it's still all theory. Once they've graduated they've got to go into the learning hospitals to learn the practice of being a doctor, the practice of what happens when a patient does present themselves with an emergency or with some kind of condition. It's ongoing training for them.

The training that we have in property management needs to be something where if you're putting your team through training, it's got to be consistent as well. If they're going off to all these different training courses, then they're not learning the process and the resource. So, there's a breakdown. All three elements of the P plus R plus T are critical in streamlining business operations.

Jason: Alright. I'm gonna recap this. So, you're saying everyone gets that they need processes and it's helpful to make sure that the processes are very well-defined and people know how long it's going to take. Explained resources because I think that's a little bit less clear. What is a resource?

Jo: Resources are your paper documents. When we put information into software, there's still a way that we gather that information or the data that is then put into the software to make sure that we've got all the information we need. I call it your intel and your insight into everything that we do.

The resources are just like what I mentioned before with the emergency doctors or the pilots where their resources are checklist. Then, your resources are also the way that the business owner can measure productivity, performance. it's how they measure, monitor, and manage what's going on.

So, resources are things like one checklist to the different forms that you use for some legal forms and some just best practice forms like getting a tenant to sign a disclaimer that they know that they're not allowed to disconnect smoke detectors for instance. We know that we didn't just tell them, we actually got them to sign a form and they understand the consequences in different forms. Your productivity trackers are manual forms so we can measure productivity against what's going into your software. So, that's all your resources.

The resources that we've developed, we've got over 500 resources there and that's the enormity of the resources that you need to manage your property management business depending on the size, of course, and team structure.

The training speaks for itself.

Jason: Yeah. You need to make sure that they're actually leveraging these things and they understand. I like what you said. There needs to be consistency because a lot of people just want to send the team off to these property management conferences and they come back with a whole different set of ideas, "Well, this company's doing this."

I had one client that didn't even talk to me but came back and said, "I decided to change my whole structure from departmental to another structure." He was changing his entire company and then everything fell apart. I was like, "How did you know that that was right for you?" He's like, "Well, all the cool people are doing it,” was basically the answer. All the cool people were changing their whole business and I said, "Your business was working and now, it's not."

Jo: Yeah. You hear that a lot and that's why I think that they haven't got a plan to start off with. Every business has to be built upon a plan. It's not a financial plan, it's an operational business plan. So, what they've done is they've created their vision for success and they've mapped it out. It's like creating the way that you're going to get from LA to Brisbane in Australia. You've got a plan, you've got a timeline, you've got a budget, you've got all of that. But you know, a lot of them become very reactionary, their business becomes default instead of design, and that's where they start to be desperate. It's like, "Oh, this is not working. Let's change something else." They lose the deliberation around their business because they don't have a plan in the first place. A killer of business growth is when you keep changing what you're doing because someone else is doing it.

Jason: Shiny object syndrome.

Jo: Exactly. That's right. That's a term we use a lot because business owners are like, "Oh, if that's happening over there, let's try that." That's why we all become clones of each other. When you talk to consumers, the people that we serve, they all see us as the same. So, very important.

Jason: Okay. So, you have processes resources training and I think anytime there's a process, somebody needs to be responsible for it, there needs to be clear accountability, there needs to be process documentation and there needs to be a clear definition of done, like how this does this need to be done? How can we verify that it's done? There needs to be accountability. There needs to be some transparency there as well like some scoreboard or some way to know that they've won, or completed, or finished, and there needs to be that accountability or responsibility. If we have all these things in place, then is that everything that they need?

Jo: Yes and no because the other thing is that the business leader or if they appoint someone to manage that business, they got to keep their finger on the pulse because accountability is just king when it comes to property management. One of the problems I have in property management is they're not profitable. They've got property managers who keep saying, "I'm so busy, I can't get this done. I need someone else." And because they don't have the data and the statistics about how long it takes to do a job because they're not using processes and resources, then they start to react to that team member saying, "I can't do this anymore. I'm too busy, I'm stressed out, I'm going to leave." I know you can't leave because if you leave I'm going to lose all my clients. Well, comes back to there's no point in having processes and resources if you don't have accountability.

That's what I was mentioning before, you've got to be able to manage it so you've got to have the ability to say, "We know exactly what's going on with the business. We know when we've got peaks and when there's pressure on the team because of those peaks. We also know when we need to bring in new resources in terms of new team and what that role will be and what we're prepared to pay and offer that new team member." For every task that we do, the objective is to be consistent, to be compliant and to complete within the timeline and priority of that task and then to be able to measure how many tasks a property manager is doing daily, weekly, monthly. The only way you do that is with the business resources.

We've got something that we call a task tracker so we can measure many things with that. One thing is the number of tasks our property manager is doing weekly, monthly. The other thing is every number tells a story. You can see that if we've done this then this should generate a job new tasks over here. What's that done? Do the numbers all add up? Are we doing that? We start to then create that historical data about our business so that we know we've got peak times, we've got risk associated with this time of the year with our business. The business leader has what we call finger on the pulse. They can make those decisions, added deliberation not desperation.

Jason: I think one of the things that's really helpful in tracking just about anything that you care about in the business, whatever it might be, the one thing that's super helpful is just it gives you context. Even just having two data points like we did this much this last month and we did this much this month, you can tell if it's gone up or down and that allows you to understand where you keep your finger on the pulse, as you say, or to have an idea of whether these things are improving or getting worse, or whether business is changing.

Property management certainly ebbs and flows during certain times of the year. It helps you to see, "Okay, these are the trends that we see during the summer when kids are getting out of school and these are the trends that we're seeing through the winter months when things have cooled down." It gives them some context and that allows them to plan and prepare for the future and understand, "All right. We're ahead of where we were last year or we're behind. We should be concerned like we can make changes, let's make adjustments." It allows you to feel safer as an entrepreneur, it lowers your pressure and noise it makes you less reactive. I'm sure there's other benefits to come from that.

Jo: Exactly. Well, it takes away what we said at the start up is that they fear losing a client more than they feel losing a team member because they've got control of their business. If their team member is not performing then, they know how to manage them to perform better. Sometimes, team members do have a use by date and it might be good to let them go but let them go with respect and honor rather than like, "Oh my gosh. I'm losing them in a one lose business." We should never, ever have that fear about our business. Our business is about us, it's about our vision.

Jason: Right. So, team members may have an expiration date.

Jo: I think some of them do.

Jason: Fair enough, probably true. So, wouldn't be great if they just had that stamp on their forehead when they came to us at the beginning? Then we would know.We can keep their replacements ready, we'd get everything documented really clearly but that's the nice thing about having things documented.

My assistant that I just had just recently took another job, but we had everything documented I wasn't freaking out like in the past I might have been freaking out. Losing a team member that was critical to operations would be really a big deal but we've got things documented. There's this safety that comes with having things documented and if it's documented well enough, that's the question you ask yourself, those listening, "Do you feel like if any certain member of your team left that you have you have their knowledge documented so that the next person could step into that without having to be trained by them directly?" If you don't, then that's where business owners have a lot of fear. They have a lot of fear in that, "Oh no, if I lost this person, it would be so detrimental."

Here's the thing I've noticed anytime somebody said, "Oh, it would be the worst thing ever if I lost this one team or if I lost Susy or whoever this person might be in my whole business. It would be terrible, it would be the worst thing ever." That's like the best person for them to lose. I notice every time it's because they don't understand what that person is doing, that person is usually doing a lot of things that maybe are redundant or unnecessary or not done the way you have them done. When they do leave, you have to step in, you have to figure these things out. You realize, "Why were they doing it that way?" Because we didn't have that transparency into what was really going on. We weren't able to manage it, we weren't able to help improve it and it wasn't very effective in a lot of situations.

I had one assistant that I had for like three years and I thought, "Oh, if I lost her it would be the worst thing ever." Really, when I lost that person, it was one of the best things that happened to our business. We changed so many things, I realize a lot of things could be done more efficiently and it's never as bad as our brains make it out to be.

Jo: You're absolutely right. Property managers love to be loved, but we need to change that thinking because we want people to love the brand and respect the team that represent the branch. Out of respect comes love. Property managers need to let go and know that clients will respect them if they're delivering on the service promises and results. They'll feel good about themselves. I think every owner needs to work their business as if when a team member leaves, this is what happens.

Everything that we've got in our business is all built upon generic names. It's not a person's name. It's not a person's phone number. Everything is associated with a role, so I move the team around within the roles and to the client, it's seamless. It's still first team servicing them.

Jason: Right. It's maintenance, it's not Fred.

Jo: Exactly. The team has that personality. They're friendly, they want to help the clients.

Jason: Yeah, love it. Cool. So, we've talked about the who, the what, the why. So, how do people get started with streamlining their business operations? Maybe we could just dig into the actual process of getting their processes and their resources and their training all dialed in.

Jo: Yeah. That's a really good question, Jason. The thing is when you're implementing processes, there's a whole process around them as well. What you want to do is you want to get everyone engaged in it. You need to get your team engaged, you need to get your clients engaged so they understand what's going on as well. You need to create a step-by-step process of, at this step, we're going to implement this new process and we'll introduce that to the clients because there might be new policy around that as well. Articulate and communicate that to the clients.

They get to buy in with what we're doing and they've got the opportunity to voice any concerns or misunderstandings. The best thing is, know that when you are implementing new processes, then you have to muddy the waters for a bit. You're going to find all these things that start rising to the surface moving up like, "What's going on here? I've got team that are unhappy. I'm losing team." Normally, that will happen because you haven't started with the process. So, muddy the waters and have a look at what you need to do first.

It could be restructuring the team to start off with. It could be redefining, and reassigning, and realigning roles, but whatever the step is, you need to look at it like a building lego blocks, one by one by one. This one means that this is going to happen. Once that happens, then this next step is going to happen. My best advice is don't do it all at once, have a plan of implementation, a plan of communication as well, and a plan of education. It really is a step-by-step process.

Jason: Yeah, I think when we're leading a team, when we're leading a company, our job really is to inspire everybody to be excited about what we're going to be doing rather than control them. I like to say, whenever we failed to inspire, we always control by default.

If you can inspire your team and get them excited, "Hey, we're going to be doing this. Here's why, here's how this will benefit you, here's how this will benefit the business. Everything will be better off," and you can get them on board and get them in alignment, then they will help you do it. But if you are trying to control them and force them and say, "Hey, we're going to be doing this," you're going to churn some people. You're going to lose some people Especially if you're making changes and they're used to doing things being done a certain way, that shakes them up and makes them feel insecure, makes them feel uncomfortable. You start documenting their processes and, “Why we didn't document these before?” They're going to thinking, “Is my job okay? Why are you having me to document this now? I'm doing a good job, aren't I?” We need to really be careful and inspire our team members to take care of these things and help us.

I think, as entrepreneurs, we also try to shoulder everything on our own a lot of times. Our team members are the ones that are doing these processes. A lot of times they know it better than us and that they should be the ones helping us do it. We have the insight to be able to look at those ones they're documented and help them figure out, "Hey, maybe we can improve this. We can make this better. Let's see if we can make this easier for you and make this faster for you. Or what would help you move this forward quicker?"

Jo: Exactly. One of the things I learned at Disney is Disney has a wonderful way like everyone who works at Disney wants to be there. If Disney makes changes, they have a lovely way of making sure that the cast are all on board and involved. The way that they do that is they have this program where they all sit around, it's like brainstorming to a degree but everyone has a say and they build on what they're saying. It's never like that's not going to work, it's like yes and they build on that idea. They bring it around to something that is a way that the business leader can drive their business in a way that they want to. The team all have that understanding.

When we go in and we work with businesses, we talk about infusing the team not just like, "This is what we're doing." It's like if you actually infuse them with the vision and how it's all going to be for everyone, then they will have that encouragement and that willingness to like, "I want to be a part of this." And that's what you want for the team. And your clients, too.

Jason: Yeah. Ultimately, we have two types of people in our team. We either have believers or we have hiders. The hiders are just there to get a paycheck, probably do as little as possible and complain about us on the weekends.

The believers, we get their discretionary time. They're thinking about us after hours, they're thinking about their job, they want to be better, they want to improve and they're looking for solutions. It's a very different mindset. But they can't be a believer unless they have something to believe in and you're relating that to them. So, we have to give them the chance to be able to believe in us.

Jo: Yeah. It's so true. You're talking before when we mentioned about the use by date. Sometimes, we can have insight into that as well because when we bring on our new recruits and then we do our monthly 1on1s with them or however often you do it, that's a way to gain insight into what they're thinking what they're short and long-term dreams are.

You will know that at some point, your company might not be able to offer them the future that they're seeking. You don't have the next role for them in their career. That's okay because while they've been with your company, they've helped you to grow your company and you're still in control of your company if you've got all of the systems and processes, that person will go off still having respect for your company and you have respect for them. That's the way I would love it to be in the industry if we all understand it's okay to say bye-bye to team for the right reasons.

Jason: Right. Any relationship can be ended amicably.

Jo: Absolutely.

Jason: Any relationship. I mean life's all about relationships and relationships can be ended poorly and very negatively and it can cause a lot of drama or they can be ended amicably. We should always look for that route first. That's the best

Jo, is there anything else that our listeners should hear or should know about streamlining business operations before we wrap this up?

Jo: I think, Jason, we just encourage them to not go it alone because creating a process and then the resources around it, it does take a lot of work. It's like engineering mindset and I see a lot of property management business owners make the mistake of letting their property managers do it. They say, "You bring in the systems and you create the systems." They can't do that. They're employing that person to look after their clients and bring in new clients. Whilst they're doing something that they're not entirely skilled to do, then it's impacting the business and quite often there is no goal and you'll say, "Well, where are the systems they created?"

I say invest in systems, invest in people that really know what they're doing when it comes to designing systems because all system should be customized to [...] their business is well. When you implement, do it in stages, do it in a process so everyone feels good about the changes that have been made.

Jason: Jo, how can people get in touch with you if they're wanting some help on their systems and on some of the things we talked about?

Jo: Well, thank you. They can email and I'll spell this out because I've got a very confusing business name, but as I was explaining to Jason before, my business name, ireviloution, is my surname backwards, Oliveri. I always said I'd create a revolution in the industry, so it kind of went together. So, my email is jo@ireviloution.com or you can call my cell here in the US. I'm living in California so Pacific time and it's (917) 969-4066 or even look me up on Facebook or LinkedIn.

Jason: Perfect. Alright, cool. Well, Jo, it's been fun connecting with you. I think we share a lot of alignment and I look forward to seeing what you do in the future.

Jo: Definitely, as I do look forward to watching you. I love what you're doing.

Jason: Thank you, I appreciate it. All right, we'll let you go.

Jo: Thanks, Jason. Bye.

Jason: If you are property management entrepreneur that wants to have doors and make a difference as we talked about in the intro, please reach out to DoorGrow. We would love to help and see if we can help you grow your company and be sure to check out Jo, really cool stuff that she was talking about today. I hope you got a lot of value from this episode and until next time to our mutual growth. Bye, everyone.

Download this Episode

Nov 19, 2019

Do you want to grow your single-family portfolio, but not sure how? Don’t think you’re smart enough to be successful in real estate? Invest in yourself, get an education, and hire a coach.

Today, I am talking to Mark Dolfini, founder of Landlord Coach and author of three real estate books. Mark shares how he ventured into real estate, property management, and landlord coach. He follows the VIP Paradigm: Vision, Infrastructure, and Process.

You’ll Learn...

[04:40] Real Estate Education: You can learn, if you want to; even if you’re not smart.

[07:21] Hospitality Industry: How to treat people, customers, and residents like guests.

[10:37] Set up sustainable business by shifting to VIP Paradigm.

[14:35] Landlord Coach’s favorite catch phrases focus on valuing your time and money.

[19:30] Better Business Owner: It’s not about the number of doors, but what you’re trying to accomplish in revenue and lifestyle.

[26:40] Cycle of Suck and 4 Ds to Revenue (doors, deals, duration, and dollars).

[29:10] Being time wealthy is more of a decision than a destination.

[31:37] Bad communication is a symptom of the problem, not the problem. The problem is a bad infrastructure and/or process.

[36:35] Product to Produce: Consistency; sloppiness is your only competition.

[37:35] Negative Feedback Loop: If you put something in place, make sure it gets done.

[39:04] Company’s Compass: Define/develop core values to make business decisions.

[41:55] Being your own boss is great, but get a coach to take you where you want to go.

[44:10] Difference between mentor and coach: Invest in yourself by paying a coach to hold you accountable.

Tweetables

Real Estate Education: It’s about the want to; not the intelligence.

Don’t do it all. Learn to fire yourself!

There is no amount of money that will make time irrelevant.

If you don’t place a value on your free time, someone else will.

Resources

Mark Dolfini on Facebook

Landlord Coach

The Time-Wealthy Investor 2.0

Marriott

DGS104: Virtual Tour Technologies with James Barrett of Tenant Turner 0

Transcript

Today I’m hanging out with Mark Dolfini of Landlord Coach. Mark, welcome to the show.

Mark: Hey, it’s great to be here. That’s a heck of an intro.

Jason: It’s our manifesto, I call it.

Mark: I love it. That speaks directly to my heart when we’re talking about people who want to grow their single family portfolios. That gets me fired up.

Jason: So Mark, I want to introduce you. I’m really excited to have you on the show. We’re talking before show a little bit and we have a lot of alignment. We both believe in coaching, we both believe in having coaches.

It says Mark Dolfini is a veteran of the US marines—thank you for your service—and the author of three real estate books. He was first published in 2017, second book released in early 2018, and his third book, The Time-Wealthy Investor 2.0, came out in March of 2019. He received a Bachelor of Science in Accounting at Purdue University, worked for Marriott International before venturing out full time into the world of real estate investing.

He’s a managing broker for property management company based out of Lafayette, the founder of Landlord Coach, sits on numerous boards, including the Better Business Bureau of Central Indiana, the National Federation of Independent Business, and is a training director for the Central Indiana BNI Franchise and Networking Organization. He spends his free time pistol shooting and kayaking, and lives in Lafayette where he and his wife, Jennifer, are raising their two sons, Leland and Logan.

All right, so we got through your bio. Mark, let’s start out with you and I want to hear about your background. How did you get into the space of real estate, property management, landlord coach, all of this. How did this all come about? Give us a little backstory.

Mark: Sure. Well, I’d love to say it was a straight line trajectory, but you know there’s your plan and God’s plan, right? That doesn’t and usually don’t always match up.

Jason: [...] and then there’s reality.

Mark: Exactly.

Jason: [...] winds. Always.

Mark: Right. I’d always wanted to do something entrepreneurial. I didn’t know exactly what that was. I mean, this is back me being seven or eight years old, I started with a vegetable stand, the vegetable that I grew in Upstate New York and sold them at a vegetable stand that I built out of out of wood. So I always started back from there.

My first go at real estate was when I was actually in the marine corps still and I bought 40 acres of property that was in Northern Arizona. I paid a couple of hundred bucks an acre for it and that was really it. It was just a desert in the middle of nowhere that no one seemed to want, but I knew at $200 an acre was a pretty good deal. I ended up buying it for capital appreciation at that point in time. But having a piece of land that doesn’t generate income doesn’t generate revenue. I learned pretty quickly is not the way to wealth. Getting someone else to pay for it was really what I wanted to do.

I was getting near the end of my time in the marine corps. Had a great time, it was good for me in a lot of ways. It was tough, but I’m glad I did it. I also knew I needed to get an education. So, I got out. Now, let me just frame this because I went to school in Upstate New York and graduated 352nd out of 354. Let that sink in, everybody. I was at the bottom of the class.

Jason: Right [...] the class by any means.

Mark: Right. Not even close. The reason I’m saying that is because people who are out there think that they have to have this high-level of intelligence and high-level of intellect to make this business work. If you know anything and you’re doing real estate, it’s about the want to, it’s not about the intelligence. Let me just put that to bed right away.

Now, that doesn’t give you an excuse to not go out and say, “Well, I need to learn things and therefore it’s just too hard.” There are lots of things are difficult. Walking when you were two years old was probably difficult. Or 18 months when learning how to talk was difficult at one point. It’s the same thing. You can learn this if you have the right intention.

Anyway, getting out of the marine corps and getting into college was a little tricky because with my “stellar” high school career. I had to figure out how to how to do that. I hadn’t sat for an SAT. I had to learn in high school all that stuff. When I got out of the marine corps, I actually got accepted to Purdue. I got a high-enough score on my SAT. While I was at Purdue, I started buying some rental real estate. By the time I got out of Purdue, I had about a dozen rental units altogether, which is roughly half a million dollars for the real estate. That really how I got started and that’s really where my real estate education really got started.

Jason: Right, so you cut your teeth on in the real world with your own real estate deals dealing with tenants, toilets, and termites, I’m sure. Fast forward to now. Help us understand. We’re going to be talking about the VIP paradigm: vision, infrastructure, and process the acronym. Let’s get into it.

Mark: Sure. Before I get into that, it’s important to know that the rest of the story, as Paul Harvey might say. As I was getting out of college and I was buying more rental units, there’s lots of property managers out there who are also investors, so now I’m speaking to them as well.

As I was growing this side of the portfolio, I was working as an accountant—I have a degree in accounting—for the Marriott. Wonderful, wonderful company. I learned an awful lot from the hospitality industry in terms of how to treat people, how to treat customers, and really treat my residents like I would be treating hotel guests. There’s a lot to learn out there from the hospitality industry in terms of what they do right. It’s just a different approach.

