ProfitCoach CEO Brad Johnson on Scaling, Selling, and Sharing the Win

One of the best ways to increase a certain portfolio's ability and portfolio manager's ability to go from 150, 180 units to 200 is to replace a 7 or 8 out of 10 performing team member with a 9 or 10 out of 10 performing team member that you pay a little bit more but get 1.5x, 1.7x return on their productivity level. That is a great trade. There are a million reasons to not tolerate 7 or 8 out of 10 work in your company. But one of the biggest ones is it is just way more profitable to pay a 10 out of 10 20% more. Like, that is a great deal.

Welcome to Season 6. Of Peter Lohmann's Podcast. This podcast is a show about all things residential property management, from property operations to sales and marketing to growing and managing your team. I'm your host, Peter Lohmann, co-founder of RL Property Management. For Season 6, we will have an exciting guest every other week. We go deep into conversation about problems facing professional property managers and the best ways to overcome them. Thanks for listening. Now let's go. Welcome back to Peter Lohmann's podcast. I'm your host, Peter Lohmann, and I'm here with Bradley Johnson, CEO of Profit Coach. Brad, welcome to the show.

Peter, thank you for having me. It is great to be here.

It's so fun to have you on here, and I can't believe we haven't had you on yet. It's, it's, it's a crime really that you haven't been on the show yet. So I'm glad to get you locked in early for season 6. It is now right around Christmas time of 2025, but this will be coming out probably in January or maybe February. So Brad, you have a really interesting background, you know, working in property management for many years and getting a ton of experience at a very sizable firm before moving over to the vendor side. So why don't we start there? Tell us a little bit about your background in property management and everything at Swayer and then how you ended up at Profit Coach.

Sure. Yeah. Just to back it up a tiny bit, I started my real estate career as an HOA manager, a community association manager. So when you start there, you quickly learn.

Property management seems really easy after that. Yeah.

Yeah. It's like, well, I don't have mobs of people coming after me every year at around this time, December, this annual meeting time of HOA people who are upset about the condition of their lawn. So everything in contrast seems better. So I started, I did that HOA management for a couple years, then I got licensed and I became a commercial property manager. Retail, office, industrial, kind of all of that. Did that for about 2 years. Yeah, this is all, all in my, my hometown of Wilmington, North Carolina. And then out of the blue, got an email from Dave Sawyer's recruiter that said, hey, we're looking for a general manager for Sawyer Property Management. I quickly Googled it. I had heard of it, but didn't know much about it. I was like, oh, that seems like a pretty decent sized company. There's this about page with 20 people. Why would they want me to be their general manager?

And I'm still wondering that actually.

I don't know. I don't know. And I'm just a, you know, just a property manager, if you will. But mostly because I hadn't had any experience. I wouldn't recommend that people do this. It just happened to work out. I had no experience managing people. I had never managed other people. And they wanted me to interview for a general manager job of running a 1,300-unit, I come to find out, 1,300-unit, 20-employee Property management company, the biggest one in our market. And so I said, well, I got nothing to lose. Sure, I'll take the interview. Go through the interviews, get to know Dave Sawyer. He put me through the wringer as he should. Again, didn't really have the right experience. 6 interviews later, he's like, yeah, I will. Not only do I want to give you this job, I want you to take this company and run with it and figure out how this game works. Go to conferences, learn from people. This is, there's this thing called NARPM. We're not very involved, but we've done a little bit with it. Get involved with NARPM, learn everything there is to learn, and then figure out how to make this company more profitable, to grow it, and just kind of to make it your own. I'll be a resource for you, but take it and go. So that process, we could unpack my learnings from that and like how that shaped me as a manager of people for hours. But suffice it to say, I got the resources and the bandwidth and the freedom to go operate, and I was able to accomplish some really— I and our team were able to accomplish some really awesome stuff at Sawyer before that business eventually was sold to Roam back in 2023.

What's your proudest accomplishment there?

Ah, that's a good question. Yeah. After about 6 months, I thought I was going to get fired. And Dave did one of the kindest things that anyone has done for me, which was basically to tell me that you came, you were excited for 3 months. I saw you put in a ton of effort. You've very quickly learned, and as we teach at Profit Coach, and as you know so well, grasping the model of running a property, growing a property management company, very difficult. Grasping the model of how to make money with an existing property management company, not rocket science. I grasped the model and was, and kind of put the company in a little bit of an autopilot and used some of that freedom of time just for my own purposes. I stopped driving hard. I stopped putting in the effort and caring even after just a few months, because I got pretty lazy and he called me in and basically laid it down and was like, You're not being a good leader of people. Yeah, the company's making money. Things are headed in the right direction. You've stabilized a ship that's been rocky for a number of years. Good for you. But you have a team of people who depend on you and that you need to actually care about. I would say one of my biggest weaknesses is that I will, just being vulnerable with you, transparent here, is I can use people like as a means to an end. Accomplish it. You know, I have a goal. These people are either in the way or they're on the bus, but either way, I'm going to make things happen in such a way that I get to the end result that I want. And that's what I was doing. He sat me down, he got real with me, and I went home like with a, uh, like a dog with my tail between my legs and just kind of had a choice to make. Am I gonna, am I gonna just be scared, be sad, be disappointed that this guy that believed in me now doesn't, or am I actually going to do the work of getting a coach, which I did, figure out, hey, where is, where are the apathy points? Where do I need to dig in and actually do some of the hard work of meeting with people, getting to know them on a real personal level, and turning my own kind of leadership around. And so I would say my proudest accomplishment in that was in, in my season at Sawyer was that I did the, the kind of the hard work of learning a lot more about who I am and some of my negative tendencies and fighting back against those to lead the people well and have a way more cohesive team and a people, a team of people who believed that I really cared about them and loved them, which I do think matters quite a bit.

That's fascinating. I didn't know about any of that. Lots of lessons there, I think, for the leaders and for the led.

I'm thinking about, you know, Radical Candor, and that was one of the books that I was told to read. Yeah.

The ability to take feedback and relate to it in a positive way and use it as a force for change and a force for good in your own life when it comes from somebody that you respect. And, you know, it's easy to get defensive when you hear someone kind of nail your issues, right? It's the most sensitive part of our, of our ego. But the ability to hang in there past that initial defensive reaction and come back to it and analyze and say, you know what, were they actually right though? And how, you know, what is this, you know, can I use this as a, as a gift rather than position it as something that's happening to me? Very interesting.

Yeah, I would say I think you just put the nail on the head of one of the really practical things I learned in that process and just over the last 5 years, 6 years or so, which is when you get negative feedback, the discipline to not react to that and to not defend yourself and to not come up with reasons or excuses, but to just receive it, go back into your own corner, assess it, analyze it, ask other people, is this true before you go back to that person and say, either A, you're right, this is what I'm gonna do about it. B, you're partially right. Let's, let's talk about some more details. Or as sometimes is the case, C, you really did just misunderstand what I was trying to say or what I was trying to do. Can I clarify for you? That, that versus no, I'm not. No, I didn't. I'm not that person. Like what a world of difference for getting people to stay on board with you and trust you as a leader or as led.

Yeah. Great stuff. So you stuck around there, kind of had a turnabout moment personally and continued to invest and grow in, in that business. And then tell me about the sale to Roam. Tell me about leading up to it. How involved were you in the sale negotiations and discussions? And then what happened after the sale?

