Property Management Success
00:40:42 · Stephen Glover
Like the probably the dumbest questions didn't make any sense, but they um they never gave me that impression. They were always, you know, uh the Adam Willis's and the Sean Johnson's and the you know, Matt Tringales and the and the the number of guys that I had uh reached out to for advice early on in those in those years were like, yeah, heck yeah, let's let's talk. And they gave me some great advice and kind of led me in the right direction. And and the and the the idea was I had a different mindset. My mindset was we were gonna win by now. I knew we were gonna be a really high quality company, um, like fat lightning fast responsiveness, great communication. We were gonna take ownership, prioritize relationships. We were gonna be different in that way. Now, I also knew that that meant that we needed to charge a premium to do that. And I was never the cheapest in our market on purpose because I thought that correlated exactly with our value. But what I didn't know, and I was a naive at the time, is I thought really it was only leasing fees, renewal fees, and management fees. And I thought I just need to have the highest management fee to establish my value, and then that would be okay. And so that's what I did. Everyone else would come back and say, hey, this other company's doing it for 8% or whatever percent, you know, this other company's doing it for this percent or that percent. And it would always be lower than mine. And I would say, no, I I understand the value we bring, I understand that that would be more attractive to you, but if you want us to manage your asset, this is our cost, you know, and then they would many times end up going with me, or maybe it wouldn't be a good fit and they just wanted a lesser cost. And so, anyway, I but that's what I thought would make me win is get more units at a higher management fee, and I eventually would see profit. And then 2020 taught me that 400% revenue growth still break even at the end. That's not the deal. And so early 2021 started connecting with people. I learned about RTMs, um, started hiring RTMs. I restructured the team, I restructured our fees, fee model, uh, which were pretty transparent about that, but uh restructured the fee model um largely off um the the fee max program that Tony puts out. Um we we took some of that and worked with that. We kind of modified some of it.
00:42:53 · Stephen Glover
We took some stuff that other people are doing and modified it, made it our own. We left plenty of fees out that I didn't feel comfortable justifying, uh, that had enough value that I could justify or felt comfortable justifying. Um, and then we implemented that. And within, again, I don't know exactly, but I'm gonna say within six months or so, it was a massive difference on our monthly uh income statement for for the um for the company. Um, and we eventually made a decision to roll it out um retroactively. I don't know if that's the right word, but basically to all current clients, uh, a modified version to start collecting to have a higher adoption rate of some of these fees, some of the more critical fees at least. It might have not been 100% uh fee rollout, but like a pretty heavy load. Um, in that rollout uh out of a good deal of clients, I think maybe we're again maybe around like 400-ish, 500 units at this point, uh very little multifamily. Um we had I think six clients that never signed the new PMA. One client terminated um just because she was probably gonna terminate anyway, uh, and she was gonna sell her house, but she terminated at during that conversation, I think, with like made it easy for her to terminate. The six that never responded, we just kept them on the same PMA. They stayed for years. We just didn't make fees off of them. And so our our company just changed, like it was it was fine. We were good. Um, and then that allowed us to hire more people, to become overstaffed, to uh hire higher levels of talent, um, get the right technology in place to take our company to the next level. And then we held our standards through the relationships we won under management uh even more because we were making a good profitability. We had the leverage in the and the conversations, we weren't desperate for doors. Uh I was able to hire a BDM and kind of get get out of the sales um and then sort of replace myself in the almost all property management activity outside of being the principal broker.
00:44:47 · Tony Cline
[00:44:47] S0: You you mentioned something, I want to circle back to it because I want to reinforce this point. But you said that if if you don't feel like there's value behind the fee, then you shouldn't be charging it. And I 100% agree with that. I tell people that and and there are people out there, you mentioned Todd, there's there's some others. Um as a matter of fact, Mark Cunningham and I back in 2015, we we put on an event where we went through and talked about just various fee structures and not telling people what to charge, but just going through the different models that that are out there. And you know, one of the things, even when I did that back then, I had not yet made the connection that it it shouldn't be about how much can you max. There are people out there that promote fee maxing and maximizing, you know, if you can squeeze a nickel out of somebody, you should squeeze a nickel out of them. You know, I don't believe in that. But what I do believe in is maximizing the value you deliver and then being appropriately compensated for that value. And one of the ways that we do this, that we coach people through, is you you I had a mentor 30 some years ago tell me one time, he says, stop giving people what they want. Find out what they want and sell it to them. And a lot of times our clients don't know all the stuff we do in the background. They don't know the things that we're doing for them to make their property rent for the highest amount possible or to to be able to continue to rent at market or to be able to put the right tenant in there that's going to be able to pay the rent. They just don't get everything that happens in the background and they shouldn't have to worry about that. But if we can slice off the things that we do, we can slap a label on it, and now it becomes a valuable service we can deliver. And if we can stand behind that service, then again, we should be appropriately compensated for that value that you deliver that the person or the company down the street is not promoting, that they're delivering that value.