It’s almost like the paradigm shift that happened with the banks maybe about 20 years ago. It used to be you run into the bank almost when you were in trouble. Now, you walk into a bank and everyone greets you, throws bottles of water at you, says hello and they give you this. That wasn’t always the way. The old school guys may remember that. Now, it’s a different paradigm because now they’re welcoming customers. They want you to come into the bank. They want you to have that transaction at their location.

I would love to see that shift continue into the property management side because now it almost seems like the residents are the enemy rather than they’re the ones who pay the bills. As I continue to evolve and I loved what I learned from the hospitality industry, eventually I got to a point where I was able to get out and start to do that full-time just managing my own portfolio.

Unfortunately, I got very, very overleveraged, not only in money but in time. What was happening is every time a task would come on, rather than looking for someone to hand that task to, I just took it on and kept it. There’s lots of property managers out there that are doing this. They’re not valuing their time highly enough.

What ends up happening is they end up taking on this job, they don’t factor in opportunity cost where they’re going to take every job that’s out there and they’re going to do it. Even though they may be worth realistically $20–$50 an hour, they’re still doing $10 an hour jobs. In essence, every time they’re doing a $10 an hour job, they’re costing their business $40 an hour or $30 an hour and they don’t look at in that paradigm.

Learning to fire yourself is one of the biggest things and I’m sure we can get in that little bit later, but really where my transition in the property management occurred was almost out of necessity. That seems to happen for a lot of people and certainly I was no exception.

Going into 2009, I had about $6 million worth of real estate in my own portfolio. I was working 16–17 hours a day just trying to keep all the balls in the air. When the economy fell apart, that’s when things really, really got bad for me. Of course I started working 20 and 22 hour days and kept catching naps wherever I could. I was doing it all and I was doing it all very, very poorly.

Finally, where the camel’s back broke was I got sick and I almost died in the hospital from double pneumonia. From all that, is really where I really got very intentional about setting up a business that was sustainable and I started delivering to my cash flow by doing some property management for other people.

I got my broker’s license, started doing some property management on the side, and that’s really where I also got very, very intentional about how I want my business to look, the infrastructure that I needed it, and also the processes that needed to run on that infrastructure. That’s the vision infrastructure process paradigm that you’re alluding to earlier is you’re getting a vision where I wanted to go, setting up the proper infrastructure for it, and then putting the processes in place on top of that.

Jason: I want to point this out because this is a milestone that I’m wondering if every entrepreneur eventually go through it. It’s like a crisis of health where we finally realize that we are not invincible, that it’s not sustainable to just do the hustle and grind that’s trumped up, and it made to look beautiful and exciting to just work, endless work weeks and crazy amounts of hours.

Looking back, I had my own crisis like this. I remember I was literally at the end of a sales call laying on the floor because I had slipped a disk in my back or something because I wasn’t eating. I was just working, I thought I had to work harder and harder, I was just do-do-do, and then I couldn’t work for two weeks. I was laying on the floor and it was ridiculous. That gets really expensive trying to recover from that.

5That was when I had this shift and this epiphany came to me that our health and self-care is the foundation for my ability to provide, to do everything in the business, and you need to have a business that serves your needs and be sustainable instead of becoming this robot slave that is going to wear your body out on the business.

Mark: Right To that point, you have to understand that we work so we can live, not the other way around. There’s so many people who are out there living to work and property managers, you get that one or two critical pieces, or one or two critical people that are doing 80%–90% of the work, and then you get everybody else who just shows up and cares or doesn’t care, whatever. I know it’s a typical 80/20 rule where you get 20% of people doing 80% of the work. In property management, it’s more like 1% doing 99% of the work. Then you got those critical pieces and you cannot build a sustainable business on that.

Lots of property managers are very small. They’re under 500 units and they’re one- or two-man shops. In the property management company that I have, definitely is a weird hybrid between management company, maintenance company, but it works and it works really, really well. We can get into that later, but I agree with you. You have to almost get to that crisis. You either get to that crisis and you make a decision or you just have enough for you to just walk away. In either one, I don’t think is good. A lot of people get to that point because they don’t value their free time. That’s fundamentally it. They’re just not buying their time.

Rob: Yup. Time is worth more than money to me now. If people approached it from that standpoint at the beginning, that’s why you hire somebody. You’re buying time. That’s why you build the business. You’re buying time. Every dollar I spend should be hopefully moving towards buying me some additional time or collapsing time. That’s why I get coaches. It collapses time. I’m buying time.

I love what you’re saying. A lot of times, we start out building the business we can have instead of the business that we want, and they’re two very different things. One you’re serving and the other one serves us.

Mark: That’s exactly right. There are two catch phrases I use all the time. One of those is, “There is no amount of money that will make time irrelevant.” When you get your head around that, then all of a sudden you say, “Okay.” The other phrase I use quite often, especially when I’m signing-off on a live event or something like that is, “Not only is there no amount of money that will make time irrelevant, but if you don’t place a value on your free time, someone else will.” Usually the amount of value that they’re going to place on your free time is far less than what you're worth, and they know it. That’s why they’re calling you with that, right?

Jason: Yeah. The, “You got a minute?” and, “Hey, can I just take you out to lunch?” these kind of things.

Mark: Absolutely right. That’s exactly right.

Jason: You need to value your time. I don’t know how you tell people to value your time, but I usually say, “Take your gross revenue of the company if you’re the entrepreneur and divide that by 20-, 80-, or a 40-hour work week. That’s a pretty good estimate of what you should, at least, value your time as a dollar if you were looking at it on a dollar per hour basis.”

Mark: Yeah, and if you did it on a 40-hour work week, you’d be surprised that most property managers I know are working way more than that. When you come back into it just from that simple math, that’s a perfect calculation. In fact, that’s exactly how I would tell people how to put just a rough number on your time. Or even people that are doing property management on the side. There’s lots of property managers are also estate brokers. They all have to be brokers, but they’re also doing real estate transactions on the side where they’re showing properties and they’re selling properties.

That’s all revenue and that’s where you need to determine your opportunity cost. I would say all of your revenue that’s coming in, divide that by coming up with an hourly rate in terms of a 40-hour work week or even a 50-hour work week, to be fair. If you’re coming up with the $50–$60 an hour rate and you’re doing a $12 an hour work, you’ve got to replace yourself from doing that task as soon as you possibly can.

I have a driver that I hire when I go to Indianapolis. I go to Indianapolis a couple of times a week and people are like, “Oh, you’re mister big time,” and I’m like, “No, it’s not about that. It’s not about because I feel super important. It’s because I get three hours of windshield time that literally is purposeless. I might listen on audio book. I still like to drive, but it’s not about that. It’s so I can get that time back.”

So when I’m done at the end of the day, I’m not completely wiped out and spent. I don’t have to spend an extra three hours at the office that I should be spending with my wife, even if just sitting on the couch with her. Or just sitting at home being with her, or being around my kids, or just being home, where I want to be.

There’s lots of people who don’t understand that and I’m like, “Okay, I pay this guy maybe $50, $75, $100 to drive me there and back. That’s easily worth it because my time is several hundred dollars an hour. Someone wants to call me and coach with me, I’m like, “Yeah, that's what I’m going to charge you,” so why would it cost myself that money driving? Sometimes, I still do because I want the solitude and I want to listen to an audio book and just enjoy it. Sometimes, I just want road time. But lots of times, if it’s purposeless, I really want to try to eliminate those bottlenecks as quickly as I possibly can, so I can stay focused on what I’m really trying to accomplish.

Jason: Yeah. It’s funny. You’ll see entrepreneurs, they say they have $1 million business. Their time is probably worth about $480 an hour by that calculation, say $500 bucks an hour, and they’re still doing stuff like sometimes you’ll see them doing their yard. If they love doing those things, great, but sometimes we’ll be so focused on one area that we lose sight. For example, there was a time period where I hired a house manager and a nanny because all the fake dad stuff was being done. [...] care about laundry. They don’t care who makes the mills. They want time. So if I can offload those thing to somebody and I’m not paying them $500 an hour to offload those things, then I can spend time. Ultimately, were buying time and that’s a critical piece to growing and scaling business.

Mark: Yes. That’s 100% vision. A lot of times, especially whether I’m working with an individual investor or I’m working with a property manager, door count is really where a lot of people say that and I stop them. I know.

For example, I got the moniker, Landlord Coach, but my goal is to make people not landlords. If I was going to be a property management coach, my goal would not to make them better property managers. My goal for them is to be better business owners. Even though a lot of times they say, “Oh, all I want,” if it’s an investor, “are 100 units,” or if it’s a property manager, “I want 1000 doors.” I’m like, “Okay, so 999 wouldn’t do it?” and they go, “Well, yeah maybe.” “Okay 997 wouldn’t do it?” I’ll go down this until they finally get that, “Well, okay Mark, what’s your point?” I said, “Look, it’s not the number of doors. It’s really about...”

Jason: It’s not an ego number, not an ego goal.

Mark: Right. It’s not about that at all. It’s about what you are trying to accomplish in terms of your revenue goals. It’s really about that. If this is about ego, I respect that, but that’s not toward your vision. A lot of times they say, “Okay, well let’s get towards a vision that’s really actually purposeful and usually after I beat him up a little bit and I go, “Okay, 997. How about 995?” After they go, “Okay, what’s your point?”

A lot of times I would say, “Okay, so in other words, you’re saying to me that you need to get to a revenue or you need to get to 1000 doors at, say, $1000 apiece. That’s what you need, but you couldn’t get there with 500 doors at $2000 apiece? Obviously the math is the same and a lot less work,” and they go, “Well, yeah. Okay.” “So, is it really about door count? Because I can get you 1000 doors. There are not going to be anything in the world that you or anybody else going to want to manage, but you really want 1000 doors?”

Jason: [...] ridiculously low, that you can get a lot of doors really quickly.

Mark: And that’s what a friend of mine did. He’s in the area of the state that I wouldn’t go to for love or money, and it’s terrible. I feel bad for him because I see him, watching him get into a leaky lifeboat in shark-infested waters, and I’m just like, “Oh, my God.” And he’s a good dude. He grew overnight from zero to, I don’t even know he’s pumping maybe 150–200 now, but they’re units that I wouldn’t take for any amount. I literally go, “Well, the rent amount isn’t enough to cover my management fees,” because they still wouldn’t be enough.

Jason: Ultimately, people really need to ask themselves the question, “What do you really want? What do I really want out of the business?” If it’s an ego goal, great, but maybe what you really want is usually some lifestyle or maybe you want to have some amount of time, you want to spend time with your kids. What do you really want? And maybe you can create that and have that without having 1000 doors or without it having to look a certain way that you may have thought. [...] really matter? Why [...] matter?

Mark: Right. It’s really not about door count as much as people want to focus on that now to a certain degree. It depends on your business structure. Again, investors are a little bit different than property managers. In my case, we do a lot of our own maintenance. We have an in-house maintenance department. A significant amount of revenues come in from that. Having more doors enables us to have more opportunities to maintenance. So in that particular case, it does really matter, but we still want to manage higher-end properties.

We don’t do a lot of low-end stuff anymore just because of the amount of banging your head against around. It just increases exponentially when you get a certain lower market. It’s just not a market that we want to court anymore. We got out of that probably maybe six years ago and never looked back. The level of drama that has decreased in my life has just been exponential.

Not saying that’s bad. There’s other people who want to court that market and do well in that market. That’s certainly fine if that’s a strategy that’s working for you. I’m not telling you about to change it. But for me, I would really invite you to really focus on not even so much as a revenue goal, because then the revenue goal, it’s funny because people go, “Well, yeah. I would like to have $50,000 a month coming in free cash flow, Mike.” And then, I go back to my normal argument and go, “Well, okay. So you want $50,000 a month coming in. $49,990 won’t do it?”

So, you have to tie it to a life output goal. That’s why I say to them, “What is this even about? What are you trying to accomplish?” When they say, “Well, okay. What I’m really trying to do,” and usually it’s after they start to fight back some tears, “honestly I just want to spend more time with my kids.” “Okay, does more time mean?” “Honestly, I would love to be able to homeschool them.” “Awesome. Now we’re getting to a vision that really frigging matters. Not some nebulous 1000 doors, or $50,000 a month, or whatever it is. That’s what you want and we can tie a number to that. We can tie a revenue number to that.”

Or, “I want to move my aging mother into a house that’s just close by.” “Okay, what’s it going to take to buy your mom a house? Do you even need to buy it? Can you rent one? The next 10 years, your mom’s 80 now. Is she going to live another 10 years or you can budget 10 years worth of rent payments for that sort of thing?”

Whatever that is, you can actually get a quantifiable life output goal that’s tied to that and that’s really what vision really needs to be. It needs to come from the limbic system of our brain. The problem with the limbic system is it doesn’t have a capacity for language. It can’t explain why you love your wife. It can’t explain why you love your grandmother. We come up with platitudes like, “Well, she bakes me cookies,” but that’s a thing. You just say, “I don’t know. It’s just the way she makes me feel,” and you get teary-eyed.

That’s the limbic system activating your brain and that’s how when you get to that point of your vision and you start to think that way, feel that when you get the goose bumps on your on your arms, that’s when you’re close. And that’s when you know you’re starting to get to a vision that really, really matters.

Jason: I like it. I like it a lot. You touched on a couple things. Some of the concepts that I share is the cycle suck. It’s like if you take on bad owners, you’ll have bad tenants or bad properties. If you have bad properties, you get bad tenants. If you get bad tenants, then you all have a bad reputation, and then you’ll attract more bad owners. By taking up on the crappy properties, you end up caught in property management hell, the cycle of suck.

Another concept that resonates with what you’re talking about that I the shares the four Ds to revenue. It’s not just about doors. The four Ds, the first one could be doors, but the next one is how many deals. Deals is usually what I share first. You get number of deals you get in, how many doors per deal? It’s not just about the doors. One deal being worth one door, that’s the ratio, then you don’t have as much leverage. It’s not as easy, but if on average your deals have two doors, you double your revenue. It’s these four numbers that multiply.

Then, you’ve got duration. How long can you keep the door on? A 1-year accidental investor versus a 10-year buy and hold, in your property management business there’s 10 times difference. That’s pretty significant.

Then, there’s dollars. It’s just what your fee structure is like. Are your fees good? It’s not just about doors. There’s all these other variables that can create that.

I love shifting it towards the life goal because the life goal is what really matters. I would imagine you found this with coaching clients. Sometimes the life goal and all the stuff they had trumped up in their mind, or built up, or that they felt they needed in order to have the life that they want, sometimes you can just jump right to life goal.

You can just create that like, “I want to spend an extra hour with my kids.” “Okay, block out an extra hour,” and they’re like, “Oh, I didn’t think I could do that.” Sometimes it’s really that simple. We can just jump right to the life goal and the business will still be there and it will still function.

Mark: Yup, that is true. One of the things I talk about in The Time-Wealthy Investor 2.0 is really about making that decision. A buddy of mine who’s got multiple units is just nauseatingly wealthy in terms of real estate. He’s a great guy and said to me, “You know? I read your book the other day.” He’s a guy who doesn’t read and he’s such a snarky friend. His name is Randy and he says, “I would never admit this to your face, but I feel I have to,” he goes, “I really got a lot out of that book.”

I was like, “Okay. What’s the punchline?” He’s like, “No, there’s really no punchline. I feel I am time-wealthy,” he goes, “and funny, I could probably retire based on the life output that I want to define right now.” He’s like, “Really, time-wealth is really more of a decision that it is a destination.”

I was like, “Yeah, it really is because right now I have all the time-weath that I want. I work about maybe two hours a week. Sometimes I’m working more, like right now, I’m pitching in more in the office just because we’re down a person,” but it gets me re-engage in the business and it makes me go, “Hey guys, why are we doing it this way?” and then they go, “Oh, because this this and this.” I’m like, “Okay, cool,” and I let them define the process.

If they’re the ones that normally work the process, my job is really to come in, look and see what maybe needs tinkering with, maybe new or adjusting, giving them coaching, that’s the sort of thing. Working 2 hours a week, sometimes 4–5 hours a month in the property management business, but I have all this time-wealth to do other things like coaching, writing books, and things that I really, really enjoy. It really is just a decision.

When you hire good people, you bring them in, you set up a solid infrastructure for your business, set up solid processes, and you let them run it. Stay the hell out of the way. When I’m coaching property managers, that’s where I see a lot of problems. They don’t have an established vision for themselves, they don’t have proper infrastructure, they’re trying to run on really lean infrastructure or none at all, so the process has to pick it up. What I’m talking about infrastructure, say property management software, or website, or things like that, when you have a weak infrastructure, it has to be picked up by a stronger process, which means people. A person has to pick up that extra process.

Let’s just go from the really sublime to ridiculous level. Say you don’t have property management software. You’re running everything on Excel spreadsheets. That’s the extreme, but there are property managers out there doing that, so that means they have to have a lot of people managing that poor infrastructure.

Here’s the thing. Here’s the one thing I hear all the time is that, “Oh, my property manager doesn’t communicate. They don’t communicate with me. They don’t tell me.” When you have bad communication, that is a symptom of the problem, not the problem. Let me say that again. When you have bad communication, that’s a symptom of the problem, not the problem.

The problem is you have bad infrastructure, you have bad process. That’s where communication issues are going to show up. Let’s just use a very obscure example. We’ve all been to a restaurant where you had bad service. You’re sitting down and you can see that that waiter has nine tables and that waiter has one table. You’re trying to communicate to someone to take your order. You can see the problem because you’re sitting on the outside. You can see the problem, but you’re going, “Well, that waiter’s got nine tables, that one’s got one. Why isn’t the manager stepping in?” Bad process. “Why does that person have nine tables?” That’s bad infrastructure. That never should have happened that way. That’s just one very obscure example.

Let me use another quick example here real fast. Have you ever walked up to a McDonald’s at a truck stop, where there’s basically four cashiers ready to take your order. You walk up, you look left and right, and everybody’s standing back away from the registers. the customers. You’re trying to figure out who’s next in line. You’re like, “Can I go? Are you next?” Because there’s no infrastructure, the customers have to decide who’s next in line.

What’s a simple piece of infrastructure that you could put in place to manage that? Well, a simple queue, a simple rope line. That’s a piece of infrastructure that you could put in place that would manage the customer flow. Then, you don’t have to worry about that.

Another example would be a bad process. Let’s pretend you go back to the same McDonald’s. This time it’s really busy and the customers are four and five deep at each line at each of the four registers. This time what ends up happening is you get a manager that opens the fifth register and says, “I can help the next person.” Then, you get somebody who goes from the bend of one line and then jumps in front of everybody else. Now you just base and created a brawl. It’s this mad rush towards this fifth line. That’s a process problem.

What should have happened is, “Hey, I’m the assistant manager. I’m going to have you open that line over there but I’m going to direct some people over there. I’m going to go out to the crowd and direct some people over there first before you say anything.” Then you can manage the process. That’s process. That’s a broken process when they do it the other way.

That’s why I’m saying infrastructure and process shows up in bad communication all the time. This means they’re not communicating work orders when they come in. They’re not communicating when a resident doesn’t pay rent. Owners need to know that. They need to know if they’re expecting the revenue to come in on a certain month and they don’t get communicated that. “Oh, by the way, the resident never paid rent,” and, “Oh, yeah. By the way, we’re going to go ahead and evict them.” They need to know these things and when you don’t have an infrastructure or a process in place to let them know that, that’s when communication falls. That’s when the bad communication issue show up.

Jason: Yeah, it’s interesting. It’s really tempting for entrepreneurs to start blaming their team. This is like early entrepreneurs that they’re transitioning away from being a solopreneur, that having a team, they usually build the team around them as if they’re just the solopreneur still, and they try to micromanage them. They’re always complaining about the communication. They’re always complaining about people not doing things, “Why can’t they just do what I tell them?” and that sort of thing.

I like what you’re saying is they have bad infrastructure and bad process. Things are not defined, there isn’t clarity, and that leads to challenges in communication. [...] built into the process. They can be part of the process. [...] you need the right tools to facilitate communication. I run a virtual company. If we didn’t have the tools that facilitate communication, there wouldn’t be any. We’re in different states, some of us different countries.

Mark: That’s exactly right and they need to think about their business, about the product that they produce. I used somewhat as a nebulous example, but the product that they need to produce should be consistency. That’s the product that they need to be shooting for. When consistency is your product, the only competitor you’re going to have a sloppiness. When consistency is your product, sloppiness is your only competition.

That’s the thing that is really hard for me to convey to lots of managers because we’ve got all sorts of products. We sell properties. We buy properties. We do all these different things. I don’t care what you’re doing. I don’t care if you’re making razor blades. You need to have a consistent product and I will not allow us to do anything in the business unless we can do it consistently.

If they come to me and say, “Hey, you know what we should do? We should send out birthday cards to all of our residents.” “Okay, great. How are you going to do that consistently? And you need to tell me. Who’s going to manage it? Who’s going to do it? What’s the negative feedback loop if that doesn’t happen?”

Let me talk about negative feedback loop for second. You put something in place, it’s like I send you an email expecting you to do something. What’s the negative feedback loop I’m going to put in place if that doesn’t happen? I’m not talking a negative feedback loop like someone complains, which is often what happens if something doesn’t get done.

