How PMI Built a 475-Location Property Management Franchise with CEO/Co-founder, Steve Hart

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We jokingly say we are the largest buyer of property management portfolios in the world.

That would not surprise me.

Yeah, because we're doing a lot. I mean, a lot of them are just small, you know, like I mentioned, you know, we have a lot of small franchise partners that just want to buy the 100 doors from that the guy down the street or this small short-term rental business, you know, on the beach. And so in '24, we helped our franchisees acquire $7 million worth of these businesses. So pretty small. The average deal is around $250,000. You know, they're getting SBA loans or whatever to, to buy these businesses. But through our programs and our systems and these revenue streams that I talked to you about earlier, that really help us make a lot more revenue per door than a typical operator does. We're able to buy those businesses and really scale them to profitability really, really quick.

Friends, welcome back to Peter Lohmann's podcast. I'm here today with Steve Hart, CEO and co-founder of PMI. How are you today, Steve?

I'm great, Peter. Thanks for having me on.

It's great to have you here. I'm excited to talk to a longtime OG of property management. You've been around. I was kind of doing some research before the show. PMI was founded in 2008. You guys have been at it for a minute and we're right on that 18-year mark this year. So yeah, you got to do something really fun for 20 years. That's cool. And you guys, it shows. I mean, we were talking the other day, you guys are up to almost 500 locations, 470-something locations, which is really remarkable. I'm excited to talk to you about how, how you grew and lessons learned from that and kind of what you're seeing today, 'cause you've got your finger on the pulse of a huge number of operating businesses. Before we get into all that, for anyone not familiar, maybe just take a minute or two and let folks know about your background and kind of how you came to get started with PMI.

Yeah, my background is not in property management, strangely. My background's in real estate sales and real estate development. And in 2008, and that's when we started PMI, you do the math, that was a tough time for a lot of us here in America. And it was especially hard for me as a real estate developer. And I found myself in a position where I needed to put food on the table for 4 young sons and a wife. And, and it wasn't happening in real estate. A good friend of mine, Christopher Layton, said, hey, Steve, with your real estate experience, why don't you consider property management? And I literally, Peter, I remember laughing at him out loud, like, property management? No way. That's, that's the tough— Yeah, that's the blue collar. I think I referred to it as And where margins are tight and, you know, and there's little money and profits in it. No way, was my response. And he just kind of smiled with confidence. See, Chris had several businesses, one of which was a property management business in Las Vegas. And he just kind of smiled and nodded like he'd heard that response many times before. And he said, well, before you stick your nose up at it, you know, next time you're in Las Vegas, I want you to, visit my property management office. And, you know, I was looking, I was looking for my next steps and I found myself going down to Las Vegas. I was living in Salt Lake and Vegas is only a, you know, 4 or 5-hour drive. So I was down in Vegas and I took him up on that deal. And what I saw was a very simple business model and very archaic almost. What blew me away was this simple business was generating a lot of cash, a lot of profitability. And that raised my eyebrows because I thought, wow, you know, I could do better than this company and not knowing anything about it, you know. And real long story short, I went back to Chris and I said, hey, maybe, maybe you can help me open a property management business here. Salt Lake, you know, could I copy your, your business? And he said, sure, but what if we, what if we take my business model and create something that is more duplicatable? And we started PMI, you know, long story short, we started PMI that spring of 2008. And again, that property management industry looked very different back then than it does today. In many ways it still does. I was really— it was really fragmented. Most companies in property management were small. You had the real big guys, but you had the majority of them just being really small. Yeah, owner-operated businesses, a lot of great people. You know, I'd go to NARPM, you know, a National Association of Residential Property Management events, and I'd meet great people, but there wasn't a lot of standardization. It seemed like there was no scalability to these businesses that they were operating and not really a professional infrastructure at all. And what Chris and I saw was an opportunity. Our vision wasn't just to start another property management company. We decided that we wanted to build the world's premier property management company and And by that, I mean creating a national platform that gives local entrepreneurs the systems, the support, and sophistication of a much larger organization. And in those early days, I mean, we were, we were literally helping franchise partners get their very first door. You can imagine. Yeah. You know, we, we we got the franchise set up, but no one wanted to be our first franchise. Can you believe that? You know, there's no brand that was recognizable. I mean, really basic systems that we'd had set up. And, you know, I'd hear things like, hey Steve, once you, once you got 20 or so franchises and you can show me that it's working, then give me a call. Yeah, but we were building operators at that time from the ground up, guys that were buying our franchise had never done property management before. And it was slow, it was hard. But the cool thing was, is it forced us to build real systems. And what I mean by systems is it's the training, it's the processes, it's the technology that we use, it's the coaching. You know, and everything that someone would need to succeed from scratch.

Yeah. So let me ask you about, you mentioned the 5 pillars that you guys offer, which is residential, commercial, multifamily, short-term rental, HOA.

Yeah.