Yeah, I'll go behind the scenes a little bit. I don't know that I've really told this story very publicly. I certainly have with people individually, but I feel like it's worth telling because it's helpful and because of how much I look back on it and I'm actually super grateful for how it went down. So what happened was after about 2 years, I'll tell you the whole story because it's interesting. After about a year and a half, 2 years, I went through that transformation process. The company was growing, especially in profitability, and just everything was on the right trajectory and really the business was really thriving. Now, I'll be the first to admit that I got to run a large PM company in a small market at the best time in world history to run a PM company. I know that I'm not sitting here saying that I am God's gift to property management leadership. I think I did a good job, but this was 2021 to 2023. Okay. I get it. So things are going well. My wife, who is a CFP and a practicing financial advisor at the time, gets this crazy good job offer in Raleigh, which is about 2 hours away. And we're considering it. And so because we're considering it and we've lived, she's born and raised in Wilmington. I lived here 20 years. We didn't have kids at the time., but we were seriously considering moving to Raleigh. I go to Dave and I say, hey, we're thinking about this. I think I could probably get a similar job now that I've done this in Raleigh that's like this. In fact, I actually had a couple leads already. Before I take any other steps forward, can you just kind of spell out for me the future for me and for Sawyer and like what you're thinking? And for the first time ever, we had never talked about this. He said, well, I was gonna, I'm planning to sell you the company at some point in the fairly near future. I was like, well, that's great news. I'm glad I asked. That's enough to say no to basically any job offer that my wife might get because of the opportunity to own a company like this. And she wasn't dying to leave, so she was very happy to say, no, I'll stay. We want to stay in what we do. So we start that process and essentially what I'm like, I say is, okay, that's great. I've been made future promises. That haven't come true before in business as well. In the company before Sawyer, I was brought in as a property manager, but with the idea that I might become the guy and take over for him at some point. I worked there for 2.5 years and we never made a single step towards that. So I was very skeptical. So I said, okay, great. That's, that's, that sounds like an awesome plan. Can we put some skin on that? Can we talk about a timeline? And he laid out a pretty aggressive timeline. He was like, yeah, within the next a year or so. So let's start the conversations. So we start having a conversation. I let that, I tabled that for like 6 months, come back at the end of the year. This is the end of 2022. So I've done 2 full years there. And I say, hey, can we do this in 2023? And he's like, yes, 2023, good time to sell the company. So he said, you go and talk to people like Daniel Craig, like people in the PM business, who know what property management companies, how they're valued and what they're valued at. I have some friends who have bought and sold these sort of companies and I'll talk to them. So I talk, I find at the time a number of somewhere like 5, 6, 7x EBITDA, like a pretty reasonable fair market value type multiple. I know they've changed a little bit since then. He goes and he talks to Associa, because he's like, oh, Dave. So this is key, key point of context. Dave sold CAMS, Community Association Management Services, to Associa in 2022. CAMS was in the top 10 in the country in terms of size of HOA companies. Florida, Georgia, South Carolina, North Carolina, big company. So he's already done business with these people and he's like, I remember in that process that they have a property management wing.

I don't know how big it is. So Associa is the largest, largest, the largest association management company in the United States.

Yes, that's right. Yep. And at the time, ROAM was, I don't know, 15, 20,000 doors, maybe 18,000 doors, something like that. I think now they're over 50,000. And so, you know, I think they will eventually be the largest single-family property management company in the United States that I'll just put my cards on.

Wouldn't that make them already the largest?

They may already be the largest.

Yeah, I think they might be.

Yeah. They're, and they're not slowing down mostly because of their operating model and their capital model seems to be sustainable to continue to buy companies at all times. So I go to, he goes to Asosia and he said, they say, Dave, the Kams transaction was one of, if not the best acquisition we have ever made. And it is already. Far more profitable than we projected. We're blowing our performance out of the water. If you have a PM company, we will buy it from you right now. And I won't put the, won't put the number out there, but here's our number. We'd pay this for that company. Let's suffice it to say the number that Dave and I were triangulating around was millions of dollars less. So this is a big company. So we're talking about a company that sells in the millions. And he comes back to me and he's like, this is what I found. I found an offer that's a lot different than this. And I had, and he and I had pro forma'd out what it would look like for me to buy the company, what I could afford from a loan perspective. He was going to seller finance all of that. And I was like, I knew immediately that that business was going to be sold to Roman, not to me. Yeah. Just because of the economics and because the right thing to do when you've helped a guy build a business isn't to fight back against what's in his best interest, but actually to further his best interest as much as possible and make the case for what I did, which was you should sell it to them. You're going to make a lot more money. I would like a cut for the work that I did to increase that valuation. And so I was initially super bummed.

Yeah, especially 'cause it, it wasn't even close. Like it, it would be one thing if it was close, they were a little more like, maybe you could argue, you know, trying to figure it out. But you know, knowing a little bit more of the backstory, it, it really wasn't close. And yeah, that makes sense.

It wasn't close. It wasn't close. And so I was really bummed and I had to go through the process of figuring out, well, what does this mean for me? I had these dreams. I was gonna be this business owner in town. This was really exciting to me. You know, obviously at the same time, I'm starting to run the numbers in my head. How much enterprise value did I add to this business in the last 3 years? I came up with a number that Dave ultimately disagreed with, as you might imagine. But we, we did come to an amicable place where, where he—

Well, I mean, even if that were correct, like you didn't own it, so I didn't own it.

Oh, he owed me nothing. That's the thing. Like that's the, the centering grounding principle here and is exactly why I did the next thing that I did, which is what I'm getting to. I didn't own it. He owed me nothing. He gave me the opportunity. He plucked me out of a job that I did not love. I, it was okay. And a situation that was going nowhere and a career that felt like it was just very flat and put me into an unbelievable opportunity. He is the reason and like the, the, the first mover in this process that is why I am where I am today. So I owe him nothing but gratitude and thanks. And so I had to remember that. But of course, I'm also thinking, well, what am I going to do next? And one of the lessons that I learned, so fast forward, yeah, he sold the business to Roam. I did everything that I could to help with that. There's a lot of due diligence when you sell a PM company, especially to an, a sophisticated buyer like Rome who knows exactly what they're doing. They were very gracious and the initial offer ended up being the exact same as the closing price. So there wasn't a lot of nickel and diming. And at that level, it just, nickel and diming is so irrelevant and just breeds mistrust. So they know that, that's why they don't do it. You know, they're not adding back in like a $10,000 expense or something like that. That doesn't happen. So the transaction goes through and I get kind of absorbed into the Roam ecosystem. I meet Charlie, I meet Kirk. These are incredible people. And I think to myself, if I was going to stay in a job where I work for someone else, this is exactly where I'd want to be. But I just learned two things. A, I have an ability to increase enterprise value when I run a company, a solid company that I can make better and make a lot more profitable. And B, if you don't have ownership in that company, then you miss out on the payday essentially. And so I knew from that moment that the next thing that I was going to do was going to be something where I had, I either started it and owned it, or I had a partnership ownership stake. And then, you know, I was patient. And over the next 6 months, just kind of put some feelers out there, talked to a number of people in the industry that I had gotten to know through my years at Sawyer, and then ran into Danny at LSU of 2023, which was cool.

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So that's great. Substantial amount.

