Special: Peter on the 300 to 3000 Podcast

Welcome back to Owner Occupied. We're nearing the end of season 3, and for the next few weeks, you're going to hear syndicated episodes where I was actually the guest instead of the host. I thought it would be fun for listeners to get to hear more from me on the other side of the mic. Today, you're going to hear an episode of the 300 to 3,000 podcast, which actually recently rebranded as the Evernest Property Management Show. Great podcast, and I highly recommend it, by the way. I always love chatting with the team at Evernest, and this discussion was no different. It was originally broadcast as a live webinar, and the topic was Processes Built for Profit. Process is one of my favorite topics, and we go deep on this episode. I got special permission from the team at Evernest to rebroadcast this episode, so thank you to them, and I'll let Spencer take it from here. Welcome back to season 3 of Owner Occupied on operational excellence in property management. Owner Occupied is a show about property management in the real world. I'm your host, Peter Lohmann, co-founder of RL Property Management. For season 3, I have a different guest each week and we go deep in a conversation about what actually works when trying to grow and streamline your property management business. Thanks for listening. Now let's go.

Peter Lohmann, our guest. Now, Peter is the CEO, founder and CEO of RL Property Management in Columbus, Ohio. Peter's a good friend of ours. He's our guest today. And I wouldn't say Peter didn't really sponsor this show, but he did share it with his newsletter, which you've got a fantastic newsletter, Peter. So welcome to the show.

Thank you. I'm really excited to be here. Appreciate those kind words. I work hard on that newsletter, just trying to provide value for folks who are in the trenches managing property. And I will say your show is amazing. You never said the name, I don't think. So, 300 to 3000. I love the name. I've learned a lot from listening to your guys' podcast. Very good.

We did not pay Peter to say that. So thank you, Peter. So let me also say this. Where can Peter— Peter, where can people sign up, A, to your newsletter And then tell us the name of your podcast so people can write that down as well.

Yeah, so my podcast, I'm going to be starting it back up this summer. It's called Owner Occupied. I interview property management operators and folks, thought leaders, people that I've learned from. You can check out the archives if you want to listen to that. And then if you want to sign up for my newsletter, or I write about the industry as well at peterlohmann.com. Awesome.

Peter's done a great job. If you— he's also a great follow on Twitter. So if you're not following him on Twitter, he, he's a flamethrower on Twitter. He's got so many followers. Let me get his post to Peter's podcast and, and there's Peter's website. So we'll put all that in the chat channel if you want to start following that. But as Todd also put in there, Peter is one of the best PMs in the business. One of the great things about him that I appreciate is number one, he thinks about the business a lot. So we share that and then he's very transparent. Appreciated one of his newsletters that recently came out. He and I texted back and forth about it. Really appreciate Peter. And then for those of you who don't know, if you haven't listened to our podcast, we also— Peter was on our podcast talking about his social media presence and growing an audience. But we also recently had Graham Robinson, who's our Evernest president, on. And Graham is from Texas. He's a went to the University of Texas MBA. He grew a, a business that was a travel and leisure business for a long time, and then unfortunately that business just got killed by COVID. And then he came over, he did a few other things, and then we talked him out of Texas here to Alabama. So he's been running a lot of operations. And so we wanted to dig in with two of the best operations minds in the business here, uh, and Graham, thanks for jumping on the show. He was not as excited about being on the show as Peter was, I'll tell you, because he— we've had a whole team of people in town training. And so we've, we've been running pretty hard this week.

Yeah.

Happy to be here. It is right on the heels of a leadership team offsite and a management team offsite. So it's been a lot of talking over the last couple of days, but I'm glad we're getting to do this together for sure.

Yeah. And I'll say, this will be the last thing I say, just as an introduction, did want to say, uh, just talk about Graham. So Graham joined us. How long have you been here with us, Graham?

It was August of '21.

Yeah.

Okay.

So coming up on 2 years and Matthew talks a lot in the office as we're talking to our leadership team, he talks about hiring really great people in your business and actually hiring people who make you nervous. And I think Graham was definitely that hire for Matthew because he's so much smarter than Matthew. Kudos.

Definitely not anymore.

Definitely not anymore. There's been new additions since then that are making everybody even more nervous. This is true.

Graham has relegated me to the mascot, Everest mascot. That's why I've got my Everest hat and Everest shirt on.