And what's interesting about your model is like you're very explicit about that being kind of the growth opportunities for your franchisees, which is really interesting. Because you have this vision across the whole landscape, across these different pillars, across hundreds and hundreds of locations, are you seeing which of those segments is the fastest growing in the last year or two?

Yeah, I love that question. And you, you bring up our pillars. Let me, let me explain what that is. You know, you fast forward to where we are today from 18 years ago, and as mentioned, we have 470 75 independently owned and operated offices. We're in almost every state. And about half of these franchise partners aren't these small little guys anymore. They're now mid-size to large operators, and many of them operate in multiple pillars.

Mm-hmm.

And Peter, when you say pillars, when I say pillars, it's kind of a PMI term, but it's really the sectors of property management and the 5 pillars that you mentioned that we have in our platform is the residential. That's typically the single-family residential properties. You know, some duplexes and fourplexes fit into residential. We have multifamily pillar, which is the bigger apartment communities, the bigger stuff. We have an HOA pillar, we have commercial property management pillar, and the fifth one being short-term rental. We call 'em pillars because they are very unique in the way these types of property management systems, processes, the marketing, they're different. Each of those five.

Totally different for sure.

You can just roll out one training, one marketing style, one coaching style, because each one of these is so very different.

They're so different that we only do one of them.

Yeah.

Like we're scared. I'm scared to try to do these others because I love—

I dabbled because most, yeah. Most property managers, especially years ago, they thought we were crazy. I remember going to NARPM about 12, 14 years ago and we brought up this concept of residential property managers managing HOAs too. And Peter, people thought we were crazy. And literally 2 years later, after we kind of shown that this is working, 2 years later, they were having breakout sessions on how to add HOA to your residential property management business. And now, now you see these multifaceted offices starting to pop up. But, but you're right, they're very different. So much so that we had to create almost like 5 different franchises to accommodate this platform because I think that's the only chance of success is by treating them as extremely distinct.

And I'm assuming you encourage your franchisees like, hey, don't try and do all these at once. Like maybe start with one, maybe two, and then build a solid foundation. Then maybe if you want to add one or two more over the course of the next 5 years, I mean, that would be what I would tell them.

Yeah.

Because they're so distinct.

Right. We learned the hard way as we did with a lot of our business growth. You know, no one has done what we are doing with this platform. And so it was, trial and error. And, and when we first started rolling out these platforms, you know, we'd have franchise partners that say, oh, well, I want to try HOA, or, hey, I, I get asked all the time to do short-term rentals. Let me just hang that shingle on my front door. Now I'm a short-term rental property manager. And what we found is when our franchisees were just dipping their toes in these different pillars, it just made it a real big mess. Yeah, they didn't have the training and it was spreading them really thin. And so to your point, we require franchise partners to start with just one. Love that choice.

That's the way to go.

We kind of push them into residential pillar up front. So let's say come to us like, you know, maybe they're on the island of Maui and short-term rentals is like the no-brainer. They're in Colorado and, you know, they just really only want to focus on short-term. Then we'll let them into that short-term pillar up front. But otherwise we have them start with residential. It seems like it's the lowest hanging fruit, seems like it's the easiest. And to answer your question so long ago, our residential pillar is our biggest just because that's what we started out with 18 years ago. And now it's kind of where we channel most of our startup, you know, level franchise operators.

Okay. Two questions on that. One, are you able to share how many total residential doors on the platform? And then follow-up question would be, what's the fastest growing of those five pillars outside of residential?

Yeah, love that. Residential, we've got about 35,000 network doors being managed, maybe around 36,000. That pillar is growing at a rate of about 15 to 16%. In same-store sales year over year.

That's very good. That's, yeah, it's quite remarkable.

Yeah, it's higher than what I think our industry property managers average by quite a bit. So we're proud of that, but it's nowhere near the growth of our fastest growing pillar, which is HOA. And our franchisees that get into HOA are growing at about 60%. Year over year, and it's probably because we just don't have a lot of competition and there's a lot less HOA property managers out there than there are residential property managers.

How do you, how do your franchisees report on, or, or how do they, what am I trying to say here? I'm interested in the relative margins between residential and HOA. My perspective on HOA is that it's very hard that you're the, the HOA board is, is likely to fire you for sort of arbitrary and capricious reasons and that it's low margin work. Am I wrong on any of those things?

You know, it's not as bad as you think, and I'm not going to share any profit margins because it varies quite, quite a bit between our more strategic operators and our, our newer franchise operators that are new. And it also depends greatly on how many revenue streams that that franchise partner is, is introducing into their, their companies that they're managing. And as you can imagine, the newer operators have, you know, a handful or two of the residual of the revenue streams and are more what we call strategic franchise partners are exercising, you know, dozens of revenue streams. In fact, that's one of the key things that our franchise offers is you see the majority of these property managers out there, smaller mom-and-pops like I mentioned earlier, they're really only participating in maybe 3, 3 to 5 revenue streams. And what our franchise partners are able to participate in is just literally dozens. And I'm not talking about tick-tacky, you know, fees and things like that. These are legitimate programs that we offer through technology and and the partnerships that we have with different vendors that create those revenue streams. And it really allows our franchisees to be so much more profitable than a typical property manager out there.