You go, “Oh, man. I don’t know. I sent that email off two weeks ago. I forgot about it. I just assume that they would do it.” What’s the negative feedback that you’re going to put in place to make sure it actually gets done? Are you going to list that [...]? Are you going to put a task? Are you’re going to put something in some task management software? What’s the negative feedback loop that you’re going to have to make sure that stuff gets done? That’s all part of process.

Let me just boil this down into an example because I keep saying vision, infrastructure, and process. Think of vision as your map. Infrastructure would be the train tracks, and then the process should be the train that runs on those tracks that all stays in alignment with your vision for the future.

Now, for property managers, they’re saying, “Well, why would my employees care about my vision?” They’re not going to care about your vision. They’re only going to work so hard, but they’re not going to work that hard to put a boat in your driveway, or a pool in your backyard.

This is an extra step to goes in with property managers is once you have that vision for your future, then you go into developing core values for your business. The core values are just the things that you value. You may value justice, You may value efficiency, you may value lots of different things that are core to you, but now you get to identify what those things are and that becomes your compass for all decisions that you’re making. Once you have those core values defined, if you’re making improvement, you say, “Okay, is this in line with my core values?”

If I’m going to make a hiring decision or a firing decision, are they acting in line with my core values? When I do my employee evaluations, I’m going to say, “Hey, when you did this, this was really in alignment with our core values and I really like what you did,” or, “Hey, when you did this, I was really upset because it wasn’t in line with our core values. I’m [...] say you. I’m just upset that your behavior because this isn’t in alignment with our core values.”

One of the things I’ll coach them through, some are three, four, five, no more than six. A lot of people sometimes want to get, “Oh, we value all the stuff,” but usually it’s something that’s inherent to them as an individual and they value these things. They value justice, they value equity, they value fairness, and they can value profitability. There’s nothing wrong with that. It doesn’t mean you’re a bad person because we all need profits to grow, get better, and be a better company.

Once you get those core values defined, then it’s easier to put infrastructure and process improvements in place. The infrastructure of the things I’m talking about there are websites, software, even the desks and chairs in your office. The process pieces are really about how you operate. It’s the rules of how much you operate, it’s your SRP, it’s your FAQs. Those things that really helped define how things are done in your office based on it that infrastructure that you have in place.

Jason: A lot of alignment between what you’re doing and what I do with clients as well. I mean, 3–4 core values for their business, you’re helping them figure out their purpose, their why as a business owner. These things sound like woo woo and fluff to a lot of people until they implement them. Then, they’re usually pretty astounded because, like I tell my clients, “You’re the sun at the center of the solar system. If you don’t like what’s going on inside the solar system, you change the sun, everything changes.” Usually as business owners, we try to externalize everything and tackle everything farthest away from ourselves. If we work on ourselves. everything changes by default.

Mark: That’s so good. I love that. That is so true.

Jason: So, we talked about vision, we talked about the infrastructure, we talked about the process. Is there anything else that you want to touch on while we’re hanging out here?

Mark: Yeah. I see a lot of people out there that are just working themselves. They’ve created a job for themselves and they’re not ever trying to transition themselves out. They think that there’s no end in sight.

Jason: They’ve succumbed. They [...] to their fate.

Mark: Yeah. I’m not saying I’m the coach for everybody and you would probably say the same thing, that you’re not the coach for everybody, but for God’s sake, get a coach. Get somebody that can help you get to where you want to go so much faster. Yeah, it’s great being your own boss because you didn’t want to be held accountable to anybody. But now you’re not accountable to anybody, know your life sucks. It didn’t turn out the way you want it. If you’re living the dream, your life is great, and you have everything that you want, that’s great. I don’t know that I can help you get much better, but get somebody to help you.

We talked earlier about each of us having coaches. I spend a lot of money each month on coaches to help me in areas where I have blind spots and just to challenge me, just to say, “Hey, Mark. You said you were going to do XYZ by a certain period of time. That’s not done, so now what?” They already know how they’re going to hold me accountable and I pay a fair sum to these people, so it hurts when I show up. I know I’m going to be ready when the bell rings.

It’s not about paying them the money just for the sake of paying them the money so that they can call and yell at me. They are a softer touch, but the thing is, I want to make sure that I’m being held accountable because we don’t have anybody that’s holding us accountable. That’s the danger of being an entrepreneur.

I would really encourage people to look at that. It doesn’t necessarily need to be real estate-focused although it probably would make more sense. I have one that helps me in sales. I have one that helps me in marketing. I have one that helps me as a national speaker. I go and I speak at a lot of different places, so I have one that help coach me in that. And of course different masterminds of things like. I would really, highly encourage people that if they are looking or just flirting with the idea, get somebody.

I am going to say this. The difference between a coach and a mentor, I would say a mentor is probably someone that you’re not paying, probably a friend. They are not going to hold you accountable to the level that you need. I say that this is someone you need to pay, it needs to hurt a little bit, and you need to have some skin in the game. You really need to be committed and you really need to be paying somebody to do that. Like I said, it doesn’t need to be me, it doesn’t need to be you. I’m just saying it’s someone they knew paying someone.

Jason: Yeah. There’s some magic I’ve noticed, just psychologically, that happens in shifts inside of my clients or that shifts inside of myself when I am paying a coach and I’m investing in myself. It just shifts psychologically how we value ourselves and energetically it allows us to convince others to invest in us as well.

It’s a hard sell to go out even as a property management business owner and if you’re doing the sales in your company, you’re the BDM and say, “Hey, you should spend money with us. You should invest. You should have us manage your rental property,” but I don’t even invest in myself. I don’t care enough about myself or my business to invest in that. I’m just trying to make money, then you’re going to ask others to invest in you.

Psychologically, when you invest in yourself, I’ve noticed revenue goes up for me, lifestyle shifts. There’s something that happens energetically and psychologically when you are subconsciously investing in yourself. It shifts things. I love what you’re saying, everybody really deserves to have a coach, they deserve to be working with consultants, they deserve to have people above them.

If you’re at the top of the org chart, there’s a problem. There’s a problem because everybody below in the org chart is hopefully being fed, getting some input, growing, and evolving, but if you’re at the top of the org chart and there’s nobody above you, it’s a scary place to be. [...] The Emperor With No Clothes, unless you get some input, unless you get somebody that you can place above you in that org chart like a coach, or mentor, or something that will feed you.

Mark: I look at it exactly the way you’re looking at it except I flip your chart upside down. I look at those people as the direct supports for everybody above them because they’re carrying the weight of everybody above them. If you get somebody that’s not doing what they’re supposed to be doing—they’re coming in late, they’re wiggling around at the top, and you’re trying the keep the org chart balanced—it’s tough.

Maybe it’s so far up that you can’t see what’s going on up there, but you have a coach that can stand back and go, “Yeah, that guy’s playing Galaga on his computer and you don’t even see it,” because you don’t want to see it or you just can’t see it. That’s where it gets tricky and a lot of times, you get too close to the problem and you can’t see it. It’s like you sitting back watching the waiter who’s got nine tables. You can see the problem instantly.

Jason: [...] you can’t sometimes. They’re too close to the fire, they’re dealing with what they’re dealing with right at that moment, that’s us as entrepreneurs all the time. I can’t tell you how many times I’ve had a coach, I’ve sat down with coach or talk to one of my coaches and said, “Hey, here’s what I’m dealing with,” and they point, they say something to me, and I feel really stupid, then I say back to them, “That’s exactly what I would’ve told one of my clients.”

We’re just too close to the fire. We don’t have somebody outside of ourselves because we are the one that created the problem. We’re at the helm. We are the problem. We are the biggest bottleneck in our company. We are the one holding everything back. We’re the one preventing growth. Us trying to solve the problem on our own is like trying to look at the back of our own head.

Mark: Yeah. It’s like trying to put sunscreen on your own back and that’s the thing. If you don’t see yourself as part of the problem, you cannot see yourself as part of the solution. A lot of times when it’s educating them to say, “Look, your company has a very real culture problem. That one is not respectful, that one is treating customers anyway that they want. As a result, they’re treating each other very poorly and blah-blah-blah.” That’s because when you got ill-defined core values, you’re going to run into that. You’re going to run into culture problems.

There’s a client that I really didn’t feel like I could help him as much as I wanted to, but he had a real culture problem is at his office. He didn’t really see it until he started letting some people go that were really some of the major problems. He had a live event that we don’t work together anymore, but I’d love to get him back on just to say, “Hey, how are you doing? How did things evolve for you in terms of getting those core values more well-defined?” and really start holding people accountable to them.

One of the things that I do is we have an 8:07 meeting every day. The reason it’s 8:07 is people are rarely late to a meeting that’s got an oddball time to it. They always get there early. There’s not much I don’t do without purpose, but every meeting, we pick one of our five core values and we review it.

They’re hearing these core values every single day. That way at their 90-day evaluation, guess what they get to roll over again? Guess what they’re hearing again? Our core values. They’re getting graded against those core values. It’s not just a shock like, “Oh, yeah. Okay, yeah. I never heard that core value before.” These are things that need to be repeated over and over.

Jason: Yeah. I think we run our businesses probably somewhat similar [...]. Everything gravitates towards truth. We do our daily huddle at 8:45 every morning. I always have appointments starting at 9:00, so it has to be short and that allows our team to see each other because we’re virtual, but yeah, it’s an oddball time which does work, to make sure people show up.

Mark: Absolutely.

Jason: Cool. Mark, it’s really great to connect with you, to get [...]. How can people get in touch with you? Now, I want to point out like we were talking before the show, your area of genius, what you really can help probably our listeners with, is on the delivery, the fulfillment side, building out this portion of their business where they may be struggling, especially those that are graduating maybe from solopreneur to trying to build a team. That’s where they’re getting the systems and processes. They’re not the guy doing every single thing or the gal doing every single thing anymore and that’s a painful transition. How can people get in touch with the Mark and Landlord Coach?

Mark: My website’s landlordcoach.com. I’m on Facebook @mylandlordcoach. You can find me easily. You can see the moniker in the back. I think where you and I differ is that I helped create capacity in the world. I helped create white space on our calendar. What they do with that white space is up to them. If they want to use that white space to grow their company from 300 doors to 800 doors, that’s fine. I don’t help them with the growth side. I just help them create capacity on their calendar, help create white space, so they can do whatever they want.

Now, some people go, “Yeah. I’m happy with the white space and I’m making enough money now and I’ve gotten time on my calendar. I’m cool. I got everything I want.” Some people get to that point in their like, “No, we’re ready to grow.” I’m not the growth guy. It’s not what I do. I’m not from that piece of it. I [...] turn it over to someone you and say, “Now that you got this increased capacity, that’s the person that’s going to help you take your business from 1000 doors to 2000 or whatever.” That that’s not what I do. What I do is I help them create capacity on the calendar.

To that aspect I just want to make sure I delineate myself there because I do work with a lot of individual investors. I also work with property managers and just helping them get their life back. That’s one of the biggest things that I do.

Jason: Love it. Mark, I appreciate you being on the show. Thanks for being here.

Mark: This has been great. Thanks so much and my best wishes to all your listeners.

Jason: Thank you. All right, we’ll let Mark go. If you enjoyed the show, be sure to like and subscribe on whichever channel we’re on. We’re on YouTube, we are no iTunes, and make sure that you subscribe to our email newsletter. If you are property management entrepreneur that’s wanting to grow your business, add doors, and increase your revenue, then please reach out to us over at DoorGrow. We’d be happy to have a conversation and see if you are a good fit for what we might be able to do for you. Of course, check out Mark and his business over at Landlord Coach. That’s it for today. Until next time, to our mutual growth, everyone. Bye.

Download this Episode

Nov 12, 2019

How can you reduce the number of times you show a property? Virtual tours. It’s time to weed out unnecessary in-person showings with time wasters and tire kickers.

Today, I am talking to James Barrett of Tenant Turner, a leading property management tool and resource that lets property managers manage tenant leads, schedule showings, and automate the leasing process.

You’ll Learn...

[02:59] Goal of Virtual Tours: Educate potential tenants before choosing to visit property.

[03:27] Customer-Centric Concept: Virtual tours evolved from quality images to videos.

[04:20] ROI: Reduced costs for video camera equipment make virtual tours possible.

[07:40] Lack of competition makes virtual tours core to growth and promotion.

[08:28] Direct correlation between virtual tours, time on market, vacancy, and showings.

[08:53] Quality over Quantity: Maximize exposure to increase good-fit tenant leads.

[13:37] Virtual tours take time and money. Are they worth it? Promoted? Required?

[16:29] Record moves, maintenance, and inspections for marketing and leasing metrics.

[21:08] Options and Recommendations: Zillow’s 3D Home, zInspector, and Ricoh; or outsource and offload to PlanOmatic, VirtuallyinCredible, and HomeJab.

Tweetables

Listings with virtual tours increase interest by 250% and generate 49% more leads.

One-third of Tenant Turner’s customers do virtual tours; 11% of its listings include them.

Do virtual tours. If you do, you’ll be different, reduce vacancy, and make more money.

About 45% of millennial renters seek virtual tour technology before making a decision.

Resources

Tenant Turner

James Barrett’s Email

National Association of Residential Property Managers (NARPM)

PlanOmatic

HomeJab

DGS 45: Automate Tenant Lead Management with James Barrett and Calvin Davis of Tenant Turner

DGS 78: Automating Property Showings with Michael Sanz of Neesh Property

DGS 103: Growth via Propertyware with Inaas Arabi 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. Today's guest is my buddy James Barrett. James, how are you?

James: Doing well, sir. Good to be back on the show.

Jason: James and I were just in Nashville, at the Southern States Conference. We got to hang out afterwards and we went dancing. We went out on the town and it was crazy, wasn't it?

James: It was a great time.

Jason: It was a great time.

James: Dance floors everywhere.

Jason: The musicians and the talent. Yeah, it was crazy. It was a lot of fun.

James: That’s what I tell people about Nashville all the time, the worst musician in Nashville is better than every musician everywhere else, it seems like.

Jason: I'm doing open mic night tomorrow night and everyone in Nashville’s better than me, that's for sure. I'm taking the risk, I'm getting on stage.

James: That’s right, go out there. You can get a lot of practice behind the mic doing this podcast so it'll…

Jason: I don't know if that's the same as singing with the guitar, but yeah.

James: We'll see.

Jason: We'll see. James, you've been on the show before, welcome back. I'm glad to have you here. In case anybody who’s listening doesn't know James and they can't see his shirt because they're listening, he is part of a company called Tenant Turner, which consistently has been one of the top performing companies for vendors. In our Facebook group, we get a lot of positive feedback from clients on Tenant Turner. I'm glad to have you back on the show. Today, we’re going to be talking about virtual tour technologies, what is that?

James: For those of you who might be questioning, “Why is James from a scheduling software, where they do lock boxes and in person showing, why is he talking about virtual tours?” With virtual tours, the real goal is how can you reduce the number of showings that are happening because people are being educated before physically having to go to the property. Jason, as you alluded to with how highly we’re rated within the Facebook group and what not, we are a very customer centric, customer driven organization.

It is something that's come up, particularly more recently, is just the concept of virtual tours. Seeing the evolution of quality images, which was kind of the norm 5-10 years ago. Making sure you have quality, high definition images on your listings, to then moving more to a model of video tours, which is a form of virtual tours but really just the gateway of virtual tours where you're taking a video walking through the home.

Now, more and more, we see customers who are adopting these 3D virtual tours like those that are provided by like Matterport. It's becoming very important within the industry because people are investing in this amount of time and effort into these virtual tours and they need to make sure they're seeing an ROI on that.

Jason: Are they always seeing an ROI or is that a problem?

James: It's been a problem largely because of the investment has always been so high, because one of the big companies that really got into the real estate market was Matterport, one that's very highly rated, but their cameras are $4000. Every property management company in the world might want to do a virtual tour, but at that price point, it's limited.

What we’ve seen more recently is there's now lower cost 360 cameras that are used by not only Matterport, but companies like zInspector which are used by a lot of property managers for inspection software. Really, I think one of the big tipping points is Zillow, who recently came out with their own app that allows you to take a 360 virtual tours utilizing just an iPhone. You're starting to see that barrier to entry drop down pretty significantly but it's still early on in its adoption phases here.

Jason: We've had some really great episodes for those listening, if they look at like that so we do with Michael Sanz. He talked a lot about how he's leveraged some of these cheaper cameras and took to offload and to reduce the number of showing significantly. Let's dig in, so how does this apply to Tenant Turner?

James: One of the things we have is we have a nice, unique data set that tells us how many people are starting to adopt these types of virtual tours and put them in their listings. We started to see a nice little increase of such tours to date. Right now, it's only about 11% of our active listings, but just a couple years ago, sub 1%, sub 2%. It was really just in its infancy. We started to see faster adoption of virtual tours and one of the things that's also really interesting is 11% of our active rentals have virtual tours associated with them, but now a full third of our customers had at least one virtual tour. Companies in general are starting to adopt more and more of the virtual tours and basically building it to their process.

Jason: Let's point this out, people that are using Tenant Turner are probably the more tech savvy, maybe more forthcoming property manager, I mean they're a little more forward thinking, is what I mean. They're early adopters and using your technology. You may have 11% and maybe 33% or whatever a third or have at least one but I would imagine outside Tenant Turner, the number has got to be way lower.

This is still a huge differentiating factor for a management company that say, “Hey, we do these tours.” It's probably really rare that people are going to bump into any competitors that are doing this yet. Even the people that are savvy enough to be using a scheduling software and showing software like Tenant Turner, only 11% of the properties it’s really being used for.

James: Yeah, and I think where there's a huge opportunity within the property management space, is now that some of these barriers have been brought down, making it core to your growth model being able to promote the fact that you do this. You actually have an artifact that is created that you can then share with the property owner, that's part of the whole thing, it's part of the inspection process. It's part of your now marketing material where you can say, “Look at these beautiful virtual tours that we're providing,” that really nobody else in your market may be doing.

Jason: Yeah and I'm sure there's a direct correlation between virtual tours, and time on the market, and vacancy, and not having to do showings and all of this.

James: It's really interesting, there's a lot of similarities between Tenant Turner and our goals and what virtual tours do. With Tenant Turner, we want to make the process as streamlined as possible. On one hand we're generating more leads because we want to make sure we maximize our customer’s exposure, but on the other hand, we want to eliminate anyone who's not a good fit. On the one side, we’re a 24/7 service that can respond to the leads instantly, but on the other side, we have a pre qualification scoring tool that weeds out people who aren’t a good fit.

These virtual tours are kind of the same thing but for the other side of the market. With virtual tours, because you have a virtual tour on your listing, statistically it's going to get more page views. It's going to get more clicks.

Apartments.com, they actually did a nice little study on this and it's something that they've started offering through their website is highlighting listings that have virtual tours. There's a 250% increase in time on page for a listing that has a virtual tour versus one that does not

Jason: Okay, you said 250%?

James: 250%, yep. You got to think too, a lot of these listing sites, they're very vanilla, you can go to Zillow or HotPads or apartments.com and it's pretty cookie cutter in a lot of ways. If you are able to provide a virtual tour and it gets pushed out to those different sites and they can put a little tag or icon next to it, it can go a long way into generating more clicks. Similar to Tenant Turner, they're trying to increase leads with virtual tours and we see more time on page. They’ve also seen a 49% increase in the number of leads. That's one of the goals of virtual tours is how can we get more leads into the top end of the funnel.

At the same time, just like Tenant Turner, how we like to weed out people who aren’t a good fit, the virtual tours are helping prospective tenants weed themselves out if they think that the place is a good fit for them.

Jason: Right. Yeah, makes sense.

James: More leads on one hand but at the same time better fit leads, so that way when it does get time for a showing, you'll ultimately have fewer showings at a particular property but it will be more people who are qualified…

Jason: More relevant.

James:…exactly, exactly. It's a quality over quantity type solution.

Jason: Yeah, I mean relevancy is the crux of everything. It doesn't matter how great the property is or how many tenants you have going through it, if the showings aren't relevant or they're not interested. It allows them to filter it out. They can see the kitchen and say, “No, that's too small,” or they can see the backyard, “That's not what I was hoping for.” They just get a better feel for what it would like to be in it without having actually go and do it. If there is a virtual tour and somebody scheduled to showing they're probably fairly legit interested. They’re probably seriously considering putting an application in on this place. They're probably ready to move. Whereas, instead of getting a whole host of tire kickers and time wasters.

James: That's right. What we’re seeing, the big thing right now in our industry is the movement to support self access viewings and whatnot. Within Tenant Turner, only a third of our properties are enabled for self access, because if you have an occupied property, if the owner won’t allow self access to the particular property, if the price point’s too low, you're still going to show and if the price points too high, you're still going to show it. This is a huge tool to help weed out unnecessary in-person showings.

If you have your showing agent, like you said, driving around town interacting with all these different tire kickers who would’ve weeded themselves out of the process if they actually saw what it looked like from the curb, if they actually had an opportunity to see the size of the backyard and wouldn’t fit their two or three dogs. If they saw the layout of it and they know they want an open floor plan, but then as soon as they walk in they see it's not an open floor plan, they're going to walk right back out.

It is a huge opportunity to generate more leads because you've got people who are going to be more engaged with your listing, but then also allow them to self identify that it's really not a good fit for them based upon what they're seeing in the virtual tour.

