Beyond Rent: Exploring Property Management
00:07:42 · S1, Nik Boone
[00:07:42] S1: Yeah. It's really interesting, I'm definitely not calling you lazy, but I recently heard somebody say something along the lines of, if you want to solve a problem, give the problem to the laziest person you know because they will come up with the easiest solution because they're not willing to put in all the extra work to solve it. So... No. Because I... I've heard your story. You're definitely not a lazy person, but it's a similar mentality, right, in the sense that I'm not going to make my life more complicated than it needs to be. I'm going be a little more carefree, so I need the straightest path from A to B. [00:08:12] S2: Yeah. My goal is carefree. That is my goal. Once it becomes, regardless of money or anything else, once it becomes more of a stress factor, like, I'm like, no, get rid of it. Like, we don't need that. [00:08:27] S1: That's great. Well, talking about stress, I can only imagine as you've grown this business and, like you said, adding a 100 doors per year and then scaling that even more in recent history, you had to have faced challenges. Right? And challenges are stressful. So what are some of the challenge that... Challenges that you faced along the way? And maybe give us some insights into some of the solutions or maybe even some of the mentalities or mindsets that you had to overcome those challenges.
00:08:56 · Nik Boone
[00:08:56] S2: Yeah. I mean, I've had, you know, everything imaginable. We had to sell a vehicle to cover office rent when we started, we considered moving the office to our house just so we could get by. I mean, you name it, we have gone through it. And we have a sizable name now in town, our brand is pretty well recognized, And from the outside it's like, Oh, it's always been, you know, the gravy train. Like, I should get in property management, it's so easy! But I mean, we've gone through our fair share of everything: tenant lawsuits, owner lawsuits, employee lawsuits. I mean when you size up, I mean statistically it's a tiny, tiny number. But when you have almost 2,000 units, 1% of that is 20 a month, you know? So even a tiny, tiny fraction of issues, you're still dealing with more than one of those large issues a month. So at this point now I'm starting to see like, I try to keep in account like we have people that hate us and think we're the worst and this and that, and it's the loudest people. There's such a tiny, tiny scale and most people love us, but I have to keep in mind like, the issues we have and how many of them we have now in relation to how big we are, it's so minuscule and it's so small. So I mean, all of those, you know, financial lawsuit, every other issue you can name we've gone through. But yeah, it did not come without its bumps and bruises.
00:10:43 · S1
[00:10:43] S1: Well, and I think that's normal for any business, right? And you had mentioned selling a vehicle to be able to pay rent. And and I appreciate you being honest and transparent with that because a lot of business owners do not like to talk about the hard times. They wanna talk about the successful times and things like that, but it's all part of your story, and it's all part of how you got there. What made you make that decision? Because in that moment, you could have walked away. Right? You could have said, I wanna keep my car. I don't wanna I I don't wanna go through this hardship. I I don't know if selling the car and paying rent will actually be a good decision. Right? Because a month later, you could have found yourself in a similar situation. So what made you have that mindset to keep going and kind of the do whatever it takes mindset?
00:11:28 · Nik Boone
[00:11:28] S2: Again, I know that most people want this like, I had the goal and the vision and I saw it. I think... I... When I was really young, when I started the business, because I was, gosh, like 21, 22 when I started it, and I remember thinking in one of our office meetings I had like eight employees at the time and I was like, I have to get off my parents' health insurance and get my own insurance. Running an eight person company, you know, and I'm like having these thoughts and realizations. But I think what I would say when I was younger is if I lose everything and I go bankrupt, and I file bankruptcy, and I do it all, by the time I'm 30 it will be like I never had a bankruptcy. And everybody I said that to that was older, they were like, You're not wrong! I mean, yeah! And so I looked at it as, you know, win or lose, I'm going to see it through and see what happens. And I wasn't scared to fail, and honestly that was I think a few times I was like, This is going to fail, this is not going to end well. But I certainly wasn't facing the dollar because we were not profitable for a long time, and I didn't have these goals of like, I need to make, you know, a million dollars a year, and like, this is how we get there. And I was literally getting by and saying like, you know, win, lose, or draw, I'm seeing this to the absolute end, and I will learn something from it if nothing else.
00:13:12 · S1
[00:13:12] S1: Well, and I love that mentality and that story. And again, you did start young, and it reminds me a little bit of the mindset of, like, failing fast. Right? This idea of if you want to do something, just dive in and do it. And if it's unsuccessful, you have the rest of your life to make up for it. And that's a little bit of what you're sharing there. Right? With this idea of, like, okay. I filed bankruptcy. By the time I'm 30, it's like I never had it, I can continue to move on. And you're definitely not wrong in that mindset. A lot of people do not find their way until they're in their thirties. Right? So using your twenties as this proving ground for yourself, taking a bet on yourself, obviously, has proven to be a really good decision because ever... Again, everyone faces challenges no matter how how you wanna look at it. So when you look at... You talked about the profitability piece that you weren't profitable for a number of years. Walk me through that a little bit because especially in the property management world and I don't know how all of your units are structured, if they're all single families or if you do some multifamily, a little bit of a mix. But when people start talking about the number of units or doors that they manage, there's always this idea that, well, if I just had a few more, then I could kind of turn the corner on profitability or whatever the case may be. But in reality, they're just scaling in a way that it will never be profitable. Walk me through your story and how you view that along the way.
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.