Yeah, that's great. So if, if someone wanted to start a property management franchise, first of all, are they even allowed to do that if they're not located in Salt Lake City?

Oh yeah.

Okay. I just wanted to check, 'cause I know that, but there's a bunch of you guys are located in that same city. It's funny. Okay. Sorry, I had to, had to get that little jab in there. But seriously though, if someone—

Yeah, we, we started in Vegas, ended up, you know, I was from Salt Lake. Just so happened that Real Property Management was located in Salt Lake at the time. This was before they got bought out by the Neighborly Network. And then you've got Keyrenter that started out. They, They started up about 4 or 5 years after we did, but all 3 kind of were operating in and out of Salt Lake.

It's remarkable.

So it's kind of a funny joke.

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Yeah, I mean, first off, property management is not for everyone, and we kind of do a much better job nowadays than we did 18 years ago at screening our applicants and we make sure they have, you know, a nice, you know, you know, financial base where they can invest in their business and grow. It's not just about buying the franchise. It's about being able to do the advertising that require— that we require and really take the time to build the business. And so we're a little bit more sophisticated in the way we offer franchising now, but Even with 475 independently owned, you know, franchise partners out there, we are not sold out in most areas. We're still looking for franchise partners. And, and nowadays we're starting to see a lot more of these existing property managers converting their businesses into PMI and not just only operating with the startup level. Franchise partners anymore because these sophisticated property managers are seeing that, wow, you know, this is a national brand that's got a national footprint and it's got a community of, of property managers that are all lifting each other up. And it's, it's pretty crazy. I mean, what we've really built is a property management platform that no one else has. It's a community of entrepreneurs.

I got you, Steve.

You're a brain. You know, and they share best— Yeah, I hear you.

Yeah, that, I, I totally get it. I guess my question was really about if someone was going to start a franchisor like today, what would you— I just, because you've been in it so long, I'm curious what your perspective would be on like, I imagine it's been a ton of work and probably very hard for the first few years. I'm just curious how you would respond to that.

Yeah, I joke with my wife and sometimes my business partner, that there's no way I would ever do this again. So I don't know.

Say more about that. Like what specifically?

I don't know if that answers your question, but yeah, it was, it was that hard and it took that long. I mean, we had no profits for 5, 6 years and it was tough. And we, my partner and I just started out with this bootstrap mentality. You know, a lot of businesses dig in and get angel money, venture money, PE money, and, and we are, we're privately held and we just, grew the old-fashioned way. You know, when we had money, we'd hire that person we needed. And we've continued to just keep reinvesting into the money, into the company, because to build out these 5 pillars, it costs millions of dollars just to add a pillar to our network. And so just a lot of, lot of work.

Yeah. What was the breakthrough moment or year? Like what precipitated profitability or a new level of growth?

Yeah, it was, it was probably when we hit around 200 franchise partners is when we started feeling like, hey, we're out of the startup mode and we're actually getting some traction. And some of these franchise partners are really elevating and performing well. And that's where we started feeling like, hey, this, we are going to hit our vision of becoming a world's premier property management brand.

So just pure scale is just a certain number of franchisee locations. Suddenly, you know, the, the original locations were starting to make more money and— okay.

Yeah, yeah. Remember, most of the, the franchise partners that were joining our network were startup. Can you imagine, Peter? Because, you know, property management, well, you work with a lot of seasoned property managers. Can you imagine working with 100 brand new, never done property management before. Not only are you teaching them how to do property management, but you're helping them go get their very first door and then it's the second door. And it just took years. I mean, it was, it was really a slow, hard way to build, but luckily we powered through that.

Yeah, that's a cool story. I wanted to ask you about some of the problems that franchising can't solve. Like, there's a lot of advantages of partnering with a franchise. You bring some branding, you bring some SOPs and systems and 5 pillars. What are some of the things that no matter how hard you've tried, it's— you just can't solve it, and it's up to the individual franchisee to really crack that nut?

It's the growth side. It's the It's the marketing. Even with all the marketing that we do, you know, we have national marketing awareness campaigns where it's really kind of brand awareness. In 2025, last year, we generated 83 million impressions just with our national marketing campaign. We provide our franchise partners with websites and social media posts and things like that. But still, they still have to get out there. I mean, this is a boots on the ground, as you know, belly to belly, local business. And that's what we love about having our partners be just local owners, because most of them really care. Yeah, they get out there. But, you know, as a franchise, a lot of times you get these partners that have this impression that, hey, I'm paying for a franchise. It's almost like they have this mentality of Hey, corporate's going to do the work for me.

Where are my leads?

Yeah, exactly. And that's, that's probably the biggest problem or hurdle that we face is just helping the franchise partner know that, hey, you know, we help you with this, but it's still up to you. You still got to get out there and generate your local marketing. And we have all the tools, you know, localized marketing campaigns and and things to help them out greatly, but it still means they've got to get out there and do it. And we can't build the business for our franchise partners.

