Unfiltered by PropertyManagement.com
00:19:10 · Josh Sterling
[00:19:10] S0: Yeah. So, again, I've talked a lot about the plateau. So I think, you know, that your standard owner operator really starts to hit a wall about 300 doors. So we intentionally... I tried to structure around that. Of course, I did it wrong and and had to go back and and kinda reorg the operation a few different times. But, you know, I guess, first, it starts with the common theme, I think, in a lot of, at least, legacy management operators was one property manager, if you will, over maybe 200 doors or whatever that number may be, a couple 100 doors, and then another... It was these individual silos. And I always thought that was a weird system because the person, that property manager, they might have some team members, but they really don't have enough units that they're overseeing to have a robust team of specialists. And that person that's really great, say, on the admin side or on the AR side or whatnot might not be so good on the maintenance side and vice versa. So we set ours up more, I think, a similar line approach. So, like, I have one person, all they do is is AP. You know, another person, all they do is maintenance dispatch. Another person, they're just a project manager across the portfolio or a couple of those. Right? And so we're kinda set up that way. And then, you know, just general org of the the operation, you know, I think of it like a pyramid. Right? And you've got your entry level, your kind of management level, a director level, and then a COO, and then I'm ideally sitting above or I'm sitting above that person there, that COO. And split down the middle, half admin, half maintenance or side. Right? Which is probably more like 60% maintenance, 40% admin, but regardless. And so with that structure, we allow each person in each spot to run their respective small little piece of the operation. And we give these people a lot of autonomy too. Because, again, being scattered site, I can't have a project manager who would be like a second tier, you know, employee second level in the organization. I can't have him having to come back to me or my COO or even a director above him to get an approval for a $8,000 roof on a single family home. We've gotta have our team know that this is our procedure. This is our... How we operate. This is our culture here. We're gonna maintain nice units.
00:21:14 · Josh Sterling, Dylan Scroggins
We're gonna fix things that are broken, things like that, and give them the authority and the autonomy that he can actually write that check. Now there's checks and balances in in the back end to compare budget versus actuals and and things like that, and there's certainly the ability to escalate something up the chain if you need. But our goal is to give autonomy at any level, even down to, you know, our admins are approving applications and like that. You know, on on a normal day to day, that's the goal to let everybody have as much autonomy and range as they can, and that keeps us efficient and able to move quick and make things happen. [00:21:48] S1: I respect the technicality and the... Even the checklist with that because in the hundreds of conversations I've had with property management over the last couple years, when it comes to the operations and the turns and the work orders, it's, like you said, like, very documented, etcetera. But sometimes with the team, it's just all over the place. Like Yeah. This person has this title. This person has this comp. This person... We don't even know what that person does. So taking that checkpoint mentality to the structure of the team and how they're being led. And I bet the custom software and the way you have everything regimented in addition to the autonomy, I am very confident that's contributing to some really good retention on your end because people aren't questioning what their role is. When you have confusion, that's when you have a lot of people looking to maybe explore other options.
00:21:48 · Dylan Scroggins, Josh Sterling
[00:21:48] S1: I respect the technicality and the... Even the checklist with that because in the hundreds of conversations I've had with property management over the last couple years, when it comes to the operations and the turns and the work orders, it's, like you said, like, very documented, etcetera. But sometimes with the team, it's just all over the place. Like Yeah. This person has this title. This person has this comp. This person... We don't even know what that person does. So taking that checkpoint mentality to the structure of the team and how they're being led. And I bet the custom software and the way you have everything regimented in addition to the autonomy, I am very confident that's contributing to some really good retention on your end because people aren't questioning what their role is. When you have confusion, that's when you have a lot of people looking to maybe explore other options. [00:22:40] S0: Yeah. No. It's been a it's been a great team, and, you know, obviously, we had a lot of fairly rapid growth, and so that's always great for culture. Right? So I've got people... Like, my director of admin, for example, started as a weekend part time receptionist for us years and years ago. So it's been cool to see people move up the chain like that. We've got a bunch of examples similar to that. That's awesome. That's always a a good, you know, culture boost as well.
00:22:40 · Josh Sterling, Dylan Scroggins
[00:22:40] S0: Yeah. No. It's been a it's been a great team, and, you know, obviously, we had a lot of fairly rapid growth, and so that's always great for culture. Right? So I've got people... Like, my director of admin, for example, started as a weekend part time receptionist for us years and years ago. So it's been cool to see people move up the chain like that. We've got a bunch of examples similar to that. That's awesome. That's always a a good, you know, culture boost as well. [00:23:02] S1: So segue, I'm always looking for a thread. Up the chain, let's zoom out a little bit. PropertyManagement as a whole, what gets you excited about the industry right now, even amongst a lot of the... I don't know what you want to call it, like the economic environment right now, and that's bound to change even within the, you know, weeks it takes to edit this podcast. But tell us what excites you right now, and in addition to that, what concerns you right now about the industry?
00:23:26 · Josh Sterling
[00:23:26] S0: Love it. So, you know, what what I think property management has become... I I'm... I often tell people this business today and what 2026 is multiples harder than it was in 2019. Inflation... And every market's gonna be a little bit different. Right? But I'm speaking mainly for Midwest markets, and and inflation, I would say, is 50 to 60% up on average. We have certain line items that are up a 100%. Right? Or Woah. While rents are up maybe 10 to 15% in the last five years. Any... And that's that's normal because rents grew very fast. And, you know, I think just macroeconomically speaking, in its simplest form, rents cannot outpace income growth over the long term. Right? They might outpace for for a while and come back down, but it's... I'm not surprised by this. But it's become... Because of the inflation we've seen in expense side and and, you know, somewhat of a limited revenue growth, it's come... Become a very hard business. So efficiency is the thing that has been so key to us, whether that's individual maintenance tech labor or efficiency with turning a unit in as quick as possible, right, or minimizing turnover, which is my number one thing. Like, that's always been what it's about. But where the industry, I think, is going is to automation. And so I think when you combine the automation with the efficiency, I I think it... There's there's so much potential there, and we're gonna get to be such a lean operation, and I'm sure most management companies will by combining the the automation and the efficiency mindset that we've had to really adhere to, especially in the last five years. I think that the next cycle in the market when there are more... Is more, you know, deal flow for the guys like myself acquiring assets or or for investors acquiring assets, they're gonna need management companies. I think when that comes around, the people who embrace the efficiency and translate it into automation are gonna be the winners.
00:25:11 · Dylan Scroggins, Josh Sterling
[00:25:11] S1: I've heard people say before that their number one priority is turnover, but you sounded really adamant that your number one thing really is turnover. Tell us more [00:25:21] S0: about that. Well, okay. I mean, this is like [00:25:23] S1: I mean, why is it number one not just top five? Right? [00:25:26] S0: It's like number one, like, by a factor of a 100. [00:25:30] S1: So look at I'm guessing you talk about that with your team all the time.