That's right. You're definitely not going to talk about processes. Just kidding. We're actually going to start this whole discussion off. I want to get right into it. All right. So let's kick it off. Peter, Matthew, this really, as we open up, I wanted to address the two of you because both of you started you started your property management companies. Well, I know Matthew started yours from scratch. Peter, you can tell me, I know you didn't have any experience like background in property management. I would love to hear how both of you went about, as you started maybe small, I know Matthew, you started with 30 properties, how you thought about processes in the very beginning of running your company.

[Speaker:PETER_LOHMANN] Yeah, totally. Thanks, Spencer. I started, my background is engineering, so I worked as a control systems engineer. I have an engineering degree and I worked as a control systems engineer for 5 years. During that time, my business partner and I bought up a few single-family homes. So this is from like 2008 to 2012, working as an engineer, buying like one single-family rental per year, self-managing. And we were both looking for an exit from our day jobs. And what we thought we were going to do is start a little management company just to pay the bills while we went hard on buying more rental properties. And that was going to be our main thing. Once we got started managing properties, it took all of our time. Shocking, I know. And we didn't end up buying too many more properties ourselves. Instead, the management thing started to take off. And here I am where we actually just celebrated our 10-year anniversary here at RL Property Management. So when we started, I had no background, no experience, no one in the family owned rentals or anything like that. So we had to figure out all the processes from scratch. And right or wrong, picture me like 15 years ago, younger, more arrogant, more think I know more. And I was like, we're going to figure this out. How hard can this be? So I didn't like go find a mentor or go work at an office for a year. I just, we just started. So the processes in the beginning, was, there was nothing, there was hardly anything written down. It was just me and my partner winging it. And as we grew and we started this, we, this sort of started to become a real going concern, as they say in the accounting world, is when we were like, okay, we need to actually document some of this partially so that we get it right every time and partially so that we can start to bring in employees and have them execute these processes.

Yeah, this is why Peter is on talking about processes and not me, and I'm going to keep my mouth shut. I, when I started my business, it was, and those of you who know my personality, it was processed through brute force. I just, I'd remember to do something and then I would go do it. And I just kept up. When you start a business, you just know everything that's going on in the business. And so you create these daily to-do lists and then I would knock those to-dos off and then you'd wake up the next morning and hadn't paid rent. And so I don't have an engineer brain. I didn't come from a real job. I've always been out doing my— trying to make it on my own.

Hustling. You were out hustling.

I was out hustling. Yeah. And as Spencer, we fell into the business back during the recession and the story goes, we owned 30 rental or 30 homes that we couldn't sell '07, '08 and started a business as a result of it to manage those. And then. Spencer, you were kind enough to give me your 30 or so homes. And so we managed 60 or 70 homes when we got started, but even 60 or 70 homes, you know, everything that's going on in the business. And as we started growing, you mentioned you were going to ask this question. I did try to get excited about processes. I'd read the book E-Myth, which I think Peter calls one of the top 5 or top 3 books that you need to read when you're starting a business. And so I went out and I, when you mentioned this, I went into the cardboard boxes and found the golden key process manual. So I did spend some time doing this and even has a table of contents. And so this'll go one day, maybe in the, in the Everness archives, but client property acceptance. So I did get, my guess is when I wrote this was about a, somewhere between 150 and 200 homes. But I didn't do it as a result of being strategic. Like it sounds like Peter was, I did it because I started to create pain. Oh, look at that. Yeah. You had a great brand to start out with. You had, you didn't have to like change your brand. And so I didn't do it as a result of being really strategic. It was just like I created pain. And so as we started hiring people, I thought it would be really important to, to write some of these processes down. And he helped with that.

So both of you have these folders.

What—

the first people that you hired, were they coming over to the folder and opening the folder and flipping pages and saying, what do I do now?

Yeah.

I mean, it worked.

