Matt Tringali - Building An Education Business In Property Management

I really think the best marketing any company can be doing is to remain focused on your current clients and to recognize that A, losing a current client is one of the most costly things that can happen to your business, right? So I think you have to constantly be marketing to your current base. Too many folks have this attitude mindset that the marketing and the sales stops once they sign the PMA. But I mean, to me, that's just wrong. The marketing and sales never stop. And you made the point too, right, of like, wouldn't it be better to have a relationship with your landlord client where you have no like and trust and they want to continue to buy more things from you? Right. Well, in order to do that, you have to continue to foster the marketing and sales to that base.

Welcome to season 2 of Owner Occupied. On the business of property management. Owner Occupied is a show about property management in the real world. I'm your host, Peter Lohmann, co-founder and CEO of RL Property Management. For season 2, I have a different guest each week and we go deep into conversation about what actually works when trying to build and scale your property management business. Thanks for listening. Now let's go. Hey everyone, welcome back to Owner Occupied. I'm really excited today to introduce Matthew Tringali, my friend and a very deep thinker and a man of action in the world of property management. I'm excited to get into a lot of topics today, Matthew. So thank you so much for joining. And if you wouldn't mind, why don't you give the audience maybe 1 to 2 minutes of kind of your background and where you are today?

Yeah, awesome. Well, I've been called a lot of things, but I appreciate being called a deep thinker here. That was very nice of you. Yeah, my background is started in real estate investing and real estate sales, I guess probably around 2004. And as was the story for many of us, 2007, '08, kind of the earth came crashing down on real estate. And so at that time I had about 15 listings to sell for others and realized they weren't going to sell. And so my very first property management sales pitch was I went to those people and said, 'Your place is not going to sell, and I've never done property management before, but I think you should rent your house out. If you want to give it a shot, I'll give it a shot.' And we were all so desperate, they all said yes to that sales pitch.

Nice. That's a classic accidental landlord, that right there.

Yes, exactly. So yeah, and at the time, I just kind of thought property management would be this thing that I would do to bide my time. But after a couple of years, the management company is growing like gangbusters. And turns out I really loved that. And so really focused my attention there, grew my business a lot, and then eventually merged into a multi-state business with some other property management companies. And we actually have since sold to one of the national roll-up companies. Not sure if you even knew that, Peter.

I did not know that. We're definitely going to have to ask you about that.

Yeah. So yeah, and then during that time, started offering some variety of consulting services that we now have all packaged together at BetterWho.

Beautiful. Okay. So we're definitely going to talk about BetterWho. I want to stick with the management company here first. So roughly, if you don't mind sharing, and if you don't want to, that's fine, about how many units when you merged up with HomeVault? And then, yeah, why don't we start with that just to give a sense of scale?

Yeah. Well, the interesting part about that story is, is I had grown to the point that I was managing about 475 units. And this is actually a story that I'll be telling at NARPM National Convention this year in October.

Sneak peek.

Yeah, I grew to 475 doors and it was all about like, well, how many doors do you manage? And that sounded exciting that I was almost managing 500 doors, but I kind of had kind of a wreck of a business. I was not profitable per unit, did not really understand what I was doing. And so actually, over the period of a couple of years, took my business down to 175 units, but was very highly profitable, had the right target clients, just had all the right things going at that size. And it was at that size that I merged into HomeVault.

Okay. Wow. That's an incredible story. And I think within the circles that you and I run in, Matthew, there's a lot of discussion around profit over doors and making sure you have your systems and ops tight. But in the broader property management world, and especially like when I first started going to conferences, it really was all about the doors. It was like, hey, how many doors do you have? What's the number of doors under management? And I think it's been great for our industry that we've transitioned to focusing on quality over quantity and profitability over just raw door count. So I love that story. And that's a— even among those who have transitioned to focus on what we just talked about, that's still a pretty dramatic shrinking of number of doors under management. So you must have had some really strict criteria around who you wanted to work for, what type of properties, and I'm guessing that your profitability increased incredibly when you moved from that number of doors down to a smaller size.

Yeah, we were managing a variety of types of units and for a variety of types of landlords. We were trying to— you talk a lot about kind of one-offs and the damage that one-offs can do in your business. And my business was basically just one big mess of one-offs because I was trying to serve all of my clients however they wanted to be served. And so we had a pretty large institutional client. We had small multifamily, we had a medium-sized multifamily, we even had a trailer park in the mix. Like we just had all these things going on. And so, so yeah, we just narrowed down to the right type of property we want to manage, increased our average rent, really focused on the right area of single family. And our profitability— I made more money in terms of owner discretionary earnings managing 175 units than I made managing 475 units.

That is unbelievable. And I'm guessing it was maybe 10% of the work because not only did you get rid of 70% of your units, but those were all the worst and most burdensome units.

Most burdensome units. And then we got rid of all the needy clients and really stuck with clients that appreciated what we were offering to them. And so yeah, 10% of the work is probably about right.

Beautiful. Okay. And so you transitioned and joined up with HomeVault, which is— well, I was never quite clear on exactly what it is or was. So why don't we have you describe it since you were part of HomeVault?

I was part of a mastermind with some other property management companies for a couple of years, and we were really all just sort of encouraging each other. We collaborated on a few different things on how we could get some work done together. And the more we did that, they realized we were all very like-minded individuals in terms of how we were approaching business. And at some point it just made sense for us to say, hey, if all these things are, if we're taking the same approach individually, why don't we take the same approach together? And that was the impetus to merge into HomeVault. And it was truly a merger of property management companies. So we brought all of our companies together. We ran it from a corporate standpoint. We tried to centralize the right things and keep the right things localized and had a lot of fun doing it.