Jason: Yeah, I mean it's really difficult when you're just looking at a bunch of photos where you’re just seeing an angle from one corner of a room, and that's all you see of each room. It's really hard to get perspective as a renter and you have no idea how these rooms kind of fit together, how that works and what the flow of the place would be like, so all that makes sense. How is Tenant Turner allowing people to get the virtual showings into the listings?

James: Yeah, it was kind of a surprising thing that we saw come through our enhancements requests and whatnot, it was just really people—they're spending a lot of money. Whether they own their own Matterport camera or they're putting a lot of time into it and these virtual tours can take anywhere from 20 minutes to an hour to record. Some people like to go in at Matterport and do video editing or maybe they pay a service like VirtuallyinCredible to do virtual tour, where they stitch together the images for you and stuff like that. They're either putting in a lot of time or putting in a lot of money or effort or both.

One of the downsides with a lot of these listing sites,and even with Tenant Turner for awhile was that you couldn't really put links in the description that were clickable that enabled that to be highlighted element. They came through in our enhancement request, just making sure that those things are being promoted appropriately that got Tenant Turner now their own section where people can watch tours. It highlights the fact that that particular listing has a tour versus the ones that do not.

The links are in the descriptions, hyperlinks and clickable, which then engages a new window for them to be able to watch the tours before they go through and schedule a showing. Some of our customers, they even have custom questions built into the Tenant Turner Questionnaire that asks if they have viewed the tour.

Jason: I was going to say, can they require in order to schedule a showing or even to do a self access, can you require them to confirm that they have seen the virtual tour so no time’s wasted?

James: Yeah and that's a huge thing. We've seen that in past questions that customers created. It was really like, “Have you driven through the neighborhood?” was kind of the beginning part of it, because they didn’t want to meet somebody at a home that the person has no idea what the neighborhood is like, if it’s going to be a good fit for them, have they driven by and seen the outside. Now we’re starting to see more people do that with the virtual tours and say, “Have you watched the virtual tour?” If not, draw attention to it before they schedule an appointment, because if they're not satisfied with the virtual tour, they're not going to be satisfied with an in-person tour once they get to the property.

Jason; Right. Very clever. What are some other ways that people are leveraging these or making sure that it's all tied together? You're at the forefront of seeing how people are reaching this stuff. I think that's a clever hack to require the virtual tour in some way or fashion. Are there any other things like that that you're noticing people are doing to facilitate this?

James: Yes. I think one thing that's really interesting and really smart is particularly the cost of these cameras is dropping and there are more options for property managers than there's ever been before. As you're doing your move outs and some of the homes obviously, they're going to need some maintenance as you turn them over, and maybe a new coat of paint, a new carpet, whatever, but as you do your next move-in inspection, if you have a 360 camera for using the Zillow 3D Home app, if you're using your own iPhone in order to record your pictures and whatnot, use that next move-in inspection as an opportunity to not only record what the status of the home is before the new tenant moves in, but then use that as an opportunity for your marketing material too.

A lot of these tools like Matterport for example if you use one of their cameras, it'll take all the pictures panoramic pictures for you, and then you can even take out specific 2D images and use those for your marketing materials too. Basically, if you have the right equipment and your budget allows for it, put the camera on the tripod, put it inside each room, it'll take stance of the entire room, it’ll create a 3D floor plan, it'll create a dollhouse view of the home, and it will create all the individual images that you would need for your listings and for your inspection. Take that as an opportunity to combine the maintenance and loop-in element with the marketing elements so that you can have that 3D tour for that home in the future.

Jason: Right. Then when your tenant puts a notice, you can start marketing the property right away, you can put it out there, you can put out the tour and everything else before, and you may be able to get the place rented before it's even vacant.

James: Absolutely. That's another big benefit that some property managers are realizing with high quality virtual tours is that they can get the properties rented, sight unseen. If the virtual tour is good enough whether the person lives in town or not, if the property’s occupied and they want to put it out there in the market, there's a higher likelihood that they'll have the home rented sight unseen with a high quality virtual tour. I think that's the goal.

With Tenant Turner, we're trying to manage the leads and schedule the appointments to get people into the home, but ultimately what we're trying to do is streamline the leasing process. If we can help minimize the number of showings to help minimize the amount of back and forth that goes on with these virtual tours, maybe even prevent somebody from going to a property altogether, it's a win-win.

Jason: The property managers that are not doing this stuff, if they're tracking their metrics, and they're tracking their average time to get things rented out, their time on market, some of these variables, and then they start using maybe Tenant Turner to start using maybe self access, maybe start using virtual 360 cameras and tours, and all this, they probably will see a dramatic difference.

To be able to say in a sales presentation to a prospective owner, “Hey, this is where we were before, like all the companies out there, and here's where we're at now, and what we've noticed,” it's such a huge differentiator in selling point. Even a month of vacancy, even a couple weeks of vacancy can be pretty expensive. In some markets, that could be thousands of dollars depending on the property.

James: Yeah. It’s just another kind of tool in the tool belt. I think a big thing is some of the concepts from virtual tours and I think something like Matterport too, just because the cost has been so high, you can get into doing virtual tours relatively easier now because of the Zillow’s 3D home app, you can do it now just with the quality of phones being able to take your own panoramic pictures. I know a lot of people out there, they're using tools like zInspector already for their home inspections, but they also offer a virtual tour tool.

There's a lot more out there now than there's ever been before and I think the property managers who are willing to take that leap into putting a little bit of extra effort into it, and putting a little bit of extra time in it, they're going to be the ones to receive the biggest returns by reducing their vacancy, reducing their rent loss to vacancy, but then also like you said, being able to inject those core metrics back into their value prop to their customers.

Jason: Between you and me, because it's just you and me right now, just us, if you're hanging out with one of your buddies that runs a property management company and they're like, “Hey, what should I use? What camera should I get? I've got your system Tenant Turner.” What would your go to recommendation be right now?

James: I think the Zillow thing is really intriguing because it's free, but for all of us in the industry, Zillow, they're kind of a…

Jason: It makes everyone scared. We’re all afraid of Zillow.

James: Exactly.

Jason: We’re all watching Zillow, but we’re all a little bit afraid.

James: With Zillow, I mean they own and control your data because you're recording it in their app, you're uploading it to their servers, and I know a lot of people in this industry, they're thinking at the back of their mind, “It's just a matter of time before I've uploaded this to their servers for free and then they're going to take me out of the process completely because now they have my virtual tour.”

I would say, the Zillow one is appealing because of the cost, it costs nothing to do it, but I do think for property managers who are a bit more sophisticated and a bit more in the know in the industry, and maybe have some fears of Zillow and for good reason, there's a couple of hundred dollar camera, a RICOH camera which is a reputable brand. It works with zInspector, it works with Matterport, you can use it with either one of those products and probably a couple of others, and that's a great place to be able to create these beautiful 360 panoramic vantage points of the rental property.

This is what we saw in the data that we looked at, a third of our customers are doing virtual tours, but only 11% of our listings have virtual tours. The higher end properties or maybe some of your smaller multifamily that you can reuse the layout or use a virtual tour across multiple units, that's where you're also going to get the most bang for your buck.

I think as time goes on, maybe we're not quite there yet where this is going to be a ubiquitous part of everybody's process, you can use it as an upsell to an owner, you can use it as something particular for those higher end listings. You tell somebody and say, “Hey, you have a top tier property, you have a beautiful space, and I want to be the property manager for you, and this is how I'm going to do it.” That's part of a way you can help win that management agreement.

I don't think it has to be something that's used all the time by every property out there. I think that's a good way to overcome it. If you don't have a camera and you want to test the waters, the RICOH cameras, and there are a couple of them out there, but they're more like $400 versus the Matterport’s $4000. It's a good way to test it out and see if it's a good fit for your organization.

To your point earlier is it going to positively impact your key metrics, are you going to see a reduction in your days vacant, are you going to see a reduction of your time on market, are you going to see an increase in either maybe an additional fee or more management contracts because you offer this, and nobody else in your market does.

Jason: Say you've got a $20 an hour employee that's helping do some of this stuff, whatever. If it's a $400 camera and if it saves you 20 hours ever at $20 an hour, you’ve broken even on the camera. I would imagine, what is that, 20 showings maybe, or trips out to a place, or whatever. I think it's a no brainer. You could probably justify the $4000 camera if you needed two guys or gals, but $400 is pretty easy to start with.

James: Exactly. We have seen with some of the bigger groups, particularly property managers who are tied into larger real estate offices that primarily focus on sales, they tend to have access to the Matterport cameras because these Matterport cameras have taken off more on the for sale side. That's another thing. Whether it's within the NARPM world or within your just local real estate group, you may have a friend that has one. Whether or not they let you borrow their $4000 camera...

Jason: Rent it.

James: Rent it, that's an option. There are services too, depending upon what you think your choke point is, but there's tools out there or services out there. PlanOmatic is one, Zillow also offers their own network of professional photographers that have access to the 3D tour technology. PlanOmatic is in partnership with Matterport. HomeJab is another new one that has 50 offices nationwide. If your issue is getting somebody to go to the property, take pictures and do the editing, PlanOmatic, HomeJab, those tools are in place. Those services are offered.

Jason: You can offload it.

James: Exactly. Think about what's the most appropriate part of the process to potentially outsource. VirtuallyinCredible, they do a good job in creating virtual tours that can then be promoted through your various listings, and websites, and whatnot. If you have an editing, if that's where your constraint is, you don't feel like you have the time or talent to do it, there's another place where you can offload and outsource that component to it. You should be doing it, and if you do it, you will differentiate yourself to make more money and reduce your days vacant, so it makes sense to do it, but if you have hesitancies around buying a camera, then borrow one, or use one of these services, or go the Zillow route.

If you can overcome that hurdle and your concern is really around editing, and formatting, and getting it to the appropriate level, you can use another one of those services like VirtuallyinCredible who can piece it all together for you, but any stage of the game where you think you have hesitancy or you're resistant to taking it on, there are opportunities to buy equipment or utilize an existing service who’s an expert in it.

Jason: Perfect. I think you’ve sold people on the idea of virtual tour technologies. Anything else that that they should know about this that you're seeing from your 30-foot view with all the different property management companies that you're helping them with the leasing side?

James: Yeah. I would say one thing to add is that some people might be listening to this saying, “We don't really need to do that, the technology is not there yet,” at least be thinking about this, whether you look at strategic components every quarter, or every year, or whatever, because one of the big statistics that came out of some of the research done by apartments.com and Zillow is, about 45% of millennial renters are really leaning into virtual tours before they make a decision.

If you don't think the stats are compelling, if you don't want to try it, just know that the largest group of renters that continues to expand within the markets that we serve, they are looking for this type of technology. Again, it's something that you can use to help sell to your owners, but as you look at quality tenants, this is something that those folks are going to be looking for, and they'll look past your listings eventually if this is not going to be there. Be ready.

Jason: I would wager to say there might be a correlation between the most tech savvy of renters and the safest ones to be placing into properties. It might help you attract better tenants. Maybe.

James: Yeah, I agree.

Jason: Psychologically, it seems sound to me, but who knows. James, it was really cool to have you here again. I don't know when the next conference is but we'll have to go dancing again.

James: That's right.

Jason: With all our homies. To be clear, it’s not just Jason and I dancing.

Jason: No, we’re not dancing together.

James: Good times.

Jason: You're married, but I'm single again, so I can pick up…

James: I could be your wingman.

Jason: You’ll be my wingman, I could use a wingman.

James: I got you covered.

Jason: Alright, well hey, it's really good to see you again. James, it’s really good to see you again. I love what you guys are doing at Tenant Turner. I appreciate you coming on the show and how could people get in touch with Tenant Turner?

James: Yeah, if you guys ever need any help with your showings, software, lock boxes, or locks, or ever just a resource to chat with as you can tell, we're really into the data, we’re really into the industry, and we want to be of service to folks. You can reach me at james@tenantturner.com. Definitely come to our website. We’ve got a live chat feature. Anytime you want to speak with somebody, we have folks standing by all US based who would love to hear from you. Come on through.

Jason: I saw your Instagram. I'm going to let you get another quick plug here. You have some new lock boxes that you guys are doing now?

James: That's right, yes. One of the big and exciting things that we've been rolling out, we've been doing it in a slow launch and actually Calvin, he owns his own property management company, Keyrenter Richmond. He was one of our guinea pig customers. We put new lock boxes on his property. They're SentriLock lock boxes, SentriLock’s a wholly owned subsidiary of the National Association of Realtors. It is an extremely high quality lock box with the six year warranty. For anybody who has had a desire to experiment with self access but maybe was hesitant because of the lock boxes, what we have now is top tier and will last you a good long time and help prevent you from having to go to those properties showings yourself.

Jason: Perfect, awesome. Alright, cool. Well James, thanks again for coming on and I will let you go.

James: Cool, thank you, Jason, it was a pleasure.

Jason: Alright, so great to see him again and have him on the show. Check out Tenant Turner at tenantturner.com and if you are [...] business feel free to reach out. Test your website at doorgrow.com/quiz. Test your website out. See if it's effective, and if not, you maybe want to talk with us and that might help you realize there's that leak, but you probably have several other leaks that we can help you with in your sales pipeline. Our goal is to show up trust, show up those leaks because trust is the speed in which you're able to get clients on close deals and grow your company. That's what we specialize in is helping maximize trust and organic growth and we’re on lead generation at DoorGrow. With that I will let everybody have an awesome day, let everybody go and until next time, to our mutual growth. Bye everyone.

Download this Episode

Nov 5, 2019

Property management businesses always want and need products and services to be profitable and grow doors. That’s why many of them choose the user-friendly residential rental property management software for single-family properties called, Propertyware.

Today, I am talking to Inaas Arabi, Vice President (VP) of Single Family Rental and General Manager (GM) of Propertyware. He understands the importance of developing new and innovative ways to help property managers attain profitability and growth.

You’ll Learn...

[04:37] Past and Present Perception of Propertyware: Before becoming GM, Inaas was a customer because of ability to customize system based on business models.

[06:38] Who uses Propertyware? Typically, larger companies wanting to scale and grow.

[07:45] Room to Grow: Never buy a solution for where your business is today; always buy a solution for where you want it to be.

[09:50] Directions for Growth:

Add units by differentiating services via customization and special offers.
Increase revenue per door by offering add-on products and services.
Reduce expenses via automation for manual and repetitive tasks.

[20:33] Propertyware stands behind its platform; serves as business advisor, not only technology provider, to solve pain points.

[23:54] Facilitating Future Integrations: Freedom to connect with third-party tools, vendors, and services.

[27:40] API Connections and Challenges: Propertyware provides two-way data exchange that’s maintained in one system.

[34:50] Status of Property Management Industry: Advocate, educate, and train others on legislation and awareness to protect tenants and landlords.

[45:38] Should you switch software? Break up dysfunctional system to experience freedom by having good data, building relationships, and improving processes.

Tweetables

Never buy software for where you’re at today; always buy software for where you want to be.

Pick property management software that you can live with for the long-term to grow.

Automate mundane tasks performed by property managers via software.

Kiss of death is double entry and manual input.

Resources

Inaas Arabi on LinkedIn

DGS 102: The Key to Debunking the Rent Roll Paradox with Tony LeBlanc 0

Transcript

DoorGrow hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you're crazy for doing it, you think they're crazy for not because you realize that property management is the ultimate high trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners.

We want to transform the industry, eliminate the BS, build awareness, change the perception, expand the market and help the best property management entrepreneurs win. I'm your host property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let's get into the show. Today's guest, I'm hanging out with, Inaas Arabi.

Inaas: Yes.

Jason: Did I say it right?

Inaas: Yes, you sure did. Thank you.

Jason: All right. Inaas, I'm excited to have you on the show. We have not yet had Propertyware on the show and Inaas is from Propertyware.

Inaas: Yes I am.

Jason: Tell us a little bit about your background and how you got into the space of property manager first and then let's get into maybe Propertyware a bit and talk about growth.

Inaas: Awesome. I do want to first of all say that I'm a door hacker as well, so thank you for having me on, I'm excited. I came in mostly from the operational background. I started a company from scratch, operated and built it a little bit to over 1700 doors and then I sold it to a national player, then I went to work for the second largest owner and operator in the single family industry, American Homes for Rent. I worked for them for a while. I was their Midwest regional director of ops. We've done a lot of great things there. We took the company public.

I left that and went to work for a company called the Altisource, which deals with banks and REITs and does a very similar thing to third party property management or property managers but on a different scale mostly for the banks and the financial industry. Operated a very large portfolio over 35 states and after that I got recruited by RealPage to be able to become the single family vice-president for them as well as general manager for Propertyware. Now, the reason why I think Propertyware would be a great choice for somebody like me and for a lot of operators is because you're able to take somebody like me with my experience and put him into the seats where we can make decisions that would actually help the property managers with their day-to-day lives.

That's the difference that we're trying to go after compared to some of the other systems, is that we really want to build things that would be usable and would make an impact for people's businesses. I know we are going to talk about growth here in a little bit, but that is really the approach that we're going with Propertyware since I came in. We are building enhancements that allows people to grow in multiple different ways. They grow by adding units, which is what you talked about as far as being a door hacker. Number two, you grow by increasing your revenue by making more money per door. Then number three, you also went to grow financially by reducing expenses while keeping everything the same, so that would allow you to be able to have a much better financials or higher NOI’s for your property, since you're an owner or operator.

That's really the goal. That's the approach that we're taking upon with Propertyware since I've started to them. I started Propertyware late January of this year.

Jason: Okay. This is kind of new for you, the Propertyware thing.

Inaas: Yes, it is. I mean, you can say it's new. I've been there since January so depending on how you take a look at it.

Jason: You're halfway through…

Inaas: Yeah, you're right. I'm definitely halfway through a year, yes, but I'm not new…

Jason: You're 0.5 years at Propertyware right now.

Inaas: Yes, it is.

Jason: I mean that's two quarters. That's enough time to…

Inaas: Make a change, yes.

Jason: Make some changes. So, what was your perception of Propertyware before you came in versus now?

Inaas: I was a customer of Propertyware when I was working with Altisource. We ran a set of very complicated and very large portfolio, a little over 10,000 units over 35 states, and we did it through Propertyware. One thing that I always appreciated about Propertyware was the ability to customize and the ability to be able to build unique or redo the system around your uniqueness as a business model. Now, I think that also causes people to be more afraid of the technology because there is not a very easy systematic streamlined way of doing things on Propertyware. You have multiple ways of doing things.

It's built as such to be able to allow people the ability to customize based on the business model. Having that I've been working for Propertyware, before I found it to be a very interesting point as a customer, it was very good for me, but when I moved in to being in the seat of making changes, I didn't realize that this is an intentional thing that we're doing where we are able to keep the business and keep the platform customizable by the business model. Now, I would also say that that will make some people be very hesitant into looking into Propertyware because they're afraid of how customizable the system could be.

That could also take you into a lot of what I would call rabbit holes, meaning, if you've got 20 ways to be able to do something, sometimes you give way too many options for some people that would allow you to take out the simplicity aspect of it or the easiness aspect of it. Overall, really what I appreciate the most as customization, if I want to have to sum it up down to one thing.

Jason: The perception that I've always had about Propertyware is I've noticed that a lot of the larger companies, the companies that really are folks on scale, that they tend to use Propertyware. Propertyware seems to be very scalable. It seems much more of an enterprise solution than a lot of the other property management software out there. That's kind of the perception that I've noticed. I have lots of clients that have used Propertyware. I noticed usually the guys with thousands of doors are using Propertyware.

Inaas: We do have people from different levels of where they're at. Now, to your point, sometimes it's very difficult and I struggle with this myself as well, it's really very difficult to be able to equate the number of units for your business to how complicated of a process you’re running. We come across some people that they maybe only running 200 units, but they have some of the most complex processes that I've seen and the opposite is very true. It's really more about how customizable are you ready to look in to be able to build for your business. The one thing that I would always say, you never buy software for where you at today, you should always be buying software to where you want to be.

It's almost like when you're talking to trainers that they always say, “You don't want to be the guy or the person who's playing today. You really want to be playing to what you want yourself to look like after you win or at the winning table,” and that's really where it comes in to be. If you're thinking you want to grow and you want to have a system that grows with you, scales with you, that allows you to be able to do different things in many different ways, Propertyware certainly will be it. Now, I would also say, you do have to be willing to take on this opportunity to be able to build things that will be customizable for you, so you can get the best advantage.

Jason: This is the feedback that I've noticed about Propertyware. What he says is absolutely true. If you're going to pick a property management software solution or any solution for your business, you want to pick a solution that is going to give you room to grow into for whatever size you imagine because it's not easy to switch property management software. Anybody that's done it that switched from one to the other because they thought the grass would be greener on the other side, usually regrets it and it's not been so comfortable. I agree, pick a software that you feel like you can live with in the long term.

Inaas: What you're saying is absolutely true. It’s really about jumping from one system to the next is not an easy task. I do recognize that you do have to put in a lot of effort into that, but you do need to find something that would scale with you for the long term, not for where you are today. That's the beauty about finding that system and being able to grow with it as you go. We've seen a lot of great companies have grown with us over the years and have done wonderful things as far as that goes.

Jason:: Let's get into growth. The topic is growth via Propertyware. How does Propertyware help somebody grow or what are we chatting about here?

Inaas: Like I said, the approach for us since I've got into Propertyware is the fact that we're building enhancements that would allow people to grow in all of those three directions. I'm going to give you specific examples because I know you like that. Number one. Growth, in my opinion, is adding units. How do you add units? You help PMCs differentiate their services and do things where they can go out there and put themselves in front of the right people that they're looking for their services.

