The Property Management Show

Google Ads can be a powerful growth engine for residential property management marketing. But for many business owners, it’s also a source of frustration. Misconceptions, unrealistic expectations, and the complexity of campaign management often leave property managers saying, “Google Ads just doesn’t work for me.” On The Property Management Show podcast, Google Ads expert Maddie Lushington shared candid insights from her five years of running Google Ads campaigns for property managers across North America. Her stories reveal why some campaigns fail, what realistic success looks like, and how property managers can avoid common pitfalls when marketing to property owners. Why Property Managers Struggle with Google Ads Many property managers walk into Google Ads expecting instant results: a certain number of leads, a specific cost per door, or guaranteed outcomes based on what a peer mentioned at a conference. Maddie has seen this play out countless times. I also recalled overhearing property managers comparing results over lunch at an industry event. One person bragged about generating dozens of leads in Florida, while another lamented that ads never worked for them in a smaller market. On the surface, these conversations sound like benchmarks. In reality, they’re stories shaped by geography, competition, and budget. Comparing success in Florida to a rural town in Arkansas is like comparing apples to oranges. The market dictates what’s possible. This misconception — that performance can be copy-pasted from one market to another — is one of the biggest reasons property managers feel let down by ads. What Defines Success in Google Ads Campaigns for Property Managers Beyond Cost Per Lead Leads and cost per lead remain the metrics everyone talks about, but Maddie encouraged property managers to widen their definition of success. Impressions and clicks reveal whether your brand is showing up consistently. More importantly, looking closely at the type of clicks matters just as much as the number. Owner Leads vs. Tenant Clicks This is where nuance comes in. Owners and tenants often use almost identical search terms. That means even the most carefully crafted campaigns will capture some tenant clicks. Maddie was quick to point out that this isn’t a failure — it’s simply the nature of how search works. Her team’s role is to constantly refine campaigns to keep the balance tilted toward owner leads. She stressed the importance of daily click volume as a leading indicator. If a campaign generates five to ten clicks a day, we know we’re creating enough opportunities for owner leads to come through. Not every click will be perfect, but the math starts working in your favor. Can You Trust AI Tools for Google Ads in Property Management? Automation and AI sound appealing. Google has rolled out tools that promise to “optimize” campaigns with little human input. But Maddie and I both warned against over-reliance on AI in property management marketing, and here’s why: The Nuance Problem You Can’t Ignore I put it plainly during the interview: “Google has now shifted from purely keywords to intent.” That sounds great until you remember that intent is slippery. Intent is a very nuanced thing, which robots find it hard to master. In property management, that nuance cuts deep. Owners and tenants search with similar phrases. Maddie sees this daily: “Tenants and owners actually search very similarly…[and] the AI isn’t nuanced enough to… know the difference… between the owner that we want and the tenant that we don’t.” Google’s shift from keywords to intent has been one of the biggest changes in recent years. If you want a deeper dive into how Google’s constant updates affect property management marketing, check out our blog on what property managers need to know about Google’s latest updates. When AI Goes Wrong in Google Ads Maddie shared a story that perfectly illustrates why human oversight matters. During a routine review of a campaign, she noticed something bizarre: Google’s AI tools had injected Latin placeholder text — lorem ipsum — into live ad copy. In another case, the AI mistakenly expanded a campaign targeting vacation property management into keywords for vacation activities. This meant ads meant to capture property owners would start showing up for people searching “things to do on a trip.” Without human intervention, those wasted clicks could have drained hundreds of dollars from a campaign. The lesson? Automation can support you, but it cannot replace human strategy — especially in an industry as nuanced as property management marketing. Google Ads Budget for Property Managers: A Reality Check Perhaps the most sobering part of Maddie’s interview was her explanation of budget math. Many property managers believe that $500 a month should guarantee a couple of new doors. The truth is far less straightforward. Breaking Down the Numbers A $500 monthly budget equals roughly $16.50 per day. With an average cost per click of $5.5

The Property Management Show returns with Part 3 of Marie Tepman’s discussion with Todd Ortscheid, which builds off the earlier discussions of fee-maxing and choosing the right revenue model. In the conclusion of this series, we focus on the importance of education when it comes to property management marketing, and how to use AI to boost productivity without losing the human touch. Property Management Marketing Starts with Content Marketing To someone who does not know the property management industry, the idea that a company like Fourandhalf would market exclusively to property management companies seems incredibly niche. But, the industry is big. And, the majority of rentals in America are not even managed professionally. Marie was shocked to learn that 10 years ago when she first got started in property management marketing, and perhaps even more shocking is that this is still true today. Ten years later, many rentals are still not professionally managed. This tells us that education continues to be necessary. It has to come first. Property managers can educate landlords that there’s value in hiring a professional management team for their rentals. Not only does it save time and prevent errors, they can make more money. A lot of self-managing landlords, as you know, don’t want to pay someone a percentage of their rent. But, that’s because they often don’t realize that a professional will help them earn more money, not only when it comes to rental pricing, but also with expertise and even the ancillary fees we’ve been discussing. Education is an under-rated part of marketing. It’s not just having a well-trafficked website and running digital ads. Those strategies help to capture the bottom of the sales funnel by reaching the people who already know what a property manager does. They’re making decisions based on prices, services, and other specifics. They know what they’re looking for. But what about the landlords and the property owners who don’t know? There’s an opportunity to capture the people who are looking for solutions. They might be having a tough time managing their own property. They’re looking for help, for answers, and for other options. Those are the customers who will make decisions based on the criteria your educational marketing has taught them to use. Investing in the Marketing that Matters Todd understands the need for educational marketing and has become so successful at it that he went on to bigger and better automation programs. He outgrew the basic marketing principles that he learned when Fourandhalf was helping him make marketing videos 10 years ago. He has some advice to the property managers who are small and strapped for cash and maybe afraid to spend money on marketing. Todd also works with a lot of clients who don’t have $10,000 a month to spend on marketing. He tells those clients that the educational component works. It was true 10 years ago when everyone was talking about content marketing and the benefit of education. And, it’s true today. Look at Marc Cunningham and his company, Grace Property Management. There is video after video after video on that website, and they spend 1 percent of their budget on marketing. That’s it. Anyone can do that. Once you start getting all that educational material out there, you’ve become the trusted source. When someone in your market looks for an answer to a question, you’re there providing it. Todd says a blog he wrote 10 years ago on screening pets is still one of the most-viewed pieces of content on the website. This blog gets tons of traffic. Why? Because there’s always going to be a landlord in Atlanta who had a bad experience with a tenant’s pet, so they will go looking for information on how to screen pets. And, Todd’s website pops up. The site provides educational information to the person who needs help, and they get value out of it. And once they’re there, they are likely to see other videos and other educational content. All of this leads to trust. They trust the information and the expert providing that information. This means that even if they don’t pull the trigger today, when a tenant leaves at the end of the year and that owner doesn’t want to go through the whole leasing and marketing and screening process again, they’ll come back to that great video they watched and they’ll find the source. Spending just a little money gets you to the point that you’re building revenue. Then, when you have the budget to spend $10,000 a month on marketing, you can do other things. Content marketing gets you to the point where you can spend more on marketing later. It Was Video Then. And It’s Video Now. Ten years ago, we were talking about videos and how important they were to content marketing. Fourandhalf was writing blogs on the power of content and education. It’s all still true today, and it’s all still important today. The difference is that 10 years ago, not everyone was writing blogs and making videos. If you were doing it, you w

Most property-management owners focus on adding new doors, or, they’re just concerned with reputation management and they don’t feel like they need to grow their business. But, they ignore the cause of lost revenue and lower customer lifetime values: annual churn that quietly erodes 20–25 % of portfolios. You probably don’t realize just how big your churn rate is. Welcome to Part 2 of our conversation with Todd Ortscheid, CEO of Revolution Rental Management. In this part of our series, we are talking about real world churn rates for property managers, how boosting your Customer Lifetime Value (CLV) can elevate your property management company and give you the budget necessary to effectively market your services, and some of the most threatening legislation and regulation around fee-maxing. How Much Are You Really Losing? Getting Honest About Churn Any industry report you read will show you that property managers can expect to lose doors every month and every year. Even if you’re doing a perfect job, your owners are going to sell their properties. They’re going to die. They might change their minds. Todd says that when asked to estimate churn, many managers guess that their churn rate is around five percent. But really, most property managers are losing 20–25 % of their doors every year. The latest NARPM® benchmarking guide says the average churn is at 20%, and Todd says that property management companies that can bring that loss down to around 10% can feel really good about what they’re achieving. Some property managers might think that they’re not losing money on churn because they’ve helped one of their owners sell a property. That’s great. There are commission earnings to be made. But, they’ve lost the recurring revenue. Never underestimate what you’re losing to churn, and even though it’s surprisingly difficult, try to bring that churn rate a bit lower. When sales are intense, churn rates will jump. Be prepared. Increasing Customer Lifetime Value When you have responsible ancillary fees in place, you’re earning extra cash to invest into better services. Better services reduce your churn and increase your customer lifetime value. Where should those extra earnings be spent? We discussed this a bit in part one of our conversation: Marketing. Each new door now yields twice the ROI, making pay-per-click (PPC) or content marketing an easy investment. Better services. Upgrade what you can provide. This might be a 24/7 maintenance line, leasing automation, and a resident-benefit package (RBP). These things are increasingly expected by tenants. Fee-Maxing Myths and The Triple-Win Model Fee-maxing means charging more money from tenants. Won’t that lead to tenant churn? If you’re taking more money from residents, the property manager and the owner have better returns, but won’t residents leave, thus increasing an owner’s vacancy rate? That’s a fear not a fact. Properly structured fees don’t drive tenants away. Most ancillary charges are behavior-based or have opt-in requirements. Late fees and bounced check fees and credit-contingency fees are behavior-based. Only the tenant can prevent those fees. Pet fees are completely optional. No one will charge a tenant a pet fee if they’re not moving in with a pet. Todd has a client in Washington State who is the only property manager in his market to allow pets everywhere. He rents every listing faster while collecting a pet fee for the owner. The result is a much lower vacancy rate, happier owners, and grateful residents who couldn’t find pet-friendly homes elsewhere. Tenants who have lower credit might not like that they have to pay a bit more in rent every month, but they’ll be grateful that they can rent a place, even with that low credit score. Those residents are grateful that someone is willing to work with them. Second Nature is the company that manages Resident Benefits Packages. They have a model that they call Triple Win. The owner wins. The tenant wins. The property manager wins. That’s what happens with these ancillary fees, whether we’re talking about renters insurance that’s offered to tenants at a cheaper rate than they’d find on their own or a rising credit score that’s occurring because their on-time rental payments are being reported to the credit bureau. It’s a better deal for residents. Those tenants aren’t going to leave. They’re getting benefits. Fee-Maxing and Regulatory Reactions Fee-maxing quickly got the attention of regulators and legislators, and they began to see it the same way they might see Ticketmaster charging “junk fees.” But it’s not the same. The airline industry has done a good job of convincing the government that their ancillary fees are necessary in keeping ticket costs down. The property management industry needs to make the same case. Our industry has advanced. We want to fund technology and new benefits for tenants, and if we cannot provide that through ancillary fees, we’ll have to increase rent and property management fees. Wh

Welcome back to The Property Management Show! Today kicks off a special three-part discussion on fee-maxing with Todd Ortscheid. In Part One of this important conversation, we will take a look at what responsible fee-maxing looks like, how it can double your revenue, improve your services, and ultimately increase customer lifetime value. When done right, it can also keep residents on your side. Expect to unpack some juicy math. Todd Ortscheid: Automation Addict and Fee-Maxing Evangelist It’s great to welcome Todd back to our podcast. He has worn nearly every hat in the property management industry. He’s a business owner and advocate, an industry consultant, and currently the chapter president of NARPM Atlanta. He’s also the CEO of Revolution Rental Management and co-founder of PM Assist. A bit of time has passed since Todd was last here, so let’s review who he is and where he comes from: Todd has been in property management for about 13 years. He started in the industry in 2012 and before that, he was an airline pilot for 14 years. Todd’s father was in the property management business, so as he got involved in that business and grew the company, Todd also became more involved in consulting for other property managers. He started and later sold a maintenance company. He did government affairs work for NARPM. Todd is still consulting, and he’s also a self-proclaimed automation addict and fee-maxing evangelist. That’s what we’re interested in talking about today. The A-Ha Moment for Fee-Maxing Todd began thinking about involving ancillary fees in his own property management business at a NARPM Owner/Broker conference in 2014 or 2015, where he heard Marc Cunningham talk about the ancillary fees that were available for property management businesses. It made sense because that’s exactly how airlines work. They make most of their money not on the plane tickets but on the extras. Later, he heard Alex Osenenko and Darren Hunter talk about this topic right here on The Property Management Show several years ago. By 2020, everyone was worried about revenue, so he put together an entire course on fee-maxing and leveraging ancillary services and fees. It’s been a passion of his for years, and when Lead Simple introduced what was possible with automation, he became really involved in that as well. Fee-Maxing Can Be Polarizing (But It Shouldn’t Be) When the topic of fee-maxing comes up, it can be polarizing. Like just about everything these days, there’s a camp that’s very much for it, and a camp that’s very much against it. Some property managers hear fee-maxing and they imagine that a property manager or an owner is nickel-and-diming a resident to death. We’ve heard the term junk fees thrown around. So, what does responsible fee-maxing look like? The first thing Todd wants to point out is this is not hoarding money or being greedy. Some people get that idea, but all you have to do is gather the math and run the numbers to realize these fees are necessary in order to provide good service. When Todd and his team first started running numbers for property managers, they found the average property management company had a single digit profit margin. It was 5 or 6 percent. That’s barely skating by, and it caused a lot of companies to struggle financially. Fee-maxing is not about trying to be greedy. It’s about making your business sustainable. You shouldn’t be struggling to provide the bare minimum. As a property manager, you’re trying to provide good service to owners and residents. You’re trying to hire and train better staff. You want to invest in better technology and increase your marketing efforts. To do that, you need the revenue that’s created by ancillary fees. The primary goal of fee-maxing is to improve the service you’re offering. Investing Ancillary Fees to Improve Property Management That’s an important distinction. If you can invest more money into your business, you can run not only a more profitable business, but also a more excellent one. You’ll improve the overall experience. Think about what property management looked like 10 years ago. How many companies had the technology we have today? There were no resident benefit packages. It was rare to find a 24-hour maintenance hotline. Now, everyone has these things. We’ve been able to radically improve the nature of the services we’re offering in this industry, and Todd says that’s due in part to fee-maxing and ancillary services. The boost in revenue has led to these services. If everyone providing property management has a 5 percent profit margin, you can’t do anything except collect rent and file evictions. Staffing maintenance services would be impossible. Fee-maxing is an invitation to move beyond the basics. Impact on Customer Lifetime Value In the spirit of unlocking better margins for property managers through fee-maxing, it’s also easier to increase or amplify the customer lifetime value for each client. To attract a new customer, you have to engage in

Ray Hespen, who is a frequent flier on The Property Management Show, joined us again to discuss maintenance metrics and how measurement improves resident satisfaction and owner NOI. The last time he was on the podcast, in late 2023, his team was just beginning to establish this concept of maintenance analytics. He was investigating what it would look like if property managers looked at maintenance from a data-driven standpoint. He was beginning to collect all the necessary data. It’s been more than a year now, and we brought him back to talk about what he’s seen since then. The Evolution of Data-Driven Maintenance If you get good measurements, you never lose. Property management has been in this black hole of information and according to Ray, that’s because we relied so much on having exceptional people run our business. It’s a super-high trust game. But, you can’t move what you can’t measure. So in order to scale, Ray and his team at Property Meld released a product that’s the best industry representation of the real world. Insights and Insights Pro are basically ways to understand your own property management business against a ladder of maintenance excellence. It’s a deep diving into: Vendor efficiency Technician efficiency Coordinator efficiency Benchmarking Finances You know what the performance actually is instead of trusting someone’s gut. Ray says it’s been surprising to see how the market has wrestled with some of this. There are some components of the data that people don’t like. They’d rather not look. Then, there are some customers where the metrics are so good, but they still want to get better. Essentially, providing access to all of this data and insights has opened Pandora’s Box. There’s no going back. It’s possible to measure leading and lagging indicators. And now, it’s possible to consider how to move those numbers. Knowing they exist is one thing. Using them to improve performance is what comes next. Geographical Insights in Maintenance Performance The most interesting data gathered from maintenance requests and responses is geographical. Ray says what’s most important in the information that’s been gathered is that property managers can see their performance against geographical regions and areas. It’s clear to see that property management companies in the southern states, which have warmer summers, have a high speed of repairs and increasing maintenance costs in May. So, it would be unfair to compare yourself to a property management company in Minnesota that does not have air conditioning repair costs until July or August. The geographical impact to maintenance in weather regions is important. Property managers don’t want to think they’re killing it or falling behind when the data is geographical. That’s what Ray calls a “big a-ha.” Customer Satisfaction and Its Impact on Retention Customer satisfaction has become a much-discussed part of property management, and that covers the satisfaction of residents and owners. It’s important to remember that resident satisfaction also affects owner satisfaction. Technically, property managers have multiple customers, but there’s also a hierarchy. Would you rather lose 50 percent of your owners or 50 percent of your tenants? Exactly. So, the hierarchy starts at the investor. Property managers do not have a business if they don’t have an investor customer. But, if property managers can make the resident happy, it’s much easier to hang onto those investor clients. So, one of the indicators of investor satisfaction is resident retention. One of the reasons that tenants leave is that they hate the maintenance. In the macro environment today, no one wants a rental on the market. Avoiding that as much as possible is important. Also, maintenance costs are growing 8 percent year over year. No one wants to turn a property when maintenance costs are higher and rents are holding or even compressing. When you’re driving investor retention, a property manager needs to look at resident retention and annual maintenance spend per unit. That’s what matters: resident experience and maintenance costs. It’s more than just wanting to be better with maintenance. Property managers can drill down from every point in the ladder of maintenance excellence. Identify the problem so you can improve it. A resident satisfaction issue might be approval speed. If it’s taking too long to get the repairs approved, you need to get into those details instead of running after different things. Don’t do work that doesn’t have an impact. Measuring things allows you to look at problems more critically. There’s a lot to be said for gut instinct, but once you start using data, you have to be methodical. Perhaps you’ve heard the W. Edwards Deming quote: “In God we trust but all others must bring data.” Following your gut is important, especially if you’ve been in this business a long time. It’s probably not wrong. A lot of data has been gathered and processes created around operator gut ins

Fourandhalf’s Marie Tepman, Interviewed by Marc Cunningham on the PM Build Property Management Business Podcast Marc Cunningham, from Grace Property Management and PM Build, invited Marie onto his podcast to talk about artificial intelligence (AI) and its role in property management marketing. Specifically, the discussion revolved around getting more owner leads for property managers. In an environment where budgets are shrinking and a lot of property managers are still unsure about AI, this discussion provides some clarity. Here’s what was discussed. Property Management Marketing and Gaining Owner Leads One of the biggest challenges all property management companies deal with is bringing new owner client leads into the company. How do you drive more leads into your company? The big catchphrase now is AI. Should property management companies use AI? How can these tools be used? It’s a big umbrella in property management marketing, but first, let’s talk about the simple fact of how to get more owner leads. What’s the big picture? Leads are online. So, property management companies need a good presence online. This starts with a website. And while some companies build business through referrals, online marketing is the next step. To really get started attracting owner leads to your property management company, you need a website and you need content. Marc remembers saying “no thanks” to a company that tried to sell them on a website in the early 1990s. He though as long as he had his Yellow Pages ad, he’d be fine. Things have changed. A property management company’s website and content serve reputation. Reputation is important because you want people to vouch for you. Before buying a product or service, consumers are going to look at reviews. They’re going to want to see how many stars are on your Google rating. If you don’t have any testimonials or reviews, people might think that’s suss (suspicious, for the over-45 crowd). If a prospective owner finds your website but no one online is talking about you, there may be hesitation. You have to show that you’re trustworthy. After you have established your website and your reputation, you need content. Content and Property Management Marketing for Owner Leads The literal meaning of content is anything with words on your website. At Fourandhalf, we’re more interested in quality content. When someone who has just inherited a home needs help renting that home out, they’re not going to go online and search for a property management company. A lot of them might not even know that property management is a service that’s provided professionally. Instead, they’re going to go online and search how to find a tenant or how much rent to charge. Property management content is not selling your business. It’s not telling anyone how long you’ve been in business, and it’s not bragging about how great you are. It’s showing prospective owners that you can be trusted. It’s showing value. Any company can say they’re great. It doesn’t mean anything to your prospect. They have a problem and they want to solve it. When you’re a problem solver, you’re providing quality content. The hero of the story is the always the customer. When you show up to offer solutions, you want to make it obvious to the owner that this is why your service can help. That allows the owner to remain the hero. As the property management expert, you’re the helper getting them what they need. Don’t be the hero. Be the helper. That’s a big concept that needs to be adopted when it comes to content. Serve, don’t show off. When an owner clicks on the how-to content, they’ll find it helpful. It’s educational. So, when they get to the end of what they’ve read or watched, they’ll see who provided the content. Trust is established. Should You Just Use AI to Create Content? Maybe property managers don’t have time to create content. Is this where AI can be helpful? Can you ask AI to write a blog on how to collect rent and then throw it on your website? You can. And this is why generative AI is so deceptively awesome. When Marie first discovered ChatGPT and what it did, she feared the end of marketing had arrived. It seemed like original content would no longer be necessary. But, the more she dug into what this tool is, the more she realized its limitations as well as its uses. The technology goes to its library of what’s already been written. If you want to use content that’s completely AI-created, you’ll end up with just an okay blog. But, we are no longer in the year 2000. Having a website is not special because everyone has one. Creating content is also not special; more and more property managers are doing it. So, if you want to put your property management company’s name on a machine-generated blog that lacks originality and authenticity, you can. But don’t expect great results. If you want to do better than a mediocre blog that could have been written by anyone, the human touch is still required. How to Use AI as a Mark