Yeah. Yeah. That's, I'm sure that felt good. And you stayed on as, as president or CEO there for a while after the sale to Roam, right? Yeah.

Yep. Almost a year.

Yeah. And so who succeeded you there in leadership?

Yeah, her name is Michelle McDermott. She was the director of operations at Sawyer, and she's worked there, man, probably close to 20 years. And she's really good. She's really, she's very strategic, very tactical. She's not a natural visionary, but that is actually what, in my opinion, works best in the ROAM model. Rome has, I think they may have changed the name of this, but they have essentially regional vice presidents and then a central office. And I think they'd prefer the vision and the direction to come through those means. And then they have branch presidents who execute and are great operationally. And so that was actually a great fit for Michelle and not a great fit for somebody like me who sits much more on the visionary side of the, of the fence. And has a tendency to buck up against someone else's vision or being told that you have to do this or you have to operate like this. And to Rome's credit, they do very little, you must do this. There is a little bit, but they do very little of it. So Michelle was a great fit for that. She's been in that role for, gosh, now almost 2 years. Still a good friend of mine and Sawyer's doing great.

That's awesome.

All right. So except that they changed their name to SPM Residential Services. Okay. They took the Sawyer name out and we were Sawyer Property Management, SPM, and they just became—

Oh, okay. Got it. Makes sense. Okay. And so that brings us to your introduction to Profit Coach and Danny. And I'd love to hear, now we heard a great story from Jordan about his exit from ownership. He, he, you know, did a great interview. I forget if it was on my show or he did on his show. Telling that story and, and he specifically mentioned during that, that it was to help make room for you to come in as, as CEO and get on the cap table and have some ownership interest. And I think that was really cool. It seemed like it was dovetailed perfectly when he was ready to focus on LeadSimple and you were ready to step in and have some ownership because you kind of learned your lesson about not having ownership. I mean, it worked out that you got a little piece of it, maybe you would've had more, or you would've, at the very least, you would've had more leverage. And so now you've, you're kind of like, yeah, ownership is everything, which is absolutely correct. And how, you know, as much as you're comfortable, how did that all happen?

Yeah, I'd love, I, I'll be succinct, but I'd love to tell that story as well. That came about via leads. You were, were you at, you were at that LSU, weren't you? Mm-hmm. Yeah. I can't imagine there was an LSU without you at any time. We were playing ping pong. We were at that ping pong place, that big contest where I was very excited and I lost to the first, lost in the first round to just a killer. I think the guy ended up getting second. Anyways, I lose. So I'm over here just kind of nursing my ego thinking that I was gonna have a deep run. I'm walking around just talking to people. I'm talking to Randall Henderson and I see, I see at the, adjacent table, Danny, who I had met a couple times. I did lunch with him once, actually in my first week at Sawyer. Dave had a meeting scheduled with Danny, pulled me into it, and I just kind of watched Dave. I, Dave, Danny knew I was there, but I just kind of watched Dave and Danny talk about PM Finance. It was a sales, it was a sales call for Profit Coach. Dave ended up not doing it. I famously also resisted Danny at multiple attempts throughout my tenure at Sawyer.

You're kidding.

And never hired Profit a coach. Really?

Wow. What was your reasoning?

My reasoning was, was a reasoning that I hear people say to me when they're not, when they don't hire us, which I respect, which is I have a, I have a pretty good understanding of how this works. I'm steadily growing my profitability. I have a roadmap to get from where I am to where I want to be. So for us, I came in, we were about 20% margin. I wanted to get to 35. We sold the business at 37.

Wow.

And I was on the way and I knew what I needed to do in front of me. And I said at, at the time, I think to Danny, and people say this to me, like, if I can't execute on that, I will call you and I will need your help. Most people that we help at Profit Coach either A, don't have a plan, or B, most of the time don't really know what to do to get from here to there, or C, even more, I don't even know where I am right now. So that's just as an aside, like I, I was, I knew what I was doing and I didn't feel like I needed all that much help, but I was ready to give him a call if I needed to.

So anyways, well, in some ways you were obviously correct being that you were able to step in as the CEO of Profit Coach. You clearly knew something about what you were doing, so maybe that's forgivable.

Yeah, maybe so. Maybe so. So he and I, he and I connect. Oh, sorry. So I see him and someone who looks a lot like him playing the most intense game of ping pong that I've seen, not on the Olympics, you know, smashing forehands 5 feet from the table, just going at it. And I was like, what is going on over there? That must be Danny's brother. I didn't even know he had a brother. Turns out he has 17 brothers. I go over there when they're finished, he's sweating, and I just say, hey, and kind of reconnect. And part of what I was at LSU to do was to talk to various industry people and just kind of put my flag up like, hey, we sold Sawyer. I'm still the CEO there. I have this employment contract that runs for many years. It pays me good money. I'm happy to stay, but I really want to figure out what's next for me. And so I said to Danny, hey, you know everybody, you know, What, what are you hearing? Is there anything out there? And then he says, it's interesting that you bring that up because I'm actually looking to hire a CEO at Profit Coach because Danny, Daniel runs a nonprofit, a Christian homeschool curriculum ministry. And he has been, he was basically doing both for many years and has really felt a call to go full-time with that ministry and to do that, and, but needs to replace himself as CEO of Profit Coach, which is hard for two reasons. First one is he started it, he's the face of it, and when people think up until the last couple years, and some people still do think property management finance, his blonde head pops up, you know, in their brains like, ah, Danny, that's the PM finance guy in a lot of ways. And then the other one is, what would it take to run Profit Coach well? You'd have to know finance, you'd have to know property management, you'd have to know, you'd have to be, have some experience running a decently large team. At the time we had 25 people. So there's just a number of different things there. It took him a while to find somebody. And so he said, is that something that you would consider? Well, what would, you know, do you want to have a conversation about that? And I was like, sure, we'll set something up. Who knows where that'll go? So we set up a meeting for later in December. We have that call. I think, and I think he would agree, it was pretty obvious to me, although there was a lot of vetting to do on both sides and a lot of like financial stuff to work out, which I'll explain in a moment because you'll find really interesting. We knew from that moment, I think, that I was going to end up being the next CEO of Profit Coach. It was just a matter of how do we figure out how to do that well.

Sure. Yeah. Okay. That makes sense. So yeah. And then, you know, the part you said I would find interesting, I wanna make sure we cover that. And then I wanna, when we close, finish that loop, I wanna come all the way back to Sawyer just for a few minutes and then we'll fast forward again to Profit Coach.