So we had really similar to what Matthew is describing. We had operations binders, just like the one I showed for each position. And we would fill that with company policies and procedures and checklists and forms and things like that. So it was very manual. Every time a new employee started, you had to like reprint this whole thing. I remember being up late, 10:00 PM the night before a new employee's supposed to start. I'm like printing out all this stuff and then I'm like, wait, I thought we updated this. Then I'll go hunt around for the new version. And cause I really wanted folks when they came on board to be able to reference this information. And it worked quite well. In retrospect, I always felt like we were super disorganized, but in retrospect, I think we were actually ahead of the average small business owner for the time. And we've since moved all that stuff to Notion, and maybe we'll talk about that at some point. But I do think it's important to draw a distinction between sort of reference material, which is a lot of what would be in that binder, and then how you actually execute your common core processes. You don't necessarily want to document like a lease renewal process on some Word document or in Notion because that's a living, breathing process that's happening multiple times every week. And needs to be tracked step by step by step. Who's doing this? What's the status? When was it started? When was it completed? So sometimes I think folks get a little bit caught up and they want to make a process out of everything. And I'm like, you don't need a, like, a process in software for that. You just need 5 bullet points in a paragraph with maybe a screenshot on a web page somewhere that someone can look at if they need to know how to do that.

And so you're saying you don't have that in Notion now. You have that somewhere living somewhere else.

Our core company processes, we've got 6 or 8 of them, like move-in, move-out, lease renewal. Those are not documented in Notion. Those are documented in our process software that we use, LeadSimple. Yeah.

Gotcha.

So we did have a question. Somebody asked a question right here off the start. Mike did. Mike Goldstein asked, if you started all over, who would be your first hire? And who actually was your first hire? So this is both for you, Matthew, and Peter.

Peter would have been my first hire. So let's see, uh, when I first got started, so I had the benefit of coming— like, we were buying and selling houses, so there were essentially 3 of us that came over from buying and selling houses over to here, and I'm the only one that's left. What my first real hire would— I say would be like a CFO or somebody to handle. So the way I would think about that is what are you good at and then what are you weak at? And then I would focus on somebody complementing your weaknesses. And I still do that. If you see the people that are closest to me today, folks like Graham, our— Graham, who's our president, our COO, Matt, all of these people that are around me are very detail-oriented, very much finishers. Because I'm a great starter and big picture and Graham can get down in the details. So that's the way I thought about it. And my actual first hire, a lot of people know him and great time to plug him because he's still in the industry is Phil Mazer, who was our CFO for a long time. And now he runs a fractional CFO business. We're still great friends with him. And I think he does a great job.

He was your first hire?

No, not really the first. He was the first hire for Matthew's weakness, I think is what he's saying. Yeah.

I would say like first. Or other than just maybe like leasing agents or something like that. Yeah.

Okay. Got it. So our first hire, a guy by the name of Greg, and he did everything. He was just like an admin assistant. He did showings, he answered the phone, he helped prepare leases. And I remember way back, I had an executive coach I was working with at the time, and he pushed me to make that first hire way earlier than I would have. He was like, hey, you need to hire somebody. And I know you feel like you're not ready, but this is the move you need to make. And that was excellent advice. I really have this clear memory of it because I was worried about how are we going to pay him? Is there going to be enough for him to do? And are they going to do everything as good as I do it? All the classic fears you have as a small business owner. And that was great advice. And it probably still resonates, like the value of getting something done at 85% by someone else versus 100% by you, it's a magnifier and a lever that you can pull on to grow your business and scale your operations and yourself. If I was starting all over, it's hard. Like that was probably the right thing for me to do at that age with the maturity level that I had with the finances that I had at the time. If I was to like start a brand new property management company, in some other state today, knowing what I know with where I'm at, I would pull in kind of like you guys were talking about earlier. I would bring in someone who scares me, right? Like I would try and hire like Graham or someone who's run a huge organization and is way, way experienced and skilled at what I need. And then I would just let them build the team under them and I would give them like a direction and some guidelines and say, go tell me what you need. Cop-out answer, but that's what like CEOs do at big companies, right? They're not working 80 times harder than a small business CEO. They just bring in people who really know how to do that thing and then let them run.

And I think Peter hit on something that's really important. We're going to get into digging into processes and where to put that and how, what spots and what does that look like, but One of the things I wrote down as a note is that hiring great people fill a lot of process holes. So as you scale, your processes will become— I think of them as like a pipe. And as you start to push more water down them, you start to see where the leaks are. And then you can either fix that same pipe or tear the pipe out and build a brand new one. That's the way I think about processes. But one of the great things about great people like Graham is when processes are breaking down, they can hold the pipe together. Long enough for you to build the next pipe or to plug the holes. I wouldn't say it's a great question because these things are really connected. Having great people with great process is super important and great people will make you look good when your processes aren't great.