Okay. But it was pretty— from what I understand, it was still very distributed. Like, it wasn't like you all joined up and used the same software and the same— like, everyone was kind of still running their own business, but maybe a couple of things that made sense, you centralized that, like the home base or whatever.

What's interesting about that story is that there was a learning curve there where we did a lot of things the wrong way and then kind of figured out some of the right ways to do it. And that is what a lot of people think is they think, oh, you basically just put a name on these individual businesses. We're still running individually, but that's actually not at all what we did. We actually completely ripped the Band-Aid off, mashed everything together.

Oh, wow.

Yeah, we put everybody on the same software. We tried to make all of our management agreements uniform, make all of our processes and policies as uniform as possible. And what we learned was, is that we pushed too hard on that lever right out of the gate. And we didn't value enough the importance of localized management and that there really are nuances to what you do in Columbus, Ohio versus what I do in Charlotte, North Carolina that are just not going to translate perfectly. And so after doing that right out of the gate and realizing that was a mistake for us to try to force that so as much as we did, we really backed off of that and put as many things— we got more surgical in terms of figuring out what are the things we wanted to keep localized versus the things that made sense to centralize.

Very interesting. So do you think that the lever you discussed that you pushed too hard on and it didn't work, in a scenario where the locations were grown organically rather than sort of mashing together a bunch of existing property managers with existing clients, Do you think that would've worked better? In other words, take a brand new company that wants to grow to 10,000 units across 20 states. Do you think it's possible to have them all on the same software, all using the same PMA, all doing everything the exact same way, maybe with some minor tweaks and nuances state by state? Or do you think, no, it doesn't matter how hard you try and how greenfield it is, or do you really just need individualized operations for each region?

Yeah, I mean, it's a really broad stroke question that's hard to answer. I think that as you pointed out, right, there are state-by-state laws that have to be reflected well in the management agreement. And then, I mean, just using a small example, right? Like the eviction process. Every state's eviction process is, is rather unique. Some states you have to physically post notice, some states you can mail notice, some states you can just email. Some states you don't need any notice at all. And of course, all of those things are various day counts. All those things are different types of fees that you can charge, right? And that's just one process. And the problem is, is when you, you can sort of on the one hand be like, okay, well this is our general process and then we're going to have these sort of subprocess state by state. The problem is, is when you, if you try to centralize who is doing it, they're likely to, still make mistakes no matter how well you perfect that process. They will just simply forget, oh, in that state I didn't have to post notice, or last state I needed to post notice. And some of those mistakes can be very costly. So all that to say, I think it is possible to make things uniform as long as you still have the right localized people running the process who are just going, because there's some things that Again, no matter how well you document your process, you just get in a routine of how you do things regardless of what the process says to do. And so having the right people focused on the right things really makes a lot of sense there.

Great. I appreciate that clarity. So kind of moving along the timeline here, you just dropped a huge piece of news, which is that HomeVault sold. That's news to me at least. So obviously a lot of that I'm sure is under NDA, but are you able to share anything at all? How many units was it total? Who did you sell to? I'm guessing you can't say anything about price, but anything about how it was structured, how you went about that? Did you shop it around or did you just get an offer out of nowhere? Did all the partners agree? How was that?

Yeah. Wow. Yeah, that's really good to get into it. And I do need to pause and answer this question carefully because I even I get confused on sort of what does the NDA cover, what does it not. And so let me start with, yeah, we had some of those national roll-up companies that were starting to approach us. When we created HomeVault, we did not go into it necessarily with the mindset that this is what we were looking for as our exit. But we did always say we wanted to be built to sell and made to last, which is something that I think every company owes to themselves is regardless of whether or not you're going to sell, I think you need to be built to sell just because it's good for you, if for no other reason. And so we always sort of took that approach. So when we started getting the calls from the national roll-up companies, One thing I learned years ago in business is you always take the call. There's no reason to ever say no to a call. And so we took some of those calls and when we first started taking those calls, the timing for whatever variety of reasons was not sort of right for us, or the way the deals were structured were not right for us. Over a period of time, as those conversations progressed, we were able to sort of structure the deal in a way that became more interesting to us. For us, knowing the mission and vision we had and realizing the limitations we had in trying to do it in more of a bootstrap way versus raising capital, which we, we didn't really want to raise capital. And so just realizing we were only going to get so far with our runway. And so we ultimately sold to Pure and we felt like their vision matched a lot of our visions. So that was important to us. Is to buy into kind of some of that vision and just to realize that their runway was a lot longer than our runway ever could have been. So yeah, you know, there wasn't— in our case, as a merger, we did, as you pointed out, we had a board of decision makers, and the decision to sell was not contentious among us, but it wasn't necessarily obvious or uniform among us either. And so we all had our own sort of various personal motivations as well as the right motivations for the company. But yeah, we, we were able to have a good meeting of the minds and determine what was best for HomeVault and move forward on that path.

Okay, great. And I think Pure makes sense to me. I mean, that— I think they're— what they have going on aligns well with what I know about HomeVault. And also, I could see you all getting along very well because both groups, I think, have a lot of industry veterans, high-quality, high-caliber individuals. Well, congrats for being a part of that. That's really neat. Are you able to share how many units HomeVault was overall at the time of sale?