Yeah. So here's what happened. So Jordan, uh, uh, all of these things had confluence at the same time, which was awesome. Jordan was wanting to, who, who co— who founded Profit Coach with Daniel and David. Jordan was wanting to step out to get, to get out of the company. He, he's, if for those who don't know, he has, he co-founded 6 or 7 property management related companies, a lot, and was in the process of gradually taking himself out of everything but LeadSimple so he could focus full-time on LeadSimple. I think ProfitCoast was the last thing that he still had. So he was looking to get out. Profit Coach was looking to hire and bring in a CEO for Danny, and I was looking for something that I could own and that I could scale and run and do my next thing. And that's why, I mean, it was immediately obvious to all of us. It was like, oh, well, we can buy Jordan out. We can give Brad Jordan's equity, or at least compensate him with some of that equity. And Danny can step out of the CEO role and Brad, who again, I'm not God's gift to property management leadership, but uniquely qualified to be the CEO of Profit Coach. And not to say that no one else could do it, but I was a good, unlike my job at Sawyer where I had no qualifications, I was very qualified to be the CEO of Profit Coach. So that came together pretty fast. So that's what happened. So Jordan exited. We paid Jordan out for his equity and because Profit Coach, especially at that point, it's changed quite a bit in the last 2 years, was still very much a startup, not a, a high margin business, like in growth mode. They couldn't match what Sawyer was paying me, which was a mature, highly profitable company. And so paying me quite well. So I took a large pay cut in exchange for a large equity share and a mandate to scale the business and particularly to scale the profitability of the business. And that has been thankfully our story over the last couple of years. And we've, yeah, we, I didn't apply this year because I didn't think it would make as big of an impact because we weren't quite there we needed this year. But, you know, and I don't know how legit the Inc. 5000 is, but like we would be on it and we'd be like not at the very end of it. So we're growing. I think we had 25, 26 employees when I started. I think we now have 36, 37. Our revenue's up quite a bit. We're, we're much more profitable. So it's been a great journey. I love, love, love, love co-owning and leading Profit Coach. But yeah, that all of that came together really fast. I was, we were hammering out contracts and, and operating documents by like mid-January. And with that conversation started in early December.

Yeah, that's a great, it's a great story and a great outcome, I think, for all involved. And, you know, you've stepped in very well from my eyes into that CEO role. And there was a challenge, as you articulated, with Daniel being very much the face of that business, co-founder, family involved, and just heavily present in the industry. Keynote speaker, you know, NARPAM accounting standards, all that. And when you came in, you know, I think myself and a lot of people were like, okay, I mean, interesting. Good luck. This guy again, let me look up in my phone. Have I ever texted with this guy? And then, but you, you jumped in. I mean, you were right there, you know, from the beginning of your role as CEO, you know, running the webinars and getting on stage and very much present on social media and it, it's, you know, feels natural now. You're just like, oh yeah, Brad's CEO of Profit Coach. You don't even think twice about it. But I'm sure that was no easy feat. You know, you did have property management experience and the finance is very much, you know, figureoutable. But, you know, stepping in as CEO of a company that somebody else founded is never gonna be easy.

So yeah, great job. It was, thank you. It was, it was hard. One thing that accelerated my, journey was I started on April Fool's Day, which is funny. And then broker-owner was 2 weeks later, 3 weeks later, something like that. It was the one in Fernandina Beach down in Florida. And so I was forced to go on the sales floor. By the way, just another great leadership lesson and just business ownership lesson is if like founders and CEOs in sales role, in sales roles, A, very effective, and B, especially if you're not a founder, if you're brought in, and I, I would've done this much sooner because I didn't take over sales at Profit Coach. We could talk about that at some point too, if you want, until this year. But having to step in on the booth or on the floor at the booth in week 2 or 3 and actually sell Profit Coach understand the value proposition, understand the details of what we do, because there are a lot— we're not like a SaaS service where there's this general, here's what we're, what we've built, sign up, check out all the features, use what you want, use what you don't want. There's a lot of nuance to working with us. There are restrictions to working with us. There's the NARPIM accounting standards angle to working with us. It's not an easy thing to sell. But I was forced to learn how to sell it because people walk up, what's Profit Coach? And then they're like, oh, how long have you been there? And I'm like, please ask any question except that question. Yeah. Don't ask me how long I've been there. Just ask me what I do there.

And I, I mean, I've been in property management a long time, you know, that's what you said.

Pretty much what I said.

The question.

Yeah. So anyways, business owners should be salespeople at least at some point in the journey. And most people who found companies like have to be, and so they were. But yeah, I, I got so much growth out of that.

Hey, I just wanted to give everybody an update on Crane. So Crane is the paid private community that I co-founded with Wolfgang Kroski a couple years ago. And if you're listening to this and you're a member of Crane, especially if you're a new member, I just want to say thank you and welcome to the community. Wolf and I are thrilled to have, um, all of you wonderful folks joining us inside the community and participating in our masterminds and showing up for our Crane dinners and Crane events that we host all around the country. If you're curious to learn more about Crane, or if you missed the application window, I wanted to start providing some information about kind of what you can do in the meantime while you wait for the new application window to open. First thing I really want to encourage you to do is join the waitlist if you haven't done that already. You can go to joincrane.co and if you just click join the waitlist, you just put in your name and your email and like one or two other pieces of information. And that way you're going to be notified as soon as we open up, uh, for new members. And something we're going to do differently in the spring is we're actually going to give the waitlist members early access to jump the line and apply first. Uh, and Wolf and I will be reviewing those applications before we even open up for the general public. We did recently finalize application dates, just if you wanted to mark your calendar. We're gonna be opening up the application window officially on April 3rd, and it will run for about 10 to 12 days there, uh, before we close up for another 6 months. And so if you join the waitlist, you can expect to get an email from us probably that last week of March or so. Really encourage you to learn more about Crane if you don't know much about it. It's been growing really quickly. We've been overwhelmed, frankly, with all of the, uh, interest and, and positive response from all around the community. Uh, we have industry leaders joining CRANE every time we open for new members, and it's just been an outstanding experience, and I'm really honored and grateful to be a part of it. So go to joincrane.co if you wanna learn more, and I look forward to seeing you inside the community. So I wanna come back to Profit Coach, but first let's rewind to Sawyer. And by the way, it's I pronounced it wrong at the beginning. It's, I guess it's Sawyer, not Swayer.

Yeah, it rhymes with lawyer, but everybody does that. And part of why they changed their name to SPN.

Okay. All right.

Very good. It's a, it's an unnecessary stumbling block.

So the owner there who hired you was sort of famously in certain circles in our industry, hands-off, very much not involved in the day-to-day. That's one of the reasons he brought you in. And it, it worked out amazingly well for him. And so I think the first thing that everyone wants to ask or wants to find out when they hear this whole story is sort of two things. How do I find my own Brad? And hopefully what they're asking as well is how can I be the kind of leader that someone like Brad would work for? So kind of two questions there is what did Dave, what did, What did Dave do or not do that you were, that made you willing to work so hard as a non-equity holder for him and grow the business and grow the profitability and help through the sale and stay on after the sale and all this? And, and then the other, the other question is, as a Dave, how do I find my own Brad? 'Cause you know, a lot of people I think have this idea of, Wouldn't it be great if somebody like Brad came around and could run my company for me while I sit around drinking cocktails?

Yeah, 100%. Those are the, those are the right questions to ask. And the second question, how do I find my own Brad, is a question I answer a lot because, because of our, our story and, and how successful it was. And, you know, let's put our cards on the table, not because I'm uniquely gifted, but because there aren't very many people who are wired for that very specific thing, which is I'm going to, I'm going to, I'm going to operate this business like an owner, but not be an owner and be good at it and stay motivated.

Yeah, exactly.