Could not agree with that more. And I've made the mistake of over-indexing on process in the past, you know, and anyone who knows me is probably not shocked to hear that. But a bad employee will— my business partner has a great saying. He says, "Bad employees always find new ways to be bad." No matter how carefully you write the process and no matter how many like edge cases you try and incorporate in the process, they'll just continually break it and find ways and complain about it and won't get it done. And it's late. You can't fix that with process. You just have a bad employee. And conversely, a great employee will pull a rabbit out of a hat. There are no process, bad process, duplicate process. They're going to figure it out. They're going to fix it. They're going to get it done. So people are at least as important as process. And I'm a big process guy. So for me to say that, like, it took some maturity and learning for me to get to that point.

I actually think we mentioned how good E-Myth was. I actually think E-Myth tries to lay out the scenario where we can build everything like McDonald's, where we can essentially have the lowest common denominator managing that process. But a scaling company, which is what we're talking about here, a scaling company needs great people with great process to be successful because it is so disruptive to grow a business.

I was going to ask, what was the maturity level of the finance organization or like your level? Like when you hired Phil to fill that need around accounting, finance, Did he come in and write process from scratch or was there already something that he took over? Was it so painful for you to do that that you're just like, oh my God, I got to hire somebody to do it for me? Or was there already something there that he kind of took over and was documented and then he like improved upon?

So for some context, one of my old partners was a CPA. So she did a really good job of kind of setting up the initial processes, right? To get us to a couple hundred homes. When Phil came on, she— I bought the business from her and some other partners in May of 2013. And when— then, so she left, and then I had this bookkeeper in the middle. And that bookkeeper, as the business continued to grow, it just like the processes needed to grow, and the bookkeeper was unable to keep up and wasn't talented enough to essentially keep up with all that. So I was stepping in. This is about the time Spencer started and we switched from one property management software to another. I manually did that. It was probably the worst time of my life. And then, and then that's when Phil, that's when I decided I need to spend some money and get Phil in here. And we looked for a CFO for about 3 to 6 months and found Phil.

Yeah. So that was around 2013 is when Matthew bought the company from his partners. Phil came on probably April of 2015. So he had almost 2 years.

Took a long 18 months.

Part— yeah, part of the reason why I was thinking about that was finding the right time to essentially put like a lower cost resource in place of you yourself doing the process. And that balance between knowing what you're good at, knowing what you're not good at, potentially solving for pain. Okay. This is not something I'm good at. This is not a process. I enjoy doing. Maybe it's not a good process because you just hate it. And finding— because often, you know, you found somebody who is probably more competent than you. And Peter, you talked about the good employee, bad employee, or the right person for that seat. But the reality is that in a lot of owner-operated property management businesses, like, you are very competent, and the person that you're putting in place to do that instead of you does not have as many reps as you doing it., and they may be less competent than you at doing it. And so writing that process, like handing off something that is like pretty fully formed to a, to a more junior person versus hiring better than needed, stepping into that situation where they're going to create from scratch and really overhaul something. Those are like two very different decisions, I feel like. And one requires a lot more documentation and thought versus I'm just going to go out, overpay, maybe even overhire for this. And expect them to fix it from the beginning. Those are like two very different things.

Yes. And I didn't know the latter was possible until recently. I thought that I had to figure it all out, document it all, and then hire like junior employees. And just, I didn't go to business school, right? So I didn't know how bigger companies operated. I never worked at a really big company or with very competent managers. And so, the idea that you could just hire a superstar, they would come in with a prebuilt set of processes, not documented, but in their brain of, oh, this is how you run a finance department. This is how you run a leasing department. And they would just come in and execute and build it out and document it and run it really amazing. I just, I hadn't been exposed to that world until I started educating myself and trying to surround myself with people who were further along than I was. I was always just in this mindset of I have to figure everything out, document it, and then bring in some $15 or $20 an hour person to do it.