Yeah, don't hold me to it. I had sort of, even at the time of sale, had put myself into a position where frankly, I wasn't that involved in the day-to-day of HomeVault Property Management and had really transitioned to already being full-time in our consulting business at BetterWho. But I think our total unit count was around 900 or so.

Okay, great. That's good to know. I want to take a moment and thank the FoundGen for sponsoring this episode. Some of you may know James Shulman from Twitter. He's pretty active on there and he's a great follow if you're not following him already. James and I met through Twitter about a year ago and I've been working with James and his team at the FoundGen for just about a year. So you can think of them as a friend. Fractional CMO and marketing department. So James and his team handle a ton of marketing work for our business. Let me just give you some of the capabilities that they have. And this is all the work that they're doing for us. They're handling content creation. So they're writing in-depth detailed articles that get published through our email newsletter, as well as our website on our blog. And You can check that out at rlpmg.com/blog if you want to get an example of content that they write. So it's not just fluff, you know, someone Googled for a few minutes and wrote a few sentences and, and fleshed it out into a full article. These are legitimate content pieces that I feel comfortable publishing on my website. They also handle social media posting, podcast publishing, email marketing, which I just mentioned, webinars, any graphic and design work that we need. They're really just a full marketing department for us. Knowing that my marketing is being handled by professionals takes a huge weight off my back. It lets me focus on the business instead of working in the business. Contact The Found Gen and they will conduct a marketing audit for your business. You can learn more at thefoundgen.com. Now let's get back to it. And thanks for sponsoring the show. So you and I had a great discussion last year at a conference in Fort Lauderdale about maintenance revenue. So we have an in-house maintenance team here at RO Property Management. We've got about 7 maintenance techs that work directly for our company. They do work on our clients' properties, and then we bill our clients for that work. And what you and I were discussing is when you're looking at the financial performance of a property management business, should you include that maintenance revenue? And I felt that you should, because I felt it was integral to the business. And who doesn't want to see a bigger number? And you felt like it shouldn't, because you basically made the argument that, hey, this is a completely different business. And that it really actually would almost make more sense as like a separate entity altogether, with its own mission, vision, values, KPIs. And everything else. And we had a really fun discussion about this over a couple beers, and I actually came away from that and thought about it over the next few weeks, and I think I now agree with you. So that was fascinating, and that discussion turned me on to the level of detail at which you think about these types of problems, which as an engineer, I appreciate. So one, I guess the question here is, where do you learn or where do you turn to when you are wanting to learn more about our industry, our business? Like, who do you like to read or listen to that's helping you cultivate some of these original, well-thought-out positions?

Yeah, well, I mean, my biggest thing is I really enjoy failure and learning from my own mistakes, rightly or wrongly. I just have always been that way. Firstborn child that was just sort of stubborn and always had to pave my own way. So that can be painful, but I do truly love failure and think failure is one of our greatest teachers in life if you're willing to stop and evaluate and learn from it. My answers to your question of who else I look to won't be surprising. I mean, Jordan, who is a good friend to both of us and kind of put us in touch with each other in some way, has been very influential over a lot of my thinking. And of course what he rolled out with, uh, Danny Craig at Profit Coach, really respect the heck out of those guys. And, and when I think of who has changed the industry, like actually impacted the industry the most, I think the work that they've done at Profit Coach just completely changed our industry for anybody that's paying attention. And I think they're going to do it again with this second iteration of the NARPM Accounting Standards that they're working on now. So those guys certainly come to mind the top of my head. And then yeah, lots of just various reading, a lot of the typical books we would all know. And then you really, Peter, have turned me on to the fact that I need to be doing a better job of looking outside of our industry for more inspiration. I think that we have come to a place where there has been a lot of good thinking that's insular to our industry, and I think there's now becoming a lot of groupthink within the industry that may or may not be good, but without more of us looking outside of the industry for more inspiration on kind of how business is run in general for businesses of our size, to learn other things. I think that's going to become very important over the next few years.

100% agree with that. And I think about our industry, we are certainly the least professionalized industry who has a fiduciary duty to their clients. If you think about the other industries where you represent a fiduciary responsibility to your client, lawyers, financial advisors, doctors. But property managers are sort of thought as low-level, tactical, just boots-on-the-ground folks. But in many states, including my state of Ohio, we have a fiduciary duty to the owner. And I think if we as an industry want to sort of grow up and become more respected by the general public and more well understood, We have a lot of work to do. So I definitely agree, we need to look outside the industry for some of that new ways of doing things and new ways of thinking.

I think there's a good reason for that, by the way. And this is one of the things that I've been thinking more about recently and putting into some of my talks. And that is the property management really— anybody who's in property management in general, probably 80, 90% of us sort of birthed from one of two past histories. And one is you probably either used to be a real estate broker, which frankly suffers from the same problem of professionalization that you just talked about. And the vast, vast majority of real estate agents are kind of doing it as a side hustle or might only do it for a few years or, or whatever the case may be. But they've— but very few of them are really approaching it with a business owner's mindset. And so a lot of property management companies have grown out of that. And one of the issues there, too, by the way, is when you're a real estate broker, your scope of service is literally everything. You get this big, large, lumpy check, and for that big, large, lumpy check, you will do anything that that client asks you to do. They say, hey, I think somebody showed the house and they left the front porch light on. Would you go turn it off? You're going to say, yeah, no problem. You go turn it off because you're looking forward to this really big check. And so a lot of real estate agents bring that mindset with them when they create a property management company. Which is a huge problem. You can't do that in the property management industry. And then the second back history that a lot of us come from, and you came from this, is a real estate investor, right? So you have a certain way you're willing to manage your own portfolio of rentals, and you just assume that's what's going to work just as well as a third-party fiduciary. But it might not, and you might not even be your own target ideal client. And so that kind of comes with its own set of problems. And so I think that's a lot of the root of why the industry has been kind of held back for so long and isn't this respected profession that we all want it to be.