As an example, I know you guys offer wonderful websites offering, which is great. One way that we can help is we do provide our clients what we call a listing widget that they can plug in anywhere on the website. This way, you as a website provider don't have to build it for them. It defeats all the information directly from the Propertyware property management software. All of the vacancies, the rent price, the number of bedrooms, bathrooms, pictures and all that are all within that listing widget. Then we make it so customizable to the point where people are able to do some awesome things with it.

An awesome thing would be, for example, you can add on banners at their specific workflow. For example, you can put in a banner that says, “Only make that banner available over the weekend to make a weekend offer,” so you can say, “Come take a look at my house that I have for rent and you're going to get $100 off if you look at it between Friday and Sunday,” or “If you look at it between the 1st and the 15th.”

You can do things like, “We're looking for awesome owners like yourselves. Click on this link to be able to see our offering.” You could do things like the workflow, like once a property has an approved applicant for it, then you would automatically take it off the listing so this way you don't have to do anything with that manually. You could also do it where you can add a lot of information in the description for that property and one thing I teach people to do and I'm sure you’d like that, Jason, is the fact that for every listing that you put in out there for rent at the bottom of the description for that listing, you should take a couple of lines and you should type in information about your services with the link to the website that will take people on to a full offering of those services.

Because we know when people go out to look for properties, rental properties on the market, majority of them will be renters, but some are not necessarily renters. Some of them might be owners that they're looking to comp out their property to figure out what the other properties in the area are renting for or they might be asset managers that [...] ability to put yourself in front of those guys while they're searching for properties. It's very unique. It doesn't cost you any extra. It's part of the listing widget that allows you to plug and play and do it as you go.

This is one example of an enhancement that does help for the unit growth. There is plenty more, I don't think I have enough time to be able to share all of them because I want to talk about other items that are important.

The second element we talked about, which is adding revenue or increasing your revenue, making it where instead of making $1000 per door, you go up to $1500 per door, you go up to $2000, $3000, whatever you feel like it's the right level that you want to go to. How do we do that? We do that by offering ancillary products that could make sense for the property managers but they're also integrated within the system so this way, they don't have to do anything offsite the system.

The beauty about that is you get the beauty of getting something that is offered, make some money on it without adding too much expenses on your end from an HR or an employee perspective. Some examples with that would be asset protection or our renter's insurance. I know some other software do offer that. The reason why I mentioned it is because between Propertyware and some of the other systems is the fact that we really want to make sure that it’s fully integrated within our system. The tenant will have a very seamless experience when they're selecting the process or selecting the product and they were going through it, and then also the PMC will have a very seamless experience. Last but not the least, if there is an owner involved, that owner will also have a very seamless experience.

As an example of the asset protection, it's a checkbox and then you can select whether it's paid for by the owner or paid for by the tenant. You can put in whatever extra fee that you would want to add on as a PMC as your profit margin, and then you can apply either to a tenant ledger or to an owner ledger depending on who's paying for it, and you do all of that very seamlessly with a couple of clicks.

If you do enough of those, you start seeing a little bit of an increase of revenue in per door that you're having. Some of the other products that were also migrating or integrating within our system would be things like utility management which is I think we're one of the only system that I know of that offer something like that. Utility management in single family has not been a revenue center for a long time, but I think that is changing with all of the legalities where it's forcing either the owner or the property management company to keep a lot of utilities in their names so you don't have any off and on for all the tenants when they leave or when you have a new tenant moving in.

If you are a PMC and you're going to have to manage that for the owner, we believe you do it with ease, but you should charge a fee to be able to do that and you can apply for that again either on the tenant ledger or on the owner ledger—depending on who's paying for it—and you make a little bit of money on it. That's the examples of how do we help increase revenue for our PMCs.

The last type of growth that I want to talk about which is very near and dear to my heart is the profit growth by reducing your expenses. In my opinion, you reduce your expenses by doing automation. Now automation, certainly I'm not suggesting that you exchange relationships or conversations with owners and tenants with technology, but what you do, if you take a look at a lot of repetitive elements that we do every day in property management, you should automate those or you should look into making them systematic, so this way you're not spending a lot of time doing what [...] specific example here.

Since I came in to Propertyware, we sat down and we looked at all the processes that our PMCs go through. From renewals, to leasing, to signing of a lease, to maintenance, to all of the big processes. Our goal was to be able to build or educate our PMCs on the best automated way to be able to do a process from A-Z, for the best results, for the cheapest cost as far as HR, and for the highest profit margin.

I can tell you, we've gotten rave reviews from our clients when they've seen what we've put together. We have what we call road shows which is more of events that we put out in some certain cities in the United States and we invite our clients and prospects to come out to see us and see what we have going and what we're working on. We share with them for example the renewal process that we build together for them. Now, the beauty about why this is important, why I talk about it, we actually talk about both sides of the spectrum here. We talk about the setup, how you can setup Propertyware for full automation, as well as the actual process of how you run it from a systematic perspective and from an operational perspective.

By the time you leave, if you have been a little bit hesitant about how do I work Propertyware to my advantage, you already know how you set it up, and you already know how to work the process itself. We've had customers where they came back and they reported that their renewal rate was at 60%-70%, now they are close to 80%. As a matter of fact, I was talking to a client a little bit earlier today and they quoted 79.83% renewal rate from, I think it was close to 71% or 72%. That's a huge movement.

Now, why that's important for PMCs, that's a differentiator for you as well as a service. When you go talk to owners and you say, “I am able to get 80% of people to renew, that speaks volumes to the owners and allows them to see the benefit of working with you compared to working with somebody else who does not have a high renewal rate. Did I explain it to you well as far as all the different types of growth and how we calculate what kind of enhancements we use for each one of them?

Jason: Yeah, absolutely. All of these things make sense and I love the idea that you're taking a look at the challenges that the property managers are facing internally when it comes to their operations to facilitate that with the software, to make that faster, to make that more simple versus all the manual stuff. Property managers do a lot of manual stuff.

Inaas: They sure do.

Jason: The more that you can pull into that software, the better. A lot of people a lot of times, they're turning to lots of different systems to try and systemize their business outside of their accounting solution and that can get cumbersome at times.

Inaas: Yeah and the renewal process that we put together for full automation, we've got a little over 20 contact steps, where if you're doing this manually, you would need about 20, a little bit over 20 steps to be able to go through the entire process. We're talking steps from talking to the tenants and making sure that they want to renew, then again talking to the owner is making sure you agree on pricing, making sure you come back and you talk to the tenant and you send them a lease and you follow up on the lease and you do all of that back and forth. We changed that down to the point where we're able to do the entire thing with about six or seven touches. Six to seven touches in my opinion compared to over 20, does saves you so much time and so much effort that allows you to really concentrate on building the relationship instead of losing the time doing mundane task that you should be automating.

In my opinion, that's how you grow, you grow by taking all of those mundane tasks, automate them, take those out of your way, and then concentrate on building the relationship, whether it's with the owners or with tenants themselves.

Jason: Yeah, makes sense. All right, cool. Is there anything else that you want people to know about Propertyware while I've got you here?

Inaas: Absolutely. There is a lot of things that I want to people to know about Propertyware but few things come to mind right off the bat. One, that we do stand behind all of our clients and we do appreciate the relationships that we have with them. Also, if you can imagine, we're taking a different approach by becoming more of our business advisors to our PMCs, not just a technology provider. A lot of times, you come across a lot of great technologies, but if you don't know how to take that technology and apply it into your day-to-day operations, that technology really failed because it's not really allowing you to get what you’d want out of it.

Think about text messaging when it came out, for example. If people didn't try it, didn’t perfected it, didn’t figure out what to do with it, we wouldn't have had such a great success with it today. The same effort would be with our platform. We wanted to educate people. We want to make a business partnership with them, to be able to tell him how to do it, what do they do with it, and how they can use it to be able to get best results from all the aspects that we talked about. That's one.

Number two, I also want them to know that we are property managers, building stuff for property managers. We’re not technologists, we're just building things in a vacuum, and really building it from the perspective of we know where their pain points are, we've been through it, whether it's myself or somebody on my staff, we know what your folks, the people that’s hearing us today are going through and because of that, my goal is to be able to build things to solve those issues for them, to solve those pain points.

Now, sometimes we have to take them in steps, but at the end of the day we are solving those pain points. For example, we rolled out our text messaging feature earlier this year and for fairness sake it was what I would call the basic features of being able to communicate back and forth via text messaging. In order for us to take that to the next level, we're also working on enhancements now that would allow us to do the multi-level, the multimedia, as well as the group texting, and things like categorize station for all of the text. This way, our PMCs could take a text and apply it toward somebody specific, whether it's an owner or tenant.

They can also do group texting. They can also do multimedia, so they can send a picture, send a file, and do all of that all within one centralized communication command, if you call it that, within the system, so it's not anywhere off the system.

Then, last but not least, I think we’ve talked very greatly about growth, but what I really want people to know, your listeners, is that if you're looking for a scalable system that has a lot of potential for you, that would allow you to be able to do a lot of customization for your business based on your business needs, then you should look into Propertyware and you should evaluate it as an opportunity as an option for you. Now, it may fit then that's fantastic, it may not and that's okay, but at the end of the day you should really evaluate it to figure out if it's a good fit for you or not.

Jason: You're talking about what you guys are doing internally. One of the big questions I know a lot of my clients have, a lot of listeners have that's really hot on the tip of the tongue of most property managers nowadays is integrations. That’s freedom to connect with third party tools, vendors, different services. Maybe you can touch on an API, what you guys have maybe going on there, and how you guys are kind of facilitating integrations with third parties.

Inaas: Yeah. That's such a fantastic point, I'm so glad that you actually brought that up. Propertyware’s current approach is that we are offering a two-way data exchange [...] an API that allows people to be able to connect to their property management software. They can connect almost anything and everything that they would like to do.

In my view, we want to provide people the opportunities to make a choice or pick the right option that fits for their business model. There is a lot of great things that we offer. If it fits your business model, if it fits your needs fantastic, use it. If you have something else that you'd like to use, connect it to property management software so you don't have to double entry anything.

To me, the kiss of death is double entry and the kiss of death is any manual input that you put into either your staff or yourself, because somebody's going to make a mistake with that manual entry and somebody's going to cause you havoc later, even if it's not happening today. That's as far as the API. Now, I know on other webcast, Jason, you did ask about things like I think the place was, remind me again, was HubSpot or something like that, where you're able to connect Propertyware to everything else that it's out there as far as softwares…

Jason: That was Zapier.

Inaas: …yes, Zapier, thank you. I appreciate that. We actually looked into that and we're talking to them now about getting our platform on their site to be able to have full integrations with everything that they've done. You could do this yourself today, meaning if you have access to the API, you can take API, you can plug it into whatever other software that you'd want to plug it into, whether it’s CRM, whether it's an inspection product, whether it's a [...] product, typically anything and everything that has got API, you can connect it to do.

Jason: If you're nerdy enough or you pay enough money to get somebody nerdy enough to do it.

Inaas: True. I mean, you do have to have a developer to be able to take a look at it. This is not something that's geared toward a property manager to be doing it themselves, that's for sure.

Jason: That’s why there's Zapier. The Zapier is very cool because it allows a somewhat normal person—you have to be a little bit nerdy, let's be honest—to do it without having to know code. You can create connections between tools and systems, so if you guys are working on that, I'll be really excited to hear when you guys have that ready.

Inaas: Yeah, absolutely. You're definitely correct, it does need a little bit of development resources to be able to do the API, that's for sure, but remember though, Jason, once you do it once, you've got it, meaning you don’t have…

Jason: You don’t have to do it over again.

Inaas: Exactly. You don't have to go do connection every day, meaning if you've got five products that you're working on plus your property management software, you connect them all at once and you're done.

You may have to do maintenance every once in awhile like if something is changed on your property management software or if you change your business model, if you do different things, you make maintenance changes, but it's not as big of a change once you've done it once. It's really more of an initial step and once you go through that initial step, you're good to go.

However, I would also say, we're also one of the very few systems that offer two-way data exchange. Some other systems would offer data out and they call that API, but that's really not an API. An API should be a two-way data exchange, where you can take data out of your system and you can put data back into your system. If you can't do that, you can't really call it API but that's again [...] view at this point.

I have seen some of our customers do some awesome things with the API connections. Those API's might have where they take information out of Propertyware, they go do something else with it and then go back and feed it back into Propertyware to be able to have one system through which is Propertyware for them. At the end of the day, you would want to connect everything you're working on with your property management software, so you're not having to enter anything manually.

Jason: One of the challenges with API's is that you've got two pieces a software there communicating and if either one of them makes changes it can break that connection like something happens, that's what's I think is really important for the different vendors and property management software to create relationships where somebody's maintaining this.

For example, if Tenant Turner was working with Propertyware or if Property Meld was working the Propertyware, if one of these vendors a lot of people are really enjoying, if they're helping to maintain that connection, then the business owner doesn't have to keep that working or make sure that it’s working.

Inaas: It’s also fair and I'm again [...] and we have a list of companies that we’re actually working with to be able to have direct integrations with, you've mentioned Property Meld for example, that's one of our success stories with the API. We have a full integration with them, they'll tell you the same thing as well.

The beauty about that is somebody could do the maintenance within Property Meld and then they can make the payment out of their Propertyware system with ease without any complications. It also allows you to do back and forth between the two systems, so if you have a work order that came in from a tenant, you can feed into Property Meld and vice versa as well.

Having that we have the API, that's what allowed us to be able to do that. There is a list of companies that we're going through to be able to do direct integration with. I think RentersInc is one of the people here, they're putting in chats. We've been working with them on a direct integration of the API. I think they're almost there, they're about 95% there to it. To me, it's all about providing opportunities for our PMCs to be able to take advantage of what the technology could do for them. That's what we're embarking upon. That's what we are going to do. And if you stay tuned, you’re going to get a lot of great news about us connected with a lot of different vendors that does different things for our PMCs.

The idea is, again to your point, we maintain the connection, so the PMC doesn't have to. If they wanted to go elsewhere like for example somebody wants to go to a different maintenance provider Property Meld is not what they want to use, they can still use the API to be able to make the exact same connection the Property Meld is made with Propertyware, if they have an access to the API.

Jason: Yeah, makes sense. I love the idea of direct integrations. I love the idea of having an open API. I love the idea of you helping them to systemize your business internally, leveraging your software. These are all powerful tools for them.

One of the main things you have mentioned at the beginning, is to lower expenses and all of these things is going to lower the level of communication, which lessens the amount of time in man-hours and manual stuff that has to happen. That's the biggest expense in property management is staff, it's people, it's those resources and that allows them greater leverage so that they can get more done without having to throw money at bodies constantly in order to get everything done. Property management is not a cheap business to run for a lot of people, so margins matter quite a bit.

Inaas: It was quite interesting to me once I came on to work for Propertyware because I went out and talked to a lot of clients and again I'm an operator, so I understand what people are going through and I remember when I ran my own company, it was really more throwing bodies at it all the time. The difference though in today's world that is very different than when I ran my own company, is today you have options for technologies that could fulfill those tasks that people were doing for you before.

Back when I ran my own company, those options were not even available. For example, if you recall back in the day when we were doing inspections on pen and paper or via pen and paper, everybody would take a piece of paper and a list of items or questions and you just fill amount while you're going through the property doing inspection.

Today, you do most of your inspections via mobile technology on mobile devices and with mobile templates. The beauty about that is that saved you the ability or the need to have someone that is actually sitting down and writing down information on a piece of paper and they're transcribing them back into your property management software.

If you have the integration correctly, you go from mobile inspection tool to the inspection report directly into your property management. We're working on something that we're just actually going to roll out here tomorrow, which is enhancements for our evaluation module. It allows people to be able to do multiple inspections and then match them column by column for every time you've done inspection.

Think of when you go out and you do a move in inspection, you do a midyear inspection, you do a move out inspection, and then you're seeing all of those inspections in front of you matched line item by line item, so you know what the kitchen looked like when you did the move-in, you know what the kitchen looks like when you did a midyear inspection and you absolutely you know what the kitchen looks like when somebody moved out

If you can show some damages that the tenant have caused that home, there is never a question anymore about who caused it because you have such an access to data and information that is beyond anyone's ability to be able to dispute it in court. Again, that's the beauty about the technology and the use of technology in today's market compared to what was before.

Jason: Yeah. Technology certainly is changing quite a bit. I think here in the US, we’re in the forefront of what's happening technologically in property management, even if we are maybe behind other countries in terms of how well-developed or how familiar people are with property management. It's exciting to see what you guys are doing. Before we wrap this up is there anything else anybody should know about Propertyware and how can they get in touch with you guys?

Inaas: I appreciate that. What I would like to do though is I do want to talk a little bit about the industry in general because I want to take this platform as a way for us to be able to educate and train. I do believe that our industry and to your point earlier some other countries have this property management business defined a little bit better and it's a little bit more integrated within day in and day out lives of people, so it's looked at a very different.

Jason: There's probably two things, maybe just more legislation surrounding it and maybe just more awareness in those markets.

Inaas: Awareness is really a good word. Thank you. The reason why I mentioned that is I truly believe that our industry has been under attack this year and is probably going to be continuing on ongoing under attack from almost everywhere. Whether it states that they're changing the rules, whether it's businesses that they're changing the rules, whether it's somebody else is changing the rules.

The problem with it is I think we're so defragmented to the point that we lost the ability to stand up for ourselves as an industry. [...] I can give you of states changing the rules on the fly and make it miserable for our PMCs to be able to operate. Not to single them out, but I'm going to make an example of the State of New York. They just rolled out a brand new law about that the tenant protection law, that's what they call it. The effect of those things that they put into the…

Jason: Protecting the tenants from the big bad evil landlord.

Inaas: Yes, exactly. Part of it, for example, you can't charge more than $20 for application fee. You can't even call it an application fee, you have to call it something else. If the customer or if the tenant brings you a copy of an old credit report, you typically have to accept it and not charge him anything if you're going to go screen them through your ways. You can imagine the complexity that this is putting on our PMCs in the State of New York and they're not the only state. I know some other states and they're changing things, changing rules. The reason why I say all of this is I do have an ask for all of us as property managers and the ask is, let's really get together. Let's support the organizations that support us.

I don’t want to make this a pitch for any specific organizations that are very well known in our industry, that are usually a couple, two or three, but let's support them to be able to have a voice, so they can stand on our behalf against some of these things that are happening to our industry. Let's really truly do a good job making sure that we're providing the utmost best customer experience, the best customer service that we can provide, because that is the only savior for us to where the public is going to realize that we have value and what we do has value and they're going to continue on working with us and our business is going to continue to grow.

That's as far as the industry. I really wanted to make sure that I put that plug in there. You asked me about Propertyware, I think we've talked…

Jason: To touch on that I want to agree with you on that. Property management is really in its infancy I think here in the US in terms of awareness and perception. Every property management business owner is either an advocate for the industry or they're hurting the industry. We all need to be advocates for the industry and we also need to educate. We need to educate because I think if a lot of these laws wouldn’t exist or they would be very different if property managers had input, because they know what works in the real world. They know what needs to happen. They do want to protect the interests of the tenant and the owner.

When things get skewed, when the pendulum swings all the way away from the owner’s interests or the landlord’s interest just towards what serves the needs and interests of the tenants, eventually it's not really going to end up serving the needs of the tenants. It creates some sort of imbalance that is going to hurt tenants in the long run. That's generally just always going to be true when something isn't right, or isn't fair, or isn’t just.

Inaas: I totally agree 100% and I think you hit the nail on its head with the education. I do also feel that we should educate everybody that we come across with. Whether it's our tenants, whether it's our owners, whether it's somebody else that we're dealing with our vendors.

One thing that I was very advocate for when I ran either of my company or other companies, is the fact that you have to have an onboarding experience for everybody you’re dealing with. An onboarding experience with your tenant, an onboarding experience with your owner, an onboarding experience for your vendor. And guess what? Also an onboarding experience for the HOAs that you're dealing with, an onboarding experience for the politicians that are responsible for your area as well because if you don't educate all of those people on what we and how we do it well, there is also not going to be something you're going to like.

To your point, Jason, I think if the property managers were involved in some of these laws that they were written, I'm sure they would have been written differently. It's not because we don't want to protect the public. We actually have the utmost respect for the public, but we know what works, and we know what works well.

If the idea is to make sure that a tenant has the opportunity to not being overly charged for a particular application fee or something like that, you could have written that in as a rule but a little bit differently than just making it where it’s mandated, it's one fee, and you're minimizing the ability for somebody to be able to do the right screening for their tenant and putting the right people in place.

Jason: Even in contracts and everything else, we need a little bit of educated language to explain the why behind things.

Inaas: Yes, absolutely, 100%.

Jason: It’s like that spoonful of sugar that Mary Poppins says makes the medicine go down. There needs to be a little bit of education added to some of the stuff rather than just throwing out, “This is how we're going to do it,” and you have to just take it.

Inaas: Agreed. Now, you did ask me about property. I do want to say a couple things here. It is a system that I'd like people to take a look into as an opportunity for them to understand what the system could do for them, what are we doing as far as these processes, these automations, the opportunities for the two-way API for them to be able to connect their system to everything else that they're working on.