It also gets into an affordability issue as you're trying to grow your business, right? Like, when do you really go for it and spend the money and hire up versus hiring what you can quote unquote afford? And you hear it all the time, you read all the books, you listen to all the podcasts, and everybody says, go spend that money, find somebody that is truly good, and then they'll pay for themselves. And that absolutely is true. It's just, when are you gonna have the faith to do that? What I have found, which is getting back to Mike's question, is in areas where I'm real weak, I can go, I wanna go pay up to get those team members around me. In areas where it's more of a strength, now this has changed because now that the business has gotten bigger, I wanna pay for everybody to be good around. To be able to add value around me. But when you're growing your business, there are certain things that you know that you're better at, and so you can hold those a little longer. Now, what you don't want to do is hold those too long to the point where you actually restrict the business because you feel like nobody can do your strengths better than you. And what I have found is that— perfect example is Spencer and I, you used to do two podcasts. One is the— what's called The Evernest Real Estate Investor, was just a real estate investing podcast. And what we have found is we were on that, and Bray Hall, who's one of our team members, has an absolute passion for that, for real estate investing. And he was so much better than us, and we thought we needed to hold that pretty close. And once we've given it up to him, it's— the podcast has really taken off. And so don't feel like Don't be the lid. John Maxwell has this principle called the Law of the Lid. You don't want to be the lid on your organization, your leadership. And there is a, I think, a perfect— and we talked about this on our podcast, it's the one on the EOS Life— but Gina Wickman talks about delegate and elevate. And the first thing you delegate are all the things you don't like to do, you're not good at, and/or you don't like to do and you're good at. But After you've delegated all that, you need to start getting into some of the things you are good at and do like to do, delegating those.

Yeah. Spencer, you sent me all these great questions. We got to dive into these.

Yeah, I know we're, we're already running out of time with these questions. So I think this is a great segue because we've been talking about the very beginning of your property management company. And as we grow, talk about— because Peter, you're— you manage around 700 doors, I think, right now. And you're in Columbus, Ohio. Hurts our feelings. You manage more doors than we do in Columbus. So we're not going to hold that against you. And of course, we've grown to a pretty big size. But talk about how processes change the more you grow. And I loved what you even talked about in one of your articles, just talking about process depreciation. In one of your articles, you were just saying, listen, processes never are good forever. They're all— you've always got to be thinking about changing it. And that is the challenge. And so I'd love for you and Graham, probably because Graham's had a lot of experience with us as we've grown and changed the process, like, how does that change as somebody goes from 50 doors to 100 to 300 to 400 to 700 doors?

Yeah, that's a great question. And so the situation when you're smaller, say under 100 doors, is the requirements for a process are documenting how to do something correctly, and then helping you complete that thing. And that's the extent of it, because either you're going to be doing it, or maybe you have someone who's working right alongside you doing it. As you get to multiple hundreds of units, there's some additional requirements that come in. One of them is going to be you need the ability to have multiple people touching a process, possibly simultaneously. And executing individual to-do items against that process. So like your move-in process, you may have a leasing person who's completing some items on that checklist or process, and you may have an accounting person completing some items, and you may have a property manager completing some items, and you need that to be able to work. And ideally, when you act, when you run the process, it's going to automatically assign the tasks to the correct people. So that's one thing that changes as you get bigger. The other requirement around process is reporting that starts to become much more important as you have more employees, like how often are we running this process? How long does it take on average? Do we have any overdue items? What's the pull-through rate of the process? Meaning like how frequently does it get successfully completed? And the other thing is that you start to be able to need to handle exceptions more cleanly as you get larger. Because like if you're in the middle of running the process, let's say it's a move-in process and the tenant emails you out of the blue and is, my mother just died, I have to move across the country. I'm sorry, I won't be moving in tomorrow. What do you do? You already have the security deposit, the lease is countersigned, but they haven't picked up the key and you need— as you get larger, this is going to happen multiple times every year. You need a way to handle that exception cleanly. Whereas like when you're like 25 doors, you're just like, oh yeah, we'll just tear up the lease. I'll mail you a security deposit check. No big deal. So that's just a couple of things that came into mind when I thought about that.

Graham, do you have any thoughts?