That's hard to, that's hard to find. So like, put your cards on the table. It's not, it's not easy to find that person. Although we have lots of clients because we have many clients who have well over 1,000 doors who have all found those people. They do exist for sure. And we'll talk about it in a second. Let me back up. So how did Dave find me and how did he pick somebody who didn't have the requisite experience? He weighted character traits, test scores, behavioral analysis, and interview performance way over experience and qualifications. And I think that matters a lot. So I had never managed a single-family door in my life. I had done HOA and I had done commercial. So, but I had done them well and he knew that. And so the competency thing on the, like, can you figure out property management was check. That was addressed. It, he did, a lot of people think when they want to hire somebody to run their business, they need to find the best property manager and elevate them to that that role, and I would say that's probably not usually going to be your best sort of candidate because property managers, great ones, are super detail-oriented. They are type A, they're organized, they have a Rolodex in their head. They have all of these things. They actually aren't usually, they're good problem solvers, but they're not usually visionaries and people motivated by bold visions tied to compensation packages. That's not really their wiring set, but he identified me well before I identified myself as the, a person in the wrong job, cuz that's what I thought I was. But then he brought me in, he gave me the DiSC assessment. You know, D is dominance, I is influence. I don't even know what the bottom two are because I sit at the very, very top of the circle where D and I meet. And he was like, oh, a high dominance influence person. That's the sort of like, that person has a lot of drawbacks. I'll be very clear about that. But that's the type of personality often that works for a role like that. So he saw that I, people don't talk about this, but they, they really should talk about this. He gave me a Wonderlic assessment. He gave me an IQ test. I think you should do that with this sort of person. I think you have to have, I don't know. Where you have to score. I don't know what the minimum is, but you need, that person needs to be fairly intelligent to be able to handle the capacity involved of running a business like that and all the challenges that come with it. Like they have to have enough RAM to do the job.

And predict, we use Predictive Index, not DiSC, and Predictive Index does have a cognitive part of the system that you actually have to request that they turn it on for your account. And they're really careful about making sure you don't use it for every, you know, receptionist role, but it is out there. So if you're on Predictive Index and you're intrigued by this, it's worth looking into that cognitive.

Yeah, that's, that's a good call. I think that matters. Again, you don't have to be off the charts, but you gotta be, gotta be high on the charts, I think, to do it. So there was that, and then there was just the, um, like the character part. So He, he likes the, not that you have to be these things, but he likes that I was, you know, I have a ministry background and acted in my church. I'm an Eagle Scout. Like I've done a lot of the things that, and I'm involved in a lot of the things that kind of stand out as somebody who has integrity and a high moral character. And that, that matters a lot to him. I think that principle at least should matter a lot to the sort of person that you, if you're going to do it Dave's way. If you're going to say, here you go, run this company for me, let's see what you got. Like, it has to be a person with a proven character. And he did a lot of character references, which I think was, was a smart move. And then putting me through the paces, not, not because there was a lot of information to find out, but he was like, all right, the, this is me in Dave's head. The person who could run this business well would jump at the opportunity to do 5-hour-long interviews in the same week with really high-level successful people who he knows are going to eat him or try to eat him alive. That's good. It's good to like come out on the other side of that. Does that, is that person deep down or does that person think, yeah, I think I did, I did well and I did well for myself and that these people are going to think highly of me. Cause he asked me, how did I feel after that? And I was like, it was great. I love talking to those, those individuals. That was a lot of fun. Like, thank you for setting that up, what did they have to say about me? And so that's, I think, part of the screening process is prioritize, I would say deprioritize experience to some degree and prioritize some real-world conversations, some character stuff, and then some assessment criteria as well. And then, so that was, that was some insight into how I got the job and why he selected me., and then I don't remember exactly how you phrased this, but the first thing that came to my mind was, okay, you get somebody. Oh yeah. You said, how do you, how do you work with them without, with them still being happy that they're not the business owner, right? They're, they're still the number 2, but they always have the capability to be the, the, the owner. Two things. One, basically convince them that they actually own the company, even though they don't. So that's what he did. You know, you know, I, we were talking about reporting and what he wanted from me and how often he wanted to meet. He said, I think you have this the wrong, I think you have this the wrong way. I'm not your boss. The company is your boss. You report to Sawyer Property Management. You, you report to the results. You report to the people. You report to the culture. That's your boss. It's not me. I'm a resource. I'm, I'm over here. You need me whenever you need me, and I will always give you my, my help and attention, but your boss is the company. So that's, that's one. It's like, I worked for Sawyer Property Management and I serve the interests of Sawyer Property Management. Have you read No Rules Rules? No. The Netflix story? Mm-mm. Oh, it's a killer book. I'm reading it right now. And one of the things that comes to mind is they have a similar culture way ahead, like way ahead of anything that I've ever been a part of, obviously. But one of their core principles for expense reports, you don't have to send in expense reports. You don't do anything. They have no oversight at all. They do like occasional department-level audits that are just to see if people are stealing. But their, their principle is act in Netflix's best interest. That's, that's what they say about basically everything. And they remove all the controls. And instead say, you're, you're a smart, qualified, capable person to work here. So, you know what that means. So therefore act in Netflix's best interest. That's what Dave told me. Act in Sawyer Property Management's best interests and everything will be, be fine. And you'll report to the company and you'll do well. So that's the first one. The second one is compensation. So I started out salary plus bonus. Probably 80% salary, 20% bonus, pretty common executive compensation. Where I got to was 100% commission-based compensation based on monthly profitability.

Wow. I remember you telling me this a while ago and I still bone about it.

It was my idea. It was my idea. Why was it my idea? Well, I just told you, I start, we started at 20% margin. I had a goal of 35. I knew how to get there. I was on my way and proving the model as I went and had a roadmap to get to where I wanted to be. And so I was like, oh, I know how to make a lot more money. I can tell Dave to stop giving me a salary and instead say, Dave, I want X percent of monthly profitability because I know that in a year and a half, I'm going to double my income. And that is exactly what happened. I doubled my income in a year and a half. And wow, who's the big winner? It's not me, it's Dave. Like, yeah, I, when you take a company that by the end of it had over $1 million in EBITDA and it's, and you go from 20% to 37%, reverse engineer the math. Somebody made hundreds of thousands of dollars more a year and it was Dave.

And that's not even accounting for the enterprise value that was added.

No.

By you raising the profit margin.

Yeah. Again, that's why when it came time for him to sell the company, I was like, Dave, can you give me like a few million dollars? Here's my math. Can I have a few million dollars? And he was like, no, I ain't. I will not give you a few million dollars. I was like, well, I tried. Maybe we'll just work back from there and just see where we get to. Yeah. So, but anyways, yes. So the, and I wasn't at that point, I wasn't thinking enterprise value because I didn't even have that framework yet. I was just thinking. Hey, I got this great opportunity. When Dave hired me, it was double what I was making before. And so I was very happy to be making that, but I realized the best way to align our incentives is to pull the plug on the salary and go fully, essentially Dave, for every, it was roughly, I don't remember exactly what the percentage was, but for every dollar that comes in, new dollar that comes in, you're going to get this and I'm going to get this. The only way, the only person who can lose here is me because the company's not declining and it's not likely to decline. And if it does, you'll just fire me and try again. But if I can do this, and here's what I think this is going to look like, then I think you'll be happy to pay me that much. And he, of course, any sane business owner would look at those dollars and say, yes, I will give you $1 to get $4. Or whatever, $5, whatever it was. So that, that's a big one is you don't have to be that extreme, but if you as the business owner, if your end goal is not just freedom of time, which is why you'd bring someone like this in, but it's also freedom of money and it's a desire to make more money, then your, your operator should be heavily incentivized towards increasing profitability. And you want, if they're good at it, you should pay them a lot of money to do it. Because all that does is wall you off from the company and make you more money while, like you said, increasing the enterprise value, all of which accrues to you because that person doesn't have ownership. They just have a really high salary or a really high compensation amount.