Yeah, that's a great insight. And I think there's a lot to learn there. Hopefully we as an industry can kind of graduate from this kind of like very basic level thinking around operations and finances. And move forward. I'd love to hear now about BetterWho and the work that you're doing there and sort of the evolution of your thinking and your involvement and your offerings that have culminated in what is now BetterWho.

Yeah. Well, thanks for asking that. And I don't want this to be a sales pitch, but I'll just tell my story and hope that it'll be helpful to your audience. But a big part of my story when I I first started property management about 12 years ago. There were a couple of books that were influential to me at the time. One is The World Is Flat by Thomas Friedman, which is actually a very old book now. It was written, I think, in the '90s. And what's so interesting about it is even back then when he wrote this book in the '90s, he said in, in this book that when you hire your CPA to do your taxes, your CPA's not actually doing your taxes. Somebody in India is doing your taxes. And so I just found that so fascinating at the time. And then I read Tim Ferriss's book, The 4-Hour Workweek, which is very popular around that time period. And he talks a lot about virtual assistants in that book and how to kind of leverage your own time. So I started hiring virtual assistants very early on. When I first started doing it, I was hiring people for like a dollar an hour in India. And you know, speaking of learning from my own mistakes, but it was an interesting experience and you know, I kind of found some things for them to do, but that really evolved a lot over time. And part of that turnaround story when I went from 475 units to 175 is we went to a completely virtual office. I ended up turning over a lot of my local staff that couldn't buy into the vision of the company. And as we did that, really replaced them with very high leverage, high talent remote team members from all over the world. And so some of my peers in the industry kind of started noticing that and just started asking me, you know, well, can you find a remote team member for me? And so that was sort of the origin story of, of BetterWho many years ago now. And so that kind of grew into what is our kind of core flagship offering at BetterWho, where we're doing about 30 placements a month right now of remote team members for other property management companies. And what we love about the way we're doing it is we're doing direct hire placement. So when we do a remote team member placement for property management company, they truly work for that property management company. We remove ourselves. We're not a middleman. And we're hiring from literally all over the world. We saw some limitations by just focusing on the Philippines and Mexico, and we're hiring folks in Eastern Europe and Central America and Africa and the Middle East and having lots of fun, lots of success there. But we didn't want to stop there. On all the lessons that I've learned, we really wanted to take a holistic full-stack approach to helping other property management companies. And this is where we developed our four pillars that we're really excited about. And that's better system, better team, better profit, and better growth. And that order is important to us because the mistake that we've already talked about here in this call that a lot of companies make is they grow before they've actually fixed their unit economics. And we just think it's really, really important to focus on system, team, and profit before you even worry about growing. And so that's a story that, that we're telling and bringing to the industry. On the Better Systems side, I know you operate with EOS at your company, and I can see how that's been a huge success for you. As you know, I used to be an EOS implementer, and that was really fun, but I found some limitations as an EOS implementer. I had to do sort of what they call "pure EOS," and I really wanted to bring something that was more unique to the property management industry. And so it took a lot of the things I learned as an EOS implementer as well as from other places and package together a system implementation specifically for the property management industry. And we're having a lot— seeing a lot of great success with our clients there as well.

Very cool. So I've been trying to branch out a little bit in my knowledge, and one of the things that I've learned from kind of looking at other industries and looking at sales and marketing folks who are not in the property management space but are at the top of their game which I think you've done a really good job at is I think most small business owners think of themselves as offering a specific line of service. Like we offer plumbing or we offer property management or we offer dental work. And so they form their identity around that and they form their business around that. And It's very limiting because your customers are picturing you in like a very narrow box, and you are— if you try to grow your business, you really only have one way to do that, which is to bring in new customers, or you could potentially expand your service offering within that specific vertical. But what I think is a more powerful way to frame this is you need to think of yourself in terms of serving a specific audience. So instead of saying, hey, I offer plumbing services, what if instead you framed it as my customers are millennials who own old homes? And yeah, we do offer plumbing services because old homes have a lot of plumbing problems. And by the way, we customize our messaging and our delivery to something that resonates with millennials. But think about what else you could offer millennials who own old homes. There's a lot of different services and products you could sell to that audience. And this is what I see you doing with BetterWho. Instead of just saying we are a remote team member placement service, and customers place you in that box. Instead, you are a solutions provider for property management company owners, and we have coaching and we have remote team member placement and we have 3 or 4 or 5 other lines of business that we can offer to that audience who, by the way, already knows, likes, and trusts you guys. So really, really cool stuff. And I'm curious, what was the impulse for you to go hard in this direction? Because I think a lot of people who own property management companies would not be as comfortable as you are with making such a hard pivot into what is essentially like a— it's a services business, but completely different from property management.