Can vendor bidding solutions like RoDevia Brigham’s Proposabid create more transparency and detect fraud? That’s where we left off during Part 1 of this discussion on The Property Management Show. Let’s pick up the conversation about how the bidding process is broken, and how property managers can avoid wasting time and money. Here’s Part 2. How has Proposabid Contributed to Fraud Detection? When RoDevia was talking with her partner, they discussed how a lot of vendors would inflate pricing or maybe there would be work that was needed but didn’t really have to be done in the particular way that a vendor believed, or at a higher price point. There are a couple of specific cases that she was able to detect, and she cautions owners and property managers that things like this could be happening without them knowing about it: On-site staff may claim that work is necessary, or they’ll be billing you for work that may not be completed or required. If you’re an owner in Arizona with properties in Tennessee, you may not know that what you’re being told isn’t true. If your manager is overstretched and has 76 different properties to manage, she may not know that 34 doors need to be replaced in a specific way at one property. There could also be a conflict of interest or some self-dealing going on. Staff or property managers may use companies they own. In San Francisco, we had a cleaning company that got a $15,000 per month contract at one property for 150 doors. It was on-site staff that was registered and had an EIN. Family members worked at this company, and they managed to claim contracts across other properties for almost $500,000 over three years without the owner knowing. There was no bidding process at all. If you have a third party that doesn’t have a dog in the fight and can source bids for you in timely fashion and has comparables for you, the process is fully transparent. Proposabid also posts their bids online so other vendors can compare. Any number of issues can crop up when a company is just assigning someone to source bids who isn’t qualified to do it or is too busy to give it the necessary attention. Challenges for Property Managers in Analyzing and Comparing Bids Let’s say a property manager does manage to get some bids. Now it’s time to analyze and compare them. What are some of the challenges and issues would a company face at that point in time? First, RoDevia would be wondering if you have enough bids. When you do, you have to ask if the bids have expired to the point where they’re no longer viable. One of the main things she has noticed is that property managers won’t necessarily know what the vendor does not offer. For example, there was a hazmat fentanyl situation at a property, and the building had to be closed down. Police were involved. To get bids for the cleaning, you also have to think about what the vendors are not offering in those bids. Proposabid needed to analyze that particular piece. What all five vendors didn’t offer was to post drug testing. Can you post it once it’s clean? Also, what about repairs and renovations after the cleaning. It might be necessary to tear into a wall. Asbestos and lead testing might be necessary depending on what’s found when you do open up the wall. Always consider whether you know what you need beyond the bids themselves. This is the most challenging part. Another challenge can be the number of hands in the pot. If you have a board or an HOA, there could be some extra time needed. One HOA client had three good bids, but they wanted more. That’s fine, but the three best bids are still going to be the three best bids. So, who is making the decision? Can you get in touch with the right people at the right time? The person receiving the bid probably cannot sign off on the awarding of that bid. Often, staff does not know what they’re looking at or what the next move is. Another example: RoDevia had a client with seven roofs. Four had allegedly been replaced and three more needed to be replaced. But as she gathered the bids from roofers, all of them pointed out that one of the four actually had not been replaced by the original vendor. Because of her RFP process, all the vendors bidding went out to have a look, and they all reported that four roofs actually needed replacing, not three. So, is there a lawsuit with the previous vendor, and how do we prove this? It’s proven with the bids. Multiple roofers confirmed it. So now the owner has to decide whether to pay for three roofs or four. The challenges are everywhere. What you want is someone who will strive to get you in line to make the next decision and help you narrow down the options so you can make educated decisions. Property Managers or Owners: Who Is Making Decisions? Even after good bids have been gathered and all of the information makes sense, someone has to make a decision. Marie asked RoDevia in her experience, who should bear the brunt of making the decision? Each relationship is different, and

It’s been a long time since we put out an episode of The Property Management Show and today we’re excited to talk with RoDevia Brigham, the founder and CEO of Proposabid. The vendor bidding process is an entire industry on its own, and this is a topic we have not covered before on the podcast. Introducing RoDevia and Proposabid Proposabid does bids and estimations for properties and repairs across US. Their niche client base is property management companies, real estate investors, and mom-and-pop investors. They work with people who do not know how to go about sourcing bids for work. The idea for this company came from a shower moment. RoDevia’s background is in computer science and IT, specifically cyber security. She has an approach to her work that follows an “if this, then that” process. She’s always thinking about how to automate things. While in the shower, she asked her partner an important question: What could she automate if she could automate anything in her day as a property manager? The answer was: bidding. She said if she could just get good bids that reflected apples for apples, and those bids came in on time, and vendors would pick up the phone and submit things relevant to the work that needs to be done, then she could submit those to her property owners who could make financially responsible decisions. That, she said, would be great. RoDevia took all of that seriously, knowing it was an everyday problem for her partner’s clients. Four years later, Proposabid is doing the work that needs to be done. Property Management’s Vendor Bidding Problem The vendor bidding process in property management is essentially broken RoDevia believes. While it seems like most property managers know their vendors and have good relationships in place, why would bidding be necessary at all? RoDevia and her company focus on projects that need three bids, minimum. The process at a high level looks like this: A property manager has to contact the three companies Three different prices are submitted Proposals have to be gathered The lowest bidder is selected But in that process, there are some key items that a property management company’s staff might not be familiar with or cannot do. The phone calls and the emails go back and forth. Then, there’s the hurry up and wait while those bids come in. This can be immediate, but usually it takes a couple of weeks. Sometimes, you won’t get the bids in at all. When those do bids come in, you have to compare them: Are they apples for apples? Do they come with the right warranty? Are they offering considerations or concessions? Is scope of work correct for the price? Are the vendors even qualified? Are they in a database for licensing and insurance? Then, you may need to make corrections to the bid, and that could include going back to the phone calls and the emails. Bids are re-submitted and reconsidered. Once you have something everyone agrees on, a property manager will go ahead and submit those bids to your property owner or the landlord, and together you might decide on the vendor. That process alone can take a couple of weeks or months or in some cases, it may not even get done. Someone has to be responsible for this process. It could be a director or an asset manager or an office manager. Maybe you have in-house maintenance folks who are taking all of these bids and working on the information. This can add up to 10 hours a week, which might cost 400 to 520 hours per year. All of that labor comes with no guarantee that those bids are even getting done, and those are hours that can be utilized elsewhere in your business. Financially, the costs of a broken bidding process can be $30,000 to $40,000 lost purely on bid management. When you’re considering the roofers, the asphalt, the mold remediation, building codes, and things like that, you have to consider how the vendor bidding process looks across multiple owners. Property management staff is busy collecting rent and going to court and dealing with residents. They may not have the time to deal with this process across all the properties you manage. Standardization is necessary but not always present when it comes to RFPs and bidding. If you don’t have a consistent and standard Request for Proposal (RFP), how do you attract the right vendors? You need to understand project requirements and have direct comparables, otherwise staff will have trouble closing on those bids. There’s also the problem of limited reach. Vendors may not be responding to calls or emails, and time is wasted. Owners might find themselves facing fines and penalties because inspections and permits are expiring. You might choose the first bid that comes along out of desperation, which might not be the right one. There’s sometimes a lack of transparency. If you don’t have the right vendors in place and the right RFPs in place, you don’t have the transparency you need. You’re getting the only bids that you can and that’s not the best thing to do. Proposabid

Welcome back to The Property Management Show. On today’s episode, we’re talking to an expert on mergers and acquisitions, who has specific experience in property management. We’re talking to Scott Duke, of OpnRoad. He’s talking about the things that make a difference in the sale of a property management company. Your buyer and your profit will depend a lot on your contracts, your efficiency, and your team. Introducing Scott Duke Scott and his wife bought and ran a property management company in Revenstoke, Canada. They grew their company for seven years and then sold it for 10 times the amount of what they bought it for. The company was sold to Western Trust, a private equity company out of Utah. Before that, he worked at a property management company in Ontario. He has experience working with three-person companies and those that have a staff of 25. His story of buying and selling that Canadian property management company is a bit of a cautionary tale. When they bought the company, there were 30 properties under management. Out of those 30 properties, only six had proper contracts with the owners. It wasn’t a sellable asset when they took it over. But, what they really wanted to buy were the brand and the website, and otherwise it felt like they were starting from scratch. It was not a massive acquisition. Scott realized that he thought property management meant taking care of people’s properties, but really, he was managing finances. It’s a cash in – cash out business model, and he had to make sure his owners had the money they needed for their mortgage payments. One specific event triggered his desire to sell that company. It was Christmas Day in 2016 or 2017, and he was under a trailer, defrosting pipes so the family living there could have water on Christmas. That’s when he realized he didn’t want to own the company anymore. When the owner is under a trailer with frozen pipes, you know that the company relies too heavily on that owner. So, he spent three years making it an acquirable asset. Scott wanted the company to be something that someone would want to buy. The starting point? Making the business less dependent on Scott. Making a Property Management Company Less Owner-Dependent Scott says it’s all mindset. At OpnRoad, Scott and his team sell businesses. They work within all industries, but a lot of businesses they sell are property management companies. They all have to get to a certain size before they can be sold. So, he’s talking about owner dependency all the time. How do you remove yourself from that dependency? Scott says you will be trapped in your business until the business cracks through the million or two million revenue mark. Until that point, there’s just not enough cash in the business to pay to replace yourself. You are buying your time and you’re buying your freedom. You want to focus on yourself as a business owner, not a business operator. A lot of owners get hung up on the idea that no one can do what they do as well as they do it. Scott tells entrepreneurs to embrace that. It’s true. But, it won’t be that way forever. The person you hire isn’t going to be as good as you on Day One. The training and the investment into that person makes them as good as you. His slogan is this: Every Day a Step Away. You’re getting a further step away from operating your business every single day. How to Avoid Hiring Bad Apples A lot of business owners worry about investing time and training into someone who may not work out. Having hired across 11 companies with a total of more than 200 staff, Scott understands that bad apples do get into the bunch once in a while. He has a specific model: Be a good leader: Make yourself better. The people you attract to your company will be 70 percent as good as you are. Humans only want to work with people who are further along than them and achieving more. They want to grow to your level. So, to get good people, you need to be a better person. Invest in your education. Become a leader locally through volunteer work. Grow personally and develop professionally. Have a good marketing package: You want to attract good people to your business. You’re posting a job into a competitive labor market. Stand out with marketing materials that will attract better people to your job and your company. Otherwise, you’re recruiting from other companies to find good talent. Retain those good people: You want to keep your best employees by having consistent operations and good training within your business. You want a solid and positive company culture full of people who are happy to be there. All of this stuff is hard, he cautions. But, the drudgery for the rest of your life is worse. How do you avoid the employees you don’t want to work with? Scott has two ideas: Run them through psychometric testing. You can use different models like PSIU or Myers Briggs. This will ensure you have the right person for the job. If you’ve never done this type of testing before, go into t

Amy Harrison is a sales and marketing copywriter from the U.K. and an expert in storytelling. After hearing her speak at a marketing conference and finding the information invaluable, we invited her onto The Property Management Show to talk about the evolution of marketing content and copywriting and how AI can help with persuasive copy, as long as you’re finessing the message with the information that only you have. Amy Harrison’s Background Amy thought she wanted to be a screenwriter for film and television, but quickly burned out at a young age and decided to pursue other things for a while. Then, she found her way back to writing and began working for a private investment firm that bought and sold online businesses. She describes it as flipping businesses, and that’s what brought her back into content writing and copywriting. When she discovered the psychology around sales copywriting, she knew she wanted to help businesses tell stories and build credibility. Amy says that her training as a screenwriter helped with her sales copywriting because it’s always important to write for the reader. If someone does not want to keep reading, you’ve lost them. You need to make sure they’ll read beyond the headline. Tracking the Evolution of Sales and Marketing Copywriting Amy remembers the early days of copywriting, when everything was very SEO-driven and it seemed like her job was to cram every page full of keywords. The idea was to reach people and to provide as much information as possible. It was more of a transactional exchange. People found there were better ways to have a sales conversation, and the content improved. Businesses have realized that not all content needs to sound like sales and marketing content. There’s a lot more awareness of what marketing and copywriting can do. The struggle, though, has not evolved much. Amy says that large companies with million dollar marketing budgets have the same desire as the freelance photographer with no marketing budget: to sell themselves and to stand out. The process has evolved, but the problem sales copywriters are trying to solve is the same. Umbrella Terms versus Storytelling with Copy and Content How is it done well? While trying to talk about what makes them different, a lot of companies will end up sounding like every other business. They’ll use generic words, and they’ll try to talk about everything they do all at once. Amy calls those umbrella terms, and she advises companies to be bold and to expand their comfort zones outside of those same words and phrases that are always used. The fear factor will sometime set in. You want to stand apart from your competition, but do you really want to be different? Storytelling can be powerful, but it’s harder to write a story than it is to create a list of benefits. You have to earn the right to get someone’s attention. How do you do that? Amy asks us to think about it from the first piece of content – whether it’s a headline or the first few seconds of your video or the introduction in your email. Speak directly to the person you’re trying to reach. Think of yourself in a crowded room at a party. You’ll hear lots of conversations, and you’re not tuned into any of them. But if you hear your name, that will immediately get your attention. You cannot call your customers by their name in your content, but you can work harder to make the content more relevant. You want them to feel like you’re talking directly to them. Think about how to write the conversation that your customer is having in their mind right now. What are they thinking about in that moment as they approach your blog or your email? Here are a couple of examples: If you’re trying to attract a client who is moving, your headline might be “Should You Sell Or Rent Your Home?” It’s not a dramatic title, but it is a title that will speak directly to someone who is trying to answer that very question for themselves. You’re sparking an awareness that they need you. If you’re trying to attract people who are displeased with their current management company, your headline might be “Does Your Heart Sink When Your Property Manager Calls You?” Someone out there does experience that feeling when their manager calls. They’re going to read your blog. Think about audience when you begin to tell your story. Are they new to renting out homes? Are they very frustrated? What’s already on their mind? Get their attention and pull them along. This is like calling their name out in a crowd. A story is only boring when it’s irrelevant, so think about what’s pressing and relevant to the people you’re trying to reach. You can also use symptoms of the problem. What are some warning lights that your audience can see? You can suggest that there’s a problem they might not be aware of yet, and your copywriting can indicate that the problem is bigger than they think. That will get their attention, too. Your prospective clients might not know what the problem is, but they’ll reco

PJ Clay, the Director of Client and Partner Services at Rental Beast, joins us on The Property Management Show to discuss the company’s role as the rental MLS, and how they provide back-end technology to MLS associations across the United States and Canada. We also discussed whether this type of technology can help or hurt property managers. PJ says it helps. Introducing Rental Beast Rental Beast calls itself the rental MLS. It provides back-end technology to MLS associations in certain markets throughout the U.S. and Canada. The Multiple Listing Service (MLS) is highly customizable, but also built for the For Sale side of the real estate industry. Rental Beast knows that rentals are different. The process of renting is different from the process of buying and selling. So, they built the technology that can integrate rental listings. MLS members can add or search for rental listings. The second piece of this technology is a productivity suite of tools making it easier for property managers and real estate agents to access lead generation, lead qualification, and rental applications. At the core of this technology is a very large database of rental listings. Members of Rental Beast have access to 12 million active listings in the U.S. and Canada at any given time. Putting all the rental listings into one database is the central part of our technology. Members can get as close as possible to reaching 100 percent of their market. Accessing Reliable Data and Listings for Rental Markets Rental Beast is currently working with MLS associations in cities like Boston, where they’re based, Chicago, Raleigh, Miami, Colorado Springs, Toronto, and other markets. They’re actively growing, too, because the demand for this platform has increased. With home sales still out of reach and unaffordable for so much of the market, people are renting. Having the technology for real estate professionals to make the rental process easier has driven that growth. So, where does the data come from? Where do they gather their listings? The rental market is fragmented. On the general MLS, you have 80 or 90 percent of available homes for sale on that site. Not all rental listings go onto the MLS, however. Some cities will include rentals on the MLS, but even then you’re only getting about 40 percent of the rental market listed. Rentals come onto the database from a lot of different sources. The Rental Beast database integrates with property management software. So, platforms like Appfolio, Yardi, RentTech, and Buildium can use Rental Beast as a syndication destination. Any listings on those software sites can be shared with Rental Beast. The other piece is more difficult and labor intensive. These are rental listings that aren’t found on the MLS or on any property management software sites. Staff at Rental Beast must find the listings and then make actual phone calls to owners and property managers to verify them. PJ says it took 10 years to build the process the right way. They’re calling any listing that doesn’t come from the MLS or property management software. It’s a huge undertaking, but it’s necessary to avoid scams. There are also a lot of details that are confirmed for those listings; they ask if there’s an agent compensation fee, what the showing instructions are, and how a tenant can access an application. These listings have to be updated every week or two, depending on the location. If they cannot get a verbal confirmation that the listing is active, it gets dropped from the database. Are These Listings Professionally Managed? The majority of listings on Rental Beast are not managed by professional managers or real estate professionals. They’re managed by the property owners themselves. PJ believes this is hyper-local. He says that in Boston, property management firms aren’t as recognized or understood as they are in other markets. If a real estate investor owns a few properties, they might hire leasing agents to market the home and get the property rented, but then they take care of the day-to-day management. Even the National Association of Residential Property Managers (NARPM) has a limited presence in the northeast. Recently, they established a local chapter in Philadelphia, but that has only been in the last years. Compare this to Arizona or other markets in the southwest U.S., he says, and things are different. There’s a larger percentage of listings that are professionally managed. The estimate is that around 40 percent of the listings on Rental Beast are managed by small, mom-and-pop operations. We’re not talking about large, professional property management companies. It could also be a terminology issue, PJ says. There may be someone who owns 100 doors, but they don’t see themselves as a professional property manager because they own those units. Proximity can also be part of the difference. In markets like Texas and Atlanta, it can take an hour to get from one end of the city to another. There’s a concept call

Two guests are joining The Property Management Show today, and they are Scott Brady and Garrett Brady from Progressive Property Management in southern California. Scott has been on the show before, and tends to talk about forward-looking topics that involve challenging the status quo. Garrett is his son, and a big part of the company’s future. The topic today is legacy planning, which can be rather difficult for property management companies. Scott and Garrett are sharing their journey and where they are. Progressive Property Management Then and Now Scott has a story that’s similar to many property management company owners. He began as a real estate agent and had a brokerage business. The recession arrived in 2010, and he wanted to be prepared for the next recession. So, he started Progressive Property Management in 2012. It became incorporated in 2015. The company grew organically through marketing and relationships. Over the last 12 years, they’ve grown to about 1,000 doors under management. Garrett joined the residential side in 2018. The business model is unique. It’s a virtual company that hires real estate agents to be property managers. Three years ago, they began an association management department, and now manage around 130 associations with about 7,000 owners, total. They use the same business model; people are hired to be off-site property managers for these communities. The team at Progressive takes care of all back office operations. About three years ago, Scott was diagnosed with cancer, and he realized the company was not prepared to be sold or handed off. Decisions were made, and a choice had to be made: did Scott want to prepare the company to be sold, did he want to hire someone to run it while he lived off the cash flow, or did he want someone in the family to take it over? He’s made a decision, and he and Garrett have been busy structuring their legacy plan over the last three years. Garrett says the company – and the entire industry – was old school in 2018. There wasn’t a lot of technology, and everything was very regional. He’s been able to see the industry move from the stone ages to embracing modern technology. It’s a more appealing industry to join. So while it was a family business that he was happy to join, he now sees the value of real estate and how it interacts with so many other business sectors. Legacy Planning: Starting the Discussion The diagnosis spurred the discussion around legacy planning. Scott hired a consultant outside of the property management industry and the first thing he recommended was to have Garrett go to graduate school. This did not make sense at first, but it was pretty transformative. He earned his position with his education and his experience, not because of nepotism. The next step was to invite Garrett to earn some controlling interest in the company. Every year that he’s worked for the company, he’s earned 2.5 percent ownership in that company. By now, he’s up to 15 percent. The idea was to have Scott maintain the controlling interest, but to give Garrett a path towards more ownership. Garrett has skills that Scott doesn’t have, and they both recognize that. Scott excels at sales and marketing while Garrett is all operations. Scott said he knew the future was in the company’s operations. With 130 associations under management, they need good systems. Garrett does all the hiring of remote team members and he trains them, too. The company now has 13 remote team members and 13 full-time employees. The future isn’t expanding full-time payroll, but in hiring remote contractors. Understanding his own skill set allowed Scott to bring Garrett in, and together they sit down and look for the next opportunities while ensuring everything is running properly. Marc Cunningham mentioned to Garrett that he had to do a buy-in for his ownership in the family business, and so it made sense to Garrett that he would buy ownership over time with his time and with his commitment to the business. He says he gets more value out of learning how to run a business, deal with staff, and handle operations and corporate accounting. He’s happy to have that security for the long term, especially as the business grows. It’s never a good idea to arbitrarily give ownership of your property management business to someone just because they’re family. Garrett is qualified, and that’s important. Scott says he’s the most qualified person to run the residential side of the business and manage the remote team members. He’s learning more about the association management side, and will eventually be comfortably with full ownership of the company. Finding the Fit with Legacy Planning It’s a perfect fit, with Scott on top of the sales and marketing and Garrett taking care of the operations. That doesn’t mean that Garrett isn’t prepared for marketing the business. As a high school student and as an undergraduate, he took care of the direct mail for his father’s company and for other