We understand that people have to have options and we're supporting that and we’re going to go with it. I just want people to take a look at what we've got to offer and if it's fitting to what they need and what their business model is, fantastic. We can work together. If it's not, it's no big deal. We will continue on staying part of the same industry and we’ll support each other, but I do feel that people are missing quite a lot by not checking out what the opportunities look like and what the options are with Propertyware.

As far as connecting with us what I would recommend, if people go on to our website Propertyware.com, we've just finalized a new experience for what I'm going to call here the free trial where you can go in, login, take a look at a little bit of the system, figure out what's going on. You're certainly not going to be able to do every single thing in the system. I'm not going to allow you to be able to take a payment in the system or put a tenant in there and kind of have them pay you through it, but the beauty of that is at least, it gives you an insider look of what we have available to you. I would also invite you to have a conversation with our sales staff to really truly understand what we have to offer and then go through a demo. If it works, great. If it doesn't, no big deal.

Jason: I want to point this out because I'm an advocate for the industry. I'm not a property manager. I want to see the industry shift towards more openness, more freedom. I love what you're saying. We've had other property management software on the past and the general message of one of the big players out there who I won't mention by name was just, we're going to just create everything internally. We're going to just try and give our customers everything that they need rather than giving them what they really are asking for.

The general feedback I hear from everybody is they want freedom. They want freaking freedom to be able to make choices, to make the best choices for the business, to choose the best tools and vendors. They want freedom. As entrepreneurs, that's why we are doing what we are doing. We don't give up the 9-5 job so that we can work even more hours a lot of times initially and have a lot more stress and a lot more pain just because we're crazy. We do it because we want more freedom. We want to be choosing what we're doing.

What you're saying I think is in alignment with entrepreneurs. It’s in alignment with entrepreneurs that are running these property management businesses. They want the freedom to be able to choose the vendors, choose the third party tools that they're going to be using, and they want that stuff to work with their property management software. I appreciate that that is a focus of what Propertyware is doing. I wanted to point that out because I think it's important to highlight those in the industry that are doing that. I see you guys doing it. I see Rent Manager doing that, the open API thing.

One thing I've also always appreciated about Propertyware since we started doing websites at DoorGrow back in the day, the very first website I did were websites for Propertyware clients and customers. I've always had that really good integration for the widget. In the first, I have a JavaScript widget, it would populate the data, it wasn't just a cheesy iframe thing that we were putting into the page, and that's always been nice. It's always been nice to have that reduced double data entry. People are putting in their properties into their websites and then doing that just back in the day.

We've come a long way since then, every everybody has. Now they're using tools like maybe Tenant Turner, ShowMojo, or Rently, and some of these sorts of integrations. I've always appreciated those aspects of Propertyware.

Question. Most people have a property management software. I would imagine most people listening to this show are not just startups that are like, “Which software should I pick?” Say they're using AppFolio, they're using Buildium, they're using Rent Manager, they're using Rentec Direct, they're using something already. What would you say as far as switching? We mentioned already. It’s painful usually to switch. How do you help facilitate this if you're going to get customers on? They're going to have to make the switch. Right now, they're probably not even listening because they're like, “There's no way I can switch. I'm married and I'm married for eternity.” I'm going to give you an opportunity to help them break up that marriage if it's dysfunctional.

Inaas: I am so appreciative of you bringing this on as well. I do want to go back though. Freedom, I love that. I'm actually going to use it because you are correct in making sure that you highlight the fact that it's all about freedom. Yes, we do have offerings. Yes, we do have products, but at the same token, I am personally a believer. In Propertyware, we're believing that we have to provide options for people. You pick whatever makes sense for you as a property management company, if you have a different vendor that is offering something that is more unique to your business model and you like to use that versus using something that we have, great. Go for it.

Now as far as the implementation—obviously you can use the API two-way data exchange to be able to connect them so you don't have to double entry anything—the implementation is such an important piece. When you talk to technologist and you talk to them about implementation, they just don't realize the amount of hassles that a PMC will have to go through when they're jumping from one system to another system. To them, it's more of a 1+1=2. Once I came in to Propertyware, the first thing that I have to tackle was our implementation. What we did with it is a couple of folds.

One, we broke it down to where we provide now tools for ability to be able to have clean data that gets into your system. Having clean data is half the battle for your implementation because if you have a good, clean data coming into your system, it makes your life so much easier to be able to operate.

What we found, a lot of PMCs may not have realized some of the, I'm going to use the word “garbage” that they may have had in their systems. When we go through our checks, we come back to our PMCs and we say, “You told us you managed 200, 300, 1000 doors but when we're looking at your data here, we're seeing 1033, so what's going on with those additional 33 units? Are they truly for rent? Are they truly something you don't use? What's going on with them?” and they're coming back saying, “You know what? You're right. Those are people that we lost two years ago and the person who was working on the system never deactivated the units.” Having good data is half the battle.

Second is the partnership between the PMCs as well as a good implementation team that allows them to go through the experience one step at a time. What that means, when they're coming in to us to be able to work with Propertyware, they're going to be assigned a particular team with one project manager who is driving the entire implementation from A-Z. They have calls, they have specific asks, there is a specific journey that they're going through step-by-step.

Data is usually number one issue that we all come across. Number two would be all your accounting setups. Number three would be all you process setups. Number four would be more of your training and your customization. Number five kind of bringing it all together with KPIs, reports, and dashboards.

Now, after you've done all of this implementation, then you're also going to get the training team to come in and do full training with you for all these processes. That training is part of the implementation. It's not something specific that you got to pay for. It also allows you to be able to customize to what your business model needs.

Let's say you have a specific way of doing move-ins, that trainer is going to learn that from you before they come out to train you and your staff. When they come out to train you and your staff, they're training you on the system to the best business model, to the best business process that you told him you want to do for that move-in. They're not going to tell you, “Propertyware does it this way,” they're going to say, “This is how you told me you want to do move-ins and this is how you could do the same thing in Propertyware for the best of all the results, whether it's for you or for us.”

Last but not the least, what I would also mention is the fact that we provide our PMCs timelines for their integration. We point it out. We basically say you have, I think the timeline is about 90 days for you to be able to be integrated. You’re not paying for the systems during those 90 days until you fully integrated. Once you are fully integrated, then you start paying for it. That allows us to both be on the same footing saying, “We're going to work with you to be able to get you implemented because you're not paying us, so we're not making any money. At the same token, it's in our best interest to help you through this process so we can get you to that finalized implementation piece so you can start using your system.”

Now, what we've seen is a huge reduction in the days of implementation for Propertyware in particular. We've also seen a very high number of what I would say happy customers that they came on our new plan for implementation. We’ve also seen a lot less issues with data when data comes in through the system and we're finding a lot of ahas from our clients similar to what I described to you saying, “Hey, I didn’t know that I had 1033 units. I thought I was only managing 1000 so now I got to deal with those 33 units,” or, “I didn't know that I could do move-ins this way or move-outs that way, or do a process of secure deposit, and refunds this way to be able to make it easier for me and more streamlined.” It's less touches, less communications, less points of friction between the teams, and then obviously what gives you the best results at the end of the day. We've seen very good results from our new approach with the implementation.

Jason: People are a little frustrated with their existing property management software. It sounds like you guys have made a lot of changes, as well as the API stuff you’ve been talking about, direct integrations. It's probably worth to them to take a new fresh look at Propertyware.

Inaas: Absolutely, yes. If you looked at it before, I do invite you to take a look at it again. I promise you, we've made a lot of changes. And we are continually making changes. We do this every day. When I say changes, it's really more of enhancements that really makes sense for all of what we talked about. You've mentioned the listing, how easy it is. One thing we just rolled out recently is the watermarking for photos in listing widget. It's a small thing but it's an awesome thing to have.

Jason: It protects the photos.

Inaas: It protects the photos. Especially if you're in areas where you're hit a lot by scams. When I went operating, I'm not singling them out but just a case of the matter. Florida was one of those states that had a lot of scams. By watermarking your photos at ease without a lot of work, it helps you to be able to protect them and making sure that no one is going to steal those photos to be able to scam you or your owners out of the property. Again, we're making enhancements that make sense and we're making enhancements that is allowing people to grow. Either by adding units, increasing their revenue, and/or reducing their expenses, and increasing their profits.

Jason: Cool. Inaas, I appreciate you coming on the show and sharing some ideas about Propertyware, letting us know where everything's at with it. Again, people can get in touch by going to propertyware.com and check you guys out.

Inaas: I appreciate that. Thank you very much, Jason. I'm really glad that I got a chance to be on the webcast with you. Thank you very much. You guys do a fine job. Please continue on these webcasts. Please continue educating our PMCs and just know that we're going to be supporting you all the way. If there is anything we can do for you and your listeners to be able to support them in their businesses, and in their endeavors, please reach out to us. We’d love to be your business partners.

Jason: Awesome. Yeah, I would love to. That would be great. It would be cool. Maybe we'll do something to your audience at some point. That will be fun.

Inaas: Absolutely. We welcome that.

Jason: All right, cool. I love sharing the message that we share. I'll let you go Inaas. Thanks again for being on the show.

Inaas: Thank you very much. I appreciate it. Thank you.

Jason: As everybody knows, I love sharing the message that I think property management, there is a bigger vision for property managers than just getting mired in toilets, tenants, and termites. I do believe good property management can change the world. There is a massive ripple effect. There are thousands and thousands of families that can be affected by good management. There's a lot of situations in which families should be underneath good management instead of a crappy landlord situation.

I do believe good property management can have a massive ripple effect that can change the world and hopefully that all of you get a little bit inspired or excited about that. You are having an impact. You get to make a difference. I am honored that through you my listeners, through our clients that we get to work with, that we’re able to get that message out, and that we’re able to have some small impact in the industry and have a ripple effect. I appreciate Inaas pointing that out.

If you are a property management entrepreneur that wants to add doors, make a difference, then please reach out. We’d love to have you and maybe work with you, and see if you’d be a good fit for the type of client that we're looking to work with, and make a difference in this industry. Check us out at doorgrow.com. Until next time everybody, to our mutual growth. Bye everyone.

Download this Episode

Oct 29, 2019

Usually, paying attention to your body, mind, and health is the last thing you do when it comes to your business. It’s time to focus on yourself first!

Today, I am talking to Tony LeBlanc, second-generation property manager and author of The Doorpreneur: Property Management Beyond the Rent Roll. Tony shares the keys to debunking the rent roll paradox when chasing doors to grow.

You’ll Learn...

[03:00] Software Engineer Stint: Tech geek at heart that brings love of technology into property management space.

[04:30] What is rent roll paradox? Property management companies that constantly rely on getting new doors to grow their business.

[05:42] Chasing doors creates havoc and stress due to inefficiencies.

[08:45] Expanding Territories/Locations: The bigger and more geographically dispersed a business gets, the more opportunities arise that aren’t taken advantage of.

[10:56] Would you want two doors making the same amount, or one door making same amount as two? One door, if the goal is revenue/profit, it's not just about adding doors.

[12:30] Premature Expansion: Go-to once a company reaches a certain size; anything premature is generally not a good thing.

[14:13] Entrepreneur’s Journey: Everyone hits stagnation or desire for more. They get distracted by opportunity.

[15:11] Opportunities vs. Expansion: Think it through, be disciplined, and follow good habits before making the jump and knowing where you’re going.

[17:40] Cycle of Suck: Bad owners, properties, reputation, and false scarcity.

[18:15] Property management is changing. It’s future is a foundation full of opportunities.

[21:50] Dinosaur Dictators vs. Millennials Seeking Meaning and Purpose: Good property management can change the world.

[22:45] Tony’s Aha Moment: We matter and play an important role in thousands of people’s day-to-day life.

[28:30] Target on Back: How to deal with being overwhelmed as a property manager.

[32:14] When we create and have constraints, when we're limited in our time and attention, we innovate.

Tweetables

Growth doesn't happen by accident. Personal growth is gateway to business growth.

Chasing Doors: Is all you care about being introduced to new people, close deals, and get more doors?

Property management’s growth is defined by doors that it turns down, not doors it gets.

Focus is power. Cut something out in your life to achieve something.

Resources

The Doorpreneur by Tony LeBlanc

Ground Floor Property Management

National Association of Residential Property Managers (NARPM)

Cycle of Suck

DGS 101: Take Confusion Out of Property Management with the Proper App 0

Transcript

DoorGrow hackers are those that love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not, because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income.

My guest today is Tony LeBlanc from Canada. Welcome Tony, how are you doing?

Tony: Hey man, I'm doing great, Jason. Thanks for having me.

Jason: I'm really excited to have you on the show. You've been on before a long time ago and I was telling you in the green room before the show, but I think we resonate with a lot of similar values. I think we're both growth-minded people. I read your Doorpreneur book, which everybody should take a look at. And I think we have a similar mindset that growth doesn't happen by accident and personal growth is the gateway to business growth. I think we probably would both agree.

Tony: Absolutely.

Jason: I posted about this just the other day. I think it's the last thing that everybody wants to pay attention to in their business, is themselves. They’ll focus on everything external. “I need more leads. I need this. I need this.” Ironically, if I could change the person or get them clear on themselves, then all of those things end up changing by default, everything. Website marketing, everything into changing by default if you focus on yourself first.

Tony give people a little bit of background. Maybe those that had heard you before, bring them up-to-date. Tell us a little bit about who Tony is.

Tony: Sure, thanks Jason. I said my name's Tony LeBlanc from eastern Canada. Born and raised out here. I am a second generation property manager. It wasn't my first career of choice. I actually got into it as my second career. My first career was a 15-year stint as a software engineer with IBM which provided me an amazing experience visiting the world and working with a lot of great people in that domain.

I'm a tech geek at heart. I love technology and I don't think that'll ever go away. It’s been interesting to bring that into the property management world, because as everybody knows, technology in the property management space is still not, in my opinion, where it should be. I still think we’re 5-10 years behind some of the stuff that we should have out there available to us. I still find it very difficult to run my business with the standard property management software that they have out there.

After I left IBM, I started my management company which had been running out for about 10 years, called Ground Floor Property Management. We have been very well-received in our community. We now have three locations and I am now an author. I've basically taken everything that I've learnt from IBM, from life, and from the last 10 years of growing my property management company as well as the spin offs that we've created over the years, and that's where I am today, introducing the doorpreneur way.

Jason: Perfect. The title of the show is the Keys to Debunking the Rent Roll Paradox. What is the rent roll paradox?

Tony: The rent roll paradox is the fact that most, if not all property management companies out there, are constantly relying on getting new doors to grow their business. I believe there's a different way. I believe there is a much better way than doing that. And I say that from experience. For the first five years of running Ground Floor, my property management company, I was nothing but a door chaser. I just wanted to grow, grow, grow, grow. That's all I cared about. I just wanted to be introduced to new people, close deals, and get more doors.

We got to the point to where we reached almost 2000 doors in five years. That’s across three locations. It was fast, it was intense, and it was incredibly painful. Incredibly painful. Now that I've gotten into the second five-year phase of the management journey, I've learned a lot looking back, and I realized that as I was going through that growth phase, I'm just adding more doors, and more doors, and more doors. I was causing a lot of havoc and stress on myself and my staff, but I was leaving an incredible amount of money on the table because of inefficiencies.

If anybody's growing a property management company, when you're getting doors pouring in—we do multi-rise mostly, not just single family—it's a lot of work. We've onboarded 50, 60, 124 unit buildings, and it consumes you for a period of time. If you don't give the proper amount of space in between those growth, it becomes rough, but you don't want to take your foot off the gas if you're like me.

Jason: Yeah, so let's touch on this real quick. I tell people this all the time. If somebody calls me and they say, “I am thinking of starting a property management business,” I say, “Do you want me to talk you into it or out of it?” because I get to see inside hundreds of companies. They usually laugh, but they usually stay into it. The thing is, this property management is easily death by a thousand cuts.

Tony: Absolutely.

Jason: If you have one little problem with one door and then you have a thousand doors, you have thousands of those problems over and over again. That's why it's so critical to shore up some of these leaks early on, because if you're having problems now and you feel like it's stressful now, just adding more doors is throwing gasoline on whatever fire you have. If that fire is a bad fire, then it's just going to explode. It’s going to be worse. Customer service goes down. You have more complaints and it compounds.

Usually, they have to make significant changes just to go from 50-60 units under management to break past that first sand trap—I call 50-60 door the solopreneur sand trap—to break 100 doors. Just to do that, they have to change everything. Ironically, I’ll real estate companies that are doing property management on the side, break past that barrier artificially without making the necessary changes. They don't get technology in place, they don’t get systems in place, and it will pass it.

One of my case studies was a client that had 600 units under management, single family, and was making $0 in this business. I said, “How are you doing that?” he’s like, “I've $3 million a month in real estate every month or whatever. I'm doing real estate.” Property management can be death by a thousand cuts.

You have this pain, but you have growth and I'm sure a lot of people are like, “I would love that problem. I would love the problem to deal with, to figure out how to get 2000 doors and quit crying,” so tell us a little bit about your experience after that.

Tony: One of the big things was expanding into different territories. Our headquarters, which is my main office, we’re doing extremely well. We then split off to another city within an hour-and-a-half away, and that ended up going well. The third location came in and that started off really well, but then about a year later, we started looking at all three locations individually, and we started seeing a lot of gaps, and a lot of issues that we're struggling with.

We made a conscious effort to obviously fix a lot of those things and it made us really pull the curtain back and look at the overall business as it sat. The bigger we got and the more geographically dispersed that we became, we started seeing a lot of opportunities that we were just not taking advantage of. When I started the management company 10 years ago, I had maintenance as part of the division. That's the way my mother did it and that's the way I wanted to do it.

I always wanted to have my own maintenance guys on my payroll so that I can control that and we still do that to this day. What really became evident as we're studying and looking at our rent rolls across all three locations, was the amount of money that was being spent outside in terms of different trades, different services that were required on all these properties. To be quite honest with you, I was getting tired of chasing doors. It wasn't as enticing anymore. Don't get me wrong, we still grow, we still love getting new doors, but something had changed in me.

Then we were really started looking at what can we do beyond just getting more doors and that's really when the whole doorpreneur philosophy was born. Our first pivot into a new business that serviced our portfolios was landscaping [...] and that's where everything grew from there.

Jason: Here's an obvious question. Would you rather have two doors that are making the same amount or one door that's making the same amount as two?

Tony: Definitely one. Absolutely.

Jason: Absolutely. If the goal is revenue, the goal is profit, and it's not just about adding doors. Everyone focuses on that one multiplier, it is doors. Everyone's trying to get a deal and it's like one deal per door. What if you can get multiple doors per deal? What if you can get multiple years per door? What about duration? There's all these other factors they’re not paying attention to. There are some property managers out there that are replacing every door every year. They're usually about 50-60 units, they're getting on an accidental investor that leaves every year, they have to replace every damn door every year, and they're like, “We’re adding doors, why aren’t we growing?” It seems so obvious.

Tony: The major shift for us has been quality over quantity. I say no to more doors today than I ever have in my 10-year career running this company. It's really all about where can we take this? Where can we take that door and what can it do in the long term?

Jason: Yeah. I think a property management company’s growth will always be defined by the doors that they're willing to turn down, not the doors they're able to get on for sure. I think another thing going back to your rent roll paradox, you talked about expanding into locations. I think that's a go-to once a company hits a certain size, they're like, “We did it here, let's go here.” They just had me speak on this at the Ironman conference on a panel and I call that, premature expansion. Anything premature is generally not a good thing.

A lot of people think, “Well, we did this here, we're hitting a cap in our door account, so instead of expanding our revenue opportunities with those doors, or here, or figuring out other ways to hit different parts of the market here, let's just go find a new market. We’ll do it all over again,” they don't realize it's worse than being twice as hard in starting a new location.

Tony: 100%. The stories that I can tell you about the two locations that we can open. It all comes back to a fundamental need of chasing doors. It’s like that's all you're able to see. We got this tunnel vision. It's like, “Okay, I've grown here and I think I'm as big as I can get. Where else can I go and chase more doors?” It's fulfilling for the first little while. It's fun, it’s exciting, but there's an emptiness to it in the end.

I think I'm a little bit different than maybe probably a lot of traditional type property managers. I knew when I started Ground Floor that it was going to be something much bigger than just a property management company. I had that vision 10-15 years ago and just running after doors, it lasted for 3-4 years and then I was like, “Okay, what's next? Is this it? What else can I do in here?” That's when a lot of other things started coming along.

Jason: I think that's common for every entrepreneur in the entrepreneurial journey. If they really are an entrepreneurial-minded person, they're going to hit this stagnation or this desire for more. The desire to do more. Sometimes that goes south and they do it in negative or dysfunctional ways. I started out just doing websites. Then I go like, “Hey, I could make residual income if I'm doing the hosting for these websites. I could do this. They also need the service.”

I think as entrepreneurs, we also get distracted by opportunity. We see it everywhere and it keeps us sometimes from even achieving the goal we're working on right now. How do you find that balance between seeing all the opportunity and expanding into new areas, but making sure that you're actually getting stuff done?

Tony: I'll be honest with you. The first couple of years, I was so focused. I had my head down so bad in terms of just getting the doors and growing my local office, that it was so busy and it was all so fast that I didn't have time to look at anything else. It's when I get a little bit of breathing room that I started looking at the different locations. I don't necessarily regret it, but I probably would have thought about it a little bit longer before I need the jump.