Yeah, well, everything you said is really cool and really interesting. It comes with risks, though. And so, you know, you do have to be careful that you just don't become known as this like, oh yeah, I do everything. Because, you know, if you do everything, that, that kind of can mean you do nothing specific or nothing well. And so I think you have to craft that message very well and tell your story very well. For me in particular, little known fact about me that probably not a lot of people know is for a period of time I was a teacher actually. Actually when I was getting my property management company off the ground, I worked part-time for this small private school. And taught physics and geometry on the side. Yeah. And so, and it was just fun for me, you know, these are things that I just have a natural inclination to. And so I've always loved teaching and it's always been something I've been very, very passionate about. And so, and then especially when I hired an EOS implementer to help me in my property management business, he, he was great. And, you know, I watched what he did and just immediately thought I would love doing that. And so that just element of me being very passionate about teaching and educating others, and also being somebody who just loves kind of strategic and critical thinking and, and problem solving were things that I knew that I could just bring together well to provide clear insights to other small business owners and provide solutions to those insights. And so the one obvious one that people were asking me for was, was remote team replacement service., but I knew that I could package that into a holistic approach to solve a variety of problems because I didn't wanna just help them with that one problem. I really wanted to identify what is the next goal that you have in your business and how are we going to get there? And I knew that I could put together a strategic roadmap to help people get from point A to point B to point C and so on down the road. And ultimately my passion is for fellow small business owners to just like in the book E-Myth Revisited, I read so many years ago, right? Like you don't want to be a business operator, you want to be a business owner, but it's so much easier said than done. And so I just have such a passion to help other small business owners do what you just did coming off of a 5-week vacation where you completely ignored your business. I want that for other small business owners and they deserve that. That's what they deserve in a business.

Yeah. And so as part of facilitating that for property management company owners, you guys just launched this thing called a Company X-ray, and you had me walk through it, which is basically like an online form, kind of like a smart form. There was some logic happening behind the scenes where I entered basics about my company, company size, company revenue, how many employees, what's our profitability, and you came back with some really interesting metrics and then kind of like a score on here's how you're doing in profitability, here's how you're doing on growth, here's how you're doing on operations on like a scale from 1 to 10. So share a little bit about what that is and what your goals are for it. And I don't know if you had a chance to look at my results. Maybe we can talk about that.

I did look at your results. You did pretty well and that was fun to see. Yeah, we just had this vision for it's like, okay, so I want to be able to help small business owners, property management companies with whatever area of their business they need to focus on to help them achieve those goals. But it's a hard message to convey if somebody just asks, what do you do? It's like, well, what do you need? That's how I can help you. And so we really wanted to design this tool to give somebody in a quick 10 minutes— is that how long did it take you to fill out the X-ray, by the way, do you think?

Less than that. I wouldn't have had patience if it took 10 minutes. It definitely took me less than 5 minutes, but I also know my numbers pretty well.

Oh, that's great. And that was our goal. We knew like, okay, if this thing is gonna take more than 10 minutes, nobody's gonna do it, right? Because that's just like you said, that's the patience that we need to have. And so we encourage folks just off the top of their head, give the best answers they can in 10 minutes or less. And to give them some insights on, because one of the things that I'm really passionate about is there are many, many things you could do to fix your business, but why waste your time putting a lot of energy in something that's only gonna move the needle, say 2%. Versus if you could put even less energy into something that's going to move the needle 10%, that's where you need to focus. So we wanted to develop a tool that will give a property management business owner the clarity to know, oh, where is the biggest opportunity gap that I have right now where I could create a lot of gain? And so that's what this tool is designed to do. We just finished developing this 1.0 version and announced it at Southern States Conference. Our plan is to work on it a lot more this summer. And to really develop it into its next iteration and then present it again at the national convention in October. But yeah, we're super excited about it and that's the point of it, is to give somebody some quick, easy clarity to know where should I focus my attention to make the biggest gains in my business.

Where are you seeing that the average property management company owner has the biggest opportunity is like the lowest hanging fruit, the easy wins. I think a lot of our listeners are probably in that same boat where they may not be a customer of Profit Coach and they may not be going to every single NARPM conference and implementing all the best practices, but they want to improve their business, grow their company, get more customers, make more money. What are some of the things that you're seeing like, okay, right off the bat, day one, 90% of folks are going to benefit here?

Yeah, probably the biggest area, and maybe it's surprising me still a little bit, is that profitability side. I think we've made huge strides as an industry over the last 5 years, and I'm curious to see what the next benchmarking study will show. My prediction is, is that we will have moved the needle a lot as an industry on profitability, and yet I still see a ton of opportunity. I speak to a lot of property management companies where they're Revenue per unit is not where it needs to be in order to give them the breathing room that they need as a business to achieve their ultimate goals. But the second part, and it really relates to this, is just that underlying system, that system component. And I know you have a lot of passion around that. And so the point is, is it makes sense that your profit's not going to be where it needs to be if you don't have your system where it needs to be. And so that's why we start with system when we help other property management companies to get that foundation right first. To then be ready to make those improvements in profitability.

Very cool. I love it as a systems guy. Yeah, you got to start with the system.

Yep.