Yeah. Yeah, that's fair. Back to the pillars for just a second. Two follow-up questions on the pillars. One is, how about brokerage?

Yeah, it's funny you bring that up. You know, I didn't list brokerage as a pillar. And but brokerage is a big component of what we offer here at PMI. And it's funny because brokerage, you know, most franchise partners have to have a real estate license depending on which state they are. I think there's only a handful of states in the US that don't require a license to do property management. But we still require even in those states, our franchise partners to get a real estate license. And brokerage works with every pillar. You know, you're working with these investors, you're working with these tenants and guests and homeowners who are buying and selling properties every day. And there's no one more sticky than a property manager. You know, we're, we're not a realtor that pops in to do a transaction every 5 years. And no, no diss on realtors. We're there, as you know, as a property manager yourself, we're there every day. You know, we're talking to these owners and tenants more than we want sometimes, and they all know that we're licensed realtors. And so we do get a big opportunity to list and sell properties to help these owners, these investment property owners increase their portfolio, or when it's a time when they want to, you know, sell some of their properties, we're the first ones we hope on their list. And so we created a brokerage component to our business. We don't call it a pillar because it's not really property management.

Okay.

One time we were calling it a bridge because it really bridges over all 5. But yes, we offer a full-service brokerage training support. We have a full-time brokerage team on staff that trains our franchise partners helps them hire agents.

I might need to ask you about all that because we don't do brokerage and I feel like we're missing a big opportunity. I need to license that little module from you or something because we just don't know how to do it. I mean, I'm a broker, but I've never bought or sold a property. I even use a realtor when I transact.

You just refer it down the street, you know? Yeah, that realtor probably loves you and he probably gives you, you know, his property management referrals. But I'm telling you, Peter, you're leaving a lot of money. You know this. There's, there's a lot of brokerage.

Yeah. Okay. Now, last question on the pillars is, are you concepting a 6th pillar? Is there any skunkworks project, beta testing? Just curious because you're seeing out— you're seeing a lot and maybe you know something I don't.

That's a swear word around here in our corporate office. You know, we, we have our hands full with 5 pillars. You know, no one's— no one's offering. No one's doing what we're doing. In fact, Some people have told me that we're crazy in what we're doing, but it's really kind of a strategic hedge. You know, people don't look at it this way, but, you know, our 475 franchise partners, more than 50% of them, Peter, are operating in more than one pillar. You know, we didn't think that. We thought, you know, most will just come in and really just do one. But once they come, become efficient in one, they realize how easy it is to add and they're getting those inquiries to do HOA or short-term rental or whatnot. And so it's a no-brainer for them to pick up an extra pillar. The costs are really inexpensive. We don't, we don't charge much to add an extra pillar. They do have to come out and do training for that pillar, which takes some time, but we can have them up and running in that new pillar within a month or so. And it's it's that strategic hedge that I mentioned earlier. These help our franchise partners diversify and stabilizes their revenue because residential cycles differently than short-term rental. You know, in short-term rentals, even if you're like managing in Park City, Utah, and you're doing short-term rentals, there's a season for it that's bigger and stronger than others. And so our franchise partners love when they have that capability to add a second pillar because it really just diversifies their, their portfolio. It provides scale to their business and it just helps them grow differently. Like that 5-pillar model protects our franchise partners from single sector risk and we feel it makes our partners more recession resistant.

Yeah, I mean, brokerage is going to be countercyclical from, from residential for sure. When, you know, when property values go up, owners sell. That's tough on the property manager, but they can make money on the brokerage side and vice versa. So yeah, that, that tracks for me. I want to ask about how many of your franchisees own multiple locations.

I mentioned that over half of our franchisees are operating in multi-pillars, but that's out of one location. And I don't know the exact number, but this is another cool thing that we're seeing in our growth recently is these proven franchise partners. You know, once you, once you've done it once, it's really easy through a franchise model to duplicate that model. You know, you often hear, you know, these guys that own franchises like Subway, that they own 10 of them, you know, It's because it's really easy to duplicate through a franchise model. And so we're starting to see a lot of our franchise partners pick up additional locations. Another big component of our growth is our acquisitions. And we have—

yeah, I wanted to ask about this.

Yeah, we have a full staff, 3 full-time financial acquisition team members whose sole responsibility is to help our franchise partner find acquisition opportunities. And when I say acquisition, I'm talking about these other, you know, property management businesses, portfolios that might be available in or outside of our franchisee's operational territory. And, you know, in property management, it's tough. It's a tough business. And sometimes operators, they just get burned out or they get worn out or they get tired and they want to do something different, or they build their business to such a value, they just want to take some chips off the table and, you know, liquidate some of that asset a little bit. And so this acquisition market is massive and we have advertising campaigns that this acquisition team does. You've probably seen them like value your property management portfolio.