Marc Cunningham is a property management consultant and he’s also the President of Grace Property Management in Colorado. He’s joining The Property Management Show today not only because he’s a prominent figure in property management, but also because he’s one of the first property management professionals who embraced video marketing. Marc is still promoting video marketing, and he believes it’s the most effective way to bring new business into your company. A Bit of Background: Marc Cunningham When Marc started his property management career as a child going to the office with his dad, things were incredibly different. It was the 1970s and buying their first copy machine was the most technology they had. The phone with an answering machine was fancy. Ledger cards were used to manually record when rent was collected, and checks were written to owners once a month. His father recognized that technology was a great tool, and they not only got a computer before anyone else, but they also even hired a programmer out of California to write a custom property management program for them. In the property management industry, there’s a big scare every couple of years. The narrative goes, if you don’t do X, you’ll be left behind. Right now, it’s AI. If you’re not using AI, you’ll be left behind. Marc says this is not always true. Provide good customer service to owners and tenants, and you’ll be okay even without the latest tool. You won’t wake up one day and be left behind. It’s the shiny thing syndrome. If there’s something that everyone seems to be doing, you feel like you should be doing it, too. It’s easy to chase the next big thing because everybody is talking about how cool it is. Marc doesn’t chase the newest thing. Technology is something to leverage in order to improve your property management business. After graduating from college with a degree in finance and real estate, Marc worked in the industry but not for his father. This helped him when it was time to go to work for his father. He brought a different perspective and a different set of skills to the family business. He always tells people in a family business to send the young people out to work outside of the business for a few years. It generates better ideas and higher level thinking. Marc arrived at his father’s company with more of a business mindset. His father was very good at property management, and Marc found he was very good at business management. Pioneering Video and Property Management Marketing Marc is one of the first property management professionals to begin marketing his company with video. He still believes this is the best marketing tool for property managers. Here’s how it happened. He was at a conference, and on the way home from that conference, he began thinking about how much time he spent talking to potential owner clients. They all ask the same questions and he found himself having the same conversation over and over again. Wouldn’t it be great, he thought, if, instead of answering those common questions over and over again, he could put those answers in a video and have it on his website. Then, potential owner clients could watch the video and decide if they wanted to know more. Marc thought that if a video could save him multiple five-minute conversations, it would really add up to getting some serious time back. He’s action-oriented and he doesn’t over-think. So, when he got home, he had his then-11-year-old son stand on his desk with an iPhone and take a video of Marc talking about common property management expenses. It was a three-minute video that included no script, no special lighting, and no microphone. The point was not quality. The point was to get it done. This has worked better than any other marketing, Marc says, because prospective owner clients will call, and they’ve already seen the videos. That puts them at about a 7 out of 10 in terms of likelihood that they’ll come on board as a client. Those owners feel like they already know Marc and the company. Marc says he’s not afraid to tell people to use video more because he knows they won’t do it. His competitors don’t. The reason this works for Marc, he says, is because he’s not a perfectionist. The Power of Action vs. Perfection If you believe in the power of action, you’ll get the videos done, and you’ll let the results fall where they may. Video marketing has been successful by keeping the acquisition costs for each client down. There’s no need to spend a lot on marketing when you have a YouTube channel full of great video content. The video version of Marc is available 24/7, and that means that the real life Marc has time to focus on other parts of his business. One video could be equal to 20 conversations he didn’t have to have in real life. Even if the video results in zero leads, he didn’t have to have all those chats with people who would not hire his company anyway. The willingness to make videos creates a filter. No property manager is designed t

Welcome back to The Property Management Show. In our previous episode, we spoke with SEO and marketing guru Rand Fishkin about the shifting tides in digital marketing and the sources of influence that are important today. On the second part of our podcast with this guest, we’re talking about money keywords, vanity metrics, and generative AI. We’re also talking about how to make those immeasurable marketing channels a little bit more measurable. Here’s Part Two of our interview. Money Keywords: Where Everyone Wants to Rank Every business or industry has a set of money keywords that represents where and for what everyone in that industry wants to rank. That’s the bottom of the funnel. If you’re ranking high for property management and your city, you know that people searching for you are very close to choosing a property management company. That’s a good lead. But, why go to the battlefield and fight with every other management company that wants the same keywords? There are other marketing strategies that can be leveraged. Remember the blue ocean strategy. Go for those keywords that others aren’t paying attention to. Then, you won’t have to fight as hard and you’ll still draw in traffic from relevant searches. It makes sense. However, people are so drawn to that battlefield. Rand says this is how entrepreneurs are socialized and trained. It’s a cultural battle that’s hard to overcome. To really improve website traffic and gain more leads, results, and profitability, you can rank for more than property management plus geography. When everyone else is chasing one thing, you can beat them all by doing something that none of them are doing. Vanity Metrics: Measuring Lift vs. Attribution Are you getting more subscribers and followers or engagement and not necessarily conversion? In 2017, there was an article in the Harvard Business Review that talked about the actual value of a Facebook like for a business. Marketing researchers did a study to figure out whether it really contributes to a business in any meaningful way. They found that a Facebook like doesn’t necessarily reflect a change in consumer behavior or an increase in spending. Consumers who like a brand on social media, specifically Facebook, are simply expressing a pre-existing preference. If they see the brand, they like it. They were going to buy from you anyway, so of course they’ll like you on Facebook. It’s much harder to convince someone who has never heard of you to like your page and then buy from you. Rand points out that hidden in that study is that the measurement can be used to find out how many people are predisposed to buying from you, and who they are. The Facebook like did not influence 300 new people to buy from you if they weren’t already planning to buy from you. So, it’s a vanity metric. It does not change behavior. But, it helps you measure. By knowing that 300 new people liked your Facebook page in a month, you can measure the size of the pool of people who may buy from you. This can be useful in a campaign. You can measure what you’re doing that’s having a positive or negative impact. Measure those likes if you want a campaign that grows your brand’s likeability, awareness, and trust. Getting a Facebook like won’t get you more buyers. But, doing things that will encourage more buyers will result in a lift on social media. That’s notable. This makes an otherwise unmeasurable marketing investment more measurable. You can measure lift. If you see that traffic went up and conversion went up and the Facebook likes went up, that campaign worked, and you know that similar investments on other networks might be worth the effort. Or, when what you did last month did not work well, you’ll know to try something else. That’s where the value comes from. Instead of disproving the value of the metric, that study suggests there’s a lot of value. If you’re focused on ranking number one on Google, that’s a problem because you want that metric to go up at all cost. But, if you instead treat the metric as a way to measure the effect of what you’re doing, that’s going to give you some value. Branded Search Volume on Google Rand suggests that branded search volume is the better place for small businesses to focus right now. Instead of Hayward Property Management, he suggests working hard to rank for Marie and Brittany Property Management. When people are looking for your brand name, it means you are doing something right in terms of brand reach. More people are looking not for a generic term, but for you in particular. Rand says he’d take one new searcher for his brand name over a hundred searches for the generic keyword combo. That’s the bottom of the funnel and the closest you’ll get to conversion. If he searches for a Google Pixel Phone 6, that’s more valuable to the brand than a search for best new android phone 2024. One of those search terms suggests that the buyer has already made their decision. He knows what he’s looking for. That’s the most v

Marie Tepman and Brittany Jones are on The Property Management Show, interviewing Rand Fishkin, co-founder of Moz and founder of SparkToro, about the changing landscape of digital marketing. This is only Part 1 of our discussion, which includes a look at the shift from SEO-centric strategies to a more diverse approach, the distinction between platforms of influence and entertainment, and the challenges of marketing attribution. Introducing Rand Fishkin Rand Fishkin is a name that’s synonymous with the world of SEO and digital marketing. He founded Moz, which revolutionized SEO tools and education for marketers. He wrote a book called Lost and Founder, an honest take on what it’s like to be part of the start-up world and follows the journey of a founder. Recently, he’s been making waves with his new venture, SparkToro, which is changing the way marketers like us understand and target different kinds of audiences. A Changing SEO Landscape For the longest time, Rand was a prominent voice in SEO and content marketing. He was known to say that everything starts with keywords and data. Recently, there’s been a pivot to the opposite sort of thinking. We asked him to explain his pivot and his new view on digital marketing. When you have a hammer, every problem looks like a nail. In the world of digital marketing, there are hundreds of channels and opportunities to reach an audience and build a brand and show off. Because he was addicted to and grew up in the SEO world, his focus was on: Target keywords Building links Making website accessible to search engines Optimizing everything It was all viewed through the SEO lens when it came to marketing. Two things happened to cause a pivot in the way he approaches digital marketing: Over the last six seven years, and especially since the pandemic, almost everyone is doing decent SEO. There was a big opportunity from 2000 to 2015. It was remarkable what you could do if you had any kind of savvy around SEO. You could be in the bottom 40 percent of SEO skills and still get a lot of traffic. Google was growing. There was more competition. Now, every smart business owner in every region and ever industry knows what they’re doing with basic SEO. It’s not the competitive advantage it once was. Demand is not growing. Google has acquired every human with an internet connection. There’s not a lot of growth left for them. They have 91 percent of the market share in the U.S. and about 95 percent of the market share globally. With no room for growth, Google has had to change the game. Now, we’re seeing Zero-click searches where people get information without even having to click on a link. Google provides it right there in the search results. That’s great for consumers, but frustrating if you’re a business owner looking for traffic. Google is using your own content and taking clicks and traffic away from you. These forces combined to mean that SEO is not the golden opportunity it once was. If you’re creative and entrepreneurial, you look for other opportunities. That’s what Rand has done. Distinguishing Online Platforms: Influence vs. Entertainment Let’s talk about TikTok. This has been a rising trend, and there are also reels on Instagram and shorts on YouTube that are popular. These are not sources of influence for businesses; they’re very particularly focused on entertainment. The content there is not similar to the content that you might see if you are doing SEO things or business to business marketing or even participating in other platforms like Reddit or LinkedIn or YouTube or Threads, which is more like the old version of Twitter. Unlike entertainment platforms like TikTok, those other platforms are serving niche functions. You might find botanists in U.K. clustering around a few account on Threads and some YouTube channels and some SubReddits. They’re all following the same sources, and all of the conversations are focused in that field. That’s not what happens on TikTok. There, you’re looking for distraction for 7 to 70 seconds. You see a series of videos to distract and entertain. The botanists don’t cluster there. They’re on TikTok, maybe, but they’re like the rest of us, watching a chipmunk dance with a squirrel. On YouTube or on a SubReddit, you’re subscribing to get specific and curated content. TikTok is prioritizing not what you necessarily want to see, but what will guarantee that you stay on the site and scroll to the next video. TikTok followership is the lowest value of any social network that has existed yet. That’s the entertainment mindset that drives people there. It’s not going to help a property management company find new owners. When we talk about entertainment networks versus networks that are a source of influence, you have to think about the places where you’re having relevant conversations. If you’re a marketer in property management, you care less about reaching the broadest possible audience for a few seconds. You want to be present in a highly relev

Welcome back to The Property Management Show podcast, your go-to source for all things property management, entrepreneurship, and marketing. This podcast is proudly brought to you by Fourandhalf, a leading digital marketing agency specializing in property management. Fourandhalf has been instrumental in helping residential property managers generate more leads and attract quality property owners since 2012. Our hosts Marie Tepman and Brittany Jones recently welcomed Courtney Wolf, founder of RentWise Property Management in Idaho, to their show to discuss Courtney’s journey to successfully creating a hands-off business. Courtney runs a thriving property management company in Boise that she has gotten to a point of running itself. When asked to expand on the steps she took to make this dream a reality, Courtney shared that it started with big dreams that were broken down into “biteable, doable, and reachable goals.” She explains that her process involved getting an excellent business coach to hold her accountable and provide guidance, as well as buying in critical team members like her operations manager Carly. Together, they methodically worked backwards from their vision to establish micro-goals that they could tackle over the years to get RentWise to where it is today. Starting Out Overwhelmed and Doing Everything Running a property management company is an extremely demanding job. You have to coordinate maintenance, place lockboxes, do showings, answer all phone calls…the list goes on. It’s not uncommon for property managers to experience total overwhelm trying to juggle it all. Courtney knows exactly what this feels like. When her Idaho-based company first launched, Courtney was a basically one-woman show doing absolutely everything needed to keep things running. Courtney knew something had to change for the business to be sustainable and for her to have any sort of work-life balance. The Genesis: A Small Business Handling Every Task Courtney started RentWise property management as the sole employee, handling all aspects completely on her own: Placing lockboxes Conducting showings Checking on maintenance issues At the same time, her eventual Operations Manager, Carly, would work at the office answering all calls and managing day-to-day relations. The lean team worked hard but constantly felt overwhelmed and overburdened trying to self-manage everything. The Catalyst: Facing Employee Burnout Courtney shares the catalyst for taking her business virtual was Carly approaching her, feeling completely burnt out and ready to quit. Carly felt she had no freedom or work-life balance between her full-time job and demands at home. Facing losing her right-hand employee, Courtney realized if she wanted to retain top talent long-term, she needed to rethink how she structured her business. Working Backwards to Make the “Hands-Off” Vision a Reality Courtney’s first step was engaging an experienced business coach. She needed someone who could hold her accountable to goals and break down her big-picture virtual vision into smaller, tactical steps. Together they mapped out: The Big Goals Create a 100% virtual property management company Design systems and processes for complete freedom from day-to-day operations The Path to Make it Happen Determine company values to guide decisions Build the right in-house and outsourced team Map all processes in extreme detail Utilize technology for efficiency Setting this strategic foundation with her coach gave Courtney clarity and confidence to systematically build her virtual model. Assembling the Right Team A key component enabling Courtney’s shift to virtual was curating the right staff across her organization, specifically: Leadership Buy-In Getting complete support and dedication from her operations manager Carly was essential. Courtney focused on aligning their individual visions for the business and what lifestyle they wished to create. Outsourced Support Courtney offloaded tasks like property inspections and maintenance via her side company Taskmasters. Being able to outsource redundant or specialized work freed her core team to focus on high-level management. Systemizing Everything Through Detailed Processes Courtney credits clearly defined processes as central to her eventual hands-off role. Here are the key benefits she experienced from comprehensive documentation: Enables Delegation By detailing procedures to a “five-year-old” level of simplicity, Courtney could easily hand off tasks to virtual assistants and Taskmaster employees without extensive training. Creates Consistency Highly specific checklists and protocols allowed both in-house and outsourced staff to seamlessly meet expectations and performance standards. Identifies Improvements Steps that created bottlenecks or redundancy jumped out clearly when every facet was scripted. Courtney could then refine or automate these areas to fill gaps. Sets Team Up for Success With all guidelines co

Hello and welcome to The Property Management Show podcast, your go-to destination for exploring the dynamic world of property management, entrepreneurship, and marketing. Brought to you by Fourandhalf Marketing Agency, a leader in the industry since 2012. Fourandhalf helps residential property managers get more owner leads and improve their online presence through website design and development, SEO, online reputation management, video and blog content, social media, and targeted advertising. Recap of Part 1: Establishing the Foundation of Mid-Term Rentals In Part 1 – Maximizing Profits with Mid-Term Rentals: Property Management Blue Ocean Strategy, our guest speakers Jessica Schirmeister and Jason Zimmerman from Trend Property Management in Texas discussed the growing trend of mid-term rentals. These types of rentals, also known as furnished rentals, have become increasingly popular in recent years. That episode highlighted the unique niche that mid-term rentals occupy, situated between short-term and long-term rentals. Key focus areas included the demand for these types of properties, their profitability potential, and the evolving rental market trends influenced by remote work and lifestyle changes. The episode provided foundational insights into the benefits, challenges, and operational dynamics of managing mid-term rentals. In this episode (Part 2), we’ll delve deeper into the operational challenges and strategies for managing mid-term rentals. We’ll discuss finances and the subtle art of balancing tenant rights with property management objectives. Evaluating Investment in Mid-Term Rentals Part 2 starts with a discussion about the financial feasibility of investing in mid-term rentals and ensuring a reasonable return on investment (ROI). Jessica shared an example of how a month-long tenant could provide up to four times the revenue compared to a traditional annual lease. However, she also emphasized the necessity of factoring in additional costs such as furnishing, utilities, and cleaning fees when evaluating the profitability of mid-term rentals. Jason stressed that property managers should be strategic in their investment, considering the demand and market conditions. It’s important to understand potential risks and always have a backup plan in case the rental doesn’t succeed as expected. Financial Considerations and Return on Investment Investing in mid-term rentals is an intriguing proposition, blending the stability of long-term rentals with the higher earning potential typical of short-term stays. For property managers and investors, understanding the financial landscape is key. This involves assessing the initial investment costs against the potential returns. Mid-term rentals often demand a higher rental rate, reflecting their furnished status and flexibility. This can be an attractive proposition for tenants looking to avoid long-term commitments. Cost-Benefit Analysis: Investing in Furnishings and Amenities While discussing the financial aspects of investing in mid-term rentals, Jessica and Jason also shed light on the pros and cons of furnishing a property. Furnishings can attract more tenants: Mid-term renters are often looking for fully furnished properties to make their stay comfortable and convenient. Furnishings can add value to the rental experience and justify higher rent prices. In a competitive market, furnished properties may stand out and attract more tenants. Furnishings can also come with additional costs: Investing in quality furniture can be expensive upfront. Managing and maintaining furnishings requires time and effort. There is always the risk of damage or wear-and-tear from tenants, which may require replacements or repairs. To get an initial understanding of whether furnishing a rental makes sense, evaluate if the property in question can generate an additional $4,000 or more each month. Jason says that after evaluating over 50 deals, this seems to be a key threshold for justifying the investment in furnished rentals. Here are some other key financial aspects that were discussed during the interview: 1.) Fixed Costs vs. Property Value: It was noted that the fixed costs associated with a property do not necessarily decrease with a less expensive property. These fixed costs can erode the benefits of furnishing a property if the additional revenue generated doesn’t sufficiently cover these expenses. 2.) Revenue Threshold for Profitability: Looking at the big picture, furnishing a property starts to make even more financial sense when it can generate significant additional revenue – in the range of $50,000 to $70,000 a year. This extra gross revenue is needed to cover all additional expenses such as utilities and other costs associated with furnished rentals. 3.) Increasing Rental Value Without Increasing Taxes or Insurance: One of the strategic financial advantages discussed was the ability to significantly increase the rental value of a propert

Welcome to The Property Management Show podcast, where we delve into the ever-evolving landscape of property management, entrepreneurship, and marketing. This show is presented by Fourandhalf Marketing Agency. Since 2012, Fourandhalf has been helping residential property managers get more owner leads by helping with their website, SEO, online reputation, video and blog content, social media, and paid ads. For this podcast episode, we were fortunate to have Jessica Schirmeister and Jason Zimmerman from Trend Property Management in Texas join us for this discussion. With their extensive experience in the field, they brought a wealth of knowledge, particularly in managing and optimizing mid-term rental properties. Their insights are especially relevant for real estate investors and property managers looking to expand their portfolios and increase profitability. As you can imagine, there was a lot of information to unpack which is why we divided the interview into two episodes. This is Part 1, where we explore the rising trend of mid-term rentals and their advantages over traditional rental models. Understanding Mid-Term Rentals With economic and regulatory factors pushing both short-term and long-term rental property owners and managers to panic, it makes sense to start looking for more lucrative and sustainable alternatives in the market. This is where mid-term rentals come into play, offering a sweet spot between short-term and long-term rental properties. But what exactly makes a rental, well, mid-term? What is a Mid-Term Rental Property? Traditionally, short-term rentals are fully furnished properties renting for less than 30 days, whereas long-term rental properties are typically unfurnished and covered by a 12-month lease. Mid-term rentals are those that fit somewhere in the middle — fully furnished properties that can be rented for 30 days up to a year. If you’re a bit confused, you are not alone. I (Marie) was confused as well. You see, the label “mid-term” makes it seem like the term or the length of the lease defines what category the rental property belongs to. But if a mid-term rental can be rented for up to a year, then doesn’t it fall under the long-term rental category? According to our guests, that is a “no”. As it turns out, even they don’t like using the label “mid-term rentals”. Instead, they prefer the label “furnished rentals”. This is because lease duration can easily be shifted, but renting a property as furnished vs. unfurnished offers a clearer way to categorize them. Now you might be thinking, who would want to rent a furnished house anyway? Don’t people typically have their own stuff to fill a house with? Let’s dive deeper into this. Who Typically Rents Furnished Rental Properties? In the world of furnished rental properties, the tenant pool is as diverse as their reasons for renting. From this podcast interview, we learned that furnished rentals are a hit among various groups — and despite what you may have heard before, it’s not just for travel nurses anymore! Here’s a rundown of who these tenants are and why they choose furnished rentals: Traveling Professionals: Often on temporary assignments, these individuals prefer furnished rentals for their convenience and home-like feel compared to hotels. Yes, travel nurses fall into this category. But so do film crew, actors, and even digital nomads. Individuals in Transition: People relocating or in transitional life stages choose furnished rentals for their flexibility and the ease of not having to move furniture. Patients and Medical Visitors: In areas like Rochester, MN near medical facilities such as the Mayo Clinic, patients and their families opt for furnished rentals for the duration of medical treatments and even as they are recovering. Some people prefer not to travel right after a major medical procedure, and may seek comfortable accommodations near the medical facility. Typically, areas that have sought after medical services or facilities would attract a similar kind of group. Corporate Groups: Companies often find it more economical and comfortable to house employees in furnished rentals for projects or training programs. People Affected by Insurance Claims: Those undergoing home repairs due to insurance claims may need temporary housing, making furnished rentals an ideal solution. Families: Larger furnished rentals are attractive to large families visiting extended family members and may need space and amenities that mimic a home environment. College Students: Jason also mentioned an increasing interest among college students in furnished rentals. This introduced additional ease and convenience in college housing, where furnishings are often included or can be added at a minimal cost. This trend is planting the seeds for future rental preferences, with students getting accustomed to the idea of not having to acquire their o