Yep. Let's take a moment to thank this week's sponsor, Appfolio. With Appfolio Property Manager, all of your business-critical workflows from marketing and leasing to accounting and work order management, basically everything you need to do on a day-to-day basis as a property manager can be completed from within AppFolio. So some of these features that AppFolio customers love include online rental applications, online payments, maintenance requests, text messaging, even virtual showings. What I'm really excited to share with you today is a brand new feature from AppFolio called AppFolio Stack. AppFolio Stack is a marketplace for apps within AppFolio that integrate seamlessly with the core AppFolio product. So this is a big deal. This isn't just an API. This isn't just a connection through a third party. This is a proper first-party integration with the core product of AppFolio, and that brings a whole new level of what's possible with a third-party app. So we already have a number of integrations that are live today. Including PropertyMeld, which I'm a big fan of. We use PropertyMeld, ButterflyMX, HappiCo, Lowe's, and more. And how this works is that AppFolio is the system of record that enables complete visibility and automated workflows. No more double entry. So when you set up a new property in AppFolio, it's automatically set up in any of these apps through their marketplace called Stack. I'm thrilled to be introducing AppFolio Stack. You can learn more at appfolio.com/stack. Stack. Cool. And so something else you're doing with BetterWho is, from my understanding, you partner with folks in the property management space to help provide them with a platform. So those who have something to share and are looking to become more well known in the industry, you guys have a model where you work with them, you give them access to your audience, your platform, your Facebook, and obviously there's an arrangement made there. But I'm fascinated by this because when you described it to me on the phone the other day, I'd never heard of something like this. So where did you get the idea to do this? How well is it going? I'm just really interested.

Well, our mission is to be the number one educator in the property management space. Again, I already shared my passion for educating others, and— but we realized to be the number one educator, I mean, I can't be the only educator, maybe not even the best educator. I need to really collaborate with other folks that I see have those talents to be educators. Lots of us are good at small business, but just because you're good at it doesn't mean you're a good teacher. And so, you know, we really want to collaborate with others who share that mission for wanting to educate the industry. So our most recent collaboration was with Wolf Kroski, who funny enough also used to be a teacher, and he also is very passionate about educating, which made it a perfect fit. And similar to you, he's very passionate about processes. And so we rolled out this service with Wolf called Virtual CTO where he gets on a call once or twice a month with the subscribers to Virtual CTO. And it's kind of a done-with-you type service where he walks people through, okay, this is the process we're gonna work on now. Everybody pull up your LeadSimple and kind of work them through it, that type of thing. So that's kind of the idea is if we're gonna achieve our mission of being the number one educator, then we need to collaborate with other people who are also passionate about being great educators in the industry.

That's really cool. And is this something you see being done in other industries or specifically the idea that you're going to bring other people on your platform, where did that come from? Did you just wake up and you had a dream and you're like, "This is a great idea," or?

Yeah, to be honest, I haven't taken my own advice yet of doing a great job of looking outside of our own industry. When Tony and I, Tony Klein and I, really kind of caught on to this vision a few years ago, we just saw a good opportunity to do this, to bring together the right good minds in the industry to kind of all work together to help change and move the industry in however, whatever opportunities existed. So yeah, it's just been a passion and a vision that we've had for a few years now, and all the pieces are starting to come together.

Very cool. And do you and Tony and anyone else who's on the leadership there, like, Is there something specific you'd love to see our industry do or stop doing? Or like, what results would you like to see that would make you feel like, okay, we're making a difference here?

The biggest outcome I would love to see is— and I already said it— is what you just did, right? I want to see every property management business owner be able to take off one month per year and just completely walk away and ignore their business. I'd love to see them be able to do that twice a year. That to me would be the sign of success for our industry, where as an industry we have stopped having jobs and we've started owning businesses.

Very cool. I love it. Okay, I want to talk a little bit about kind of operations again. Kind of, we're going to go back down the stack for a minute because you're an operations and systems thinker. I want to get your take on something, which is I've had this thought recently that our industry almost never talks about customer service. In a lot of larger small businesses and also in a lot of tech startups, there's a lot of discussion around the customer service function. Are we going to hire customer service representatives or CSRs? Are we going to have an online ticketing system? What's going to be our average response time when someone has a question? And it almost goes without saying in a lot of these other spaces that you're going to have a dedicated customer service person or 2 people or 10 people who, they're not doing any operations at all. Their only job is to help customers who have questions. I have this thesis that this is like a missing link in our industry, which is having dedicated customer service because right now, at least for us, the folks who are doing the work are also providing support. So the person who is preparing and sending out the lease renewals, the actual physical work of doing that is also the person who's fielding questions about lease renewals or even after it's signed, like the tenant has a question on a late fee and now they have to stop doing next month's lease renewals to answer that question. So I've got this idea of separating out the customer service function. Have you seen this done anywhere else? Did you do this? What are your thoughts here as a someone who thinks deeply about how to structure property management operations?