Yeah, let me just— let me toot your horn for a minute. Yeah. So, I mean, when you say that you've got people on your team doing acquisitions, I think a lot of people are sort of rolling their eyes like, okay, this guy says he does everything. He's got all these pillars, he's got all these locations. He says he's got these acquisitions. Let me tell you, there's a lot of activity happening with this part of your business. Yeah, I see it.

Let me share you some stats because it's It's kind of mind-blowing. Just 2 years ago in 2024, we did $7 million in acquisition. Now when I say we did $7 million, this is our franchise partners buying. They're buying just, you know, this, the, the little mom and pop shop down the street that has 100 doors. You know, they're picking them up for usually a really good price. These are off-market deals typically that we're finding for our franchise partners, or they're doing, They're finding them themselves just through networking and being out in the community.

Yeah. And let me clarify, this is, 'cause this is a little confusing. If you're listening to this, you haven't been familiar with what's going on here. This is not PMI buying doors for their corporate locations, nor is it PMI buying offices and turning them into franchises. This is PMI on their franchisees' behalf sourcing and finding books of business and companies for sale, then matching those with their existing franchisees to help them grow their doors, which is, as far as I know, no one else is doing that. It's fascinating and it's, in my opinion, from what some of the data, and maybe you're about to share some, it's one of the largest acquisition motions in the industry.

Yeah, we, we jokingly say we are the largest buyer of property management portfolios in the world.

That would not surprise me.

Yeah, because we're doing a lot. I mean, a lot of them are just small, you know, like I mentioned, you know, we have a lot of small franchise partners that just want to buy the 100 doors from that guy down the street or this small short-term rental business, you know, on the beach. And so in '24, we helped our franchisees acquire $7 million worth of these businesses. So pretty small. The average deal is around $250,000. You know, they're getting SBA loans or whatever to to buy these businesses, but through our programs and our systems and these revenue streams that I talked to you about earlier that really help us make a lot more revenue per door than a typical operator does, we're able to buy those businesses and really scale them to profitability really, really quick. And so our franchisees, you know, saw this and they just really have been getting behind it. Last year in '25, we did $18 million. In acquisitions, so more than 2.5 times what we did the previous year. But here's the cool thing. The average deal size was $660,000. So still small. These are smaller companies. Our goal for '26 is $50 million.

Love it.

It's just skyrocketing. And I think it's because the franchise partners are like, wow, you know, I'm not just gonna grow my business one door at a time anymore. Yeah, I'm going to grow this thing in huge leaps and bounds. You know, we have a professional service that helps them value. We can tell them when they're— when they've got a really well-priced acquisition opportunity and when it's fair and when it's not looking that good. And, and, you know, we help them with all the gotchas in acquisitions because there's a lot of ways you can really get hurt if you don't know what you're doing in an acquisition. And because we do so many of them, we help them with, you know, all the documentation, the legal and, and the acquisition and the financing side. Again, we're not doing it for them. We're helping them through all this process. Well, it's cool.

Yeah, I think it is really cool. And it's interesting because the incentives are really aligned here, much more so than— so when you do a transaction, when you buy or sell a business, every single person you deal with in that transaction is— does not have their incentives aligned with yours. Every person you deal with, their incentive is to get the deal done because they make their money and then they're out of it and they're— they make their rip and they're done. And of course, the person on the other end of the table is completely opposite from your incentives. But with what you guys are doing, your incentives are completely aligned because you make money in the long run, just like the buyer does. As a, you know, as your royalties. So the last thing you would want is for a franchisee to overpay or buy something that they're not going to be successful with because you're going to do all this work for them and then all those doors are going to walk right out the back door and you're not going to make any extra money on the royalties. So this is cool because your incentive is like, hey, let's find great deals for our franchisees. They're going to buy these and add to the revenue of the business. That is how you make your money. Yeah. So it's a, it's an unusual thing to find incentives aligned in this way, which I think is worth calling out.

Yeah, we call them— thanks for saying that. You know, we, we call them franchise partners for a reason because we are partners together in this business and we truly only win when they win and we win together. And so we don't compete with our franchise partners. We don't have any corporate-owned stores. That's a very different model than a lot of franchisors. You know, they'll go out and they'll do these acquisitions and things on their own.

And they'll cherry-pick the good ones.

Yeah.

Yeah.

You know, there's a group that did that and kind of is phasing out of the franchise world because they've done so much corporate-owned, you know, locations that it's just kind of overpowered their franchise side. And then, uh, they went in and tried to buy a bunch of their franchises. And it's just a model that we don't feel is a way to build trust with our franchise partners.

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Yeah, great question. We call it getting stuck in transition and it's right around the 100-door for a residential property manager, it's right around that 100-door, 150-door maybe mark where they're big enough where they can't do it alone anymore. And if they're still trying to do it alone, they're just burning that candle at both ends.

And you mean literally alone, not like the figuratively alone of like not within the franchise network, but you mean like literally by themselves?