Welcome back to ‘The Property Management Show,’ where we deep-dive into the world of property management, marketing, and entrepreneurship. Your hosts are Marie Tepman and Brittany Jones from Fourandhalf Marketing Agency. Since 2012, Fourandhalf has helped hundreds of property managers get more owner leads through digital marketing. Whether you need help with your website, SEO, online reputation, content, video, social media, or even advertising campaigns – we can do it all. Our guest today is Jordan Bennett, who is the Senior Director of Network Risk Management at Nacha, and a former Risk Analyst at the Federal Reserve. We are discussing ACH fees and payment fraud, and to put the entire discussion into better context, we asked Jordan to explain what his job entails. Management Payment Risks Nacha is the rule-making body and trade association for ACH payments. They are always promoting ACH, and Jordan’s job is thinking about how to prevent risk. He wants to keep people’s money in their accounts, and he wants to stop the schemes that can rob them of that money. Not only does he want to make payments safe, but he also wants to educate consumers on the fact that ACH is one of the safest payment methods they can choose in the U.S. He works with banks and companies to decide how to utilize it and better manage any risks that may be present. ACH Transaction Fees For the longest time, ACH has been popular because it’s free. It’s always been the free option versus credit cards, where consumers have to pay transaction fee. Some companies, however, are beginning to charge transaction fees for ACH payments. Why is this shift happening? Jordan reminds us that there has always been a cost to run an ACH system. It’s a low cost because it’s a batch system, so it doesn’t cost as much as credit cards, which operate on an interchange system. With ACH, there’s a lower cost to the financial institution and the property manager who is accepting the payment, but there is still a cost to running the network. So, it makes sense that a property manager and their financial institution may want to recoup these fees. A lot of systems and anti-fraud tools and infrastructure needs to be maintained with ACH. It’s never been free (even though the customers see it as free). Nacha cannot suggest or encourage or discourage fees. With antitrust laws what they are, Nacha cannot tell an industry whether they should or should not charge a fee. However, it’s important to remember that this process does not automatically happen. People get paid to do their jobs, and it takes jobs to keep these payments safe. What we don’t want to do is set a precedent where it’s preferable to pay with a check to avoid the ACH fee. Consumers who do not want their information available and want the convenience of an ACH transfer will continue to use this method and not return to the days of using checks. Even from a management company or HOA perspective, accepting checks means you physically have to open an envelope and process the payment every time it’s made. If you have hundreds of rent checks coming in, that’s going to take time and require personnel. There will be a transaction cost regardless of how the payments come in. Your check fees may be higher from the bank than the ACH transfer fee. Property managers should not encourage checks. When a check is paid, the consumer knows they have money in their account, but they may forget. And, if that check takes a few days to get through the mail and be deposited, the consumer might have forgotten about the rent check that was written and they’ll spend the money that’s in the account. Everything could bounce. That’s an unnecessary risk that landlords and property managers don’t have to take. ACH can be a regular recurring payment that comes out every month on the same day. It takes a few minutes to set up, but once it’s there – it’s there. Unlike checks, there’s not another entire process every month. Checks have routing and account information printed right on them. It’s an opportunity for fraud. When an employee is processing an ACH payment, however, there’s no visible access to the routing or accounting numbers. Online Payment Fraud and How to Prevent It Nacha has put out a framework for risk management in order to fight fraud. There are several fraudulent scenarios that are addressed. Debit fraud causes most of the problems. Usually, the fraud begins when someone debits an account from the information found on a paper check. Or a consumer continues to be charged for a subscription that they let go. Rules have changed on the ACH network in order to get those bad actors off the network. The banks have also been enlisted to help fight this type of fraud. Previously, banks said they were not responsible for those originator issues. But, if someone is debiting without authorization, it’s a problem that comes with consequences. There will always be debit fraud, but Nacha has worked hard to minimize this prob

Welcome to the latest episode of the Property Management Show, presented by Fourandhalf Marketing Agency. Since 2012, Fourandhalf has been helping residential property managers get more owner leads by helping with their website, SEO, online reputation, video and blog content, social media, and paid ads. In this episode, we’re excited to host Jennifer Merritt, the Chief Operating Officer at RentScale. RentScale is a pioneering sales coaching company that specifically caters to the property management industry, and Jennifer’s expertise is a treasure trove for anyone looking to improve their company’s sales function. With the property management industry being highly competitive, staying ahead of the game when it comes to owner lead generation is critical. In this podcast, Jennifer shares her insights on all-bound lead generation and how businesses can adopt this comprehensive approach to sales and marketing in the property management sector. All-Bound Owner Lead Generation for Property Managers This week, we discuss the innovative concept of “all-bound owner lead generation,” a comprehensive strategy that transcends traditional lead generation methods. This approach is particularly crucial for business development managers and broker/owners striving to grow their residential property management business. The all-bound strategy is a tri-fold model: 1 – Inbound Lead Generation: These are owner leads generated through various digital marketing efforts, including a mixture of organic and paid marketing channels. Examples of organic channels include search engine optimization (SEO), content marketing, social media engagement, and email marketing. Paid channels, on the other hand, include tactics such as Google Ads, Social Media Ads, and Pay-per-Lead such as All Property Management (APM). Each of these avenues brings unique opportunities to attract and convert property management leads into clients. Jennifer emphasized the importance of a strong online presence to attract owner leads naturally. 2 – Outbound Lead Generation: Outbound lead generation involves proactive strategies such as direct calling to rent-by-owners and engaging with secondary homeowners. This type of lead generation allows property managers to reach out to potential owner clients directly and pitch their services. Outbound lead generation requires a strong understanding of the target market, personalized messaging, and a consistent follow-up process. Jennifer highlighted the significance of being proactive in reaching out to potential clients. 3 – Next Bound Lead Generation: A novel term introduced by RentScale, the next-bound lead generation is focused on generating leads through referrals and building a robust network for future business prospects. This aspect underscores the importance of relationships in the property management industry. Jennifer explained that successful owner lead generation in property management requires a blend of these three strategies. It’s not about relying on one magic solution but consistently working across different channels. Redefining ‘Junk Leads’ in Property Management A pivotal moment in our podcast discussion focused on the often misunderstood concept of ‘junk leads’ in the property management industry. Jennifer brought her team’s perspective to this topic, challenging the traditional notion that some leads are simply not worth pursuing. She argued that the term ‘junk leads’ is often a misnomer, and these leads should instead be viewed as untapped opportunities. The conversation brought forth the idea that leads commonly considered ‘junk’ are those that don’t immediately align with the ideal client profile or seem less likely to convert at first glance. However, she emphasized that every lead holds potential value. For instance, a lead without a current property to manage could evolve into a future investor or become a source of referrals. The key is to engage with these leads in a way that fosters relationships and trust, even if the payoff isn’t immediate. Moreover, a strategic approach was suggested for handling such leads. Rather than dismissing them outright, nurturing these leads over time could be more beneficial. This might involve providing valuable information, keeping them updated with newsletters, or maintaining periodic contact. Keeping communication channels open is crucial, as circumstances can change, transforming today’s ‘junk lead’ into tomorrow’s valuable client. This part of the conversation shed light on the nuanced understanding of lead dynamics in property management and the importance of innovative approaches to sales and client relationships. It underscored the idea that in the property management business, the longevity and strength of relationships are key drivers of success. By rethinking our approach to leads deemed as ‘junk,’

In typical fashion, we ended up covering so much ground with Ray Hespen of Property Meld that we had to split our full conversation into two episodes. In Part 1, we discussed what maintenance analytics is, why it’s important, and what it can do for a property management business. This is Part 2 of our chat on The Property Management Show, where we’ll talk about the current shortage we’re having on tradespeople, its effect on net operating income (NOI), and what property managers can do about it. Maintenance Analytics Surprises Some data around owner and investor retention was surprising, according to Ray. While looking at landlords and investor/owners who had one to four units, it turned out that owners who renew their property management agreements for a year or two or three had a higher maintenance rate per unit annually. More maintenance was performed. The number of actions were about 20 percent higher than in the cohort of owners who churned and left their property management company. The actual maintenance spend was lower, but the number of maintenance touches was higher. This seemed impossible until the team dug a little deeper and realized there were more preventative repairs, on average. So, it ties back into that big correlation we discussed during Part 1. Drive spend per unit down and resident satisfaction up. That behavior is triggered by more preventative programs. Maintenance is getting more expensive and it’s harder to find people to do repairs. There’s a high demand for tradespeople and vendors, and no one is running out of jobs. It’s supply and demand. Given that, how can property managers invite more maintenance but lower maintenance costs? Ray doesn’t know. He points to a report released by Invitation Homes and American Homes for Rent that forecasts an increase in costs that have dropped their NOI from 11 percent to five percent. It’s an industry-wide challenge. What’s becoming more important is keeping renters in a unit. Someone Ray recently talked to said that they could get a price increase on a lease renewal, but not by putting that same property on the market for a new tenant. That’s where rents are right now. Renewals are an important part of revenue generation and they also keep your expenses down by avoiding turnover costs. On the maintenance side of things, you have to find ways to get work done during the shoulder months. Schedule your inspections, your work, and your preventative services before summer and after summer. The Case of the Disappearing Tradespeople The trick in keeping up with the necessary speed of repairs is ensuring vendors WANT to work with you. If vendors are avoiding you, maintenance suffers and so does tenant satisfaction. Three or four years ago, property managers could set forth a list of demands before agreeing to work with a vendor. Maybe you had legal and insurance requirements that had to be met. Maybe you wanted your vendor to accept your work request within an hour. All of that has evaporated. The balance of power has shifted, and you have to find a way to make it easier to work with you. Ray has over 40,000 vendors working within the Property Meld platform. The want some of the requirements taken away before they’ll work with a management company. Scheduling and communication has to be easier on them. His recommendation to you? Grease the skids so you can attract vendors and tradespeople. They don’t need your work, and they’re going to be selective about who they’ll work with. Non-monetary incentives are important. Vendors are willing to negotiate better rates with property managers, and you’ll always pay less than an independent consumer. It’s part of relationship building. They’re going to choose the work they want to do. Don’t leave yourself on the retail side of a vendor relationship. Make sure it’s easy to work with you and that there are incentives such as simple systems and processes. Scheduling should be automated. Payment of invoices should be immediate. These things matter. Non-monetary incentives. Most vendors have fewer than 10 employees. These are small operations. People start a plumbing company or electric company because they want flexibility and freedom. Controlling their calendar is more important than driving a profit number. So, attract vendors by reducing the friction points that often come with scheduling, updating property managers, and invoicing. Why is it so hard to find vendors and tradespeople? Ray’s hypothesis is that the pipeline of talent cannot keep up with the demand. A lot of capital was invested into the economy during and after COVID. Home improvement projects became huge. It was easy to borrow money. Build to Rent is now an industry. The tradespeople who are in business are busy. There’s also still some social pressure around these types of jobs. It’s not cool to be an electrician or a plumber. There’s societal pressure to go into debt getting a degree. It’s actually a really good idea to become a

On The Property Management Show, we recently had a conversation with Ray Hespen, the CEO and co-founder of Property Meld. We always find ourselves talking to him a lot – and about a lot. This episode is no different. We covered so much ground that we split the interview into two episodes. Here’s part one – where we talk about what maintenance analytics is, why it’s important, and how it can help a property management business hold onto business and grow. Property Meld and Maintenance Analytics In total, this is the seventh time that Ray joined the property management show, which means there’s a lot to learn from him. In this conversation, we want to know what his team has been so busy doing this year. It turns out, they’ve been combing through maintenance analytics. Ray says he’s thrilled that the industry continues to evolve into something more sophisticated, especially around maintenance. Property managers are looking for more information to make data-driven decisions around maintenance, rather than relying on a gut feel. So, the questions Property Meld has been focusing on are: How do we make decision based on quantitative or numerically-driven data? How can a property management company use that information to move the needle as an organization? Property Meld has collected data on hundreds of thousands of maintenance issues and units. That data is used to transform how people run the maintenance part of their property management business. Maintenance analytics is a term that sounds technical. It’s also called maintenance insights. This is simply following the data and learning from it. Basically, maintenance analytics or insights is this concept of allowing any operator to, at a granular level, understand how they’re doing on maintenance. The maintenance analytics will help you understand how to think about maintenance, and to understand what happens before the next things happen. This provides visibility into a maintenance operation. How is your communication? How is your scheduling efficiency? How is your maintenance staffing? Are you prioritizing preventative maintenance? Some of the information that Ray and the team at Property Meld have been gathering will be ready to share, soon. It will help property management companies really get into the weeds of how they’re doing with maintenance. If there’s a specific KPI you’re trying to move, you might learn that you need to engage your vendors better. Maybe you need to work on efficiency with your maintenance coordinators. The deep dive will move you into a pointed plan of attack, and that’s going to improve your business. Think about your bank account. What are you spending all your money on? By examining the withdrawals and the expenditures, you might see your rent payments and your gas and then you’ll also see a lot of brunch. You know that you need to reduce the brunch budget if you want to save money. That kind of visibility is essential when you’re making spending decisions. Ray’s maintenance analytics can bring that visibility into the maintenance world for property managers. As a business owner, you need to make data-driven decisions. Other industries have figured this out, and it’s exciting that property management finally gets it. Lagging Indicators and Leading Indicators What kind of data do you need? First, you need to know what’s going on. Then, you need to be diagnostic, and then predictive, and then prescriptive. The data presents itself. It tells you what to do. Ray tends to start with lagging indicators when looking at insights. Your lease renewal rates, for example, is a lagging indicator. Resident satisfaction is lagging. Things will tell you if it’s going well or if it’s going poorly. That’s what we call a leading indicator. Then, you have to consider behaviors. What behaviors can you incorporate to bring in good leading indicators, which deliver a good lagging indicator? Here are some really good lagging indicators: Speed of repairs Resident satisfaction Vendor health scores Technology utilization rate. Annual maintenance spends These are good indicators around quality and efficiency, and it’s information that can help you focus. What are the leading indicators that contribute to those big ones? If you’re trying to talk to a maintenance coordinator and you need them to get the speed of repair down from one number to another, they need to know what to do. So, you’ll look at communication indicators and scheduling speed. In order to get the speed of repair down, you need to reduce the time between maintenance request and maintenance assigned. The lagging indicators are descriptive. They tell you the speed with which something is being done. The leading indicators help you identify what’s going on higher up the river. Knowing what’s happening right now, what will happen in the future? It’s more predictive. Identifying the Leading Indicators that Impact Lagging Indicators The job of a property manager is to drive net operating

Byron Thompson from Monument Real Estate Management is joining The Property Management Show to talk about a subject we’ve never addressed on this podcast: urban real estate markets. Byron has been a listener for a long time, and we’re happy to have him in the guest seat today to talk about the unique challenges and opportunities for both investors and property managers who work in urban markets such as Cleveland, where his company is based. Introducing Byron and Monument Byron owns and operates Monument Real Estate Management in Cleveland, Ohio. They manage properties and portfolios in Columbus as well and recently, they’ve begun expanding into the Carolinas. There’s a strong growth mindset in his business operations, and he’s always looking for new opportunities. What’s unique about Cleveland is that it has a strong urban market that he talks about in his book: Your Guide to Investing in the Urban Real Estate Market. The urban market doesn’t get a lot of attention from influencers in our industry and speakers at conferences. No one has been talking about it, so we asked Byron how he found himself in this niche. Discovering and Exploring Urban Real Estate Markets His journey began in 2016, when he got his Realtor license and immediately started working with investors who had good portfolios. Many of these investors had been buying properties all around the country and finally landed in Cleveland. While he worked with them to locate and purchase properties, he learned a lot about real estate investing. They were buying 15 or 20 or 30 houses a month. This was a big education, both in real estate and property management. The investors asked him to manage the homes for them when they became rentals. At first, he said no. But, he soon realized the opportunities this could provide. That’s how Monument Real Estate Management began, and it didn’t take long to realize how different the urban market of Cleveland was from other real estate markets. How We Define an Urban Market According to Byron, there are three conditions that must be present in order for a market to be considered an urban market: 1. The overall economic conditions of the city. It’s usually poor. Crime rates are likely to be higher. Available housing and employment rates are likely to be lower. 2. The assets investors buy are going to need more maintenance for asset. Most of these homes will be older; potentially 100 years old, even. 3. There’s heavy government compliance to the management that’s requirements in an urban market. There are more Section 8 homes. There are more inspections. You’ll have more transient tenants and potentially more evictions. Byron has identified and researched similar markets in cities like Birmingham, Memphis, and Detroit. There are a lot of similarities there, but also unique challenges in each urban market when it comes to investing and managing. Urban markets will generally focus on C and D class properties. These are high risk and high reward, versus other markets that provide a slower yield. They’re generally safer. They focus on A and B class properties, which provide less risk and fewer headaches. If you’re going to specialize in the urban market like Byron does, you have to know what makes them lucrative for property managers and investors. For property managers, it’s all about volume of business. The number of rental homes in urban markets is high. They need management because these markets are heavily impacted by investments. Most of the investors are out of state or even out of the country. For investors to make money, they must have the appetite for high risk and high reward. There’s an opportunity for heavy cash flow and these can be cash-positive investments. You need to know the risks, as a property manager, and you need to gain the trust of your investors. Managing Investment Properties in Urban Markets Property managers need to help investors earn their returns. It’s also a property manager’s job to educate investors who may not know the market. Sometimes, an agent will sell you a property and you’ll never see them again. At Monument, that won’t work. They find that in an urban market, you have to be there for the long term. You have to support your investors on their entire real estate journey. Educating them and making sure expectations are understood are important qualities in a property manager serving this market. Urban markets generally have lower purchase prices. That’s going to attract a lot of investors who want to make money. You need to help them understand what they’re getting into, and what will be required in order for that money to be made. Byron says it’s important to keep investors informed. He provides quarterly assessment reports that show them what they need to know about their asset. These reports commonly highlight the deferred maintenance that’s often found in an urban investment. Often, investors won’t do their due diligence before buying, and you want to make sure they understan

During Part One of our conversation with Heather Nicely, we talked about the pros and cons of adding short term rental (STR) properties to an established portfolio of long term rentals. Today, we’re getting more into the state of the STR market and how you can set yourself apart and serve owners better. Market Saturation and the Rush to Short Term Rentals There has been a rush towards short term rentals because investors wanted to capitalize on the rise in travel. Then, a single tweet set off alarm bells about many markets being over-saturated. Articles came out about people who lost money on short term properties, especially during the Super Bowl in Arizona. They were expecting to make more money. The (incorrect) data in that tweet induced a bit of a panic. The snapshot they showed of a few key markets alleged that there was a drop in revenue of 47 to 49 percent. Everyone thought this meant the Airbnb industry was collapsing. If you drill into this, it’s not true at all. You have to know your own numbers to accurately know how the market is performing. Heather says that property managers have a duty to know how the market is actually performing so they can be honest with owners and tell them what’s a good idea and what’s a bad idea. Grabbing onto every hot take on Twitter is never a good idea. Panic posts are set off by people who are not even in the industry. It’s very easy to get more accurate data on your own. Even better – study your own data and know your own market. Heather says you have to give your owners that reassurance. Increasing revenues on their own properties is really all they’ll care about. It’s important to encourage owners to stay focused on their own properties and not latch onto viral tweets. In Arizona, there was a bit of an exodus after the Super Bowl. People thought they’d be able to pay off their entire mortgage after one good rental season. Now, the gold rush has passed and people who should not have been in the industry have left the industry. That’s not such a bad thing. Heather works daily with investors, and she knows that her market isn’t the best market for everyone. There are still deals to find in and around Phoenix, but you have to know your numbers and you have to know that costs are higher now. Interest rates are at an all-time high. Insurance costs have risen. There are a lot of economic factors influencing the market that have nothing to do with whether it’s saturated with short term rental properties. Short term rentals, like long term rentals, are not a get-rich-quick scheme. Shifting Investment Mindsets Recently, the behavior of the market has caused a mindset shift with investors. They’re especially viewing mortgages differently. More capital is going into properties than before. That’s good news to Heather, who often has to have difficult conversations with the investor who only has $30,000 to put down on a short term rental. They have to talk about whether that’s possible with the interest rates so high. They’ll need money to furnish that rental and prepare it for bookings. Will they make it through a month when bookings are down? Short term rentals are seasonal, remember. Conversations have changed over the years. Rates are higher, and getting approved for more money is often necessary. So, more capital is needed. Heather doesn’t feel bad when she has to talk someone out of a STR investment. She doesn’t want to have to sell that house in a year because they couldn’t afford the property. As a property manager and real estate professional, it’s often your reputation on the line when an investor wants to make a bad decision. Make sure there’s a back-up plan. For example, if the property doesn’t seem to work as a short term rental, will it work as a mid-term rental for 30 or 60 days? Is it close to a hospital, where visiting nurses may rent it? Or, could it make an ideal long term rental? The benefit, if you’re already a long term property manager, is that you already have the information to evaluate a property. You can talk about all the options. Unraveling the investor who is determined to make a bad decision usually involves encouraging that investor to work with someone else. Heather says there’s never an “I told you so” moment. She’s still serving the industry. Hospitality and Short Term Rentals Heather is looking forward to what artificial intelligence (AI) can do for the industry even while stressing that hospitality is absolutely critical. The personal presence will always be necessary, especially since a live person is required to clean between tenants and wash linens and solve problems. The influx of new technology makes it look easy. But, the hospitality comes first, and the tech supports the hospitality. According to Heather, individual hosts, even if they don’t know much about property management, do a better job at providing hospitality than rental managers. They’re more hands-on. Property managers will be more interested and more prepared to le