Not only does the increase in profitability drive up the enterprise value, but the fact that the owner isn't involved and has a leader in place, a general manager, also increases the enterprise value because a buyer looks at that and says, okay, great, the owner's not involved. This is a self-running company. So if we purchase this business, it's not as if suddenly the owner is responsible for half of the sales and 100% of the owner relationships. In fact, the, the rental owners may not even know who the owner is or care if the company sells, cuz they're still dealing with Brad and people who work for Brad. So it's, Really great. And I think my guess is that Dave was a pretty hands— I mean, it's clear that he is a very hands-off boss. He's a hands-off owner, business owner. And I think, you know, that's very, very difficult for most business owners to get to the point where they can literally turn over the keys to somebody else and say, go have fun, figure it out. Let me know if you need help. It's just, it's incredibly difficult to get to the mindset where you're okay with that because the whole reason most of us got into business is because we looked around at the world and at the marketplace and said, I can do better. I can do better. I, I'm gonna figure this out. And we did. We jumped in there. We figured out how to run a management company. We figured out how to onboard clients. We figured out how to deal with tenants. And so you kind of, you learn so much and you figure so much out in the process of starting and growing a business. And the idea that you would turn all that over to somebody else, you're kind of like, well, wait, I'm the one who knows how to do all this. I'm the one, that's the whole reason I started this business. It's a very, it's kind of a total flip of what it, so it's the old what it took to get you here won't get you there. Thing. What got you here was being highly involved, caring about every detail, knowing every customer's name, jumping when they said, you know, and what, what will take you there, if we think about Dave on the other side of this, is just saying goodbye to all of that and finding an operator step-in who will do all those things while you sit around and kind of do nothing, which is just anathema to the instinct of most entrepreneurs, I think. So I, it's so good to hear a story that doesn't align with the normal path that most entrepreneurs go down because it sort of proves that it's possible. And I think a lot of people hear advice from consultants and from, you know, other folks who are outside of our industry and they sort of are skeptical, like, ah, it wouldn't really work in property management. You don't really know how hard it is here. But now we have proof that, hey, it is possible, it has been done. And I know that Dave and you aren't the only sort of dynamic duo who have gone down this road.

No, it's true. And I mean, you know, friends that, friends that we both have are, are in the process of doing this and are doing this well. I know Ben Sensenbaugh, by the time this comes out in January, like he'll be officially done at RealtyMedics. He officially, like he successfully sold that company. Continued to run it, exited it. Courtney's running it now. It's going to be extremely successful under her leadership. Like, yeah, it's definitely possible. I would say one thing that I, this is fairly anecdotal, but I think it's important. I think about Dave's story. Why was Dave, there's a reason why Dave was so content to be hands-off. Someone with that level of success, does not get there by accident, right? Sold CAMS for a lot of money, sold property or sold Sawyer Property Management for quite a lot of money. And also started this software company called Vantica, which does HOA management. It's HOA management software. Part of why Dave was so content to step out of different entities was he was always doing something else. As well. So part of why he was comfortable with hiring me and stepping out of Sawyer and not running it himself was, well, Sawyer was making him hundreds of thousands, eventually more than a million dollars, but he had his eyes on a higher ambition. He started Vantika with the ambition of, there's so much green grass in this space over here, we can create a billion-dollar company. So I think part of what made it easier for him to be that person was a different pursuit that he really cared about a lot. And so my counsel to business owners in a similar spot thinking, I could never do that. You know what, I know what got me here won't get me there, but like I got me here and so I can't step away from it. It's before you try to do that, maybe figure out what you would do with those 40, 45, or 30, whatever hours in a week. What would you do that would stimulate you even more than this? If you get clear on that first, you're much more likely to give this, you know, do this risk. And by the way, just because it's a crazy story, VanEck just got a $300 million Series B at a valuation of $1.375 billion. Wow. Yeah. And I don't know how much he owns, but He started it and I think he owns a lot of it.

So next week on the podcast, Dave.

That's crazy. Like in our little Wilmington, you know, there's a unicorn now in, in 2025 where you don't get a billion dollar valuation from a good idea. You get it from a predictable ARR roadmap. Right. So that paid off that. So there's a lesson right there. Like, start these smaller businesses, hand them off, make even more money from them, but then free yourself up to do higher leverage things like a moonshot thing. Like just as an example, that's something you could be doing with your time if you didn't run your PM company. You're probably not going to become a billionaire, but it's worth a shot.

Yeah. So if you're having trouble stepping back from your property management business, just start a billion dollar company and then it'll be much easier.

Yeah, from scratch. They started that company. Vanica started as CAMS was so dissatisfied with the HOA software landscape that they were like, we can just do this again. To your point, what do entrepreneurs think? I can do this better.

Yeah. He runs Rentvine. Rentvine's trying to go along a similar path.

Yeah, totally. We could do this better. So we're going to give this a shot and then we're going to spin this out and then Dave's going to do what Jordan did. Which is consolidate all of his time and energy into the thing that could actually create the most for him and his family.

Great, great move. Really great story and lots of lessons there for entrepreneurs. I want to ask you one more question about Sawyer before we fast forward again to Profit Coach. When you were driving profitability from 20 to 35-ish percent, This was— were you using the NARPM benchmarks to help you make decisions? Or maybe the better question is just simply what were the 1 or 2 levers that you were pulling on the hardest that, that really drove profit through the roof?

Yeah, it's a good question. So I was using them as a rough framework for how does the unit economics game of property management work. I wasn't on the NARPM accounting standards. To my shame, I wasn't like, I, it wasn't totally my fault. We, Dave had a number of different entities and he centralized corporate accounting for them. And so there was actually like a corporate accounting team that did the P&Ls for all of his different businesses. They would not let me convert. So it's not totally my fault, you know, but I'll put my cards on the table. I was rogue. I didn't use the NAS. Never would I commit that sin again in the future. So I use them as a rough guide. Two things. I'll give you one, one on each side of the ledger. On the revenue side, obviously I was really focused on revenue per unit. What can I do to maximize revenue per unit? Analyze my pricing schedule, come through with a resident benefits package that was kind of new-ish in the industry at that time. Reforming my pet fees into a pet guarantee, doing a whole guarantee program. And then offering different rates of essentially like, here's our standard rate and then here's our rate with our suite of guarantees. So really trying to drive RPU well into the $300s starting from, you know, more like the low-ish $200s. So that was one and that's a great driver. And then on the other side, I was very, very focused on units per full-time team member, full-time employee. Very specifically in our model, I was heavily focused on units per property manager. In their portfolio. So we used a hybrid model where we had, you know, across those 1,300, 1,400 units, we would have teams of 2 PMs and then 1 assistant property manager. Eventually we also added some maintenance coordination there to kind of centralize some of that. But I was, because all of the assistant level work was done with remote talent, with global team members, most of my salary burden, of course, was on those property managers. So I would think to myself, as I would look at our P&L and as I would think about projecting and driving profitability, how can I get those property managers from where I started, 170, 180 units per property manager to 300? Didn't quite get to 300. I was in like the mid-200s, low 200s when we left. But how can I, get them to manage more units and, and do what so many PMs, smart PMs want to do, which is I'm going to grow my company by, I'm going to grow units and then as best as I can systematize and scale the labor and the processes that I have so that as I grow units, I don't have to hire additional stateside property managers. That is a great road to profitability and that's, that's what we were driving pretty hard on. Some of that looked like one of the best ways to increase a certain portfolio's ability and portfolio manager's ability to go from 150, 180 units to 200 is to replace a 7 or 8 out of 10 performing team member with a 9 or 10 out of 10 performing team member that you pay a little bit more, but get 1.5x, 1.7x return on their productivity level. That is a great trade. There are a million reasons to not tolerate 7 or 8 out of 10 work in your company, but one of the biggest ones is it is just way more profitable to pay a 10 out of 10 20% more. Like that is a great deal.