Yeah, I was thinking about how you touched on it, multiple parties being involved, being very clear about those lines of demarcation, like who is responsible for what. And anytime there's a handoff, like there being really clear documentation of what it is like, what is sufficient, like what is sufficient for a handoff. If you think about, I don't know, like an owner onboarding process, like maybe the salesperson is handing it off to a property manager, if we don't have a W-9 yet, like they can't get into— we use that fully, right? So a BDM or a salesperson may just want to sign up a property management agreement, like lob it over the fence and expect somebody to just catch it. And so being very clear about what has to be like all the way pre-packaged, ready to go so that the next person or the next step in that process can continue and it's not incomplete. Like Moving something incomplete through a process is just a recipe for it to backtrack and go back, and you're very quickly out of process. So thinking about that servicing, that information, you know, Peter, you talked about like multiple hands in the pot, kind of like all touching the same checklist. And then that's when like ordering of events gets really important. And somebody may be waiting or you've already kind of shown this lease renewal to somebody, but that other thing is not ready yet. Like, and a better way to do that is obviously not show the, the next person what is coming until they're really able to action it. And Peter, you talked about it earlier, but I think it's very important to understand that what needs to get done is different than how to get it done and how, or how to do it. So that checklist of these are the things that need to get done, that is different than here's where you go click on it, or here's a video of a walkthrough of how to actually accomplish that particular thing in Buildium. Now you want those two things to be close, but you don't want to muddle the checklist with all the how-to-dos because really those checklists in a way need to become data and need to turn into some of that pull-through rate or what substatus are we in, how many of these renewals are we waiting to hear back from the resident on. That's almost like a substatus within an overall status, like this unit is in this renewal phase. And so like when I think of checklists, I also think of being able to aggregate that data and you don't want to mess that up with the video on how to— where to go click to accomplish that thing in affiliate.

Yeah.

And that matters when there's multiple people messing with it, right?

Yeah. And in my experience, good, good process software will keep that clean, but they'll provide you what I think is a superpower, which is they'll put how to do it where you do it. And so the checklist will be clean in the sense that it'll say, execute the lease, upload to software, notify the owner, and there's not 50 million sub-steps for each one of those, click here and compose. But within that step in the checklist, you can click and there'll be a little video showing you how to do it, or there will be a paragraph with some bullet points explaining how to do it. That's separate from the status, right, of is this item completed or not completed.

If you use, use LeadSimple's software, right, they've obviously put a ton of thought and effort into organizing that and doing it the right way. I'm also thinking for the, I don't know, 100-unit property manager, they may be running some of these processes off of spreadsheets or off of Google Sheets or the things like that. And so the temptation to mix and match some of that They, you can mess it up when it's a freeform medium, like a spreadsheet or even in Notion, but separating those things I think is, is worth the time and effort so that later when you're maybe upgrading to something like LeadSimple software, it's a smoother transition.

Yep. And I think it's important to know also the bigger you get, the more expensive it gets going out of process. So Graham, can you even talk about, we were even talking this week about, hey, we've Not been following a process here and it's cost money. Have you, where do you see property managers possibly losing money when they don't follow a certain process or they outgrow a process?

Sure.

Yeah. There's a ton of things I could talk about here is the, the reality that unfortunate reality. I was thinking about certain fees that don't get billed when a process isn't followed, then there's not like a trigger that goes to our property accounting department to charge a financing charge or charge a certain fee and there's supposed to be or something like that.

So.

Literally leaving money on the table, leaving money on the street. Matthew found a dollar walking back from lunch the other day, and it was just sitting there on the sidewalk, and he brought it back to our leadership team. Was like, this is what we're doing in our business.

We're le—

we just need to look around and we can pick up free dollars on the ground.

I thought that was going to be a lesson around like the value of his time, so he decided to purposefully leave it on the sidewalk because the extra 3 seconds being back in the office would be more valuable.

Tell you a lot about the value of my time. I've been over to grab it.

And if you knew what a germaphobe he was, you'd be surprised that he picked that thing up off the street.

I thought this was going to be like a pennies in front of a steamroller thing.

He did not like picking it up, but he did. I was also thinking about our— yeah, just, I mean, there's lots of Spencer, there's lots of this. It's a real dollar. Yeah. When one thing gets off track because you got to process because Look, I think most people are like, what do you mean? But a team member who feels overwhelmed may feel tempted to go outside of process because it appears easier to take the shortcut. And the reality is that creates way, way more work to get something back into process or to then fix the unintended consequence that you didn't realize you were going to have on something. And I think, I can't remember the number, did you say it was like 17 times more work to get something kind of fix versus getting ahead of something. I don't remember the stat exactly.