Heather Nicely is a Realtor, broker, and loan officer, and also the president of the Arizona chapter of NARPM. She’s been on all sides of property management and today, she’s joining us to talk about short term rentals and how managing those properties are different from managing long term rentals. Heather’s Journey to the Short Term Rental (STR) Space While other little girls were fantasizing about growing up into princesses, Heather was fascinated with real estate. By the time she was 12 years old, she knew she wanted to purchase a home in the mountains or near the beach so she could vacation there. Ultimately, she wanted to buy 52 properties so she could live in a different home every week of the year. She also wanted to make money off the properties while she wasn’t living in them. As she grew up, the idea seemed silly. But now, it feels like maybe she was onto something. Short term rentals were part of a platform within a software company she and her husband owned. She took the time to dig into it and learn about that space. Then, she became Vice President for an after-hours emergency call center and serviced some short term rentals while there. Heather learned that short term guests have more persistent needs than long term tenants. It seemed like a difficult market. As her career evolved and she became a Realtor and opened a brokerage, she began to gather clients who were purchasing investment properties to be used as short term rentals. It made sense to her as she began to manage properties that she would include short term rentals in her property management portfolio. Are Short Term Rentals the Future? When COVID happened, short term rentals were the worst place to be. But, since the pandemic has dissipated, there’s been a surge of binge travel. Now, short term rentals are more popular than ever. As a property manager, you might have heard about other long term property management companies dipping into short term rental management. We asked Heather about the pros and cons of adding these properties to a long term management business. Short term rentals can be lucrative. Anyone renting out a short term home can tell you that there’s money to be made. Everyone wants a piece of the Airbnb market. But, if you’re generally doing long term rentals, you have to wrap your mind around the different business model that’s in place for short term rental homes. Your 15 or 20 years of experience managing long term properties won’t help you. This is a different beast, and trying to offer short term management services through an existing management company can be trouble. Here’s the main difference: In the long term rental space, you’re developing a relationship with tenants over time. Your property owner is your main client. In the short term space, you’re renting out more than a roof. Vacation properties especially require you to rent out an experience. You have to cater to those guests. They’ll want coffee filters in the kitchen when they wake up on their first morning. If they’re checking in at 2:00 a.m. and the lockbox doesn’t work, you can expect a frustrated phone call. Short term guests will want refunds if everything is not perfect. And, everything is an emergency. So, it’s different. But, Heather says that when you can hone in on those differences and create a good experience, you’ll do very well in that space. Educate yourself and understand the industry. Most importantly, separate yourself from what you already know about property management. Short Term vs. Long Term Property Management Mindset Heather worked on the vendor side in a call center, and that demonstrated the difference between long term tenants and short term guests. If someone is in a home for only two days, they’ll expect everything to be perfect for those entire two days, otherwise they’ll want their entire reservation refunded. This requires a mindset change for long term property managers. You’re not dealing with residents. You’re dealing with guests. Two things need to be established if you’re a long term property manager considering short term rentals: Property turns are frequent and fast. With long term properties, you have a couple of days and can take time to renovate. With short term rentals, there’s maybe a four-hour window to do all the cleaning, change the linens, take out the trash, and make sure everything works. You’ll need high expectations for your cleaning crew. Be ready daily for those property turns. With long term rentals, you have a checklist and you have more time. Short term rentals require you to get it right immediately. There’s no second chance. You need to be more available than you are with your long term property management business. There are no 9-5 hours, and you don’t get weekends off. In the short term rental space, you’re on the clock 24 hours a day. People check in early or late and they’ll always have questions. There has to be a communication process built in. There’s no ignoring the tenant until M

Hello to all our loyal listeners and property management enthusiasts! You must be wondering about what’s going on with The Property Management Show podcast. We’re here to give you the scoop! We’ve been busy with pre-production for our upcoming season. After a brief hiatus, Brittany is back with a bang! Yes, that’s right! Our beloved co-host will be making her return next season, much to the delight of our listeners (and Marie 😉). We have already recorded interviews on the following topics: Managing investment properties in urban real estate markets (Guest is Byron Thompson – published author and Broker/Owner of Monument Real Estate Services) Adding Short Term Rentals to an existing Long Term property management operation (Guest is Heather Nicely – REALTOR/Designated Broker/ Sr Loan Officer/ NARPM AZ Chapter President, and co-founder of Rent My VR) Maintenance Analytics and its impact on the industry (Guest is Ray Hespen – CEO and co-founder of Property Meld) Understanding and avoiding online payment fraud (Guest is Jordan Bennett – Senior Director of Network Risk at Nacha, former Risk Analyst at the Federal Reserve) We’re also examining some lesser-known blue ocean strategies from real-life property managers. If you or anyone you know is doing something unique with your business, reach out to us and you could be featured as one of our guests next season! To add some spice to the podast, we’ll also have discussions around Data, Decisions, and what Marie intriguingly labels the “Death of the Human Touch.” If you’re as intrigued as we are, make sure you stay tuned for the next season of The Property Management Show. We aim to launch the new season this fall, so keep your eyes open and until then, have a not-so-crazy summer to our dear property managers! Remember, this podcast is brought to you by the marketing mavens at Fourandhalf Marketing Agency, your partner in getting more owner leads for your property management business. As always, we greatly value your feedback. Feel free to share your thoughts by filling out the form below or by emailing us at [email protected]. CommentsThis field is for validation purposes and should be left unchanged.First Name(Required)Last Name(Required)Email(Required) Phone(Required)Company NameComments or QuestionsThis field is hidden when viewing the formDate MM slash DD slash YYYY /* = 0;if(!is_postback){return;}var form_content = jQuery(this).contents().find('#gform_wrapper_33');var is_confirmation = jQuery(this).contents().find('#gform_confirmation_wrapper_33').length > 0;var is_redirect = contents.indexOf('gformRedirect(){') >= 0;var is_form = form_content.length > 0 && ! is_redirect && ! is_confirmation;var mt = parseInt(jQuery('html').css('margin-top'), 10) + parseInt(jQuery('body').css('margin-top'), 10) + 100;if(is_form){jQuery('#gform_wrapper_33').html(form_content.html());if(form_content.hasClass('gform_validation_error')){jQuery('#gform_wrapper_33').addClass('gform_validation_error');} else {jQuery('#gform_wrapper_33').removeClass('gform_validation_error');}setTimeout( function() { /* delay the scroll by 50 milliseconds to fix a bug in chrome */ jQuery(document).scrollTop(jQuery('#gform_wrapper_33').offset().top - mt); }, 50 );if(window['gformInitDatepicker']) {gformInitDatepicker();}if(window['gformInitPriceFields']) {gformInitPriceFields();}var current_page = jQuery('#gform_source_page_number_33').val();gformInitSpinner( 33, 'https://fourandhalf.com/wp-content/plugins/gravityforms/images/spinner.svg', true );jQuery(document).trigger('gform_page_loaded', [33, current_page]);window['gf_submitting_33'] = false;}else if(!is_redirect){var confirmation_content = jQuery(this).contents().find('.GF_AJAX_POSTBACK').html();if(!confirmation_content){confirmation_content = contents;}jQuery('#gform_wrapper_33').replaceWith(confirmation_content);jQuery(document).scrollTop(jQuery('#gf_33').offset().top - mt);jQuery(document).trigger('gform_confirmation_loaded', [33]);window['gf_submitting_33'] = false;wp.a11y.speak(jQuery('#gform_confirmation_message_33').text());}else{jQuery('#gform_33').append(contents);if(window['gformRedirect']) {gformRedirect();}}jQuery(document).trigger("gform_pre_post_render", [{ formId: "33", currentPage: "current_page", abort: function() { this.preventDefault(); } }]); if (event && event.defaultPrevented) { return; } const gformWrapperDiv = document.getElementById( "gform_wrapper_33" ); if ( gformWrapperDiv ) { const visibilitySpan = document.createElement( "span" ); visibilitySpan.id = "gform_visibility_test_33"; gformWrapperDiv.insertAdjacentElement( "afterend", visibilitySpan ); } const visibilityTestDiv = document.getElementById( "gform_visibility_test_33" ); let postRenderFired = false; function triggerPostRender() { if ( postRenderFired ) { return; } postRenderFired = true; gform.core.triggerPostRenderEvents( 33, current_page ); if ( visibilityTestDiv ) { visibili

Our guest on The Property Management Show today is the legendary Deb Newell, of Real Time Consulting Services. She has a lot of experience as a consultant and a property management business owner, so we wanted to get her thoughts on the state of the industry and what property management companies need to do to prepare themselves for the future. Deb Newell: A Background Deb began renovating homes as a hobby in 1998. That grew into buying rental properties, which was a matter of wanting to get out of debt. This was the best way for her to do it, so she partnered with someone and they bought property, did all the work to renovate it, and then sold the home. Deb says she learned a lot about maintenance and she made a lot of mistakes. She kept buying more properties and eventually instead of selling them, she began to hold onto those assets and rent them out. It escalated, and that’s because she enjoyed the recurring income. At this point, Deb wasn’t thinking too far ahead. She didn’t even realize there were resources out there that could help her do this more profitably. But, she treasures the mistakes that she did make because they made her a smarter business owner today. From there, she became a third-party property manager and from the beginning understood the importance of setting boundaries. She took on owners that she probably should not have, but she learned from those experiences, too. And then she kept growing. Deb managed properties for over 20 years. Then, personal circumstances required her to sell her company. In 2013, she began a consulting company because so many people had been asking her to help with their businesses. She grew organically, went back to school for her MBA, and is now in a Ph.D. program. Her goal is to keep expanding so she can help others. Real Estate Recessions and Property Managers Deb was in Minneapolis in 2007 to 2009, when the last recession hit the real estate industry. She points out that these downturns can sometimes be a win for the property management industry because people always need a place to live. What matters is how you create the narrative. Recessions are a good time to consider investing in the market. This is the story you need to tell when you’re protecting and building your business. What we learned from the last recession is that markets bounce back. Maybe not to the level that we would want, but it’s an opportunity for property managers. Owners are not equipped to manage themselves. Or, they do a poor job of it. Rising Regulations and the Need for Professional Property Management Deb believes the industry is in a stronger position now, thanks to the regulations and new laws that have arrived over the last 10 years. This is especially obvious in states like California, Oregon, and Washington. It’s painful for property managers to deal with these laws, but it positions you well. You’re the experts. You’re able to capture new business because dealing with these regulations is a huge headache and a big risk for landlords and investors. Owners don’t want to make mistakes. They don’t want to make bad decisions. Property managers who are prepared to help them and make sure their needs are met will win new business, especially and even during a recession. Show these potential clients what you can do to help with licensing and rent control and eviction. You need to know what’s coming, as a property management business owner. Always be aware of the legislation that’s being proposed. You have to understand what’s going on in order to paint yourself as an expert. Even locally, make sure you can speak intelligently on what new laws mean. Sometimes, inspectors don’t always understand what’s changed when new regulations are passed. Property managers can be a partner instead of an adversary. Deb talks to a lot of people who are trying to start property management companies, and sometimes they can’t even get started because the licensing rules have become so strict. She always advises them to first make sure they can start a company. You need to know what might prevent you from getting started, and only a handful of states don’t require a real estate license in order to run a property management business. Property management is not a passive business. How Disasters (Recessions and Pandemics) Impact Property Management Deb says her business wasn’t big enough to be too impacted by the recession in 2007 – 2009. She does recognize the damage that was caused by the pandemic, though, and believes that the pandemic was harder on most companies than the recession. During the real estate meltdown, a lot of people lost their homes to foreclosure. It was detrimental, but it was an external factor that impacted businesses. The pandemic, however, did the unthinkable and actually shut things down. It was always more of an unknown. But, Deb reminds us, everyone needs a place to live. We recovered from the pandemic and from rent that wasn’t paid and from waiting for rental assistan

The Property Management Show is pleased to welcome Matthew Kaddatz onto the podcast. He’s the senior director of product at Appfolio, and before joining Appfolio, he co-founded a property management company in 2006, right before a major recession. We’ve been talking to property management experts about how they moved through that recession and what they’re planning for the potential new recession that is coming for the real estate industry. We asked Matt to tell us about his property management company and what things were like when he got started. Remembering Real Estate and Property Management 2006 – 2008 Matt was just getting out of college in 2006, and real estate was red hot. His degree was in computer science, but he knew he didn’t want to be a programmer. So, he found an opportunity to grab a management agreement from family friends who were developing a property. He managed the properties they developed for them. Admitting he was a bit naïve just out of school, Matt says he imagined he was going to be a millionaire making money in real estate. But, about a year and a half in, he realized he had no idea what he was doing. He spent some time learning the business. Those first couple of years were not about growing a business but about learning how to do property management. Then, the 2008 recession arrived, and the housing industry fell apart. Identifying the Signs of Trouble Something weird was going on in 2008, Matt knew. He wasn’t as connected to the industry as he is now, but Matt knew something was wrong when his dad was laid off. Matt’s father had his own business and then sold that business and began working for the company that bought it. It was an insurance company he worked for, and they were in front of the rest of the recession. He had never seen his father without work – ever. Matt realized that things were going to get a lot worse before they got better. His dad being laid off was the canary in the coal mine. Soon, there were foreclosures and an astonishing number of people simply abandoning their houses. They just disappeared. Matt lived in a second-home community. There weren’t a lot of permanent residents in the neighborhood, and a lot of people were willing to give up their second home in order to save their primary home. Around 20 percent of the homes were simply left, and the home values in the area were cut in half within 12 months. This was a scary time to be in real estate. Matt was managing properties right over the border with Mexico, in Rosarito Beach. The drive from San Diego was about 45 minutes. It was a high growth market in 2006, but in 2008, construction crews had stopped building and sales teams had stopped selling. Everything changed substantially. The property management industry is resilient, and Matt had plenty of business with community associations as well as property management contracts. And, he was running a maintenance business, too. While the market stopped growing as aggressively as it had been, the business model they were working with was sound. They got through the recession. Making Difficult Decisions During Real Estate Recessions The business Matt was running was built with a partner, and around 2008, it became clear that growth and expansion was not going to happen. They had been banking on a lot of new construction, and that wasn’t going to happen. Matt’s partner left the business to pursue other opportunities. This was challenging for Matt because the partner had been leaned on as a fluent Spanish speaker. He had also been running most of the maintenance activities. It was a hard decision, but for the business partner, it was the right one. There was enough recurring revenue coming in that the business could still support itself. Anyone who was in foreclosure was hesitant to make any kind of move with their homes, whether it was going to be to rent them out or try to sell. Matt survived and then exited the business himself. Going through the recession as an entrepreneur didn’t necessarily drive him out. He loved building the business, and it was fun to learn how to run a property management company. Matt liked solving complicated logistical problems. But, he missed working with a larger group of people. He missed collaboration and colleagues. The company was small; they worked about 450 units and had 30 employees, most of whom were on the maintenance team. Matt wanted to be part of something bigger, so he joined a large firm out of Texas. They had done a great job building a business, and Matt was happy to be offered an opportunity with them. They had more resources and a lot of colleagues. Matt felt like he could continue to grow. He was also happy to utilize his software engineering background. The software he had used in his property management company was what he had cobbled together. Some of it he built from the ground up and some of it was integrated with Quickbooks and other existing programs. Property management software is much different no

We’re talking to one of our long-time clients, Jeff Hacker, who runs Bayside Management and Leasing. He was on The Property Management Show three years ago, and we love talking with him because he’s been in the property management industry for 20 years. He was with Bayside during the great financial meltdown between 2007 and 2009, and we asked him to come back and share with us some of what he learned as that crisis unfolded. We also wanted to know what he’s doing to prepare for another potential crisis in the industry. Learning from the Past: How the Crisis Unfolded in 2007 Jeff recalls the crisis building slowly the last time. Interest rates were going up and the news grew more negative over time as he tracked real estate industry trends. People were not able to make their mortgage payments. The default rates were rising. Most people had an inkling that something was going on, but no one expected it to be as severe as it was. People generally try to be optimistic. Everyone remembered the savings and loan debacle, and there was a general sense that whatever crisis was looming, it would pass and not be too significant. But, as 2007 and 2008 and 2009 wore on, it became clear that this was something truly catastrophic. The significance of this economic event was pretty widespread. From a property management point of view, the industry was lucky in some respects. While there is no industry that’s truly recession-proof, property management in general can weather a financial storm better than other industries because people always need a place to live. Even if they’re not owning homes, they need a place to rent. So, while not completely insulated from the effects of a huge recession, property management usually does not go to pieces. Jeff said that what he noticed early is that as the crisis was unfolding, applications were coming in for vacancies from people who had owned homes. They defaulted on their mortgages or their mortgage companies foreclosed on them. Some of these homeowners purchased a home with an income-only loan. They put five percent down or in some cases, they put zero percent down. So, there was not a lot of skin in the game. They borrowed up to 100 percent of the mortgage, so when the house was suddenly worth less than the mortgage, people walked away. One of the things that Jeff learned was to be significantly more proactive with landlords and investor clients at Bayside. A surprise during the last recession was the number of layoffs that came from the financial meltdown. Jeff would have liked to have been more prepared for the number of job losses that impacted the industry. This led to more vacancies. When a tenant loses a job, they may be okay for a month or two. But then, they’ll vacate because they’ll need to move in with someone else to save money on housing. Or, they’ll move for a new job. Homes sometimes have to be rented out for less than an owner would like in a business environment such as this. Jeff learned the importance of being proactive with owners; to explain this situation and to let them know what to expect. There may be less rent. There may be multiple vacancies. Jeff said another thing he would have liked to have done better is to suggest that owners lower their rent in order to keep tenants who were struggling. While no one wants less rent coming in, it’s better than a vacancy during a recession. Current Layoffs and Recession Fears In the San Francisco Bay area, where Bayside Management is located, there have recently been mass layoffs in the tech industry. Jeff said this has led to layoffs, and proactive steps have been necessary. Local tenants who have been laid off by a tech company could move out of state. They might take a job Texas, Florida, South Carolina, or one of the areas where companies are relocating. There has been a lot of migration out of California. On the flip side of that scenario, there are still a lot of start-ups in the area, and tech employees who were laid off from large companies can quickly find new jobs with smaller companies. That allows them to stay in the area and continue paying rent. Jeff is talking to his owners about these potential issues. He’s discussing ways to prepare for every possibility. Ideas include: Possibly holding rents flat instead of raising rents. Maybe reducing rents in order to keep tenants in place. There has been a positive response from owners, especially after they see the data and understand the numbers. It’s difficult to accept; costs are going up and every owner wants to maximize what they earn. They look for increases every year. This makes sense. While there has been some push back, there has not been a loss of any accounts. Jeff and his staff are talking to owners in order to prepare them. It’s an ongoing conversation. Owner Outreach during a Potential New Recession Jeff is worried about churn with the real estate industry on the cusp of a potential new recession. In 2008 and 2009, a lot of investors began self-

We’re welcoming MaryAnn Hoffman and Andrew Dougill back on The Property Management Show. They are the couple behind Hoffman Realty in Tampa, Florida, and they were with us on a previous podcast, where they discussed how they got started in the property management industry as a husband and wife team. One of the things they said during that discussion was how scary it was to have all their eggs in one basket during the Great Recession of 2007 to 2009. We asked them to come back and talk about how they managed that crisis and how it affected their business, especially since there’s talk of another real estate crisis looming. Business Lesson: Learn to Be Prepared MaryAnn says she has learned to be prepared. She recommends having some extra money in the bank because it will be tough for a while. During any recession, you’ll be white-knuckled and wondering what’s going to happen next, but always remember that the market comes back. Last summer was wonderful in the Tampa rental market. They were renting houses easily and the rents were going up. Now, the market is adjusting. Prices are coming back down. You have to be prepared for that, and you have to remember that when things are really good – they’re not always going to stay really good. And, when they’re really bad – they’re not always going to stay really bad. Nothing lasts forever. Andrew remembers that in 2005, they began working with an older couple who had about a dozen rental properties to be managed. Everyone could see, at that point, that the real estate market was potentially going to tank. Everyone wondered when it would happen, and as Andrew was talking with this couple, he asked for some advice since they had been through three real estate recessions in their lives. They told him that it would be scary, but that he’d get through it and the market would recover. When it did recover, they said, it would recover better and grow even more than before. They advised him to be prepared and to know his financials. So, Andrew and MaryAnn took a hard look at their financials. They are real estate investors, too, and they had their own rental properties to evaluate. They decided that they’d probably be fine if the recession did arrive, but they might struggle a bit if rents dropped. They made the decision to sell three rental properties so they’d have enough cash on hand to keep their business alive. It may be what saved them. In 2008, rents dropped 10 percent. They dropped again in 2009 and in 2010. Andrew reminds us that the great thing about getting loans for real estate is the leverage that provides. They increase your yields when things are going well. Cash on cash returns are better with a loan. But, when things go bad, you find yourself with negative leverage, and that can sink you quickly. The number one lesson, then, is to have enough cash on hand so you can make it through the worst of the recession. Making Recession-Proof Business Moves: Deciding which Properties to Sell One of the properties they sold was actually their dream home. It was a gorgeous house they had just finished remodeling, and the idea had been to move into it themselves. But, knowing what was potentially coming, they sold it instead. This made them a lot of money and helped them get through the economic downturn. They had to give up a dream home, but they kept their business running and they paid their staff. And, they built another dream home after the recession. The experience of MaryAnn and Andrew is interesting because the negative leverage and dropping rents weren’t just their own concern – it was a concern of their property management customers. These investors began giving up on their homes. So, they lost some property management business but they were able to make some short sales for those clients. A lot of accidental landlords began to come through the doors of Hoffman Realty. They could not sell their properties for the amount of money they had invested. The logical alternative was to rent until the market improved. The diversity of the business at Hoffman Realty – having a real estate sales division and a property management division – as well as the surplus of cash from a few key sales helped them stay afloat during some very difficult times. Educating Property Management Clients on Market Shifts As early as 2005, Andrew and MaryAnn started talking with their clients about the market dropping. This wasn’t just something they had to prepare for. It was also something they had to prepare their clients to manage. When you own a property management company, you have to see yourself as an advisor to your owners. Let them know what’s happening. Even now, Hoffman Realty is telling their owners to be careful using comps from last summer. They’re not accurate anymore. Those owners who are listening are doing fine, but they also lost two management contracts over this message. The summer was a different market, and MaryAnn says she’s committed to being honest. If there are own

