Property Management Success
00:42:56 · Tony Cline
[00:42:56] S0: Well, Casey, I want to close this out with uh talking a little bit about growth. Growth is on everybody's mind. I think it always has been, but for some reason, as the market's shifting, there's um I always say that the dollars are in the change. So when the market, when the market stays the same, it's really hard to grow competitively or or take up market share. But when when the market changes, that's where the dollars are. You if you get really intentional about thinking about the changes that are coming down the line, the changes in legislation, the changes in market, uh changes in consumer expectations, that's where the dollars are. And so I'm curious, what what are your plans? What are you looking at for growth for 2026? Is it we've got it figured out, we're pouring more gas on it, or are we starting to think about maybe some different other avenues? Uh, not trying to lead you in any direction. I'm just curious about what your growth plan looks like for for 26.
00:43:57 · Casey Howe
[00:43:57] S2: Yeah, absolutely. Um, so We're putting gas in the fire, for lack of better terms. You know, we spent the last year, I think, sort of right sizing, getting more focused on the type of business we want. We know who the ideal customer profile is. We've made some good hires. You know, we're we are um the strongest we've been operationally in terms of the service that we deliver to clients than we've ever been. Um, and we're ready for for more growth. The growth is going to come from two things. One is, you know, obviously we want to sell more units, but we also want to continue to vertically integrate. I think, you know, when you talk about some of the changes that you're seeing out there, you know, we're seeing two things with with our investors. One is this apprehension around rent control. If rent control is passed in Massachusetts, um, you know, operating properties profitably is going to be uh very, very important and mitigating costs and things like that is going to be very, very important because the the rents aren't going to increase at the rate they need to in certain situations. And so the way that we do that is is is but through vertical integration. And so we can usually, if we have, you know, we have in-house handyman and some other things now. If we do that, we can do it at a lower cost. We can still make money and it's better service for the client. And so we want to continue to bring those things in-house, make revenue there, deliver a better service, and grow our door count as well. Um, yeah, it should be a good should be a good year. We've got a business development rep that started about four months ago. We're working with um uh rent scale and and you know, we've got everything locked and loaded to to grow. And you know, we're not going out and signing anyone. We, you know, it's funny. If you want to grow by 300 doors, which is sort of our our goal this year, um, or 350, you know, that's that's we want 10, 10-unit clients, five 20-unit clients, and three 50-unit clients. You know, that's that doesn't when you break it down like that, that doesn't sound like that that much really, considering what we've already got in pipeline and stuff like that. And I have I am very confident we can serve all of those clients really well because we we know that type of client really well.
00:46:03 · Tony Cline
[00:46:03] S0: I know I said I was gonna wrap up with growth, but you said something, so I want to touch on it and then we can wrap up. But uh you talked about having in-house maintenance, and that is a topic where a lot of, you know, there there are other businesses out there that will uh tell you what your revenue per door should be, and and that if your uh revenue per door on your management side isn't high enough, they really push you to try to bring that up. But then there are companies that are making a ton of money on maintenance, and that doesn't get factored in. It's like, I don't care what pocket the dollar is in. Like if if it's in my maintenance pocket or my management pocket, I still have a dollar, right? I still got that money. And so there's there's a lot of people looking at how can I increase my overall revenue for the company? And a lot of them start looking at bringing in-house maintenance in. And I know companies who have solved it, I know companies who've tried it for a few years and never made them made money on it. So I just do you have any insights or any feedback for people who are thinking about bringing maintenance people in-house or even creating a separate maintenance company?
00:47:10 · Casey Howe
[00:47:10] S2: Yes. I first of all, I'd say strategically, it could be a matter of life and death. And I don't want to be all doomsday, but I do think that the the ability of an owner, let's say an owner has a portfolio of 50 units to run everything on their own out of state through AI and automation and all that stuff, and just have like one local 1099 here is easier now than it's ever been. And you're seeing Zillow and all these other platforms offer these things. And I realize we think we like to think we add all this value, but like that becomes more and more attractive, not less attractive as time goes on, right? Yeah. And so as a matter of survival, I think that as property management companies, good ones, need to have boots on the ground because you can't replace that. Okay, so so strategically, for us, it's not a question of done, you know, do we make money this month? It's I don't think we're gonna be a viable business in five years if we don't do that. That's how strongly I feel about it. Secondarily, it's really hard to do. And that was an area where we certainly took some missteps. So not having things like utilization dialed in and direct, you know, labor efficiency ratio and how much you're gonna charge for things, there is a much smaller margin of error with maintenance because maintenance people are expensive, trucks are expensive, tools are expensive, their time is expensive, all that stuff's very expensive. If you make a misstep on the property management side of the house, it's easy. You know, you you can carry a couple extra remote team members for a couple months as you rebuild, but you you you can't carry extra maintenance tax when you lose 300 units. And so it's a much harder thing to do right, I think. But I think the the risk of not doing it, tactically, you provide a worse service to your client, you're leaving money on the table and you have less control. Strategically, I think you're setting yourself up for a situation where you could lose half or all of your customers in five years because you know, collecting rent um and following up on late rent is I don't know, like it's gonna there's gonna be price compression at the very least. It's gonna be a race to the bottom of companies that are based in Vegas that charge 3% flat rate um or a hundred dollars, you know, fifty dollar flat rate.
00:49:16 · Casey Howe, Tony Cline
And and then you have a local manager here that does everything else. That's that's a real competitor for us, I think. [00:49:23] S0: Yeah. I've been in this business long enough that that I remember when Zillow first hit the scene and everybody was excited about Zillow and and look, they'll advertise your properties for free. And then once they got everybody hooked on it, then they started slicing away on the things that they would do. And, you know, I uh ever since that started happening, I always said that a company doesn't have to be able to do everything you do to put you out of business. They just have to slice off enough of the profits that it no longer makes sense for you to continue to be in business. And I think that's what you're talking about here with as they start doing the price compression, as AI starts being able to dispatch and call vendors and follow up and send out uh late notices and all this stuff that could happen automatically. Where are we going to figure out how to add slices of profit back on? And that maintenance piece, if you can figure it out, is is a gold mine there because properties, no matter what you do with AI, properties are gonna continue to deteriorate, tenants are gonna continue to break things. And so there is this need for the physical component of property management. I think you're right. Yep. All right, Casey, I'm gonna give you the last word. Anything that you uh thought we would gonna talk about that we didn't, or anything that's top of mind you wanted to circle back with, leave us with something here.
00:50:42 · Casey Howe, Tony Cline
[00:50:42] S2: No, I mean this has been a really good call. You know, I think I I I want to emphasize that, you know, I I I did come in, I think, a bit um sort of arrogant. I I've learned a ton from other managers in the industry. You know, Profit Coach has been really helpful, just understanding, you know, profitability and how to build a business that's profitable. It took me too long to learn that lesson. Um, so I appreciate the feedback I've gotten from others on that. I would encourage other managers to make sure that we're listening to customers and clients as much or more than we're listening to each other. And um, that's usually gonna guide us to the things that we need to do in our business. I think if we can do both those things well, we can build profitable businesses that grow. I think if we just do one of those things well, we're we're gonna lose one way or the other. [00:51:30] S0: Well said. Casey, thanks. Yeah. Yeah, we'll wrap up. Uh I I could talk to you for another hour or two and just keep the conversation flowing. So uh let's have you back on again in the future, but let's wrap this up here. Really appreciate you joining and and sharing a little bit about your story. [00:51:47] S2: All right, Tony.