Love that. Some very practical advice there for, for us property managers. Okay, so Profit Coach, I want to know what you guys are up to over there. You know, you had great success with the NARPM accounting standards and the follow-up benchmarking studies, and you've been in the CEO role now for a couple year, year or two, and want to hear a little bit about where you're headed with the product. You know, what is your current suite of offerings? I know, so you're doing our corporate accounting, you've been doing it for years, fantastic job, always recommend you guys. For that. I had a great experience prior to you stepping into the company, going through the full coaching program with the dashboard, and that really helped us a lot. So what does the current suite of offerings look like and anything you can share about, you know, what it may look like in the future?

Yeah, I'd be happy to. So our main ambition is to help property management companies build highly profitable property management entrepreneurs, build highly profitable self-managing companies. So everything is towards that end. How can we both decrease the burden that this has on you, this company has on you, and increase your ability to monetize this thing that you've built? So 3 broad categories. There's finance, process or operations, and accounting. So those are, those are distinct departments in our company. I'll go backwards. Accounting, very simply. Corporate accounting and trust accounting. We do that accounting in my view, and I think in most, most people's view at a very high level. We are not the cheapest option in the market. Don't really intend to be. We do what we call accounting on purpose. Everything is on the NARPM accounting standards, especially, you know, on the corporate side with the purpose of delivering crystal clear financial clarity, reliable ability to track and benchmark yourselves. On the trust accounting side, same deal, like just a lot of intentionality towards, towards compliance, towards excellence and feeling like an extension of your team.

Are you still just at Folio on the trust account side?

At Folio and Rentvine.

Okay.

Yeah, we're Rentvine as well. So, and then on the corporate side, we're QuickBooks and Xero. Process side, so we do what we call data-driven process design, which is our approach to ground-up property management process design, thinking like property process, not, not really business process. The standard move-in, move-out, maintenance requests, application screening, designing and building processes in LeadSimple and Apsley. We do that for, you know, for the general public for sure. I would say most of that work is done with our, our existing customers and for our existing customers though. Of course, we're open to doing it for all kinds of folks, and sometimes we do it for people and then they become customers of our other, other services. But that's kind of our, our own, the only real standalone work that we do. Don't really have a recurring model there. Those are, those are buildouts. Those are process design and buildouts. Um, and then finally is finance. So that's, that's kind of the bread and butter. That's what we've been known for, for a very long time. We help people convert to the NARPIM standard. Chart of accounts, get rock-solid financial clarity, understand where you stand relative to industry benchmarks, and then with that, get you and help you get clarity on where you want to go and what has to be true for you to get there. So that's the financial performance coaching element. And I won't go into the details about like exactly how, how we do that, but general broad categories, those are the three. So You asked, you asked, what are we up to? Where are we heading in the future? A couple things. One is our industry doesn't have live industry benchmarks or continuously updated industry benchmarks. That's no longer the case. We have those. How those are being rolled out will probably be clear by the time this episode airs, but it's not at the moment. So maybe I'll shoot a little a little video to appendage onto this if there's an announcement between now and then. But we're bringing live, going to be bringing live financial benchmarks to the industry. We have a dataset similar to Greg Crabtree's like 100-company model. We have a dataset that's super clean and gives the ability to show how things are moving across the averages and the benchmark companies. So we'll be bringing that to, to the game. And then we—

go ahead. So by live benchmark, that means rather than looking at this printed out PDF from 3 years ago on the average company revenue per unit and DLR, I'll actually be able to go on your website and see last month's average across Profit Coach customers. Now, presumably Profit Coach customers are going to have better benchmarks than the whole industry average, but it'll still be really useful as a way to say, I mean, I'll probably personally use your average as the, as my benchmark. Your, the benchmarks in the studies are, are just, I still am like, wow, they're really high. And, you know, we, we hit almost none of them to be clear. So that'll be really fun because, you know, those numbers do get out of date and it would be nice to know like, Another great one is gonna be churn, right? So, you know, we had a, we had a pretty good year for churn this year, but last year was horrendous and it would've been nice to know what was happening in the overall industry with churn and not just, you know, word of mouth. I talked to 3 friends and try and triangulate that.

Yeah, 100%. I mean, I'll give you the, just in case they're not out by the time we, we get there, the general trend is profitability going up. With the average companies going up at a faster rate than the benchmark companies, which in a maturing industry is probably what you would presume. Direct labor efficiency going up. That has a lot to do in the last 3 years of the proliferation of remote team members doing a lot of that direct labor. Management labor efficiency going down. Remember, down is bad because of kind of the inverse effect, which is management-level talent is more expensive. In the United States. And so the efficiency's not quite there. So TLER, total labor efficiency, perfectly flat across the average and the, like, this is one of, are you familiar with Greg Crabtree? Yes, very. Okay. This is one of his just points that he, one of his, one of his books is up here. Orange. Simple Numbers. Yeah. Simple Numbers. So that's one of his points. And he made that in our webinar last week, which is Property management, that's a 2.0 TLR business. 20 years ago, 2.0 TLR business. In 20 years, 2.0 TLR business. It just is. The average is 2. The benchmark is 2.5. So I won't get, I won't get too in the weeds here, but to your point on churn, the industry is improving its churn percentage. So the average churn used to be 20. I think now it's more like 15, 16. Benchmark churn used to be 10. Now it's more like 7. So people are attacking churn for sure. Now, if I'm going to throw a prediction on here, it's that although that number has been declining, I would not be surprised if it starts to rise again, or as the R12 kind of catches up, it, it, because that's, you know, yeah, we don't, we don't need to get into the weeds, but I think it probably got way better in the last year, and I wouldn't be surprised if it got a little worse in the next year.

Yeah, our churn was half this year. Client churn was half what it was last year. Now a lot of that was because it was so bad last year and we, we, we really focused on it. Yeah, we, but okay, really interesting. I'm really excited for these live benchmarks and Crane members know that we've been running kind of a mini version of this inside Crane for, over 6 months now where Profit Coach, anyone who wants and is on the NARPM accounting standards, they don't have to be a Profit Coach client. CRANE members submit their financials once a month. Profit Coach crunches all those numbers and comes back to CRANE and says, here's the CRANE average over the last 30 days. And we get to do some fun analysis there. So that's been kind of a fun little experiment.