Kathleen Richards recently interviewed Marie for her PM Tribe coaching group. They talked about the importance of marketing for property management companies, when it makes sense to seek professional help, and the current trends in the property management industry. There was lots of good information during that interview, and we want to share it with property managers today on The Property Management Show. Kathleen Richards and Fourandhalf Kathleen began working with Fourandhalf in the early days, when the company was the first and only marketing agency that focused specifically on property managers. She began with creating video blogs, which was a new idea. Even the idea of property management marketing was new. According to Kathleen, the content marketing help she received from Fourandhalf over six years helped her grow her business. Not only did she grow her business, she established herself as an expert in the property management industry. Kathleen had been teaching at the local college and doing workshops on property management, so the video marketing added to her credibility. In her coaching group, Kathleen introduced Marie and Fourandhalf as a great team to work with. They took her local business, a “little company in Santa Cruz” to the next level and helped her attract new clients. The Purpose of a Marketing Strategy The first question to tackle is a pretty simple one: What is the purpose of marketing? And, why should property managers invest in marketing strategies for their local businesses? General Purpose of Marketing The general purpose of marketing is to inform, educate, and convince people about a product, service, or idea. Even nonprofit organizations can use marketing to convince people to join their causes. Politicians use marketing to get people behind them. Local businesses want to share who they are and what they do. Marketing Property Management Services For a property management company, the purpose of a marketing strategy is to attract prospective renters who may want to rent your properties. Or, to attract self-managing owners who may need a professional property manager. You invest in marketing strategies to attract investors, to retain current resident and owner clients, and to educate potential clients on the value of professional property management. Education is marketing at its core. You’re explaining why a professional property manager is better for property owners than managing a property on their own. You want to share benefits and highlight the problems you help property owners solve. How Can a Property Management Company Benefit from a Marketing Plan? Let’s say you need to go somewhere you’ve never been, and instead of using a GPS or glancing at a map, you get in your car and start driving. You might get there eventually, if you stop and ask for directions or try several different routes. But, you will get lost, and you will waste a lot of time and money. In this metaphor, a formal marketing plan serves as your GPS or your map. It shows you the most efficient way to get to your destination. It doesn’t mean you’ll never get there without it. It’s just a smarter way to do things. Competing with Other Property Managers and Local Businesses The theme for Kathleen’s PM Tribe this month is competition. Competition can be a good thing, keeping you sharp and focused and relevant. How does a sound marketing strategy help you not only find new clients, but also compete in the marketplace? Sometimes, it feels like you’re doing the same things as other property managers. Marketing is the best way to differentiate yourself. It starts with identifying your ideal client and understanding how to talk to those ideal new clients. You have the opportunity to position yourself as a no-brainer choice. Too many property management companies don’t spend time thinking about their ideal client. Or, they’re not working to decide which market segment they’re best designed to serve. The market thinks property management is a commodity, but it’s not. Every company is a bit different. The ideal client is important as you put together marketing strategies to attract prospective customers. Then, you have to think about what makes you unique in attracting those new ideal clients. A marketing strategy will help you communicate your message. It’s a trap to accept all the new clients who come your way. Not everyone will be a good fit. There’s more churn and turnover and conflict when you open your doors to everyone. Be clear about your ideal clients. Where do they want and need specific services? What kind of properties do they rent out? You’re more successful when you’re more focused. Property Management Marketing Sets You Apart It can seem like a challenge to set yourself apart from your competition in a local area. How can a company set itself apart from all the others in Santa Cruz? Marie says with authenticity. As a professional property manager, you find yourself roped into the lives of your owners an

Scott Brady from Progressive Property Management, a successful property management company in southern California, is back on The Property Management Show, talking to us about an updated Blue Ocean Strategy that a property management company can use for the current market. You might remember that he joined us in 2015, when he introduced the Blue Ocean Strategy and how it pertains to property managers. It’s the theory that property managers don’t actually have to compete with each other; their own property management company can access a local market that’s wide open because of the overwhelming number of self-managing investment property owners (SMIPOs). Not much has changed, he tells us today, except instead of targeting only the SMIPOs, there are three pools of potential business that can help you grow your property management business. A Refresher on Scott Brady Scott’s journey to property management began in 2015. He was a top Realtor in the city of Placentia, California, which had a population of about 50,000 people. He ran for city council and won. He served as mayor for a term. When the recession hit the real estate industry in 2007, like many real estate investors and professionals, he was caught flat-footed. He had been busy buying and selling real estate and building a real estate brokerage. He left the city council in 2008, and spent a couple of years regrouping. He knew that recessions happen every seven to 10 years, and he wanted to be prepared for the next one. So, he decided to start a property management company. He wanted to build right away, so in 2012, he launched Progressive Property Management. Scott started with zero doors and now he and his team manage 1,200 doors. Association management was added to his company during COVID. There was a good month where every property manager was sure all their tenants would stop paying rent. So, association management seemed like the logical next step to diversify a property management business that may have suffered during the pandemic. He began taking on association clients in 2020, and now serves 85 associations and 5,000 owners. The lesson he learned is this: You have to think ahead. Get prepared before the other shoe drops. One of Scott’s favorite quotes is from Jeff Bezos. When he was running Amazon, Bezos said that during quarterly earnings calls, analysts would get excited about a particularly good quarter. They’d try to figure out what they did so differently that quarter. But, if they had a good quarter, it was likely because of something they had done three or four years ago. Nothing happens overnight. What you’re doing today will benefit you in two or three years, not two or three days. Residential Property Managers and New Business In 2015, Scott told us that 75 percent of rental property owners in the country were self-managing investors. Given everything that’s happened since then, what do you think that percentage is now, in 2023? Scott believes it’s about the same. Real estate investors self-manage their own investment properties because they think they have the time. Property managers need to tell these self-managing property owners that they’re costing themselves money. Because if you can describe a person’s pain points better than they can, you’re going to earn their business. By managing on their own, they’re not getting quality renters. They’re not getting lease renewals and high rent payments. They’re not being proactive with maintenance, and they’re not protecting their asset with specific programs. They’re not conducting property inspections or charging tenants appropriate fees. As an industry, we have to tell them that they actually don’t have the time and the skill to provide their own management services, but more importantly, they’re costing themselves money. As a property manager, if you’re charging around $150 a month, after they deduct that cost on their taxes, they’re paying you $100 a month, net. So, for $1,200 a year in management fees, they can make a lot more on their investment. An ongoing management fee costs less than vacancy. Lease renewal fees cost less than turnover. This is the time to for a growing property management company to bring in more business. You might have been successful adding 20 doors a month in the last few years, but you’d also be losing 20 doors a month because everyone was selling. No one is selling now. So when you gain those 20 doors a month, it’s a net gain. This is a good time to be in the property management business. 3 Blue Ocean Strategies for Property Management Companies Today A Blue Ocean Strategy keeps the waters blue with opportunity instead of red with competition. We discussed this idea in depth with Scott in 2015, and you might want to refer to our 2015 podcast for background on this strategy. The idea is: other property managers are not your competition. Those self-managing landlords are your competition. Scott says most property management companies can target three group

The current economic climate is a double-edged sword for property management companies. On the one hand, we are seeing increasingly high demand for rental property as people look to downsize and move away from homeownership. On the other hand, with reduced job security and income levels, tenants may find themselves unable to pay rent or in search of lower cost housing options. This means that property managers must be prepared to weather any economic storms on the horizon – but how? Kim Meredith-Hampton & Scott Hampton have some ideas about how best to recession-proof your property management business. Lessons Learned from Past Recessions Kim and Scott are no strangers to economic downturn. Their company survived the Great Recession of 2007 to 2009. Before the recession hit, Hampton & Hampton had a large portfolio of rental properties, mostly brand new homes, managed on behalf of various investors. These investors were able to obtain financing from banks with little difficulty. So they were able tobuy homes they couldn’t afford. The company did not realize the risk of this until tenants began calling with foreclosure notices on their rental properties. Kim and Scott soon discovered that many of their clients had not made mortgage payments for months and were only collecting rent. The banks were approving everybody for everything, and they had unknowingly taken on clients who were in over their heads. As a result, the company had to adapt quickly. They implemented new procedures, such as checking if owners were in foreclosure before taking on their properties and creating a foreclosure disclosure for tenants. This disclosure would inform the renter that the owner of the house they are renting is in danger of being foreclosed on by a bank. This helps people know if their home could be taken away from them and lets them plan ahead for this possibility. Eventually, the company was hired to handle foreclosed properties for banks. They would offer tenants cash to vacate the property. This was a win-win for everyone involved – the tenants received a payout to help them move out, and the banks were able to avoid costly and time-consuming eviction proceedings. Strategies for a Recession-Proof Property Management Business There’s more than one way to create a recession-proof business. As a matter of fact, it’s a good idea to implement multiple different strategies to keep yourself from getting stuck if one proves ineffective. Let’s look at a few of the ways you can make your property management company more recession-resistant. Diversify Your Portfolio of Properties Diversifying your portfolio means investing in different types of properties, such as residential, commercial, and industrial. If you have all your properties invested in one sector, an economic recession that impacts that sector could have a significant impact on your overall income. However, if you have properties in different sectors, the impact of the recession is spread out, reducing the overall risk. Different types of properties may also appeal to different markets, allowing you to access a wider range of tenants or buyers. Cut Costs Without Sacrificing Quality As a property manager, you’re always looking for ways to reduce costs without sacrificing the quality of your properties. In today’s economic climate, it’s more important than ever to find ways to save money while still providing a high level of service to your tenants. Here are some strategies that you can use to achieve this: Energy Efficiency By investing in energy-efficient appliances, lighting, and HVAC systems, you can reduce your energy consumption and save on utility bills. This will also improve the comfort and convenience of your residents, which leads to higher tenant satisfaction. Preventative Maintenance Regular maintenance is essential to keeping your properties in good condition. However, by focusing on preventative maintenance, you can catch issues before they become costly repairs. For example, scheduling regular inspections of your properties to identify small issues before they turn into major problems that require expensive repairs. Use Technology Kim and Scott are always ready to try new things. When hedge funds started getting into real estate, the property management industry began to ramp up quickly. At the time, there wasn’t a lot of great technology available. By being flexible, they were able to discover new systems and improve the efficiency of their team. Ultimately, this is what enabled Kim and Scott to step out of the nitty-gritty, day-to-day operations and work on growing the business. Technology can be a cost-effective way to improve efficiency and reduce costs. For example, using property management software for leasing, accounting, maintenance, etc, can help you streamline your operations and reduce administrative costs. Smart technology, such as smart thermostats and lighting, can also hel

Greg Crabtree, CPA is back on The Property Management Show to talk about marketing spends and the return on investment (ROI) that property management companies should expect to see on marketing budgets. If you’re not already familiar with Greg, he’s an accomplished entrepreneur, financial expert, and the author of Simple Numbers, a book that every business owner should have read by now. When we first had Greg on The Property Management Show, it was at the beginning of the COVID-19 pandemic, and we were talking about managing cash flow for small businesses. He said that although company owners pick marketing as the first thing to cut back on, he didn’t necessarily agree. You can watch/read our previous interview: Managing Hits to Your Property Management Cashflow. We asked him back on the podcast to talk about why that behavior exists in business, and why he thinks it’s a big costly mistake. First, let’s talk about the effect of economic trends on marketing spend. Marketing Spend and Economic Trends Marketing spending is traditionally seen as a canary in the coal mine for economic slowdowns. The spend may not be cut to zero, but companies don’t want to spend extra money on marketing when they feel like there’s not a customer willing to respond to those marketing efforts. When marketing budgets are cut, it’s an indicator that the economy is softening. While researching for his next book, Simple Numbers 2.0, Greg created a model that aggregated clients’ data as if it was one big conglomerate. This was across a blend of industries and across geographies. This model focused just on U.S. economic statistics and captured data from 100 companies. The marketing spend of that model dropped about 60 percent right at the beginning of COVID. Remember that a lot of businesses closed during the early days of the pandemic. You’re not going to market a business that no longer exists. On the other side of that trend, some companies saw a huge influx of business because they served the needs of customers during an unprecedented pandemic. Business was coming in faster and faster. They didn’t need to invest in marketing, either; they had more business than they could respond to. It took over 12 months for the rate of marketing spending to get back to the pre-COVID level. Fast forward to today. There have been a lot of wild shifts. Companies have done a lot of different things, but even many of those that suffered are now getting back to the feeling that things are working. The biggest issue for those companies, right now, is labor. Labor Supply’s Effect on Small Business’ Bottom Line The biggest issue businesses are facing is the labor issue – they are finding it difficult to find people to do the job at the same price. It’s not a question about generating new sales. It’s a question of not having the people they need to deliver on the product or service they’re selling. This is a population problem. This is a problem that had already been set in motion years before now; COVID did not cause it. In the U.S., we don’t have enough people to do the labor. In 2001, we were at about a 2.4% replacement birth rate. Today, the U.S. is at about a 1.6%. A stable society is a 2.1%. And, we are not willing to fill that birth gap with immigrants at the moment. This is a serious problem globally, and quite a few countries are in what we call an inverted pyramid when it comes to population. We don’t have enough people. Marketing Spend is Going Up Despite the Economy Tanking The economy is slowing, but marketing spends have not dropped. Marketing spends are continuing to increase in the current economy. Here’s why Greg things that is: Your highest production and earnings capacity is the last 10 years that you work. In 2019 and 2020, a vast majority of the baby boomer generation in this country decided to retire. And, there aren’t any replacement workers to fill the gap. Those baby boomers retired with more money than previous generations. They also retired with a pretty developed habit of consumption that is breaking the pattern of previous retiree generations that as you get older, you spend less. This generation likes to spend money. That’s creating a demand that doesn’t necessarily get met. There’s an economy of people who are consuming, but not producing. Businesses have to increase their marketing because new business is not going to show up through an expanding economy. You’ve got to take that business away from someone else, which is why you’ll see more aggressive and more expensive marketing that helps you differentiate what you do against what your competition is doing. Not only do you have to market better, you have to perform better, too. How Economic Factors and Marketing Spends Impact Property Management When COVID first arrived, a lot of property management marketing was suspended. We were at a standstill, waiting to see what would happen. In the world of property ma

Dave Gorham is back as our guest on The Property Management Show. He is a co-founder of Realty Solutions in New Jersey, and we’re diving into his philosophy around customers for life, and how it’s important to align a business with the idea that you’re going to serve your customers in some capacity for as long as you can. Dialing into Customer Lifetime as a Business Model Customer lifetime is an important part of Dave’s business. And, it was never intentional. This focus grew out of the discussion he began having with clients about their financial assets and their exit strategies. It became part of the same conversation. As the company began to grow, Dave was acting as the Business Development Manager (BDM), and he would talk to potential clients about exit strategies. He’d be curious about why they were buying a particular property and what they planned to do with it. Dave found himself wanting to know what the client would do with a property if it became unprofitable and a financial advisor recommended letting it go. This naturally helped him to create customers for life. He found it was necessary to figure out how to serve a client as a property manager for the lifetime of the relationship. Curiosity really drove these conversations. It was Dave, building relationships and being really curious about why his clients wanted a particular property and what they planned to do. If the property didn’t make money, was that his concern as a property manager? Or, did it depend on the owner’s strategy? They might have an equity position where they don’t need the cash flow now, but they know the zip code they’re buying in will lead them to a profitable sale in five years. For other investors, there has to be cash flow. They invest in properties that will never provide the equity that others are looking for. Scope of Services and Customer Lifetime A lot of those conversations resulted in owners not necessarily having the answers to those questions. For Dave, this became an opportunity to build relationships and plan for a lifetime customer. He and his partner built Realty Solutions on just one property. Many of the owners who struggled to answer Dave’s questions about why they were investing or what their exit strategies were could relate to that. They were starting with one property, too. Initially, these questions were curiosities. Now, Dave sees these questions as part of the conversation. If a potential customer cannot answer the questions, Realty Solutions can provide advice and guidance. If they can answer the questions, they’re getting a glimpse of how Dave’s company can help them succeed. They’re saying: “This is what the journey can look like.” This is part of helping new customers and even existing customers understand the scope of services that Realty Solutions can provide. You don’t want a client looking for services elsewhere when you can provide those services yourself. When you have the conversations up front, you’re better positioned to provide all the required services, and for life. Knowing how to talk about what makes you unique is a huge selling point. What is the heart of what you do? Customer Lifetime from a Sales Standpoint This can be part of your sales process. You’re trying to educate someone on how to think about what would make a good investment. Why one asset instead of another? You cannot just buy a property and wait to make money. Dave acknowledges that this lengthens the closing cycle. There might be a client eager to sign up for property management services, and Dave sees the value in slowing down and gathering all the information. What if this goes the wrong way and the client decides not to hire them for property management? Dave says there needs to be a distinction in the company that establishes at what point services start. Before they start, he is willing to give away everything. All the advice. All the information. All the education. Why? Because it makes them a better customer for life. They’re an investor. We’re investors. This makes those clients colleagues. Realty Solutions wants to put together programs and solutions. They want to build a network. If they give away all the information they have and then a client’s exit strategy changes or they decide to manage the property on their own because they’re more educated, Dave thinks it’s great. They haven’t hurt themselves. Self-managers are not competition. They’re future clients. As an investor, you know how overwhelming it is to lease and manage properties. They’ll be looking for help eventually. Maximizing Customer Lifetime Once a customer hires you to manage their properties, how can you maximize their lifetime customer value? The goal is to get your investors to continue growing their portfolios. The pandemic was a huge detriment to economies. But, Dave says it allowed them to get clear on who they are. They decided that improvements could be made to how they interface and communicate with clients. They also decided they

On The Property Management Show today, we’re speaking with Andrew Smallwood, who is the Chief Customer Officer (CCO) at Second Nature and the host of the Triple Win podcast. We’re diving into the difference between lifetime value and transactional value and how understanding that difference will help you have a successful property management business. Building Customer Lifetime Value versus Transactional Value The conventional thinking around winning is that you have to get the biggest part of the pie. You have to focus on maximizing profits. Andrew is asking us to think about winning in new ways. Here’s the technical definition of customer lifetime value: Customer lifetime value is how much revenue you get from a customer over the lifetime of that relationship. From a revenue perspective, that’s an appropriate way to define lifetime value. It’s a fine metric. What gets overlooked is that revenue cannot be the only way you look at things. When Andrew thinks about lifetime customer value, he’s not only thinking about how he’s monetizing the relationship. Here’s what he’s thinking about: What difference do we make for the customer? What value are we bringing the customer? How do we expand the difference we’re making and the value we’re delivering? Increasing the value proposition and creating new value for customers will impact your lifetime customer value. If you make a bigger difference, you reap the rewards. If you start and end with how to monetize your relationship, this might lead to sub-optimal thinking and behavior; and, ultimately counterproductive results. Lifetime Value: Keeping Customers and Residents and Talent Property management thrives on recurring revenue. Churn is an acknowledged problem in our industry. We’re excited to see the new benchmark study but from the early results, we know it’s typical for a management company to lose 20 percent or 25 percent of its units. In the hot sales market we had through the pandemic, losing 30 percent or more would not be unheard of. When customers are leaving at that rate, it becomes difficult to grow a business. A lot of property managers experience getting stuck. Once you reach 150, 300, 500, or 700 doors, growth comes more slowly. Until you solve for the churn problem and you manage to be more effective with acquisitions, looking at lifetime value is your best way to sustainably grow a business. Andrew says the question that needs to be asked is: How do we grow a relationship and bring so much value that people have such a great experience they would never leave? At Second Nature, his team asks how to create a resident experience so good that residents don’t want to leave. They want to create an investor experience so good that investors don’t want to sell properties, they want to buy more. They want to create a team experience so good that the talent within the company wants to stay in the industry. That drives the Triple Win philosophy. Creating Retention Experiences While Making Money We want to create experiences so good that people don’t want to leave. But, we’re all in the business of making money. Andrew says this takes some nuance and thinking. Who gets to define what a good experience is? Ultimately, it’s the customer. Are these experiences that people pay for? Are they experiences that people stay for? Are they experiences they’ll want to tell their friends about? If the experience isn’t doing one of those three things, is it really relevant? How can you create a generous market value that grows the value of a customer? This is what you really need to be asking. Often, we think about the economic relationship and the pie. The longer the relationship goes on, the more you can expect the economic pie to grow, but it’s growing at the same scale. When customers are looking for more value over time, they’ll need a bigger slice of that pie. For property managers, this means more management for less money. You need to create new value and different values that are not necessarily commoditized. If we grow a bigger pie, everyone will get more from it. It takes a willingness of the person creating the value to share the value. This can be challenging for people. You made something happen, so you should recoup all the spoils of those efforts, right? That’s fair-minded. But ultimately, if you’re trying to build relationships for the long term, you have to be willing to share value and be generous with others. This extends your relationship over time. Sales and Customer Connections Andrew has been in sales for a large part of his career. He understands the hyper-focus on closing deals and increasing commission checks. But, he does not think about sales in a conventional way. Second Nature attracts a different customer to the company because of that. Here’s what he believes about sales. Sales should be about how you help people make good decisions. What difference are you making as a salesperson? It’s not about commission. Everyone has been on the opposite