Yeah, I do actually have a lot of thoughts on this. The journey that I think I've seen our industry take over the last couple of decades is originally you pretty much just had portfolio managers in our industry that their job was to literally do 100% of, do everything, right? And so they did everything for their portfolio and it kind of was very, in, from that regard, customer service centric, but they also probably were pretty overworked. And then within the last 8 years or so, there became this big push for processes and automation. And it was such a big push that I do think for the industry as a whole, we began to lose sight of customer service and it became all about how do we automate everything. And I think finally within the last, just the last year or two, we've kind of come full circle to really understand, okay, Actually, we need process and automation so that we can provide better high-touch customer service. Now, to me, the other thing that's interesting about that though, is there's kind of two books that over the last few years have really been sort of bookends to my thoughts on this. And one is the Never Lose a Customer Again by Joey Coleman, but the other is this book called The Effortless Experience by Matt Dixon. And what's interesting about these is The Never Lose a Customer Again is all about wowing your client, which is kind of cool. Like everybody talks about the Nordstrom experience, but I don't know that the property management industry is really primed to like wow your client with tons of giftology and all this and whatever. Like it's sort of like, yeah, there probably are times to do that, but I don't know that that's really the core of what we need to do in the property management business. So that's when I found this book, The Effortless Experience, and it's really all about how Really what our clients want is fast, efficient answers to their problems. And it's not that they don't want to talk to you, but they want their answers at their fingertips and they want to be able to get their answers on their terms as quickly as they can. So I think in as much as possible that we can anticipate our clients' questions and provide those answers before they even get asked. And so that was a method, you know, that was a mindset that we really brought in. Hovault was like, hey, Every time a client asks a question, we need to stop and figure out why did they even have to ask the question? What can we do differently next time so the client never even has to ask that question again? And I think the better and better that we could get at that, the better we'll be able to provide that good sort of client experience and customer service. But, but really focusing on that effortless experience I think is really important.

I know that book's been getting a lot of traction. I haven't picked it up yet, but I think this is probably going to be the final straw and I'll go ahead and order it and read it because there's definitely something there. And the gifting thing, I think I agree with you when I think about the property management industry from the perspective of a customer. Of course, we're in the industry, so we feel like our customers are thinking about us all day, every day. But the reality is they're not. I mean, do you think about your banker all day, every day? Do you think about your— the person who cuts your hair? No, you think about them when you need them. And when you need a service from that specific person or company, you want it conveniently, quickly, correctly, and then you want to be done and move on. You don't want to— I always hear people talking about, "Oh, we're a relationship-based business." And I'm like, "I don't want to have a relationship with the guy who does my deposits at the bank. I just want it to be done right." So yeah, the idea of giving a gift, I don't know, I go back and forth because I feel like if you could get that right and make a big wow and really kind of knock their socks off, maybe that would bank some goodwill that you would want down the road. But I think you have to think about it from the perspective of, is this actually going to make a difference for my business? Like, is it going to change my churn? Because if it's not, what's the point? When a customer churns out, would it be the case that they wouldn't have churned out if they got an engraved set of steak knives when they were hired? Like, I don't know. I'm not sure about that because I feel like when people churn out, there's always like something really significant happening. Like they need the money for their kid's college or they're moving to another state or something like that.

Yeah, don't get me wrong. I'm not saying no to giftology. Actually, what I'm saying is, is I think that the conversation sometimes gets started at the end when it should have started with, okay, how do I provide an effortless experience so that then when those right opportunities arise, I can also do the never lose a customer again experience? But the problem is, is if you start with never lose a customer again, I think you're already behind. It's a game you're never going to catch up to. I think you're swimming upstream at that point. So I think you just have to start with that mindset of how do I make this easy and as easy as possible for my clients.

Love it. So from one systems and automation lover to another, I'd love to hear what you're most excited about in our industry right now. Is there any new integrations, new softwares? There's been some marketplaces that have recently come out from AppFolio and Buildium before that. Is there anything where you're like, "Okay, yes, now this is finally possible," or maybe something that's coming soon?

Yeah, I think I have one of the rare distinctions of being one of the only property managers that has used Buildium, Propertyware, Appfolio, and Rentvine. Oh my gosh. I know, which is funny because I always, I give people generally the advice of don't switch if you can help, but I have switched a lot and I have a lot of different thoughts on all those. But the, my summary thought is, is I do think Rentvine, they are making big waves. I think they're going to continue to make big waves. I'm really excited about what they're doing. I'm excited about LeadSimple bringing more and more pieces together. You know, I've been for years now a big fan of a ticketing system and I've used Help Scout for a long time. The fact that I can now do that in LeadSimple, I think is really helpful and a big game changer. I see what other technologies are— I guess I'm going to ask you, what other technologies are you excited about right now?

So for me, it's definitely the LeadSimple integration with Buildium because we are Buildium customers and having all that in one place is a big deal for I'm curious what you're thinking about Rentvine that's getting you excited because I feel like Rentvine is missing a big opportunity. If I was building property management software from the ground up in the year 2022, or maybe they started a couple years ago, I would've had API and Zapier integration day one. That would've been non-negotiable first thing that I would've had in the software. But from what I understand, they don't have that. And I guess I'm confused as to what would make that software attractive if not that.

I have felt the same way as you. I've had conversations with those guys and they've kind of helped me understand their mindset behind it. Somebody who— I am passionate about systems and process and automation, but I'm a plug-and-play guy. I don't write all the code and necessarily understand everything that goes behind that. But one thing that I like about Renvite a lot, like one thing I don't like about AppFolio is that it's property-based accounting. And I just, to me, that's a big limitation. I think it's really important to be portfolio-based accounting unless your entire portfolio literally is one property, one owner. So I'm a big fan of portfolio-based accounting, which Renvine is. In terms of the API thing, I also, I do agree with you and thought, hey, that should have been day one. It would've been a total game changer. Their mindset behind that is that now it's kind of like we talked about before. When I started my property management company, I was trying to be all things to all people. And in order for them to have a really good API like that, they're constantly sort of having to cater to all these other companies that are going to plug and play with them. And their mindset has been, let's really take the time to get all of our stuff internally right and as right as it can be before we then turn our attention to the API. So I think that that'll be coming very soon. I have encouraged them to like to play with Zapier. I don't know if that'll come or not. I think that would be a game changer, but I think that piece will be coming for them.