Yeah. And CRANE members, CRANE members are solid and the CRANE scoreboard is really solid. I'd like to do a little in-depth analysis on the one metric that's totally jacked up for Crane members, which is expenses as a percentage of revenue. If that got fixed or drastically reduced down to benchmark, and maybe there's an issue with the benchmark, although I don't really think there is, 'cause this isn't consistent across our dataset, Crane members would be a lot more profitable. So I don't know if people are just like, have pimped out offices or what, what Crane members are doing.

They, they love their— You've self-selected for, you've self-selected for a group that's willing to spend a little more money on things, but one would hope they're getting a great return on, you know, what they're spending their money on.

But yeah, and you're making, you're kind of edging around a point that I like to make to a lot of people, which is, and you're a great example of this, RL Property Management, to have a great property management company that makes you really good money, you do not have to be benchmark across all the benchmarks. And in fact, highly profitable companies very often have some, and I'll, I'll give you Sawyer as an example, very often have some things at or well above benchmark and some things well below benchmark. You can pick and choose your own adventure on the type of company you want. So an example is Sawyer Property Management was high RPU, fairly high DLR, and pretty high churn. So we charged a premium. We lost a lot of clients, 20, 25% churn on a 1,300. We lost hundreds and hundreds of units every year, but it didn't matter because we had a great new business development engine coming in 20 to 25, sometimes 30 units a month. We had high RPU. So if you stayed, we made a ton of money off the RPU and our labor was pretty efficient. So we could handle a high churn. Now, if new business falls off that model, there's, there's downsides in every model. But anyways, all that to say, you don't have to hit every benchmark to be really profitable. You just have to pick what, because some people do the opposite. I want to be average RPU. I want benchmark, really low churn, high customer service, low DLR, because I want to take a high-touch approach, but people stay with me for 15 years. So that's— we're getting into the weeds, but that's the cool part about our business.

That is so, so on the money. And I think where property managers can go astray is when they try and be everything to everyone, right? They try and have high RPU but low churn, but high lead flow, but, you know, low expenses. You do have to sort of make a decision on. And I think those are the two traditional paths? Are you going to be high-touch, low-churn, kind of moderate cost? Or are you going to be kind of accept high churn but have a super high RPU and kind of a lower-touch model where you maximize your DLR? And if people— it takes them a day to get back to owners now and again, that's kind of the price you pay for that high DLR. I think it can work. There's probably there's at least 2, maybe 3 or 4 different sort of paradigms here that you could put together as a coherent strategy. But if you don't think about it coherently and you just jump from one to the other to the other to the other to the other, your team is going to get completely confused and burn out because one month you're on churn and then you're saying we got to be high DLER and now you're driving up RPU. And then so the leads aren't coming in and you really need to think carefully about how you want to position yourself in the marketplace and really That's what branding is, is it's picking a strategy and then building a brand that's in alignment with your strategy there. You wouldn't want to have like a Hilton type of branding, but then you're a McDonald's type of an experience and vice versa wouldn't work well either.

So, yeah, you know what's interesting, Peter, what you're kind of describing is the company. You just put out an article last week about role design. I made fun of you because it was long, but that's just because I was just being silly. But the next thing made— what you're talking about is company design. What kind of company do we want to be? And everybody talks about that in sort of vision, core values. No, no, no. Like, I'm a high RPU, high churn, high DLR, low touch. Like, if you can get some conviction on that, then you can see a 20% churn rate as an example. And just say, I baked that in. We lost 10 owners yesterday. I baked that in. That's part of my model. And not freak out because you're just trying to hit every single benchmark. That's just so unrealistic and so few people do that. And then you just start tweaking things that hurt other things because they're not involved in your model. Yeah. So I think there's an idea there on company design.

John Mastner has a great line he always brings up here about there's really only 3 strategies in business. Customer intimacy, low cost, or technical innovation. I might be slightly mangling that, but I think I pretty much got it correct. And you need to pick one of those and go hard on it. And if you try and be everything to everyone, it's a, you're just gonna be a, you're stuck in the messy middle and you'll make nobody happy.

That's the, the Hormozy principle. So yeah, high price things to rich people or to a few rich people or low price things to a lot of very poor people, but don't do anything in the middle. That's like a derivation of that as well. Yeah. Which, that's pretty good advice.

Yeah. Well, we are over time, but this has been a really fun conversation, Brad. Anything else you want to touch on or kind of mention before we wrap?

Yeah. And I'll be brief. You would, you would ask like, well, we're working on a profit coach. Maybe by the time this, this airs, I'll have some out publicly about this, but it's probably a little bit later in Q1. We've been using our, and this is funny 'cause this could go down a, a, a rabbit hole here that either that you love. We've been using our dataset, datasets, 'cause we have both super clean, highly, highly sanitized financial data as well as all of the correlated unit data to train some, to train some models, some LLM models on how to how to analyze in real time that sort of data, how to make the connections between operational efficiencies and operational changes that go into the, the financial side to look for patterns and to proactively make recommendations. So I, I don't exactly know right now, December, as we're recording how we're going to roll that out or what that product is going to look like. What I can tell you is the work that we've done, and we've, we've brought in some really, really talented people to help us with this project. The work that we're doing and the early results we're seeing as far as the level of analysis is super, super awesome. And I'll give you kind of the framework for what are we after? We're after this phrase, decisions made easy. The, the property management company owner or operator makes so many decisions all day long. And that decision fatigue adds up. If you had something, if you had a tool that, because you have conviction on the company that you want to build, the tool understands how property management works, how the financial model works, it understands your goals and what you're after, alongside, in our view, probably a human to kind of coach and contextualize. If you could take all of those decisions or a lot of those decisions, be able to run it through something that understands how to make those decisions in light of the goal that you're after, it might really make decisions a lot easier for you and let, and help you feel a whole lot less tension and burnout because of all the different decisions that you have to make throughout the day and for your company as you, as you go, even on the big stuff. So that's what we're after.

Decisions made easy. Really looking forward to kind of seeing more of that as it rolls out. For folks who wanna stay updated on that and just kind of what you're up to, where's the best place to do that?

Sure. Yeah, it's pmprofitcoach.com is our website. My LinkedIn is probably like the most up-to-date things of what's happening and what are we doing at Profit Coach. Just Bradley Johnson. You'll have to scroll through all the other millions of Bradley Johnsons to find me. Just put in Bradley Johnson. @pmprofitcoach. And then my email for anybody who just wants to chat, I take any call requests really that people have. I just love communicating, love talking to folks in property management. It's brad@pmprofitcoach.com. We can set up some time and I can tell you a little bit more about what we do.

I'll give a shout out too for your monthly webinar series called the Profit Power Hour. Oh yes. That's the longest— what did you tell me one day? Well, this is the longest running webinar series in Property Management, I think is, I think so. Yes. The line that you use. Yes. It's yours. And it's great. I mean, every month you have either a different presentation or a different guest. It's a very informational style show. It's not interview style. It's very much informational. It's always, you could tell that you guys put a lot of work into preparing for those and maximizing the value of the time of your viewers. So definitely sign up for that. It's free. I've been a guest on it many times and most of the other leaders in the space have as well. So well worth your time if you, if you own a management company or if you work in one.

Yeah. And we try to be very PM-focused as far as our guests go. It's not, it's not a vendor happy hour. Yeah, it's definitely property manager focused.

Yep. Well, thanks, Brad. This was great. And yeah, appreciate you coming on the show.

Yeah, thanks so much.

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. Mm-hmm.