Andrea Hardaway from First Property Management is blazing a path of success as she has published her book, Property Management Freedom, and recently gave an inspiring talk on the topic of market consolidation at PM Grow Summit 2022. Despite hefty acquisition offers by larger management companies coming in their direction, Andrea and company remain determined to move forward with independent operations – something we wanted to explore more about! Let’s take a deeper look at what makes them so successful. Property Management Offers versus Property Management Conversations Andrea and her two partners started First Property Management seven years ago in a Panera Bread. With no prior experience in property management, but a passionate drive to succeed, they steadily built up their portfolio – now managing nearly 1,000 doors! Team members are loyal and talented and they have an ever-growing list of clients and residents who trust them to keep things running smoothly. With such a successful business, the leadership at First Property Management could probably make a lot of money by accepting one of the many offers they have to sell the business. So, why do they keep turning them down? Andrea is clear that she’s not turning down conversations. It’s smart to have conversations because there’s always something to learn. But, selling her property management company is not something she and her partners are ready to do. There’s a lot that’s happened in the last few years, and a lot that’s still to come. Here’s why Andrea and her partners aren’t ready to sell: They have a great business environment which allows them to be free from the day-to-day operations of the business. The portfolio at First Property Management is growing. They’re managing almost a thousand doors and preparing to expand from Chattanooga throughout Tennessee and into Alabama and Georgia. A lot of business operations are being streamlined and automated. There’s more going on that can’t be shared yet. All of those things are increasing the value of their company. They’re also increasing and the value of what they bring to the property management industry. Andrea and her partners want to see where those things go. Beyond Customer Retention to Brand Ambassadors Part of a company’s success is retaining clients and employees. It’s one thing to retain someone by keeping them from leaving. It’s another thing entirely to make them a brand ambassador. That means something to Andrea’s company. First Property Management has achieved incredible success without relying on traditional marketing and advertising. Instead, their growth relies entirely on organic relationships. When your growth and your success is based on relationships, you need a lot of trust, and that trust has to be protected. Their clients refer other clients to them. Several owners on the west coast talk to their colleagues and when those colleagues are ready to invest in Andrea’s market, a referral is made. By building strong bonds with both customers and employees, FPM has managed seven years worth of sustained development – proving how important it is to invest energy into creating meaningful connections when striving for success! Here’s how Andrea and her team turn owners, residents, and employees into brand ambassadors. Keeping Property Owners and Investor Clients Happy The client base is grown from relationships. Andrea and her partners Brian and Randy also invest in properties themselves. This means they’re not a fee-heavy property management company. They have fees, of course. How else would they stay in business? However, there are certain things they’ll never charge their clients for. One example is maintenance. A lot of property management companies use maintenance as a profit center. Andrea says she understands this; it’s a great way to make money and sustain a business. At First Property Management, however, there is never an upcharge for maintenance. The vendor’s invoice is passed on directly to the owners so they can see that they’re paying exactly what the vendor charged. Their clients trust them and value their commitment to transparency. They’ve built a reputation for effectively managing properties and helping owners and investors build wealth and grow toward greater financial success. As a result, not only do clients stick with them, they’ll even refer others to First Property Management. Residents, not Tenants At First Property Management, they understand that a home is more than just four walls and a roof – it’s an essential part of living. That’s why Andrea and the rest refer to their tenants not as renters but rather residents. This messaging is important in communicating with residents. When a property manager sees a house as a home, there’s a different sort of relationship in place. When property managers understand that a home is just one part of a broader life, the relationship deepens. Property managers at First Pr

We’re back on The Property Management Show with Kathleen Richards. In Part I, she shared her story about buying and selling a property management business, and how she introduced herself to her new employees and clients. We ended the chat talking about toxic owners and how to deal with them while acquiring a business. Property Management and Customer Service Giving bad owners permission to leave is helpful when you acquire a new business. And, if you don’t call people out on their bad behavior, you’re telling them you are okay with it. Don’t do that. Make sure you can distinguish the bad owners from those who simply need a new strategy. In her first six months of taking over the business, Kathleen had to fire a couple of owners that were not working out. Overall, she was committed to being proactive with people and letting them know that she was there to help. One owner had extremely high expectations. Kathleen is fine with high expectations, but what she didn’t like was his habit of bringing up every mistake that had ever been made with his properties. These are problems that pre-dated Kathleen, but he hammered away at them anyway. Kathleen told him that she represented a fresh start. She suggested that they tour all of his properties together. They did that, and then they sat down over lunch and discussed what he wanted to do with each property. It was a meeting of the minds. It delivered a great outcome. Everything was reviewed together and they agreed on a course of action. Moving forward, he agreed to let Kathleen do her work without bringing up past mistakes where everything went wrong. It was about discussing what could be done together, and the relationship improved dramatically from there. This owner became a favorite client and a dear friend. Setting expectations is an important part of the acquisition process. Tell the owners who you are and what they’re getting with you. They need to know how you operate. Communicating with Your Employees While Acquiring a Property Management Business Be positive when meeting with employees. Invest in the time it will take to sit down and talk to them. You don’t want to give superficial assurances that everything will be okay. This is new for you, and you’re excited. But, the employees you’re meeting with are likely scared. Connect with employees by asking a lot of questions. Listen to what they’re saying. Get them to understand that you need each other. Seek their advice. Ask for ideas. Find out what their career plans are. There may be room for pay increases. Discuss a performance plan. Show them that you’re looking to work with people who are excited to be contributing to the company. When you come into a new team from a place of compassion, you’ll earn their trust. Employees leaving is not usually the problem. The problem is that they’re stuck in how they’ve always done things. “That’s not how we do it” is commonly heard, and there’s often resistance to some of the change that’s coming. Getting employee buy-in will matter. Performance growth plans will matter. Find out how to work with your employees. With remote working, you might find out that someone is starting to care for a parent. Why not see if they can work from home for some hours? If you’re willing to work with your people, you’ll see they are bringing a lot to the table. What can you bring to that table? Have a meeting of the minds. When you’re talking to your employees as a new owner, ask more. Tell less. You also want to make space for emotions. It’s okay to be sad when the company is sold. Be compassionate and acknowledge their grief. Retaining and Restructuring Tenants How can you retain good tenants and set boundaries with problem tenants? Problematic tenants need to be dealt with head-on. Enforce your rental agreement and remind your tenants about what the rental agreement says. You cannot just evict nasty tenants anymore in California. You need just cause. People skills are necessary when dealing with tenants. Here’s an example Kathleen provided: A tenant was late with rent every month. She would come in and pay $200 and then $400 the next week. Obviously, the prior owner had allowed this. Kathleen met with her at her home and realized she was living in a three-bedroom home all by herself. It turned out this was the home in which the tenant raised her children. Kathleen suggested finding her a one-bedroom with lower rent. It was less of a financial burden. She could have said no to partial payments, and she would have been within her rights. Instead, she began asking questions and finding out a better way. Owners, tenants, and vendors typically want to do the right thing. But maybe the owners you’re working with have had multiple property management companies, and they’re scarred by previous experiences. When you let people know how you can have a successful relationship, they’ll rise to the occasion and be willing to participate. Another example Kathleen shared is from 2009 when she had a

The prospect of acquiring a property management business is very exciting. The hard part comes when the deal is done. How can you handle the baggage that comes with a book of business? How do you protect yourself from the potential loss of owners and employees? Our guest on today’s podcast has personal experience with this. We are welcoming Kathleen Richards, also known as The Property Management Coach. She’s also the brain behind PM Made Easy. There’s so much to talk about with Kathleen that this is a two-part podcast. Let’s jump into the first discussion. Acquiring a Property Management Company: How Kathleen Did It If you’re not aware, before she became The Property Management Coach, Kathleen was a successful property management business owner. She did not start from scratch. In fact, she acquired Portola Property Management before it was even called that. The company she bought was an established business with a decent door count. Owners did not know that Kathleen had acquired the company right away; she was introduced as a new property manager. It was rolled out as the former owner being semi-retired and pursuing other things. Kathleen took a few immediate steps: She sent out an email introducing herself. She explained she was excited to be part of the team and shared her background and experience. She invited any owners to call her directly with questions. She began calling owners and personally introducing herself to them. This portfolio had a lot of clients who had been with the company for 30 years. They were older and the internet in 2005 was not what it is today. These personal phone calls were necessary (We didn’t even have smartphones then). At the beginning of her ownership, Kathleen did not make any changes to the way the business was run. Continuity was important. Acquisitions and Employees The person Kathleen bought the business from did not tell his employees there would be a new owner. The secretive nature of the transition made things difficult. She was introduced to the staff as the new owner, and there was some stress. Kathleen reassured them quickly. In the first week, she let the part-time leasing agent go because that employee had been lying to owners. The company was structured as a real estate office with a property management division. There were four property managers, each with their own portfolio of business. Most of them were Realtors. One person was a full-time property manager. There was also a full-time assistant who was very valuable to Kathleen as she took over. They discussed her career goals, found money for a pay increase, and Kathleen supported this employee in getting her license and moving forward with the work she wanted to do within the company. This employee knew the owners. She knew how things worked. It was important to keep her on board. Before buying the business, due diligence was essential. An outside CPA was brought in to look at the books. Kathleen looked at the properties on paper and drove by the homes. It’s a different situation when you only have a couple of employees. But, even if there are 20 employees, you have to approach the business you are buying with excitement. Take time to talk to each individual employee. Reassure them as a group that you’re going to look to them because they’re the experts. Cultural fit is critical. If you’re buying the business as your starting point, you have more space to keep things as they are. If you’re buying the business and incorporating that business into your own existing business, you have to make sure there’s a culture fit. If your existing business works in a way that’s 180 degrees different from the new business, you can expect some friction. When Kathleen ultimately sold her company, she was told the new owner didn’t need a bookkeeper. It was painful for Kathleen to let her own bookkeeper go, but she wanted to be the one to do it so she could offer severance and support. Employees will want to know where they stand. Before You Acquire a Property Management Company: What to Look At Kathleen consults with property managers preparing to buy a business. Here’s what she tells them to find out first: Look for pending lawsuits. Look for recent lawsuits. Review all the books. If you’re not an accountant, pay someone to audit them. You don’t want to bring on a business that’s going to cause financial problems for you as a new owner. Check the actual files. Are these quality accounts? Kathleen worked for a property management company for a little while to ensure she liked the business, and she was surprised when the broker bought a whole book of business that turned out to be junk. They were crappy properties with owners who didn’t care. The new owner had to close out every door. This portfolio was bought from a friend. Deals are often done between property managers, but remember – this is still a business. If you’re buying from a friend or colleague, do your due diligence anyway. If the company runs well and p

Retaining Employees and Clients in a Way that’s Purposeful and Profitable: A Chat with Jan Leasure from Monterey Bay Property Management Wouldn’t it be nice if you had a team who was in it for the long haul? How do you define the long haul in property management? Is it 10 years or maybe 20 years? What about 30 years? Is it possible? It is. We’re talking to Jan Leasure, the owner of Monterey Bay Property Management. Her company has a great track record for employee retention, and they also do well with client retention and profitability. Employee Retention – Why Do They Refuse to Leave? Jan has employees who have been with her for decades. Thirty years, even. What’s the secret? There are a couple of things that impact this type of retention rate: Choosing the right person the first time. When you hire right at the beginning of your work relationship, you can count on longevity. This does not necessarily happen on sites like Indeed and ZipRecruiter. You’ll find great people there, but Jan has noticed that she has better luck hiring people that she knows in other ways. She looks for qualities and personality traits that she believes will match her company culture. Jan has turned a golf pro into a property manager. She’s also hired a former nail salon owner, a former restaurateur, and a former physical therapist. This doesn’t always make sense, but their professional backgrounds aren’t as important as their fit with the company. It’s been highly successful. Choosing the right person at the beginning is a good way to start. Another tip to success is creating the right job for the right person. Over the years, Jan has created positions whether there’s an opening or not. It’s expensive to do that, but it means that when growth came quickly, there was a deep pool of talent to choose from in the company already. Jan has never had a job opening at Monterey Bay Property Management. She invests in her team before she has the work, creating opportunities and trusting that the work will show up eventually. Identifying the Right Employee and Position For Jan, there is always wisdom in starting new people at the front desk. Everyone coming into the company starts there. It works well because they are on the firing line from the very beginning. They’re taught to answer the phone, find out what the person needs, and then ask that caller to hold while the right answer is sought. That shows a new employee how the wheels of the company will turn. People learn by doing. You can give them a procedure manual or a checklist, but just by listening to the questions and finding the answers, a lot is learned. That’s training. When Jan meets someone out in the world, what is it about that person that makes her want to hire them? She hired the woman she saw in the restaurant time and time again because of the person’s sparkling personality. She was always on an even keel no matter what was happening. The temperament was always the same. That’s the attitude that’s so desperately needed in property management. We have to be unflappable. Customer service skills are much the same. How do you approach someone not even looking to work for a property management company? One day when Jan was being waited on by this woman, she engaged her in a conversation about how long she had worked there. Jan asked if she had ever thought about doing anything else. She pitched property management and they kept talking about it. The interview process is different from any other typical job interview. Jan wants to know how they will fit into the company culture. They discuss problem-solving skills and talk about challenges. Once that step is complete, you hire them and you get them to a place where they feel like they can see themselves working there for 20 or 30 years. Retaining the Employees You’ve Hired Once you have the right employees in place, you need to lead them to the decision that they want to stay with you for the long term. This is done by understanding what each individual needs. Before she became a real estate broker and a property manager, Jan was a teacher. One of the skills teachers have is the ability to evaluate each student based on their individual skills and abilities. From there, they can meet their individual needs. She transferred those skills to her work in property management, and it helps her retain employees. After someone has been in place for a while, they talk about what they like and what they don’t like. Adjustments are made. Jan can clearly remember a specific situation where she thought an employee would make a great reservation agent for her vacation rental operation. But, she had no interest or intention to do that. The employee is still with the company, however, as a bookkeeper. Some people are fine without a periodic check-in and other employees need that ongoing conversation. Instead of having one process for everyone, Jan nurtures and coaches her team individually, depending on their unique needs. Compensation a

Managing Properties in One of the Country’s Toughest Places What does it take to get an amazing reputation, not just on Google, but also on Yelp? Our guests on the podcast today are from R.E.M. Residential. It’s one of the highest-rated residential property management companies in all of New York. They have not had a negative review, not even on Yelp, since 2017. How can they manage in one of the toughest markets in the world while keeping people happy without people-pleasing? We’re about to find out. Introducing R.E.M. Residential R.E.M. was started in 2000 by Rick Elezi. Rick came from an extensive real estate background. He started out as a porter, and he also worked as a doorman and handyman. Shpresa Elezi met him because her dad was a resident manager next door to the buildings where Rick met. They began doing property management in 1995, and five years later, R.E.M. was born. Rashaad Middleton is the company’s director of management. He started with R.E.M. about 14 years ago as a broker. Ten years ago, he became the director of management. He’s been a landlord for two years, so he understands both sides of the rental relationship. He’s proud of the retention rate of the company, both with clients and employees. Fourteen years in, he’s happy. Lara Lapysh has been with R.E.M. for seven years. She started as a broker and has been growing the condo department. She specializes in condos and co-ops. R.E.M., she says, is a family. The industry has a large turnover rate, and she enjoys being an old-timer in the company she’s committed to. How To Maintain Zero Negative Reviews in a Thankless Industry We know the property management industry can be thankless. The concept of property management is simple but keeping up with the concept is hard. It’s really just about meeting needs and exceeding expectations. We all have basic needs wherever we happen to live. We want to know that things will work. Doorknobs turn and there aren’t any leaks. When you go to the bathroom, you want to know that the bathroom is going to work the way a bathroom should work. When clients or tenants approach the team at R.E.M. Residential, the goal is to give them what they want. It’s not just fixing what needs to be fixed. The team helps them solve problems. They’re bringing a better experience to the people they work with. Property managers cannot control everything. Some situations have no resolution and no one is perfect. But, when the focus is on relationships and innovation, exceptional customer service can be achieved. One of the main complaints people have is that they cannot get to a live person when they’re making a phone call. When property managers and their teams are willing to talk to people, those clients and tenants will feel updated. They’ll feel taken care of. Sometimes, that’s more important than an instant resolution to a problem. People appreciate a personal touch. Spresha says she has had disagreements with people, and those people recommended the company to other people anyway. The disagreement is not the problem. As long as you’re communicating and sharing your expertise, even your adversaries will relate to you. Layers of answering machines and automation do not resolve anything. There’s a lot of disagreement in property management. It’s part of the job. The team at R.E.M. Residential is dealing with sophisticated, educated, and successful people. They might tell their property managers what they want, and those property managers will respectfully disagree. This is the job. What makes the relationship work anyway? Communication. Common ground can be found. A perfect record of reviews is more about relationships than resolving management issues. Keeping Relationships Happy When People Are Not Happy You cannot make everyone happy all the time. The key to keeping the relationship happy is getting back to people. Right away. Don’t promise you’ll call back in an hour and then wait two days to call. Even if it’s bad news, communicate immediately. Be respectful. Use soft words. Treat tenants and owners and building board members like humans. Guide people in another direction if they can’t get what they want. Property managers can establish better relationships with tenants by explaining that they need to implement what their owners require. You’re the liaison between landlords and renters. You have to get to know the people you work with and show them that you’re sticking around when it comes to service. For example, Rashaad has rented apartments in many of the buildings managed by R.E.M. People know him. He showed a lot of his fellow tenants an apartment. They remember he was easy to work with, and they remember when he got them a deal. When those tenants find out he’s also working with the management company, they know that he understands their needs. Your contract with your tenant does not end when the lease is signed. The job of a property manager is to advocate for everyone; owners and tenants. A little bit of effo

Note: The names in the video are swapped. The first guest shown is Tommy Chambers and the second is Chris Harold. We welcome you back to the Property Management Show with your hosts, Marie Tepman and Brittany Stephens. In Part 1 of our conversation with Chris and Tommy of Chambers Theory, we talked about how they used data and innovation to expand their customer lifetime value amidst area-specific market forces that tend to shorten it. Here, in Part 2, we’ll cover how they balance profits, people, and the customer experience. Retaining Property Management Employees A happy property management team will almost always lead to a happy set of property management clients. How is employee retention encouraged at Chambers Theory? In a number of ways. First, there’s a new role: Director of People and Culture. That role really sprung from fast growth. In four years, they grew to 30 employees and while every employee is moving in a different direction, helping the company succeed is the end goal. There’s also a focus on work/life balance. The team is friends outside of work. Many of them have been together for 15 years. When you’re working with fellow humans and not just working in a company, it’s easier to focus on what you do together. Committing to a capacity-to-care ratio. 8Profit sharing so that a portion of the company’s profits are dispersed among the entire team. Everyone benefits from company growth. There’s a timeline for reviews with the team where each employee gets to discuss their own plans for career advancement. Tommy and Chris have also borrowed a measure from Navy SEAL Team 6, which is focused on two things: performance and trust. You want high performers who you can really trust. And sometimes, if a particular team member isn’t performing well, they’re worth keeping close because you know you can trust them and their peers can trust them. Capacity-to-Care Ratio The capacity-to-care ratio began as a look at how many properties per person made sense to keep the team functioning as well as they wanted. Companies that have problems with quality seem to have a higher property per team member ratio. A 100:1 ratio makes it hard for those team members to care about the 100 properties they have to manage. It doesn’t matter how good you are, if you’re too burdened, you’re losing your capacity to care. To increase that capacity to care, the ratio has to be lower, and/or more infrastructure is needed to support the team. Each team member at Chambers Theory is specialized in what they do. And, more experienced hires have more capacity. So, increasing capacity has become a key metric. Right now, the company is at 24 properties per staff member. They’re investing heavily in the staff ratio, but expect to grow to 30 properties per staff member before too long. They’re skeptical of going any higher than 35 to 1. Even if the team seems capable, they’ll want to hire enough people that the ratio stays closer to 30 properties per staff member. How to Stay Profitable While Focused on Capacity-to-Care How do you balance taking care of your team with making money? Profitability is more likely – even if it’s tighter – when you have better quality of service and higher average rents and lower vacancy rates. Hire so that you’re prepared for growth and not waiting for it. And, remember that employee retention increases profitability over time. Your employees, when they have the capacity to care, will continue to improve their service and be more efficient. You’re not spending money on hiring and training new team members when you have great retention. Referrals as a Source of Growth When new business is continually coming in the door and current clients are easily retained, there’s little to worry about in terms of profitability. Chambers Theory has a stream of referral business that comes in because most of their clients are Foreign Service and military clients. They have a presence in the community and throughout the Washington, D.C. area. They like to say that all of their clients become friends and all of their friends become clients. Developing relationships is a huge part of their business model and their plans for growth. They know their capacity to care is higher and that turns into a powerful referral machine. Clients are served well, so it’s easy for them to earn new business based on their reputation. After four years in the property management business, they have around 700 single-family homes they’re managing in northern Virginia. There’s also a small portfolio of properties in Oregon that make up about 80 doors. They see the sales market softening eventually and a lot of accidental landlords looking for help when they cannot sell their homes. Protecting Reputation and Asking for Reviews It’s amazing what happens when you ask for a review. Their team has focused on building relationships, so quickly solving problems when someone is unhappy is almost intuitive. On the other side, when they have d