That's in the book Scrum. And what they realized, the Japanese realized that fixing a car on the back end versus stopping the assembly line and fixing it at the moment they realized there's a problem, I think it was like 17 or 25 times more time to do that. In fact, it took, it took the Germans because they were allowing the issues to go all the way through and then fixing it at the end. It would take them as long as it took the Japanese to build a whole car to fix the one issue. The point being, it's much better to fix those as you go versus waiting. I want to jump in because I've got another question, just thinking about guys thinking about customer service and, and as it relates to processes. But William asked a question, so I think it's like a good time to jump in with a little bit of a— one of my favorite podcasts is Tim Ferriss, and he jumps in the middle and gives a, a commercial in the middle. And so William wants to know, why do we do the podcast and spend our energy doing this instead of focusing and growing the property management company? Is this a sales technique for your services and expansion? The answer, William, number one, is yes, it absolutely is a sales technique. We don't try to hide that. I think Spencer mentioned that at the very beginning. The reason we do this is because one day you're going to sell your business. And we want to be one of those phone calls. And so that's the reason we do this and we don't, we're not hiding it. And, but we, there's also two other reasons. The second one is we think that professionalizing the industry is good for everybody. This industry is so new. There's so much opportunity to institutionalize this, like what we call third-party property management for single-family rentals, that it is way better for us to share information. Even though Peter, you would call us competitors, it's easier for Peter and I to share information on how things get done because it's almost like we're all going west here and we're all settling a new land. And if Peter and I are going to settle the land, it's way easier for us to go together and attack some of this together. That's another reason we do it. There's obviously a selfish reason because us going together, we stand a way better chance of all getting there. And then the last thing I wrote a note is we have a core focus here that is developing people personally and professionally. And we think of it as we spend a lot of time developing our team. And so doing this is very, it comes very naturally to me and Spencer because we just have a passion for it. And so we do this internally as well. And so those, to answer your question again, yeah, we're doing this for selfish reasons, but we're also doing it. Because it's our passion. So hope that's helpful. Love to ask you guys a question we have on here about customer service and as it relates to, to processes. How do you manage like running efficient processes, Peter, with the idea of customer service?

Yeah. If your processes are efficient, you should have more time for customer service. There's a great quote. I forget who said it first, but automate the ordinary. So that you can personalize the extraordinary. And when you're dealing with property owners, if you're not having to manually re-figure out how to do a lease renewal or a move-in or a move-out process, or you're not having to help a team member because you've documented your processes, you have more time to spend with your property owner clients on unusual issues that come up or just being more responsive in general. So that's how I think about process. I think some folks get the idea that like everything is automated and it's like a machine or an AI running the background and no, we never talk to our clients and it couldn't be further from the truth. There's a limit to what you can automate and systematize and there's a lot of low-hanging fruit there, but there's plenty of person-to-person interaction and opportunities to shine in customer service.

Yeah, my, look, I've been here for a year and a half, but some of what I've come to realize is that owners and residents, they actually have— I know, like, there are obviously extremes, but the reality is that there seems to be relatively low expectations of property managers in the industry. If you go and you look at industry-wide Google ratings or Yelp ratings and other things like that, like, the reviews aren't great. And so I think that if you can be— I was talking about this earlier with our CEO, But if you can be consistently average, that's actually better than average because at least you're consistent. So finding ways to just do the same, write a process and do it the same every time, and then try to iterate and get better. I think that applies to customer service because exactly, I guess, you know exactly what you're trying to accomplish by following this particular process and that consistency is in itself, I think, like a form of good customer service. Like being very clear with an owner that like, no, this is not— that is not a service that we offer. Going down, okay, the courthouse like closes in 25 minutes and your property taxes are due and they call you and you cut a check and run down there and get this thing deposited. No, I'm sorry, but that's not something that we do, right? Like that, yeah, it's not bending over backwards for them. It's just being very clear and direct about what we can accomplish and what we can't accomplish.

Couldn't agree more. And I got to give credit to Jordan Moeller here. He's got a great quote. He says that process is downstream of policy. You will never have great processes if your policies, such as we don't run down to the courthouse, aren't locked down. So you as a property manager have to define both for yourselves and in writing in your management agreement what exactly you're going to do for your property owner client and what you're not going to do. We actually have a whole section in our property management agreement that says the following is excluded from our scope of service. It's got all kinds of crazy stuff like outbuildings. We're not responsible for sheds and we don't handle like your personal mail that got delivered to the property and we won't do tax appeals and we won't handle your mortgage payment. There's a whole list of them. And until you're clear in your own mind what you're going to do and what you're not going to do, both for clients and tenants, you're not going to be able to process your way around that problem, the problem of not having it clearly defined. And you have to feel out your local market and figure out what's customary and ordinary in that area and probably do those things. And it's really challenging because property owners will just like tenants, they'll give you a sob story or they'll even promise, we're buying 100 properties this year. And they'll tell you all kinds of stuff to try and get you to make an exception to your normal process. But it's never worth it. It's literally never worth it. And I've been tempted and gone down that road 3 or 4 different times for different owners. Sometimes it's a friend of mine or it's a big client or it's whatever. It's just never good. So Once you get that locked down and you get to the point where you're just like, nope, we don't do that. Nope. We don't, sorry. Nope. We don't do that. Now your processes can really get dialed in and get really tight and just execute super smooth every time. And your training for your team can be really consistent and just everything gets smooth from there. Yeah.