If I look at myself now, it really comes down to being disciplined and a lot of good habits. Like I said, I say no to more business today than I ever have. I am 100% focused. Property management is my life. If it's not in property management or in my sphere, I'm not interested. I don't have time for it, I don't make time for it, and I'm very blunt with that. I have an extremely tough schedule that I follow. I do a lot of stuff for myself personally, and then that translates over to the business side. I know where I'm going.

It's kind of fun to where you'll have other guys or people that'll come in and say, “I got these cool opportunities, I got this, I got this,” I'm like, “Cool, good for you. I hope it works.” Me? I'm not interested. I got my path and I know what I'm doing.

Jason: Yeah. I did hit up for opportunities all the time. Different property management there's like, “Hey, we could do this cool thing together.” I’m like, “No, we can't.” Focus is power like with anything. You could be a flood light or you could be a laser and actually cut something out in your life and achieve something.

All right. Can we touch on your book a little bit? I read through it. I think there's some interesting ideas in there. I don't know where we should start, but you've got this book, you call it The Doorpreneur: Property Management Beyond the Rent Roll. It's a quick read. I think it's a good read. You share a little bit of your journey and some of the things you've gone through. I think we've done some similar things. I'm going to quote a part of it. It says, “We are the problem and we are the solution.”

You were talking about how property management had a bad rep because we're allowing it to. I think that's the case. Everyone who’s heard of me, if they listen to my show at all, talk about the cycle of suck. If you haven't, just google “Property Management Cycle of Suck” and you'll find an old video I did on it. I think that the industry as a whole is that's where they are. It's caught in the cycle of suck. It has a bad reputation because everyone's taking on bad owners, and they're taking on bad properties, and they're not being picky, and they feel all the scarcity. Everybody's trying to do the same stuff that's not working which creates false scarcity in the industry and there's no scarcity in property management.

You said that you believe the industry's time has come. What do you see for this industry? You say it's on the brink of change. I feel that, too. I feel like there's a shift going on right now. I'm hoping that DoorGrow is helping to push that forward. What do you see for the future of property management?

Tony: Just over the last few years, I would say probably in the last 4-5 years, I will say that you’ve had a part in this in terms of, you're starting to see a lot more people get together and talk about property management, and not just NARPM. I know that’s a big organization in the States, but in order for an industry to really take over, I believe it's got to go beyond just the regulation of the groups that are that are like that.

It's exciting to see a lot of that happening, whether if it's groups online or different organizations, all sorts of cool stuff. But I'm also seeing that the opportunities that are becoming present in all these different places are becoming much more attractive to different people. It's like you're seeing the density being built in a lot of different cities—the rise of renting out in this whole generation of millennials—in terms of it being a renter's nation. That is providing a good foundation for a lot of required property managers to come out here and start managing these properties.

The tools are getting better. They're not amazing yet, and I'm speaking in terms of technology. Those things are getting better over time. But more and more, I'm seeing the property management is getting away from the old school that started in the business 30, 40, 50 years ago, and you're seeing a new breed of property management come into the picture, which is they’re a lot more professional, they're running real businesses, it's not just a side gig from a realtor, or it's not just this big owner that owns a big portfolio and he decided to manage a few places on the side so he can make a few bucks and pay for him running his own stuff.

They're seeing legitimate people, business people coming into the space and making a run at it, and that's what we need. We need professionals coming in and we need professionally-run businesses. More than ever today, I'm seeing and talking to a lot of people that are running greater businesses and it's exciting, because I think the opportunity is huge.

But it's also at the same time somewhat limited because I know I've done this long enough. I've been around it my entire life. This business is tough. It is not for everybody. We're going to have the turnover that's going to come through and hopefully the good will stick and make the business better for everybody. Better first impression of the business, better for us working in the industry, being able to grow together, and making it all better together.

Jason: Yeah. I think that the way to change the industry is obviously to have healthy businesses. Healthy business owners in this industry, leading the way, and they have to be profitable. I think also there's a huge opportunity right now in that, millennials are the workforce largely. I think a lot of people, they’ve gotten a bad rep. A lot of people think they're lazy, they’re unmotivated, and I find that to be patently false. I think millennials are our new generation of workers that don't want to do menial work.

They don't want to do something without meaning. I think this is a huge opportunity for business owners that are not acting like dinosaurs saying, “I'm paying you to do something so just freaking do it.” Those are the dinosaur dictators that think, “Well, I give them money. Why don't they just do everything amazingly?” Millennials want purpose and I think there's an opportunity now for business owners that believe they have a purpose, that there's a greater vision for what they do.

You touched on that in your book. I talked quite a bit about that as well. People have heard me say, “I believe good property management can change the world. It can have a significant impact. We’re affecting families. We’re affecting lives.” I could have that impact through my clients, which is what gets me excited about showing up helping property management business owners lead the way and do good work. They can't do that if they're struggling.

Tony: Yeah. The biggest aha moment I've had in my career with Ground Floor, my management company, was four years ago. We had an offsite meeting with all my staff. We’re about 50 people with all 3-4 different companies. I was looking at the rent roll, I showed it to everybody on the big screen, and I'm like, “We've got 2000 apartments,” roughly it was right around there, that we're almost full all the time, “and if I take an average, we’ll probably have around 3000-3500 people that live in properties that we take care of. Guys, we matter. You cannot not look at that and how important of a role we play in day-to-day life for close to 4000 people.” I'm like, “That's pretty special.”

Like I explained in the book, we’re a part of all sorts of experiences for these people. We've seen deaths, we've seen births, we've seen marriages, we've seen plenty of divorces, we've seen it all. It happens underneath our roofs. Again, I grew up in the business, I've seen it all from a personal standpoint, and now I've seen it all from running a business. There are no ifs or ands about it. It's a special business.

Jason: All of those different situations require some activity or involvement with the property manager. I mean, even if it's just maintaining the property and doing some maintenance, it's affecting these families lives, and it's affecting these sometimes challenging moments that they're going through. Those interactions can be positive, helpful interactions, or it can deepen their words, they can cause more pain, and the ripple effect property managers have is huge. Property management is death by a thousand cuts. It also can be a ripple effect of a thousand possible positive interactions on a regular basis.

I know property management can be tough. I hear about it all the time. I know how difficult it can be to run a business. I know that. Every entrepreneur knows that. It doesn't get easier the bigger you get, often. It can sometimes get more challenging. But it makes it worth it when you have somebody that comes to you and says, “Hey, you made my life better,” or, “You had an impact,” and those little moments we don't always hear about them, but when they do come through, they do. That’s why we do what we do.

Tony: Yeah. I think a lot of property managers will be able to agree with me, that there's an old saying that the phone never rings with good news in our business. If someone’s calling, it's usually something bad on the other line. It’s either a complaint, or an issue, or something. It’s almost like you have to come into the office each day knowing that you may not get a million praises from the outside, and that's why the office environment is sacred for you and your staff, for the people running the business.

I just hired a new girl a few weeks ago and I'm very honest and transparent during our interview. I was like, “You're new to this industry and you are going to struggle. It’s going to be really tough. It’s going to test you emotionally. It’s going to test your ability to deal with a million things going on at the same time, it's going to test you in every way possible.” I asked her the other day, she’s going on her third week and she's like, “I knew it was going to be tough, but I didn't think there would be so much that I had to learn,” but the office environment is such a way that we're very much a team, we help each other out, we have each other's backs. If there's a difficult situation, other people step in. You really have to have that environment because it can really help the overall business. If not, it can get in get a little lonely.

Jason: Yeah. The turnover in property management businesses regarding staff can be pretty high. I think one way to mitigate that is what you're talking about, it's creating a really positive culture, a safe place within the business, a place in which your team members are allowed to make mistakes, they're allowed to screw up, and they're allowed to figure things out. Otherwise, they start hiding stuff.

Tony: And start costing you money. Bad mistake.

Jason: I think it's important to realize, a lot of times in any business, the people that are really attacking or really causing you grief, are hurt people. They're hurting on the inside. It's not even really usually about you. We were talking about before the show how I've been really attacked lately in some forums and some groups. I have several people messaging me privately and lots of people that message me like, “Hey Jason, you don’t deserve this, you’ve done a lot for us,” and it's ironic because in property management, we deal with this.

Everybody gets these negative reviews. They feel unjust and unfair, they didn’t give the deposit back which rightly so probably, you're being attacked, and these people have nothing better to do than just try to destroy your business. That's just part of being in business, I think. In general, you're always going to have haters. The bigger you get, the bigger the target is on your back. You just have more people that you're dealing with.

I definitely got a target. You dealing with 4000 maybe potential constituents connected to your business that you're impacting, all the owners, all the renters, everything, you have a big target, Tony, on your back.

Tony: Yeah. It's overwhelming in the best of days. That’s probably one of the, I would say, either the first or the second biggest problem overall arching in this industry is how do you deal with the overwhelm of dealing with so many different things. If we were to count all the different balls that we’re juggling in the area at any given time as an owner even as a property manager, it's a lot. That's why I've gone to the depths that I did with the book in terms of putting the importance on lifestyle, in terms of installing good habits, in terms of being healthy, working out, just simple things because if you're going to go in this industry and you're going to make a run at it, you got to be firing on all cylinders.

A big part of that is your body, your relationships at home, your relationships with your kids. You got to go into the office with a clear mindset. If not, it's going to be rough. I've walked in the holes in my office on many days after either having an argument with one of my kids or having an argument with my queen and that's like, “I can't do anything in here. I have zero patience and I just want everybody to stay away from me.” That's not a way to run a business.

Jason: That's how I would feel if I'm hungry. That's how I would feel if I didn't get enough sleep the night before. We tend to start externalizing these challenges. That's why even people coming to my program they're like, “Well, I wanted to grow my business, why are you having me focus on some of the silly stuff like drinking water?” I get picked on about some of those things but I know the impact that it's had on my own life to get the basics in place and have that foundation so that you can tackle the world. We have one vehicle in which we approach everything in life and that's our body.

Tony: Yeah, absolutely.

Jason: Our current ability distinct cognitively, to function, to be able to deal with stress, be able to see objectively, to be able to handle all the stuff that gets thrown out as a business, to be able to see alternatives and ideas, all of it has to do with our brain and being able to function on all four cylinders or however many you might have.

Tony: Absolutely. I'm a true believer. I've always been an athletic guy. 2019, I've taken it up a notch and done some other things.

Jason: I've noticed.

Tony: Yeah. It's funny because 8½ months getting ready for an Ironman, I made more money in that eight months than I probably did in the last two years by just condensing the amount of time that I had and the focus that was required to do it, and to pull it off. I still look back at it and like, “How did I do that?” and I'm still digesting it all because it’s still fairly new, but it's taught me so many lessons that I'm going to be able to take forth with the new stuff that I'm doing.

The very first video that I made to get ready for my Ironman training and it was January or February, it's like I'm doing this because I need to become somebody different in order to launch this book, to write this book, to finish this book, and to grow beyond the book. It was amazing. It was a journey like I can't explain

Jason: I’ll point out one thing that's very obvious to me because I've seen it in you, I've seen it in a hundreds of entrepreneurs. When we create constraints, when we have constraints, when we're limited in our time or limited in our attention, we innovate. That's when our brain starts to really fire and we get really, really creative.

It's the same thing with our team members. If you give them unlimited time to do something and unlimited resources and money to do something, they're going to do it in the most costly, time-sucky way possible. But when you create constraints and having a goal of doing something big like an Ironman, where you're going to put your body to some massive stress, you have to be prepared for that, and you know what it's actually going to take, then it gets really difficult and it creates constraint.

I'll point out to everybody. I've seen this in lots and lots of businesses and I've seen in my own life when we have constraints. You don’t notice, you come up with ideas when money get scarce. When you have a team member leave, all of a sudden, you're changing things that they've been doing a status quo forever. A lot of these challenges that we perceive as challenges really are opportunities for us to innovate and to grow and to change.

I'm not sure if Tony will make it back here, but I'm sure Tony would love for you guys to reach out. Tony, I'm going to plug you. He's got his book, Doorpreneur, and I recommend you check that out. You can go to doorpreneur.com You can preorder it now. Make sure you get his book. Check it out. I think there's some really great value. It's a quick read, it’s only 125 pages, and I think you'll really enjoy it. He's got some previews of the first four chapters on his site doorpreneur.com and it looks like you'll be able to get it on Amazon and in some other places.

We'll go ahead and wrap this up. So if you are property management entrepreneur, and you are wanting to add doors, and you are wanting to get your business in alignment, and you are wanting to create that space for yourself, you feel like you're the hamster on the treadmill, then reach out. You can check us out at doorgrow.com.

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Oct 22, 2019

From surfing waves to making waves by fixing exploding toilets for tenants—how an entrepreneur and creative technologist leveraged design to streamline simple solutions.

Today, I am talking to Mark Rojas, CEO and founder of the Proper app that streamlines the building repairs process. Mark has spent his career creating positive user experiences and adding value by solving problems related to efficiency and human connectivity.

You’ll Learn...

[04:40] Definition of Design: Viewing how something works in the real world and creating a corresponding experience to make your life easier and more enjoyable.

[05:34] Proper app idea originated with possibility of becoming an accidental landllord.

[07:13] Maintenance is the bain of their existence. There’s got to be a better way to fix building repairs process and problems.

[09:30] Maintenance is more than one issue. It involves many problems for many people.

[10:10] Lack of Communication: Leverage “chat room” to create efficient and effective dialogue between contractors, property managers, and tenants.

[13:07] What makes Proper different? Visibility and shared platform for centralized communication between all participating people and places.

[14:50] Building Repairs Process: Submit image, describe problem, create work order, send notifications, add contractors, diagnosis issue, complete fix, submit/pay invoice.

[19:50] Property Management Platforms: Proper’s integration and import/export plans for increased visibility for systematic way to save time and money while simplifying lives.

[22:42] Common Questions and Concerns: Is Proper app intuitive? Is training provided?

[28:15] Future Feature: Email integration and aggregation to avoid duplicate data.

Tweetables

Every elegant solution involves some element of intelligent design.

Design isn’t all about pixels. It’s applied via various mediums by viewing how something works in the real world.

Maintenance is the bain of a property manager’s existence.

First Step with Proper App: A picture is worth a 1,000 words, so describe the problem succinctly.

Resources

Proper

Mark Rojas on LinkedIn

DGS 100: Jason Hull on the Cashflow Diary 0

Transcript

Today’s guest, I’m hanging out with Mark Rojas. Mark, welcome to the show.

Mark: Hey, it’s good to see you again.

Jason: Mark is coming to us from a company called Proper Chat, correct?

Mark: That’s correct.

Jason: Mark, I’ll read a little bit of your bio. It says you are the CEO and founder and it says, “While you might not think of hiring a designer to fix an exploding toilet, Mark Rojas still might be the man for the job. From starting his own surfboard manufacturing company at 16 to founding multiple tech companies focused on creating positive user experiences, Mark has spent his career working to add value by solving problems of efficiency, and human connectivity.

An entrepreneur and creative technologist from Queens, Mark is the founder and CEO of Proper, an app designed to streamline the building repairs process.

He first began befriending property managers while producing the Venice Art Crawl, a passion project that transformed vacant properties into temporary art showrooms (aka fun, free open houses). Shortly thereafter while subletting his apartment in 2017, Mark was blessed with the invigorating experience of needing to manage repairs for a bathroom explosion involving multiple tenants.”

Why don’t you take us from there?

Mark: That’s a good intro.

Jason: I’ll let you tell the rest of the story. How did you get into this from surfboards?

Mark: Surfboards was a little I went to when I was 16 years old, but that did throw me into design and ultimately product design. Right after college, my career quickly became into web development, app development, and working with a lot of startups here in the Bay Area, which is where we’re based out of, to leverage design to solve water problems. It came with the advent of mobile, really becoming this fast-growing platform, where your everyday user now is expecting this very seamless experience that is solving various problems we’re on.

That transitioned from building a product, starting a company, and then continuing to wanting to build products for others. I think one of those things that continues to be a passion of mine is finding a problem and leveraging design to simplify, streamline it, and make everyone’s life better.

Jason: I love it. That’s entrepreneurism in a nutshell. We see a problem and we’re crazy enough to think we can solve that problem. We can make money solving that problem and create a win-win. You love that you say that you focus on doing it through design because really, every elegant solution involves some sort of intelligent design, whether it’s a system, whether it’s something visual. People think design, they think it’s like graphic design or something creative.

Mark: Yeah. I don’t think of design as just pixels. There’s various mediums through which one can apply design. It’s really viewing how something works in the real world and seeing how can you create a corresponding experience that can streamline it, that can make it simpler, that can make it more delightful, more efficient, and really give you a lot of your life back, whether that’s time or even just joy.

Jason: What problem then did you really see that you’re like, “I’m going to create Proper”? Let’s try to build this problem up.

Mark: I’ve seen a lot of different thoughts to my life in being a tenant, but it really became a problem for me when I almost became an accidental landlord. I was traveling for an extended period of time, I have known my landlord for a while, and she was happy to actually let me sublet it. It’s like, “It’s okay. Go off, I trust you, and when you come back, it’s all good.”

But there’s still a level of responsibility that was pressed upon me. As I rented out my apartment, I quickly realized that I have become a landlord. So, two days into it, the subtenant called me to let me know that there was a major problem. I was like, “What? What’s going on?” It turned out that the pipe above our ceiling under our neighbor’s bathroom had burst.

To say the least, it’s quite a mess. This set up a flurry of emails, phone calls, text messages between the tenant and myself, the property owner, neighbors, contractors, plumbers, et cetera, and it was happening over phone calls, emails, text messages, WhatsApp calls, FaceTime calls. At some point, I was like, “Wow, this is rather ridiculous,” and my design mind immediately started thinking...

Jason: Broken. This is flawed. There’s got to be a better way than this.

Mark: Yeah. My wheels are just spinning and spinning and spinning, and I started designing it in my brain. Then, one day I just whipped it out of my computer, I just mocked it up, and I was like, “I’m going to build this.”

I started building it and I think one thing that’s true then and now, and even more true now, is we spend a lot of time talking to our users and our customers, and really dissecting their problems or processes. I immediately started doing calls with property managers that I already knew.

As you saw in my bio, I knew a lot of property managers. When I started the Venice Art Crawl, which is a crowd-sourced art event, we have 40 different art shows going on at the same time in Venice beach. The way I did it was I found vacant spaces, [...] the property managers and basically said, “I know I can bring high net worth individuals to these empty spaces and we can treat it almost as an open house.”

That worked not only well—I was creating value for them—they all basically love me. When I started working on this idea, they were happy to talk to me for hours at a time. What I found is that maintenance is almost the bane of their existence.

Jason: Oh yeah. We did a survey inside the DoorGrow Club Facebook group—property managers listening, you should be in there if you have a property management business—and we asked—just an informal poll in the Facebook group—“What’s your number one challenge in your business?”

There were two or three items at the top of the list that were connected to maintenance. It was sourcing vendors, it was maintenance coordination. Maintenance is the biggest headache or challenge in property management.

Mark: Yeah. It’s very painful to the point that I actually thought that I was becoming a therapist. Sometimes, they would talk to me for three hours at a time just talking about it, and I was like, “Wow, this is a very real problem.”

I was able to take those learnings and turned it into a product that corresponded with it. What started off was really just a project. I didn’t think, “Oh, I’m going to become a billionaire off of this. This is my next big thing.” This is more, I was traveling, I wanted to start building a product, and I wanted it to not be something that I built in bane, but rather, to possibly solve someone’s problem.

Initially, it was my problem, and when I talked to property managers, they actually laughed at me because I was building an app already and only dealing with a monthly maintenance issue, while they’re dealing with hundreds a month, if not more.

Jason: Right. You’re building an app for one maintenance issue.

Mark: Yeah, so talking to them totally validated that this is something worth pursuing. Then, I just went deeper. I kept talking to them. I started talking to the contractors, the tenants, and I realized that this is a problem on all sides of the equation and set out to start building a solution that could solve a lot of the issues with it.

I think a lot of my history in design has been focused on communication, really making it richer and removing barriers. Essentially, a lot of friction and a lot of time wasted happens when poor communication happens. That’s why it’s proper.chat and leveraging chat as a platform to remove a lot of the bottlenecks that happen, like playing Whac-A-Mole between an email for this contractor, phone call for that tenant, and really starting to centralize everything where we could remove those bottlenecks and with the oversight of the property manager, the contractor and the tenant can speak with each other. Anything from scheduling, updates, “Hey, I got to go to Home Depot and get this part. I’ll be back tomorrow.”

In the world today, the tenant would know. Three days could pass and that creates frustration and friction for the tenant because they don’t know what’s going on, and that means another phone call to the property manager.

Jason: Right. Communication in a business, for any business, causes a challenge; internal communication. For a while, as I was growing from solopreneur to building a team, I have freelancers. I thought this was so great because I only have to pay them when there’s work. “Here’s the job, do this work.” But the challenge with that is the communication level was just not strong enough. I didn’t realize that until I started getting full-time employees. The communication level is dramatically different when you have somebody that’s dedicated because you’re reducing the number of people that you need. That person is giving more of their time.

Two people that are doing 10 hours a week versus 1 person that’s doing 20 hours a week, I would take the one person any day of the week, especially if those two have to communicate. The communication back-and-forth wastes so much time, and there’s always a percentage of loss when there’s any sort of communication. If there’s communication between two parties, there are gaps. There just always is. It could be a misread and body language. It could be somebody doesn’t understand something. Somebody’s a poor communicator. There’s some sort of flaw. The more you can reduce that, the less friction there is.

