Beyond Rent: Exploring Property Management
00:14:35 · Nik Boone
[00:14:35] S2: Yeah. No, I think that's really important. Another way I've grown is I've bought several other small companies, two to 300 doors, and I see it all the time. They don't like when I say this, but profitability really does not start until like 600 doors or more. If you're under 600 and you are profitable, the owner is working in it day and night to make it profitable. If you have staff doing everything, it's running nicely and it's not profitable. So it's this like, you have to break through this barrier and it takes so long to get through that breakthrough. And what I'll see a lot of times, I don't know if it's a countrywide thing or just locally, but 300 doors seems to be like, that's people hit that and they're like, Cool, like I'm at a decent spot, I'm biggish, like I'm turning some profit and, you know, but they're just stressed, systems are crazy, like they have no, they're dealing with what fire comes in for the day and it's just full chaos for the staff, for the owner, for everybody. So yeah, I would say 600 doors. But when we started, I have no accounting background, I have no business background. We did our taxes the first year and I was thinking like, Oh, you know, money's in the bank, like, doing great. We lost like $25. And I was like, I don't think that's right. He's like, No, it's right. I was like, Okay, next year we made $25. So I was like, All right, like, that's pretty good, but for two years, just dead even. And then we rode this, you know, every time we would make money, we would put it back into the company or hire somebody or do a little more marketing. So the profitability stayed just insanely low Until right around 2020, we started to see a little, like, swing in things. And then we had this little shutdown where California said, You don't have to pay rent. Don't go inside people's houses. And the only way we were making money is people paying rent and doing repairs on people's houses. So a whole another, you know, COVID topic, but yeah, I mean for five or six years it was like a just daily grind of understanding accounting, understanding property management, because I was, you know, I was a kid. I lived at home with my parents and was managing full grown adult houses, you know? So it was this weird concept to me of like, I gotta learn everything.
00:17:06 · Nik Boone, S1
I gotta learn how to run a business, I gotta learn how to manage a property, I gotta learn how to have employees. Like, had to learn everything, and it was not without the bumps and bruises. [00:17:20] S1: But a lot of times that's the best way to learn. And thanks for, again, for the transparency on that because, again, people talk about the number of units all the time, and you're saying you gotta get over 600 units if you want any bit of margin in your own personal life and margin in the profitability of the business as well. So kind of listening to your story, it was multiple years, like you said, before you started to turn the corner. As you were building that business, how did you look... You mentioned, like, systems. Like, how are you looking at systems and processes and maybe even technology a little bit in those early days? Were you always building for scale so you were ready, or was it an afterthought after you hit 600 plus stores?
00:18:02 · Nik Boone
[00:18:02] S2: No. I was always... My... The only goal I had, it wasn't money, it wasn't, you know, goal was to have the schedule that I wanted and the stress free aspects of running a business. And that was always the goal. I didn't have an employee account, I didn't have a profitability account. At this point, more money doesn't change what I do day to day. I come in here, I love it. Whether we have a great month or a mid month or whatever, it's I'm in here every day doing what I love. I have the best job in the world in my eyes because it's what I get to do and it's what I get to... But I'm not dealing with tenant maintenance issues, I'm not dealing with complaint, you know, I'm not dealing with any of that anymore. All of that's taken care of on the back end and I'm strictly like, you know, PR for the company, marketing, systems, like I'm constantly fixing systems big into AI right now. Like we're integrating, a bunch of AI into a lot of the software that we do and systems that we have. So that's... My full goal right now is just strictly like efficiencies, systems, tracking things, like big into metrics right now, KPIs, stuff like that.
00:19:19 · S1
[00:19:19] S1: Yeah, that's really the fun side where you get to start, tweaking the business and refining the business. I think we would be doing a disservice if we didn't talk about the AI, portion a little bit. Where are you seeing, I guess, the the biggest movement in your business when it comes to AI? Like, where are you plugging in? Is it more on the back end of operations, administration, things like that? Is it resident facing, owner facing?
00:19:46 · Nik Boone
[00:19:46] S2: It is all over. I have people using it to type emails when they're angry and make it nicer. I have people using it for marketing. We have, a full marketing department that that's what they use for, like creating some flyers or badges or... I mean, it and the other thing too is like, I've even used to be fully transparent there's all these metrics that like, you know, private equity people look at. It's not your net income, it's how is your expense ratio versus your current ratio and they look at all this stuff. I have no idea what they're talking about. I'll upload my balance sheet and P and L and say like, Hey, Like, how are we looking compared to other companies? You know, and it'll tell me like, Oh, watch this, look for this, this is a little bit higher. Stuff like that. And it's, I mean, it's decent. Gives me things that I should change that I have no interest You know, it thinks that I have too many people employed, my payroll is too high, but I made the choice to pay people great and hire more so that if it got busy we were fully staffed instead of, you know, people at 90 to 95% capacity all day, every day. And, you know, like that's... It gave me the recommendation, but I said, you know, thanks for that, but I'm not changing it.
00:21:10 · S1
[00:21:10] S1: So AI is not always right, and AI doesn't always understand your goals and your strategies. Like you said, if you're looking to maximize profitability and things like that, you're gonna make totally different decisions compared to someone else. So... And that's not your goal. Right? You've already stated that your goals are a little bit different from that. So, no, I think there's plenty of places for AI to fit and to really be helpful. And... But like you said, the... Its ability to analyze things and bring information into your world that you wouldn't otherwise be aware of. Like you said, you know, some people understand kind of the the financial side and, you know, evaluating a business with expense ratios and things like that. That's not something someone's had experience with. All of a sudden, they can really catch up pretty fast and have a good level of insight, enough insight to know where they sit and get some recommendations.