Note: The names in the video are swapped. The first guest shown is Chris Harold and the second is Tommy Chambers. The Property Management Show is back with Marie Tepman and Brittany Stephens from Fourandhalf, and today we’re talking about customer lifetime value. When we think about customer lifetime value, the biggest variable that comes to mind is the length of time a customer stays with your company. But what happens when your service area is full of military or intelligence personnel, who only need your services while they are deployed overseas? Our guests today are Tommy Chambers and Chris Harold from Chambers Theory, and not only have they discovered how to protect their customer lifetime – they also found a way to expand it through innovation. Customer Lifetime Reflects Customer Satisfaction This season of the podcast is all about companies that are doing so well their customers don’t want to leave. Chambers Theory tracks a lot of data to review and improve their performance, and according to that data, they’re a company that’s doing very well. We asked Tommy and Chris to talk about some of their most impressive statistics. Two of the statistics they are always tracking are days on market and average rents. This property management company has lower days on market and higher average rent than any of their competitors. With a slogan that says “Real Estate with Intelligence,” Chambers Theory has managed to embody what they say about themselves. They collect data on their own performance and that of their competitors, and then they use it to their advantage. Days on Market Average Rents Sometimes, the results of their data seem intuitive. A property in one area is going to rent faster than a property in another area simply because it’s a more desirable neighborhood. But it helps to know those numbers. At Chambers Theory, they look at the historic data and they use their experience to make intelligent decisions and improve the metrics that they invest so much time into collecting. Here’s what they’ve found: Chambers Theory has rents that are an average of 27 percent higher than their competitors. The average rent in the northern Virginia market is close to $3,500 a month. The average days on market is 12. This is notable because their competitors have an average days on market of 30. The data they collect is used to make intelligent decisions and to improve the work they do for their clients Which helps with their client retention rate. The simple act of measuring is what’s important. It’s important to the company and their clients. Measuring allows you to see how you can get better and then track your improvement over time. New solutions and innovations show up and the entire team works together to improve. But, you can only improve by tracking your progress and monitoring the numbers you care most about. Client Retention Rate At Chambers Theory, the client retention rate is over 95 or 96 percent. Tommy and Chris are quick to say that a lot of that has to do with the team and how well they are able to service their clients. They also have a stellar reputation in the industry. Reputation, systems, and a well-focused team are the reasons that they retain so many clients. Two specific things have pushed this client retention rate even higher: A team member was recently promoted to Director of People and Culture. All staff achievements are communicated to clients, and Chambers Theory has become a fantastic place to work in an industry that has a reputation for quick burnout. There’s a lot of value invested in the community of the team. Tommy likes to say that by “serving each other, we become free.” The team has that mindset every day, and that mentality allows them to maintain high retention rates with both clients and employees. A unique value proposition to their clients also keeps retention rates high. A large percentage of the clients they serve are military and Foreign Service workers. So, when they go overseas it’s usually for three or four years and then they come back to the area and move back into their homes. So, they close out their property management contract when they come back to Virginia, and then they re-hire their property managers when they’re reassigned again a year or two later. They’re now offering a different model of property management to those clients where they assist in the management of the home even while the homeowners are living in it. They’ll take care of bill paying and maintenance coordination and scheduling even while the property is being occupied by the owners instead of tenants. Tommy and Chris also point out that they let go of clients who are not willing to be responsible for their properties. They want their tenants to have a good experience too, so if owners are not willing to invest in the property and take care of their home, they are willing to take on that attrition. Keeping Property Management Clients Close The innovative program they’ve designed for homeowne

Customer Lifetime Insights and Marketing Let me ask you a question. When was the last time you made a big purchase? Imagine you realize that you need a new car. What would you do next? If you’re like most people, you would probably head over to Google or your preferred search engine. What would you type in that search bar? What results would you get back? Most of us would get some ads on top and then some search results with star ratings. You’ll probably see some articles with titles like “The 10 Best Cars of the Year.” And, by the way, if you actually read those articles…none of them will actually agree on what the 10 best are. That’s because everyone defines “the best” as something different. All these results you see are intentionally driven marketing pieces created by people who want to lead you to their sales funnel. You might click on articles. You might check out some head-to-head comparisons. After a while, you’ll realize that you’ve collected enough information and that you’re more knowledgeable than you were when you started. You’re actually ready to buy. But, why? What’s actually going on here? And, most importantly, what does this have to do with property management? Everything. And that’s what we’re talking about today, on The Property Management Show. Buying Decisions and Property Management Content What happens as we move through our buyer’s journey on the internet? We spend hours and sometimes days doing research and reading articles and consuming data and content. This is all done to make us feel better about the big decision we’re about to make. All the pieces of content we consume during the journey shape our expectations and nudge us closer to making that decision. All of us are like this, especially when we’re making big decisions such as hiring a property manager. So if your customer’s buying decisions and expectations are influenced by the content they’re seeing during the exploration phase, then it’s in your best interests as a property management business to have your educational content out there for prospects to consume before they even give you a call. This makes sense, yet we encounter a lot of property management business owners who don’t believe in content marketing or don’t think it’s worth the hassle or the investment. The content you create is here to fill information gaps. It also helps when prospects are trying to make a buying decision or looking for a solution to a problem they’re experiencing. Content creates a relationship between the prospect and the business, and it helps the prospect make a decision. You can’t expect leads to pour in the moment you publish a piece of content online. The effects are more delayed, and sometimes it can take a year or more for your content to generate a huge increase in business. But, here’s what’s interesting: Research has shown there’s a positive correlation between content and customer lifetime. Customer Lifetime Averages Fourandhalf actually did an industry study on property management marketing last year, and we found some interesting things about customer lifetime. Before we nerd out on all the data pieces of this study, let’s do a quick poll: How many of you listening right now know how long your owners stay with your company? If you have a number in mind, how confident are you of that number? If you couldn’t come up with the number or you hesitated a bit, you’re not alone. In the Midwest, 10 percent of property management business owners had no idea how long their owners stayed. In the South, 5 percent had no idea about their average customer lifetimes. In the Northeast and West, there were even fewer people tracking, and that was interesting to us. For those who did track or at least try to guess how long their customers were with them, here are the numbers we gathered: Property management companies from the West and Midwest keep their owner clients for 1 to 6 years longer than their peers in the Northeast, on average. The most common customer lifetime length in the West and Midwest was 4 to 7 years. In the Northeast, it was 1 to 3 years. In the South, the length of customer lifetimes was evenly distributed between 1 and 3 years, 4 and 7 years, and even 10 to 15 years. Understanding Customer Lifetime Value Knowing how long your owners stay with your company is key to understanding customer lifetime value. There’s a lot of discussion in the industry right now about customer retention and the importance of providing the best client experience. That’s great in concept, but what are you implementing to improve client experience and customer value, especially if you have limited resources? How do you, as a business owner, prioritize efforts and resources related to retention and client experience versus the other needs of your company? This is where customer lifetime value comes in. If you only look at the annual contract value when you’re making these decisions, you’ll see that clients staying for one year are just as valuable to

Customer Analytics with Aurelie Lemmens Today’s guest on The Property Management Show is Aurelie Lemmens, an Associate Professor of Marketing at the Rotterdam School of Management, Erasmus University in The Netherlands, and Academic Director of the Expert Practice on Customer Analytics at the Erasmus Center for Data Analytics. Dr. Lemmens is an expert on the topic of customer churn and has written peer-reviewed papers on the topic. Defining Customer Analytics What does customer analytics mean, specifically to a property management company? Here’s the general definition of customer analytics: The idea is to leverage as much data as you can gather about your customer. You’ll want a good collection of data at the point of customer acquisition and even before that – when they’re visiting your website. You want data about the customer when they’re signing a management contract or filing a complaint. You want to collect data on that customer when they’re saying something positive or negative about you and when they’re canceling their contract. Leveraging all that data with sophisticated analytics can help you decide what the best action might be for your customers at each of those points in time that we mentioned. You want to find the optimal action to reduce churn and increase profitability. Mentioning data and analytics can sound pretty technical. But, these churn analytics can help you better understand why your customers are leaving and whether it’s worth your time and resources to try to keep them. Studying Customer Analytics and Churn Two main points are important to remember from the study conducted by Dr. Lemmens and her colleagues. First is the notion of incremental lift. What will be the impact of your marketing intervention on the customer? What will happen with the customer that would not have happened if you did not perform a certain action? This sounds easy, but it’s actually pretty complicated because it’s hard to observe what’s happening based on what you didn’t do. How can you see the impact of choosing to take one action and not another? Second is the notion that all customers are different from each other. You have to recognize and understand all the different types of customers you are working with. Only then can you design an action that speaks directly to Customer A and not Customer B, who will have their own actions designed based on who they are and how they behave. How should you choose which customers to work towards retaining? That’s another takeaway from this study. Those Likely to Churn, Those Likely to Stay, and All the Others When companies think about preventing churn, they tend to focus on identifying the people most likely to leave. That’s the first step. Then, they’ll figure out what they should do to keep them from leaving. But, if they’ve already made up their minds on some level to leave, can you really manage to keep them? Is it worth your time and resources? This is a natural reaction. It’s tempting to try and prevent people from leaving when we’ve identified that they’re likely to leave. But, this strategy could have you retaining customers that are hard to retain or maybe not worth retaining. There are also your customers on the other end of the spectrum. They are happy, and there is a low probability that they’ll leave. You don’t need to do much to keep them happy. They’re already there. Those customers in the middle are where you should focus. There’s no reason to believe they’re planning to leave but there’s also no reason to believe that they’ll be with you for the long term. You’re not really sure where they are in terms of staying with you. Maybe they’ll consider leaving, but there’s more of a chance you can keep them. Those are the customers who you want to reach with interventions. Predict what their level of responsiveness will be to those interventions. Basically, you’re studying the customers who are on the fence. Some Customers are Sleeping Dogs Research has shown that you have a negative impact on half of your customer base if you target them. Half of your customers want to be left alone. They don’t need intervention from you, and if you bother them with constant emails or offers – you’re just going to lose them. Some of those customers might also have forgotten that they’re unhappy, but when you intervene, you remind them of that unhappiness. They’re sleeping dogs, and if you keep contacting them or you keep trying to ensure you’re holding onto their business, they’re going to resent it. To reduce churn and increase profitability, you need to figure out which customers are worthy of your intervention without a high risk of waking up those sleeping dogs. How can you do that? First, you need to define what KPI you want to look at. Maybe sending your customers a $5.00 gift won’t make a difference now, but it will contribute to a long-term relationship. Decide what you want to measure. Once you know the KPI, the easiest thing to do is to have a docum

Welcome back to The Property Management Show. If you joined us on Part 1 of this podcast with Ray Hespen, you learned about why it’s important for property management business owners to pay attention to churn. You need to do more than pay attention – you need to measure it. We’re back to talk about how you can prevent owners from leaving in the first place. Measuring Owner Churn If you’re not measuring your churn, you don’t know how big of a problem it is. Owners have different goals. Whatever your business goal is, owner churn should be a KPI. It impacts your growth and profit. We cannot think of a single property management strategy that would not need a metric measuring churn. So, who should measure it? That depends on how your property management company is structured. Ray says that whoever is responsible for owner engagement after the sale should ultimately track owner churn. All Churn is Not Created Equal You need an ideal customer profile. This is something that gets talked about a lot. Who is your perfect client? Churn from anyone who does not fit that profile is likely okay. Churn from perfect clients is not okay. It’s important to keep track of who you’re losing and who you’re keeping. You need a scorecard to show you whether you’re losing those perfect clients or others that you took on knowing they weren’t a perfect client. Then, you’ll need to decide how much you’re willing to invest to recover the clients you lose. It may be worth it to recover the perfect clients. Resident Satisfaction and Owner Churn In Part 1 of the podcast, we talked about two things that impacted owner churn: Maintenance visits to the property (more visits = better retention) Staying below the 12 percent maintenance costs threshold The third thing is resident satisfaction. There’s a direct correlation between lease renewals and owner renewals. This makes sense and it matches the maintenance indicator. Residents who are not satisfied with maintenance will not stay in a property. When lease churn is higher, owners will reconsider their property management relationship. Sometimes, property managers worry about providing great service to residents because they don’t want owners to believe that it’s at their expense. That’s crazy. Owners should want you to treat their residents well. When you retain tenants, owners save money. When a resident leaves a property, here are some of the things that happen: The property manager has to do an inspection. The property manager has to organize repairs and replacements. The property manager has to find a new tenant quickly to avoid a long vacancy. And all those costs are passed to the owner. Retaining a resident for five years requires resident satisfaction. It’s worth it to you as a property manager because it helps you keep your owners. Keeping Churn Low: A Dashboard If you want to keep your property management company’s churn low, you know you have to measure it first. Then, you have to think about these three specifics. There is probably a way in your accounting software to capture this data. Which owners are at risk of being above that 12 percent maintenance cost vs. rental income threshold? Know who they are. Give them the white glove treatment and take good care of them. Focus on resident satisfaction. Look at the things you can control and correct any issues quickly. The average rental unit has an average of four service issues a year. Be attentive. Measure the percentage of owners who opt into preventative maintenance services. Drive that number higher because we know that the more maintenance visits you make, the more likely you are to retain clients. These are the metrics you need when you’re fighting against churn. Get the numbers and then make a plan. Tell your property managers that you want the number of owners enrolled in preventative maintenance services to be 30 percent higher by the end of the year (this is an example). You’ll find it addresses all three of the points that we made about why property owners leave their management company. You get only one shot at an investor. We can’t invent new investors for you to chase down. Make it count and keep them as long as you can. If you can implement programs that reflect what we know, you can see some changes in your owner churn numbers. When Should Churn Make You Feel Okay? If you lose an owner and you know that you did everything you could to keep them, let that owner go in peace. When you can look at their account and see: High resident satisfaction. Lots of maintenance oversight. They’re well below the 12 percent threshold. You know there’s nothing you could have done to keep them. Their departure was totally outside of your control. It has nothing to do with what you’re doing for them. Zero churn is not realistic. Not everything is in your control. You cannot save every single owner, so focus on the factors that you can control with the owners who can be kept. Consider this scenario: an owner dies and the trust de

On The Property Management Show today, we’re talking with Ray Hespen, who has been here before to talk about maintenance, data, his company PropertyMeld, and the dangers of ghost maintenance requests. Today, we asked him to discuss what some of his recent data has been telling him about customer churn in the property management industry. How Can We Describe Owner Churn? When we think about churn, we typically think about losing a customer. The property management space includes more third parties than it did 10 or 15 years ago. You’re working hard to hold onto the customers who are trusting you with their property and paying your property management fees. How good are you at hanging onto those customers? How many of them do you lose? Understanding your churn rate is not complicated math. Let’s say you sign up 100 owners this year. At the end of the year, you have 80 of those owners still with you. This means you have a 20 percent churn rate. Mastering Your Churn Number Forget growing your business by 200 doors this year. That’s a big, bold, and brave statement. But, it doesn’t matter how many doors you add if you cannot hold onto your current customers. This has a much bigger impact on growth than a lot of people realize. Customer retention impacts your earnings in a potentially huge way. Let’s say it costs you $750 to gain an owner. That’s inclusive of your BDM costs, your marketing budget, etc. Let’s say you earn a 40 percent margin on that customer and earn about $2,200 a year in revenue. For an average or small company, the difference in hanging onto that customer for five years instead of three years is pretty meaningful. But, if you’re a company with 500 doors, the difference in three-year customers versus five-year customers can add up to a million dollars in profit. The difference over 10 years is actually $4.9 million in revenue (5-year customers) versus $2.8 million (3-year customers). Your acquisition cost is the same, whether you hold that customer for one year, three years, five years, or longer. But when you hang onto that customer for longer, you earn higher revenues. This has not been a talking point for property managers the way it should be. Everyone knows losing a customer is bad. But, if you do the math on how much money you’ll make when you keep those customers – those retention goals take on a new urgency. This needs to be a key metric. It’s potentially more important than acquiring new clients. You can spend a lot of time on conversation rates and leads per month. But, you have to think about your churn rate, too. What to Assess When Evaluating Churn Why are owners churning? You need to spend time understanding why customers leave and then trying to make things better whenever possible. Ray stresses the importance of collecting qualitative and quantitative data. Quantitative is hard data. It involves numbers, and it’s critically important. Qualitative data requires conversations that are sometimes difficult to dig into. Customers won’t always tell you the real reason they’re leaving. How can you uncover it yourself? In America, we’re less direct than people are in other cultures. You have to get to the real reason an owner is leaving. Here’s a great story that delivers a good analogy: A woman goes to a grocery store and says she’s looking for potatoes. The salesperson takes her to that section and asks why she needs potatoes. She says she’s having guests for dinner. The salesperson asks who she’s having for dinner. It’s her mother-in-law. The salesperson asks why she’s making potatoes for her mother-in-law. The woman says because the mother-in-law hates rice, so she can’t make rice. That’s the kind of investigating that’s needed to get to the root struggle and the reason for your churn. Instead of agonizing over what makes people leave, you can take a different approach and figure out why people stay. Solve problems early. Studying Why Owners Leave Property Management Companies PropertyMeld works with 190,000 investors. That’s a lot of data. That data is being used to look at owners who stay and leave property managers. Some common themes and threads have emerged. They looked at everything from communication to maintenance to whether owners seemed to respond better to simple billing or complex billing. Some of the data has proven inconclusive and some of the data was surprising to Ray. Here are some high-level pieces of information that you need to know right now, based on the work that PropertyMeld has done: Measure your owner churn. You cannot change what you don’t measure. Three things seem to have the largest impact on whether owners stay or leave their property managers. First, let’s look at measuring your owner churn. You need to know who churns after the first year, after the second year, after the third year – etc. Now. Let’s talk about those three things that matter most. But first, the biggest surprise: Communication may matter less than you think. A lot of prope

Daniel Craig on Why Customer Churn is a Silent Killer Daniel Craig from ProfitCoach is joining us on The Property Management Show today to discuss the problem of churn and the value of retention. Walk down memory lane with us for a bit, and you’ll remember that Daniel’s first benchmarking study led to the NARPM Accounting Standards and a new focus on property management profitability. On our podcast, we’re discussing how client retention and client lifetime value affect your property management company’s profitability. Churn Kills Profitability If you have a low rate of client retention, your property management business has a leaky bucket. When it comes to your sales and marketing efforts, you’re investing a lot of money to ensure doors are coming into your business, but those new doors end up going out the back door. The money you’re spending on sales and marketing doesn’t contribute to profitability because you can’t earn anything significant. Too much business is being lost. Your customer’s lifetime value is what contributes to profitability. If you can’t keep your clients, you’re basically operating at a net loss on your sales and marketing spends. When we look at overall profitability in any organization, profit increases when revenue rises. It’s that basic. When you don’t have decent lifetime value from your customers, your rate of growth suffers. You lose the opportunity to make more profit off those customers. Doors have to stay with you for the long term, otherwise you lose money. Reputation and Customer Experience To really maximize the dollars you spend on sales and marketing, make sure two things are in place: A good reputation Delivery of a fantastic customer experience You’ll undermine your entire marketing effort if you don’t already have a good reputation established. That reputation is a foundation upon which you’ll build with your sales and marketing dollars. The customer experience is what prevents churn and the loss of existing profit. Organic referrals are a big part of your marketing strategy. People don’t always think of it as a strategy, per se, but it should be considered exactly that. Referrals don’t just happen. They happen when an outstanding customer experience is provided. It inspires your clients to talk about you. With a good reputation and a significant referral strategy in place, your sales and marketing efforts will work better. Creating the right customer experience will drive new business and retain existing business. You can throw a lot of money into marketing your property management company, but if you’re not establishing yourself as a reputable company, your marketing dollars aren’t going to spread as wide for you. Leads will get more expensive, and your lead quality goes down. The people contacting you when your reputation is subpar may not be the right clients for your company. Tracking Who You Keep and Who You Lose Is your glass half full or half empty? Meaning, are you calculating who you keep or who you lose? From a metrics standpoint, it’s important to watch your churn. But, don’t lose the real value in tracking that churn. You can look at it as a way of diagnosing the chinks in your armor when it comes to customer experience. Are you delivering what you’re supposed to deliver? Churn can give you the insight you need to see where you’re falling short of your ideal. Your property management company needs a specifically designed customer experience. How is that delivered? Is it delivered that way every time? The churn can provide some feedback on how well you’re delivering that experience. You need to collect feedback from your customers all the time, but you may get more honest feedback when those customers leave your company. Avoiding churn and being a more profitable property management company is about having a clear vision of what you’re leading your team towards. Each team member has their own job. But the job of everyone at your company is to provide the experience of working with your company. Daniel says that at ProfitCoach, each team member asks these questions to know whether they delivered the ProfitCoach experience: Did they own the client’s outcome? Did they make it easy? Did they do it in a way that provided an extraordinary service so the client goes out and talks about it? When your vision is clear and your team knows what they’re delivering, you’ll find that you have more referrals and churn goes down. You can cut down churn by focusing on customer experience. Average Churn Rates for Property Managers The first benchmarking study said the annual average churn rate for property management companies is 25 percent. Another study will be revealed at NARPM National, and we asked Daniel if he had any guesses or gut feelings about what would be revealed for average churn rates with the new and more recent data. He expects that the new study will show an initial drop in churn and then an uptick. Here are the factors contributing to that: First, with th

Meet Ray Hespen! He is the CEO and Co-founder of Property Meld. You might recognize him if you attended PM Grow Summit 2022, where he spoke about maintenance as an owner retention tool. He’ll be on the podcast talking about Owner Churn. The post Podcast Sneak Peek: Owner Churn with Ray Hespen appeared first on Fourandhalf Marketing Agency for Property Managers.

Meet Aurelie Lemmens! She is the Academic Director of the Expert Practice on Customer Analytics at the Erasmus Center for Data Analytics in The Netherlands. She’ll be on the podcast talking about Customer Churn. Check out the video for a sneak peek of our interview with her. The post Podcast Sneak Peek: Customer Churn with Aurelie Lemmens appeared first on Fourandhalf Marketing Agency for Property Managers.