Yeah, I'm talking about your average property manager out there in the US with a 75 or 100-door portfolio. Portfolio and they're grinding. They have limited systems. Their marketing is probably limited to some business cards and, you know, maybe a website that's not generating much for 'em. And they literally are just stuck. And we love working with these type of operators that are stuck because really they, they have the keys, they know how to do property management, they just need a little help.. And we help them, you know, by putting together those processes, the systems to streamline their operations of their business, help them out with things like RTMs, remote team members that are less expensive, that can help them scale quicker. You know, we do a lot of the marketing, the national marketing and things like that. We plug them into a tech deck with proven industry best technology. That helps them operate more efficiently.

Tell me about like the mindset, though. Like what has to change in the property management operator to break through? Let's assume that you have all the resources in place, but that was always true. So what has to change in the mindset of the operator to break through to that 200, 300 door mark?

Yeah, it's tough for a lot of people because they've got to be willing to to trust the system and pass off some of those responsibilities to other people. I dealt with this, you know, years ago in just the franchise side of the business where I felt like I was the only one that could do all the things. And it just got to the point where I was killing myself and I just had to trust the team around me and the systems that we were building., and it was a big lesson for me to learn. And I think a lot of these solo operators that are stuck in transition, you know, that are out there, you know, they— that's, that's the only advice I'd give them. Trust that there are people that can help them. There are systems that can help them smooth things out.

Yeah. On that subject of growth, are you seeing your most successful partners price aggressively? In other words, compete on price, lead with price, or are you seeing your most successful partners not compete on price and instead articulate some other unique differentiator in a sales conversation?

Great question, because we see our new startup guys go out there. They're willing to do anything to get their, you know, get their doors and build their portfolio. They take the crappy properties that are with the owners that no one is in the, in the neighborhood wants to work with. Yeah, they cut their teeth on in the industry with that. Been there with that. We're okay with them competing on price because they're learning, but we teach and coach against that. Our strategic property managers, that's the first thing you see them doing is, you know, they, they're competing on what they're providing and what service being offered is all about. And what they're able to do that the other guys aren't, and just really creating that trust between themselves and that, that investor.

Yeah, I think you're right. It's, it's definitely an evolution that we went through that same transition. We started out, I would take anything. I mean, I was going into these neighborhoods, I was scared, you know, I was just— but eventually you get to the point where like, it's not worth it. And those owners actually they don't have the money anyway. The low-rent properties, the owners have the least amount of money to spend on property management fees and repairs and everything else. So we moved away from competing on price. But I just wonder if, like, I wonder if it ever swings back around. Like, once you get big enough that you do have, you do have the service and the differentiators in place, can you then be so operationally, operationally efficient that you once again compete on price and you're delivering not only all of the values and benefits, but also you're like a really aggressive price. Yeah, that seems like it would be a killer combo if you could do it.

You always have to be competitive in price. You know, you have to be in this industry. But at the same time, any seasoned investment property owner knows better than to just hire the cheap guy. Because you usually get what you pay for, right?

Yep. So in terms of, I want to ask you again, like just because you see across a huge platform, guarantees is a topic that comes up a lot. Rent guarantee, lease guarantee, eviction guarantee, pet guarantee. Is this a part of your platform? And if yes or no, What's the reason for it? What are you seeing as the advantages, disadvantages?

Yeah, good question. You know, that's a broad question, especially when we're running 5 different pillars and we have different programs, different guarantees in each of those pillars. And yeah, it's a word that both tenants love to hear, owners love to hear. So I can say it is used. We do have programs that use that. We even have a professional alliance guarantee, which is the agreement that our property managers have with the realtors in their area. So any property that that realtor refers to them to manage, that if it ever comes on the market or if ever the owner says, hey, PMI, list this property for me, you know, we can, as realtors, we refer that back to the referring agent. We call that our professional Alliance Guarantee. But yeah, we have a lot of guarantees, several in our program, and it works. You know, it's a little nerve-wracking to be the business owner when you've got a bunch of guarantees out there because sometimes, as you know, guarantees are misrepresented or misconstrued.

And even when they're not, we just make mistakes. You know, we guarantee this, we guarantee that, but if once in a while a mistake's gonna happen, Sometimes I like to talk about this statistic I read years ago, which is that the error rate for an average US office worker is 3%. It's 3%. So if you have, you know, property managers and admin assistants and leasing people making hundreds of decisions a day, sending hundreds of emails a week, there's going to be errors. And of course, it's all about how you handle it and everything else. But yeah, you know, we don't have guarantees right now, but it's something I've been thinking about. I've always wondered if prospects would respond to that language because I feel like it's overused. But if you're telling me they do, I believe you. So maybe we'll look at doing some of these guarantees. So good insights on the topic of churn. So churn, churn was down for us last year, but the year before that and the year before that and the year before that, it was pretty bad. I'm curious what you're seeing across your platform in terms of owner churn trends.

Let's start with that. Yeah, churn is a swear word around here too. We don't like to talk about it, but we have to. Just like your results, ours were similar the last couple of years. We had significant churn, not necessarily because anything that our franchise partners were doing wrong,. It was just where the industry and the, the market was taking.