Okay. I want to close with a question about marketing. So I love to ask this because I think every property management company owner could benefit from some original thinking and some fresh thoughts around the idea of how to grow their business. You've obviously grown a property management business yourself, and you've consulted with a lot of other property management company owners. Today, 2022, what for you makes sense for marketing a small property management business?

I hope my answer doesn't come across as skirting or cheating the answer.

Okay, I won't let you do that. Don't worry.

Okay, good. Okay, call me out if I'm doing that. But for me, it's two things. Number one is just getting back to the basics. We all know reputation management, right? I mean, if your reputation slips, like, you're done. Just, you know, so I think prioritizing reputation management, it doesn't happen by accident. It has to be extremely purposeful and intentional. It has to be baked into your company ethos that everybody in your company knows to ask for those 5-star reviews. But my second answer has really been, you know, we've gone through a period where a lot of folks in our industry, as expected, have gone through a lot of churn, not necessarily even bad churn, but just good and neutral churn. As the real estate market doing what it's doing. So I really think the best marketing any company can be doing is to remain focused on your current clients and to recognize that A, losing a current client is one of the most costly things that can happen to your business, right? So I think you have to constantly be marketing to your current base. Too many folks have this attitude mindset that the marketing and the sales stops once they sign the PMA. But I mean, to me that's just wrong. The marketing and sales never stop. And you made the point too, right? Of like, wouldn't it be better to have a relationship with your landlord client where you have no like and trust and they want to continue to buy more things from you, right? Well, in order to do that, you have to continue to foster the marketing and sales to that base. Number one, to make sure you don't lose them. Number two, so you can help sell more things to them over time. Maybe you help them buy another investment property. And then number 3, so that you could get referrals from them.

And we get about— so out of all the new units we add, about 10% of them come from existing clients. And so there's definitely something there. Do you feel like if you market and sell to your existing clients well, are you thinking more in terms of them buying more units, kind of like I was just saying, or more in terms of them referring other customers?

I think the hope is that they would buy more units. I think the educational hurdle sometimes is really challenging for that unless they already came into it with the mindset of being an intentional investor. If they're an intentional investor, I think it's very easy to sell them more units. If they're an accidental landlord, it's a really high hurdle to overcome. But to me, the primary thing is to have such a good relationship with them that you would be the obvious thing for them to regularly refer you to other folks because they're having conversations. People talk about real estate, even if you're not in the industry. People talk about their homes, they're moving all the time. What should I do with my house? And so you want to be top of mind for your current clients to basically be little mini sales agents out there for you.

Yeah. And I think one of the ways you can gauge that, and not a lot of people do this, but one of the ways you can gauge the likelihood of an existing client referring you is an NPS score, net promoter score, which I'm a fan of. Now, does that book you were talking about, The Effortless Experience, do they recommend that CES, customer experience score? Am I getting that right?

Yeah, I'm a big fan of the CES. So I used to operate with an NPS and then at Hovalt we switched to using a CES, which is basically just simply asking your clients on a scale of 1 to 7, how much effort did you have to put into being our clients? And we felt like that told us actually a lot more that we wanted to know about the relationship rather than simply the NPS, which asks what you just alluded to, which is on a scale of 1 to 10, how likely are you to refer us? Also a good question. There's no wrong answer to that, but we definitely preferred the CES.

And backing up for a second to the reputation management piece of it, do you recommend focusing that effort exclusively on Google? Or do you, like, are there a few, like, because I know there's other like Yelp and there's a couple like BBB. What are your thoughts on those? Are they worth investing effort in?

Yeah, I mean, that to me actually is a pretty local question. My understanding is that Yelp is a lot more common on the West Coast. For me and you here kind of on the East Coast to Midwest, I don't know that Yelp is as important. I've found with Yelp, there's a lot of challenges because they do track your— whoever leaves a review, they're looking at your geography, and they want to know that it was a quote-unquote local review. And so they will prioritize a local review over somebody that gave you a review from multiple states away. Well, the problem with that, of course, is that means the tenants are the ones that are getting all the reviews in. But if you have out-of-state landlords, then their reviews aren't counting. So that's a big problem with Yelp.

Yeah, that's a great point. And I think Google does the same thing. I think there is some weight given to scores provided by people who are more local to the business.

I haven't noticed that as much with Yelp. It's very glaring and in your face where they literally hide the reviews completely. It doesn't even count on your score. It's probably true with Google that they're at least bumping up to the top of the list what you're looking at.

Yeah. Well, I appreciate those shares. So to summarize your marketing advice here, reputation management, Can't overstate the importance of that. And then marketing to your existing customers and making sure that they're happy and willing and would have a reason to recommend your firm to other businesses or other investors. Absolutely. Awesome. Well, thank you so much, Matthew. This has been really fun. I always enjoy chatting with you and I really appreciate you coming on the show. For anyone who wanted to kind of follow along with your journey and learn more about you and what you're up to, where should they do that?

I'm easy to find on Facebook. You go to betterwho.com. We have a great Facebook group community, Better Who, just look it up. We have about 800 members in there so far regularly talking about stuff like we just talked about today. We also have a remote team member Facebook group, which you can just look up property management remote team members. For anybody that has remote team members or is thinking about it. It's not a sales group. It's just we're all in there talking about best practice with remote team members. So would love to see you in there as well.

Very cool. Thanks again, Matthew, and we'll catch up later. Thanks. Thank you for listening to Owner Occupied. 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.