One of my recent hires was one of these unicorns that can do web development and design. The communication level is way shorter. He can get things done in such a short time. Normally, I want a specialist, but he’s able to create something so much quicker because he’s not having the communicate and negotiate between another party that doesn’t understand what they do. A developer and a designer are two different universes, right?

Mark: Absolutely, yeah.

Jason: [...] crazy guys setting you both. So, I get it. Explain how this helps reduce the communication and why is this better than the other stuff that’s out there, what other people have been doing? What’s unique about Proper that you’re noticing?

Mark: A lot of it comes down to visibility and a shared placed for everyone involved with the maintenance, to communicate with each other. Where we really differentiate is that we started on mobile. We’re a mobile-first solution. We do have a desktop and a web experience for the property manager.

In terms of being able to report, what we notice from a lot of property managers, whether they have Yardi, AppFolio, you’re still getting these maintenance requests from many different places. You’re getting from phone calls, emails, text messages. What we set out to build and we’re building right now is one place I can centralize all that. Not only centralize it but make it a more useful format. When someone writes you a three-paragraph email, a lot of it is frustration.

Jason: Right. There’s all this emotion and they want you to understand their pain. They’re like, “I got to relate this. I got to paint this picture.”

Mark: Exactly, and part of it is because they’ve waited too long to write this email. This frustration has built up and they want to write this email. With our application, which is native, you as a tenant are able to create a work order very quickly, and it’s very visual.

An image is worth a thousand words and it really is in this area. Often, these emails don’t even include images, so a tenant is able to quickly snap a photo, almost like Snapchat or Instagram. You don’t train anyone. There’s literally billions of users on these apps who know how to use this and they’re able to create a work order in under 30 seconds.

The format is not to write paragraphs and paragraphs. It’s to be succinct, 140–200 characters max and you choose a category. This gets fired off to the property manager, you get a notification on your phone or on your desktop, and then from there you have your contractors that you can add this this conversation.

The idea is that it turns into a group chat at this point, with the property manager still being involved. Instead of trying to get back and forth between scheduling, instead of the contractor having to ask questions to the property manager to then go ask the tenant to further diagnose what’s broken, the contractor’s able to immediately see what’s broken because there’s always going to be a picture. We pretty much make that almost mandatory for the tenants.

What we’ve seen from contractors is that they’re able to save time and cost by more quickly able to diagnose where the problem is, what tools to bring, what materials to bring. Everything just happens there. The property manager is still part of the process, but they don’t need to insert themselves. When they insert themselves now, it really takes up a lot of their time. Not only because they have to go back and forth, but often they’re fielding phone calls, they’re fielding emails, and then this really, really adds up.

Jason: I love that it’s prompting them to take a picture.

Mark: Yeah. The first step is to create a work order, take a picture. That’s the first thing.

Jason: And a picture’s worth a thousand words. They’re not going to have to write a thousand words in order to get it across. You can see it and you go, “Okay, you can fluff it up or make it more dramatic, but I can see it. Here it is.” Or they might do the opposite. They might say, “Hey, there’s a problem with the faucet and it’s flooding the whole bathroom.” So, you can see it. They send you a picture.

In a lot of apps, a picture’s an afterthought. They have to do some serious extra work in order to get a photo into something or to do it. I’ve had maintenance companies ask me, “Could you email me a photo?” or, “Can you take a picture so we know what to look for or what type of fixture we need?” whatever. It slows down the communication significantly.

Mark: Totally and I think there are these added benefits that currently property managers don’t have the bandwidth to do. Because of the contractors there, they can easily provide updates themselves like, “Hey, I have this question.” “Hey I have to come back.” Right now, that has to go to the property manager, the property manager then has to tell the tenant, and then often this doesn’t happen. So, you have this built-in benefits of transparency that you have with the tenant that really builds trust, but also stops them from calling you, which once again takes up a lot of your time.

The very nice thing is that at the end, the contractor is able to close up the job by providing proof that they’ve done it. So, they have to take pictures of it. Then, you have these records of the conversations that you have with everyone, the images at the beginning of the job, the images at the end, and it just creates a ton of transparency and documentation that you can have, that’s very easily searchable, filterable later on.

One thing we’re starting to work on is really reporting. You can start to really understand the volume of workers that you’re getting, the stages that they’re at, the amount of time it took to complete it, and really how much time it’s taking up for you.

Jason: It makes a lot of sense. If you can cut out one phone call, you’re probably saving your team, at a minimum, 15–18 minutes of productivity, simply because one interruption in a team member’s day, typically they say, cost about 18 minutes of productivity. Even [...] take 18 minutes, they got to rebuild the house of cards they were working on or go back to whatever project they’re trying to figure out. So, if you can cut down the phone calls significantly, even if you don’t have that large of a portfolio, it’s almost like getting a new team member on your team. It’s that significant. People are really expensive in property management businesses. It’s the highest cost in the PM business.

I know what property managers listening to this are going to be thinking. They’re going to be thinking, “Well, that sounds great, but another piece of technology. How is it going to work with my Buildium, or my AppFolio, or my Propertyware? I got these, they’ve got maintenance requests built into them. How will this work?”

Mark: In terms of the different platforms, there are ones that permit direct integrations and we’re starting to work with building some of those. Then, we’re also building a way for you to be able to easily export, search, and import this data at the end. I think the difference really is that the maintenance offerings that they have don’t create the same level of visibility and don’t save you the amount of time. Even if their integration is not there, the amount of time that we’re currently saving you and that we’re going to continue to increase, really starts to outweigh some of the cons of doing that. That’s the way we’re moving through with all these things.

Jason: Can you tell us who you’re working to start integrating with yet?

Mark: We have a couple of partners, mostly in the Los Angeles area. One has about 1000 units, another 2000 units, and we’re working with both of them. They’re both on different platforms and seeing what’s going to be the most efficient way. It’s not just integration of the maintenance, but also I think what’s really important here is their accounting.

We’re really looking at accounting and how we can start to streamline with that because there is one of the things that we’ve seen with the contractors is a lot of them don’t have a systematic way of not just keeping track of their work orders or invoices, but even just generating invoices, so it takes up a lot of their time. On the property management side, you’re getting all these different types of invoices coming in, totally different formats, and then you’re manually doing double data entry into all these different systems. It’s kind of a pain because it’s like, “Why is it formatted this way?” You have this hurdle that you’re dealing with all these messed-up invoices.

One thing that we’re seeing is there’s the ease of use of our invoice. A lot of the maintenance techs and workers are actually enjoying using it and starting to use it as a way to create a uniform way of generating invoices for their property managers. What we want to do is actually make that very easy to export so you can import so that you can import it into your accounting system.

Jason: Cool. What are the big questions that people ask about this? What are their frequently asked questions, concerns? What are the big questions that they’re asking so that we cover all the bases here?

Mark: There’s quite a few, but I think there’s this very chat-focused, very simple, clean design. There isn’t a lot of other platforms that we’ve seen in the space yet. They’re starting to show up, but really there’s very few. I think a lot of people are like, “Hey, do you provide training? How much is training going to cost?”

Jason: You’re like, “Do you know how to use instant message?”

Mark: No. We don’t want to be sending that at all. We really care about our users, so we offer like, “We’ll train you,” and then the funny thing here is that we do a demo and not for a minute we train them.

Jason: And by the way that demo was the training.

Mark: Yeah. If you know how to use iMessage or any of those things, it’s very intuitive. That’s really the core principle of the company is designing something that is not only beautiful, but it’s extremely easy to use because we don’t think that we should be paying and send somebody out to train you or that you need to hire some expert to use the software.

Jason: All right. I’m going to go to the devil’s advocate on the other side here. It’s so easy, it’s just chat, it’s so simple, why don’t I just sign-up with Intercom or Help Scout and get a chat tool and take tickets? What’s different between those solutions and something like Proper?

Mark: Proper is really geared towards maintenance. Even just the terminology, the flow, the understanding of the whole workflow of maintenance getting done, is what is unique to us. You could theoretically use text messaging to do. The reality is you can start to use that, but then very quickly it breaks down and it becomes cumbersome.

For example, Intercom. There’s no mobile app. There’s no way to really add photos into what’s going on. There’s no way to categorize it into the type of problem that might be related to maintenance. For us, we provide all those things but then, you’re also able to search, filter, and zoom in on a property and be like, “Okay, these are all the work orders. This is how we spent maintenance on this property.” As we move forward and we start to integrate with other systems, that’s something that Intercom would probably not do.

Jason: They’re going to put this chat tool probably on their website, so people coming there if they have maintenance requests, do they hide it like, “Go here for maintenance and then the chat is there”? Or is it [...] and if so, the maintenance coordination is one side, but they also have lead gen that they’re trying to do. They have sales. They’re trying to target owners and capture people with their live chat tools. How do you usually recommend they segregate that or can Proper help up with that other challenge as well?

Mark: Good question. The way the application is working right now is that the live chatting or website, if you’re using something like Intercom, that is something that we’re not providing right now. Essentially, what happens is that property managers will announce that they’re using Proper to their network, share the app, then they’re able to install it, and then start reporting through there. It comes into our web app and mobile app. As a property manager, you can use the app from anywhere, but you could also use it at your desktop. From there, is where to start to field everything.

Jason: So, Proper works more like an internal tool. When you onboard your new tenants, you can say, “Hey, get this. This is how you can communicate with us.” It’s probably not just functioning as the live chat tool that’s capturing leads on the front-end of your business, but you could always take that tool and put links into it or pre-written messages to say, “Oh, it’s a maintenance request. Go here.” [...] Intercom a button that they click, that I’m here for maintenance and it takes them to Proper to take care of that.

Mark: Yeah and one of the really interesting things is that we’re starting to build email integrations, so the initial one that we built is that if you receive an email that’s coming in from a tenant and it’s maintenance-related, we build the Chrome extension where very easily just sends it to Proper and then it turns it into actual work orders. You’re not actually trying to do double data entry there.

The next step of that is making it so that your tenants and contractors don’t have to join Proper. They can submit things via email, but then you have one place where it’s starting to aggregate everything, whether it’s submitted directly to Proper or through another channel like email. That’s one of the really exciting features for these next two months that we’re working on should be out.

Jason: So, that will be similar to Intercom, which you can have a certain email address like maintenance@businessname.com and have that forward those emails into Proper?

Mark: Yeah, it all vacuums it right up and then as it comes in, you’re able to categorize it and make it something that is not mixed with thousands of other’s emails but rather centralized and easy to find just like any of the other maintenance tickets.

Jason: It sounds like it would make sense for them to have some sort of support solution and still use Proper for the maintenance portion for the back-end, and internally with tenants. Very cool. What other questions then do people tend to ask?

Mark: One of the big ones is really that email integration that I just mentioned. That’s essentially what we’ve been doing is tons of user research and starting to find what are the biggest problems. Using that is like having it bubble up to the top and turning it into features that are usable to them.

Jason: One of the challenges in maintenance is the communication between vendor and owner is getting paid, payouts. What if the vendor starts messaging and they’re like, “Hey, property manager, when do I get paid? Here’s my invoice,” and the tenants are seeing this stuff. How do you deal with that?

Mark: I’m glad you asked that because that’s literally the feature we’re rolling out right now. We’re waiting for the upstart to approve and by the way, we’re on iOS, Android, and web. The next thing I told you, we make it really easy for your maintenance staff or techs to create invoices and generate them. We’re actually about to roll out payments where they’re able to get to pay through ACH and really it’s cut out a lot of time for the contractors to generate those invoices or even for the property managers to [...] and all these things which I still see very frequently happening.

Jason: In the app, the contractor maybe see something a little different and they can submit invoice or something like this?

Mark: Yeah. Basically, when the contractor closes up the job, they provide proof that they did it and they’re prompted to create an invoice.

Jason: And one proof would be another photo, something along these lines?

Mark: Yeah. You’re able to add multiple photos as the contractor. This then generates an invoice that the property manager receives. This is a separate view where the tenant is not part of it. They’re not anything around cost, they’re not seeing this. The property manager is actually able to pay via ACH directly to the contractor through the app. There’s no need to go elsewhere and try to cut a check, having anyone pick it up, or mail it, or anything like that.

Jason: So again, it’s reducing a lot of the friction and communication challenges between the property manager or maintenance coordinator and the vendors.

Mark: Yeah. That’s one thing that we’ve seen on both sides of the equation. A lot of property managers are still spending a lot of time just doing payments. On the contractor side, they are spending a lot of time generating invoices. They have a good support, so at the end of the week, they’re tying up all the work that they did. They don’t even necessarily have the good system to keep track of all the jobs that they did.

So, they’re often once again spending this admin time where they’re not actually getting paid to do that. What happens now is that with the invoicing feature, although it’s simple and very intuitive, it actually reduces the amount of time that they’re doing this stuff, they’re able to get paid faster, and they’re able to spend a lot less time worrying about the stuff and actually getting more work done, which means your maintenance is getting done faster, which means your tenants are happier, which means you’re happier as a property manager because you’re hearing less from them.

It’s really an interesting problem because you have these three different groups of people and you’re trying to design the simplest solution that takes into account their unique set of problems.

Jason: If you imagine, what would be the ideal situation so that all three parties could communicate the most efficiently? You would just have all three of them sitting in a room face-to-face talking like, “Hey, you’ll do this. I’ll do this.” “Okay, I’ll pay you then. I’ll do this.” “Okay, team. Ready? Great.” Everybody’s there, it would be fast, but that’s not reality, right?

Mark: Yeah.

Jason: You’re trying to run a business and so is the vendor. The tenant should hopefully has a job and making some money to pay rent. There’s all this stuff going on, we can’t just all hang out, but Proper really creates a room that they can all hang out in and communicate.

Mark: It’s great that you actually put it that way because that’s very much how I think about solving this problem. When you’re in person with sometime, it is the richest form of communication. If it’s a group of people, then the bottlenecks or the walls that exist, that is created through distance, creates all these inefficiencies.

Essentially, that is actually how we think. That is what we want to be able to create these rooms and make this very efficient, yet rich way to communicate with each other, to eliminate a lot of these barriers that are currently costing a lot of time, which includes money, and often just frustration.

One thing that I didn’t mention here is that I spent a whole year working out of a property manager’s office. You can call it extreme customer development and I really understood a lot of their operations and just so much of their time is spent on communication, but because they don’t have good tools for it, it just generates a lot of frustration on each side of it. Assuming that it’s hard to measure, the quality of life when you’re constantly doing frustration just really goes down.

Jason: Yeah. Plus there’s a lot of turn-over. Among the property managers that are working for a property management business owner, it’s very difficult.

Mark: What’s true of us as a company is to improve that quality of life because we know how gruesome the job can be, how hard it can be, how taxing it can be. If you use our app, it’s very colorful. We kind of joke around in the copy and we try to make it not just extremely efficient but fun. We want to make it [...] inject a little bit of fun into it. I don’t think that I see that very much in the space yet, which is one of the things I’m very excited about is that I want to bring that to the space.

Jason: Some of the things I’ve seen in some apps lately that people have been doing to gamify things, which is really funny, that once you complete something or you finish something, you get confetti and balloon noises and stuff like this, like this is a little celebration. So, I’m just going to throw this is a feature request that after a maintenance is completed and somebody marks complete to get […] and they get this little celebration thing. It gives them that dopamine boost to get things done and they feel good about it.

Mark: Oh yeah. That’s actually something that now that we’re starting to mature as a company and we’re getting ahead with the feature set and the road map, that’s something that we actually can bring into it. So, given my part of design background, I also know a lot of animators and illustrators. As you can see, we have a lot of illustrations. We very much want to use those opportunities. When you’ve succeeded at doing something, really just letting you know.

Jason: Even rewarding a tenant for using the system. Instead of calling you, like they submit a ticket and you’re like, “You’ve done it! Good job!” All these little things just create positivity and they add a positive feel to the property management company. The tenants are usually pretty upset if there’s a maintenance request. The vendors are having to deal with that, the property manager. Anywhere you can add a little bit of fun and gamification into an app, I think is [...] world a little bit more fun.

Mark: Yeah. There’s no reason you can’t have fun doing this job. I want to save you time, but like in this, get you to crack a smile a couple of times a day. It’s not just about saving time but it’s about being able to continue to do that job and be happy doing it.

Jason: All right, cool. Mark, I really enjoy having you on the show. One thing that might be cool, it would be after a maintenance request is submitted, if we did an integration with GatherKudos, real super easy, super simple. [...] whether they’re happy or sad.

Mark: I’m totally happy to talk about that.

Jason: All right. That would be cool. It’s really great to have you on. How can people get in touch with Proper? How can do a demo? How can they find out more?

Mark: We actually created a unique link for the show, so if you go to proper.chat/doorgrow, you can definitely learn a little bit about our products and then very easily set-up a demo with us. Again the tool is super easy to use, so we are happy to set-up a demo with you. It shouldn’t take more than five minutes. Once you start seeing the product it becomes very quickly evident how this can start saving you time and also maybe make you smile.

Jason: Awesome. All right, everybody check that out. I appreciate you setting up that link. That’s awesome. Go to proper.chat/doorgrow and check it out. You get a little special perk for being a DoorGrow Show listener. Mark, really grateful for you coming on the show. I love hearing about new technology. I think this sounds really innovative and I think it solves a problem. I think that it will really be beneficial and I’m really excited to see what you guys do in this space and start hearing some feedback from my clients on what they think.

Mark: Yeah. Thanks for giving me time and always a pleasure to talk. I look forward to checking in again soon.

Jason: Cool. Yeah, we’ll be talking again soon. All right, I’ll let Mark out. If you are a property management entrepreneur and you’re looking to add doors, you’ve been struggling, you’re wondering why does it feel like there’s scarcity in an industry and 70% are self-managing. There’s no scarcity in property management right now. There just isn’t, but they’re not looking on Google. You’re going to have some trouble if your whole goal is you have people find you through Google. There are ways to go out and create business and we’re focusing on that.

So, stay tuned with DoorGrow, keep an eye on us, and if you’re wanting to grow your business, if you want to short some of the leaks in your sales pipeline, you want to dial in trust engine, have generate more warm leads and warm business, it’s easier to close and have less conversations about price, price sensitivity, and comparison to other companies, that’s what we do. Reach out and talk to DoorGrow. We’ll be happy to help you add doors to your business, figure out how you can optimize your business for growth and creating trust.

Again, I’m Jason Hull with DoorGrow here on the DoorGrow Show. I appreciate you tuning in. Please like and subscribe on whichever channel your hearing this on, whether it’s YouTube, iTunes, Facebook, whatever. Stay plugged in and make sure you get inside our DoorGrow Club Facebook group where we are putting out discontent. We have an awesome community of DoorGrow hackers like you. So, check it out doorgrowclub.com. That’s all for today, everybody. Thanks for tuning in. Until next time, to our mutual growth. Bye everyone.

Download this Episode

Oct 15, 2019

To celebrate the 100th episode of the DoorGrowShow, I’m doing something a bit different. Instead of me interviewing someone, I’m the one being asked the questions.

Today, I am featuring my appearance as a guest on the Cashflow Diary (CFD) podcast hosted by J. Massey. We discuss my journey into property management and how to optimize a business through organic growth to achieve success.

You’ll Learn...

[05:00] Today’s entrepreneurs are like yesterday’s superheroes. They save lives.

[06:01] Who is Jason Hull? Someone who has never managed a property, but helps others grow and scale their property management business.

[06:48] Being an entrepreneur is in his DNA: Grew up with an entrepreneurial mother, who taught him to make more money and beat the competition.

[08:16] Failed Marriage and “Disney” Dad: Jason needed a job that offered freedom and autonomy to spend time with his kids and create clients.

[10:13] Website Design, Marketing,and Branding: How to win when competing with Goliaths and make it to the top of Google.

[11:53] Financial Decisions: Entrepreneurs like to make money, not lose it.

[15:25] Conventional to Comfortable Confidence: Do what works for you, not others, to lower pressure noise.

[20:15] Curiosity: See what others don’t and causes businesses to lose leads and deals.

[21:55] Still struggling with imposter syndrome? Hire a business coach who believes in you to rebuild confidence and effective communication to make a difference.

[28:55] Why choose property management and deal with tenants, toilets, and termites?

[32:53] Why choose Jason and DoorGrow? He helps create positive awareness and address negative perception surrounding property management.

[40:00] Cold vs. Warm Leads: Prospecting pipeline plugs leaks to grow business and get people to know, like, and trust you.

[44:56] How do good property owners find good property managers? Avoid sandtraps of solopreneurs with few doors; add doors to build a property portfolio.

[49:10] Short-term Rental Success: Get a property manager to solve revenue issues.

[52:32] Precipice of Decision: Believe in yourself, make it happen, and decide to be different by listening to your truest voice.

Tweetables

Today’s entrepreneurs and yesterday’s superheroes save lives and make the world a better place.

Entrepreneurism: Insatiable desire to learn and explore opportunities.

Entrepreneurs: Allow yourself to do what you need to do to lower the pressure noise.

Entrepreneurs create positive, uncomfortable change wherever they go.

Resources

CFD 542 – Jason Hull On How Property Management Can Change The World

Jason Hull on Facebook

Steve Jobs

6 Non-QWERTY Keyboard Layouts

Alex Charfen (Business Coach)

Momentum Podcast