Totally. And that, that's what's interesting about seeing across hundreds of offices is like, if you see that churn was up in 2024 compared to 2023, that's clearly a secular thing. It's, it's not as if suddenly all of your offices are making the same mistakes at the same time. And there's clearly something broader happening.

Yeah. But we address churn, we talk about it. Openly with our franchise partners and we train on it in our training and our coaching. And so, you know, it's something we're very aware of. It has gotten, it has improved over the last year. In 2025, we had much lower churn than we had in the two previous years, which we'd love to see. But, you know, I can say because of that, we are much more aware and our franchise partners, you know, are coached to, to do things to avoid that and look out for that. Yeah.

What, what are some of the most effective inoculators? Is that even a word? How can I inoculate myself against churn? What are the, what are the fixes? Give me the hacks.

Give me the tricks. Yeah. I wish there was a real secret sauce that I could share with all the property managers out there that are listening to, listening to this podcast. But the reality is you just have to be in with and have that relationship with your owners and where they do trust you. And when they trust you and they can rely on you for real asset advice, asset management advice, and helping them through those, those rough times with their, with their properties and helping them find ways to adjust and scale that rental property. We saw people pulling out of short-term rentals a few years ago and converting those properties into long-term residential. And with our multi-pillar approach that we had, if that franchise partner was in both those pillars, it was really easy for them to suggest and coach that investor on that type of transition and to help them, you know, with things like that and just be able to advise them on better strategies is, is the best way to, mediate churn, in my opinion.

That's great. In terms of that relationship with the owner you're describing, do you prescribe an organizational structure to your partners? Departmental, portfolio, pod?

Curious about that. You know, I don't even know how to answer that question. You know, we, we coach our franchise partners. We have set programs, we have set structure, But it doesn't mean that our franchise partners do it exactly that way. And we're okay with that too. There's a lot of creativity that's allowed in our brand and our franchise partners are, and what they do and how they manage has helped build our brand to what it is today. You know, I wish, I wish I could say 18 years ago that Chris and I had this amazing vision of being, you know, this property management platform and 5 pillars. But it didn't really happen like that. We started out as being commercial and residential offering only in our franchise. And what we had was a franchise partner. He was actually in Maui and he just purchased the franchise. And at the time we were just teaching him how to do residential and commercial. And he said, hey, there's this new thing called Airbnb out here and I want to give it a try. And I literally said, I have no idea what you're talking about. We, we don't do short-term rentals in our franchise. I said, but if you think there's opportunity there for you, go ahead and try and we'll work with you and, you know, see how it, how it pans out, literally. So the guy kind of created his own systems because we didn't have any. And we watched the startup franchise partner grow to be one of our top 10 performers. And we thought, oh, maybe we should give a little heed to this short-term rental industry. And that's what spawned our short-term rental pillar. Shortly thereafter, we had the same thing with HOA where we just had franchise partners that were experimenting and playing and, you know, doing, you know, creating their own, you know, processes outside of what we offered. And we saw the opportunity with HOA. And so we really give the credit to what we have created here at this platform to our franchise partners. They've helped us build what PMI is today, and we still embrace that that open-mindedness. You know, we're all entrepreneurs. We work with entrepreneurs in our business, and we're entrepreneurs here at PMI Corporate. And we have— it's one of our core values is entrepreneurship. And we love to say we find a better way because we're not locked into the technology that we use. We're not locked into the system, and we're always looking for ways to improve And to round it back out to your question, it's our franchise partners that are bringing some of these ideas and technology to us.

That's awesome. What's the hardest decision that you've had to make when it comes to choosing between rapid growth of your platform and protecting the brand? I'm sure you've had opportunities to grow quickly or to sell to different types of people. You could grow, you know, your count in terms of locations, but you decided, hey, this isn't in alignment with what we're about.

Yeah. Yeah, we get offers all the time, as you can imagine. And it just, you know, right now our vision and mission are our core values. Have a real tight focus and it's not about money right now. It's about achieving that vision, you know, to become a world's premier property management brand. We're, we're still a long way from that and there's a lot of work to be done. There's a lot of opportunity to be that brand. And can you imagine in the United States if there was a property management brand that every investor knew about. It was located in every city, every major city and state across the US. They all referred business back and forth to each other because, as you know, most investors own properties, investment properties in multiple towns and cities, and they know that they can trust this brand because they've had great success. And that continuity with the systems, the processes, the— yeah, is simultaneous throughout the brand. Can you imagine what that type of value would be to the property management industry if there was a brand that could do that? And we feel it's ours for the taking. We feel that we can achieve that. We need bigger, better operators. That's why we love that our franchise partners are doing these acquisitions. We're really heavily leaning into the conversion market where we work with these existing property managers that are tired of doing it on their own and they want to be part of a bigger community, a bigger brand, and they still own their business. And so that's how we feel we can accomplish that vision and that goal. It's not by taking lots of money on, it's, it's just by really working hard, working with great people like that are in our industry.