00:46:43 · Stephen Glover
[00:46:43] S1: Right. Yeah, we have we have a um sort of a maintenance package. So instead of charging a maintenance coordination fee, we've created a monthly maintenance package where they pay for it monthly that covers any coordination that could happen. It's a flat rate. Um, they pay monthly, regardless of work order submitted or anything like that. That no one else in our market is doing that currently, right? And so that is a fee we have to explain every single sales call. But for us, it's recurring revenue, it's consistent, it's known. We've done the math a million times based on a um coordination or a coordination fee based on invoice or tickets or whatever. Um, and we've stuck with the package, it's it's simple accounting. Um, and so it's things like that that that that is different than the rest of our market, but we have a ton of value behind that package and what's offered in that package that we can explain to set us apart. And so they could either go with an uncertain maintenance coordination fee or they can go with a known value of the maintenance package and what what that provides. And the investors that we work with really appreciate that package.
00:47:52 · Tony Cline
[00:47:52] S0: I love it. Well, you had mentioned as as we get ready to wrap up here, you had mentioned that you you have been able to hire people, create the teams, create the systems that allow you to be less and less involved in the day-to-day over the years. You're at around that 1300 door mark, and you you are still trying to figure out, or you you have figured out, but you're working on what you should be doing, what you should be contributing. And I talk about there's $10 an hour tasks, there's $100 an hour tasks, and there's $1,000 an hour tasks. And the the job as the business owner as you grow is to relinquish as much of the $10 an hour activities as soon as possible. But sometimes we get stuck in that $100 an hour activity, and you have now elevated yourself where you're you're looking where can I contribute the most? How can I continue to be present in the marketplace? And so I want to dig into the marketing that you that you are doing now. Uh I think we we mentioned in the show notes that you've you've brought on a few people recently for marketing, you've launched a podcast. I just want to I want you to share with the audience what you're doing to continue to grow the company and do the things that only you can do while you've built out this team that does everything else for for the company.
00:49:16 · Stephen Glover
[00:49:16] S1: Yeah, and I'll say like we had a really good word-of-mouth flywheel, it was spinning fast. And so when we hired a um our first BDM, that flywheel spawned for a long time when that BDM was getting up to speed. We were still bringing in plenty of units. Um, over time, that natural like word-of-mouth flywheel starts to slow a little bit if you're not massively like nurturing it and building relationships and everything. So we actually have two BDMs now. They are keeping that flywheel going, but naturally, like people for good or bad, better or worse, people want to speak to the owner. There's there's something about talking to an owner that that feels differently to people. And so the owner, in my opinion, we we are very much a community-based business. I have great relationships in this market. Um, people will forget about me if I'm not putting out something, right? And at our team size, about a year ago, maybe a year and a half ago, I realized I was not getting out anymore. I wasn't talking to anyone. I was I was just focused on running and operating the team, not the business. They were doing the property management stuff, but making sure the team was up to speed. They had everything they needed to be successful and putting in my time and effort there. Plus, where's the business going to go? What direction? But that flywheel was slowing a little bit. The BDMs are still bringing in stuff, they're doing a good job, but the flywheel wasn't spinning as fast. And so the BDMs are getting less leads, and they're like, all right, we're, you know, let's start considering marketing because also at this point, we need to bring in more units to feed the team. It's no longer just kind of like a fun game of just bringing in a few units here and there. We have to be bringing in a solid amount of units. And so I looked at, you know, I have a three-year-old and a five-year-old, um, a wife that I love and want to spend time with. Um, I don't want to go back to 80-hour weeks. I don't want to go back to 60-hour weeks. Um, but I want this business to continue to thrive. I'm still very invested in this business. We have big plans. I think we've only made it a small fraction of the way we can make it with this company. So there's still a long runway of opportunity here.