Nikonomics - The Economics of Small Business
00:06:23 · Peter Lohmann, Nikolas Hulewsky
[00:06:23] S0: Correct. [00:06:24] S1: Are there commercial property management companies? [00:06:26] S0: There are. Yep. Far fewer of them because there's far fewer commercial properties, and they're also a lot easier to manage actually. But yeah, that's the thing. [00:06:34] S1: When did you launch your business? [00:06:36] S0: 2013. [00:06:37] S1: Oh, you've been in this a while. Okay. I was thinking like, oh, maybe 2020 because you saw a bunch of people buying homes and then a bunch of people thinking, oh, I'll house hack or oh, I'll, I can buy a rental property or probably a lot of people who bought Airbnb's that are now either can't get rid of it or are just turning it into an investment property. Tell me a little bit about the history. So 2013 until this year, 3,000,000. How long did that ramp take?
00:07:03 · Peter Lohmann
[00:07:03] S0: The history is that prior to 2013, I was working as an engineer. I have a degree in electrical engineering and I was working as a control systems engineer. My partner and I, my business partner who's also an engineer, he and I had started buying up single family rentals here in Columbus, Ohio in 2008. We bought our first one. So, we were buying and owning and self managing single family rentals for a few years there while we were working as engineers and we were self managing and then in 2013, about a year leading up to that, we decided, hey, we wanna own our own business. We wanna do our own thing. We don't wanna work for other people. What can we do? Well, we already know how to manage properties. Why don't we just start a property management company? So, in 2013, I quit my engineering job and started RL Property Management. At the time we had zero units, no clients, nothing. It was me in my apartment and that was it. And over the next year, we just we just started adding clients and my business partner quit his engineering job, came on board full time. So from 2013 till today has been just a slow but steady ramp up of units under management, revenue, employees. You know, we figured everything out the hard way because we had no experience in professional property management or real estate other than the small handful of units we owned. We didn't have any family in the business or anything. So we honestly made every mistake in the book and I, a lot of what I do these days other than keeping an eye on my own management company is trying to put out content that's helpful for other people who are starting or growing a management company, sharing a lot of the stuff that I wish I would've been able to read or consume when I was getting started.
00:08:42 · Nikolas Hulewsky, Peter Lohmann
[00:08:42] S1: Alright. Now's the part of the show where I feel the most uncomfortable, but my therapist says I need to face my fears. So here we are. I've started a newsletter, and I want you to subscribe. And what you're gonna get every single week are the aggregated conversations from that week that I have on this podcast with an overview of what their business actually looks like. I'm also going to throw in a review of one or two businesses that are listed for sale. I'll give you my opinion on whether or not the EBITDA multiple is good or there's customer concentration or there's red flags or green flags. And then lastly, I'm gonna give you one piece of actionable advice every single week on how to buy your first business. So click the link below, subscribe to my newsletter, and let's get back into the shelf. [00:09:16] S0: There's so much to it with all the accounting and all the ins and outs of leasing and how do you deal with these clients and what happens if you have to file an eviction and there's just a lot to it.
00:09:16 · Peter Lohmann, Nikolas Hulewsky
[00:09:16] S0: There's so much to it with all the accounting and all the ins and outs of leasing and how do you deal with these clients and what happens if you have to file an eviction and there's just a lot to it. [00:09:26] S1: My business partner, Chris and I, we have a... Every Friday, we do this thing called Hold Cobros. It's on his podcast, but last week we talked about a business in a box idea that I had, which was there's a lot of people who just... They're trying to do side hustles or they're trying to launch a business and they don't want to spend on QuickBooks or they don't want to buy HubSpot or they don't... Know, they're not ready for Salesforce, but they still need to be organized. And so I was like, man, that'd be really cool to just have a business in a box. Cool, this is how you set up Google Sheets, this is how you set up these automations with Zapier in order to get the flow of things up. I think that that's just a huge piece very intimidating to people when they're getting into things, is not understanding just how to organize. [00:10:03] S0: Yeah, and there are a few franchises in our space that are seeing success and they sort of help with some of that stuff, so that's an option you can look into. But a lot of folks who start companies, start businesses, they're doing it because they want the freedom, right? They don't want to be under a franchise or bound by someone else's idea of how things should be done. So it's interesting to watch sort of the different approaches that people take to help other people start management companies.
00:10:03 · Peter Lohmann, Nikolas Hulewsky
[00:10:03] S0: Yeah, and there are a few franchises in our space that are seeing success and they sort of help with some of that stuff, so that's an option you can look into. But a lot of folks who start companies, start businesses, they're doing it because they want the freedom, right? They don't want to be under a franchise or bound by someone else's idea of how things should be done. So it's interesting to watch sort of the different approaches that people take to help other people start management companies. [00:10:34] S1: So I think of property management. Again, I'm I'm an idiot when it comes to this stuff. It's like, oh, I gotta go out to the house if there's a problem with maintenance. Collections, you can probably just set up online, but you probably have to collect paperwork at some point unless, probably everything's all digital. Is your team fully remote? Are you on-site? Like what does the management of the actual properties look like from your team? [00:10:56] S0: Yeah. So we are a mixture. We have a pretty sizable office here near Central Ohio where most of our team works, including all of our maintenance guys and a lot of the day to day PM operations. You do need some real life component that's near to the properties you're managing because you need to go out there and deal with issues, meet inspectors, show vacant units, and things like that. So you couldn't have, like, a fully remote company. You do need people who live in the area where the properties are being managed. [00:11:30] S1: K.
00:11:30 · Nikolas Hulewsky, Peter Lohmann
[00:11:30] S1: K. [00:11:30] S0: But we've moved more and more of of the functions remote. So... And that's a mixture of US based employees, as well as global talent more and more. [00:11:42] S1: What functions are you doing remotely? What functions do you still have to do locally? [00:11:46] S0: Yeah. So again, anything where you need someone physically going to the property, obviously that needs to be local, But a lot of property management is communication, and that can be handled by a remote team member. And a lot of it is accounting and paperwork, you know, answering the phone, following up following up on emails. So a lot of, like, the leasing activity that's not actually showing the unit, that's handled remotely. A lot of the lease renewals, property management agreements, our sales function, marketing, a lot of the compliance and accounting. In our industry, we call them RTMs, remote team members, but basically global talent or even US based, you know, remote employees. [00:12:24] S1: Are the majority of the properties that you manage in Ohio, or are you all around the country at this point? [00:12:29] S0: They're all in Ohio. [00:12:30] S1: They're all in Columbus, actually. That's by design, I'm assuming?