A couple thoughts I had from that. You mentioned beginning of that answer, you know, offers. And I don't know if everyone listening knows this, but a franchisor with hundreds of locations is a highly sought-after asset by private equity, among others. And we've had examples of franchisors in our space who have sold to larger type, you know, institutional money. And you guys haven't. So for whatever that's worth, I wanted to highlight that you've said no, surely, to hundreds of— I mean, just, just like you, if you, if you're listening to this, you own a management company, you're getting these emails and calls too. Oh yeah. And the franchisor is even more so. And the, the numbers have a few more zeros on them. So pretty, pretty exciting stuff.

I mean, the consolidation is out there. Every property manager is getting the emails, they're getting the calls. Yeah. And you see it happening. I mean, you just saw the Pure Home River consolidation and, and in the HOA side, you know, there's these giants like Associa and FirstService Residential and Cam Collective that are out there just buying up every management company they can. And it's all with PE money, all with private equity entering. And even these— I'm even seeing these PE groups creating their own funds to just buy up property management companies. They don't even really have a brand and a concept behind it. They just want to, you know, kind of acquire all these real estate companies because they see the value in our industry and how it's recurring revenue, recession resistant. And they love that. And so the big guys are coming. They're trying to do it with money. We're trying to do it We feel like PMI is the entrepreneur's answer to consolidation and where we work with entrepreneurs and help them get the win. They, they grow the business as big as they want. They can own 10, 20 franchise locations. They get all the upside. That's what we love about it.

It's really— yeah, I mean, there's— if you look at other sectors in franchising, I mean, famously Panera, McDonald's. There's a few, there's a few areas where you see franchisees with hundreds of locations that they own and operate under the franchise brand, driving hundreds of millions of dollars in revenue. It's actually quite remarkable.

So that could happen. We have a club we call the President's Circle, and it's for any franchise partner that does an acquisition or a series of acquisitions totaling over $1 million in a 12-month timeframe, they're invited to this President's Circle and we take them all expenses paid to an exotic resort once a year and just got back from this President's Circle trip. And one of the franchise partners that was on that trip, his goal is to, to pick up 10 franchise locations. And he's doing this, Peter, through acquisitions. Like, he'll use our acquisitions team to source a business, and then he'll buy— he'll, he'll buy that business and buy a franchise in that area, convert that business with the PMI brand and systems. And his plan is to buy and purchase $10 million in, in these acquisitions over the next 5 years. Wow. And he's, he's already halfway there. So, you know, exactly what you're talking about, these, these multi-unit franchise owners is what, what they're referred to in the industry is even coming into our space where they see the value and they feel like they can do that better with PMI than doing it on their own.

Yeah. You mentioned sort of wouldn't it be cool if there was a property management company that all the investors knew and it was in every city and everything? I want to ask you about in, in order to realize that dream with 100, even now with hundreds of locations, you are going to occasionally have a member act poorly, deliver poor customer service, steal, harass somebody, violate for housing. I mean, even if it's only 1 in 100, you've got hundreds of locations. So how do you protect the brand in that scenario?

Yeah, you talked about one of the hard things that's kind of out of our control and stuff, it's, it's that, you know, we can't— we're not running these businesses. We work with our franchise partners, but from time to time we do have those situations. And, you know, we try to correct it and work with them. But sometimes you just— you're not a good fit. You're not a good match. Some people aren't, you know, franchise material. They just want to do things their way only. In those situations, we usually find a polite, simple way to— maybe it's not so simple, but find a nice way to just part ways and move on in our own directions. We had to do that a few times. Yeah.

And I think that's important because the other franchisees are counting on you to do that because it's their reputations. It's their and your logo on the door. So, but that's hard. I mean, that's gotta be a hard thing.

It's hard for the larger franchise partners, you know, when we bring a startup guy in there in their territory. Let's say you're in a big area like Atlanta, you know, it's not a one, one franchise only territory. You know, we'll open several franchises in Greater Atlanta. So you have a big, sophisticated, strategic franchise partner and we open a brand new startup guy, you know, on the other side of town. And it's hard for them sometimes to see these guys come in and, you know, like I said earlier, cut their teeth on, you know, rough situations. And we try to mediate that and try to make sure that the brand is protected and that we're all elevating and being strategic. And we use the word premier, you know, we're being premier together.

Yeah, that's great. Well, this has been really enlightening. We're, we're at time here. I wanted to really thank you for being candid with me and sharing some behind the scenes at PMI. For folks who want to follow along with your journey in PMI, where would you point them to?

PropertyManagementInc.com, or you can go to PMICorp.com to find out more information about us and what we're doing.

Okay, great.

Thank you again, Steve. Thanks, Peter.

Really appreciate your time. I hope you have enjoyed this episode. If you like the show and want to get connected to the community, You can follow me on Twitter @PSLohmann and subscribe to my email newsletter on my website, PeterLohmann.com. I try to share as much valuable property management content as I can on a regular basis. Thanks again for listening and have a great week.