I think you learn a lot of that through experience, right? So if you're a newer property manager and you're trying to build your business, the temptation is to want to go and do everything for the owner because you want to keep them, you want to keep them happy.

Happy.

So you become that boutique manager. They've got your cell phone, they're texting you at night, and you're willing to do anything until you realize you can't do everything and you— it starts really destroying you and messing with you, and it really throws off a lot of your business. So you learn a lot of that from experience. And I think this is a great time to talk about— we do have a question here from Eric, and he just says, Peter, can you talk about how you use Notion throughout your company? And then On top of that, I would say, would you recommend something like Notion for even smaller property management companies as they're growing?

Yeah, absolutely. We use Notion heavily at my company. We use it as a knowledge base internally for our employees. So that binder that Matthew was holding up and I had one too, everything that was in there is now in Notion. All the random emails, like as the owner, have you ever like sent out an email? You're like, from now on, we're no longer doing refunds, right? You're like writing policy in an email. And then 9 months later it happens again. You're like, you don't remember my email? And they're like, dude, I was hired 3 months ago. I didn't, I never got your email. You're like, oh man. So now you like, you take all that stuff and you put it in Notion and it's there for everyone. It's searchable, it's editable, it's easy to update. You can comment, you can link to other pages within the knowledge base. So it's kind of like Wikipedia. And I've got a great video pinned to my Twitter profile doing a walkthrough of our Notion. Showing exactly how we use it at our property management business to stay sane. It's web-based, there's a nice app, and I encourage our whole team, anytime you're in Notion and you see something wrong, just fix it. Don't even ask me, just fix it right then and there because I want this to be like a living, breathing document. And the beauty of it is now whenever someone comes to me with a question, first thing I say is, did you look in Notion? And if they say no, I say, okay, go look in Notion because it's probably there. If they say yes, and I couldn't find it, then I say, come over here, sit down right here. I'm going to open a new Notion page. I'm going to write out the answer for you. Maybe I'm going to record a Loom video. Maybe I'm going to take some screenshots. We're going to do this together because you may know a little bit about it that I don't. I'm done. I'm going to fire you the link and now it's there forever for anyone who needs to know that. So it's super, super powerful. It's like one of my favorite things that I did over the past few years at our management company.

How do you keep those up to date, Peter? One of the things I found was I had this static book and then I wouldn't touch it for 6 months and I'd come back to it and half of it's outdated. How do you think about keeping it up to date and stay disciplined to that?

Yeah, so it's, I've tried to instill a culture of Actually, one of our company core values is do it in real time. So I've tried to instill a culture of keeping it up to date and it's just constantly coming out of my mouth. Like we'll be in a meeting and we'll make some decision and I'll be like, make sure you update Notion. Do you update Notion? Okay. And you're just constantly reminding people and then it becomes a resource for them. And it's not, it's not perfect. There's definitely stuff that's outdated and usually the stuff you know best, you just do it and then you forget that you made a change because it's like you just have it memorized, but When you end up finding errors and making corrections is when you onboard someone new and you're walking them through the various pages and you're like, oh, actually, that's wrong. Let me go ahead and fix that real quick. It's great because it's digital. You can fix it right there. You don't have to print out a new page for the binder and then go find the 3-hole punch and all that stuff.

I'd like to— this is off the cuff question, but I'm just thinking about from an acquisition standpoint, we had a lot of people in our acquisition webinar. There's a lot of interest out there in people buying property management companies. Peter, I don't know if you've bought property management companies, but I'm just thinking about when you do the merging of processes and we— what we found the challenge is we're buying a property management company, they're running completely different processes and it's like the training of people to be on the Evernest way. Talk a little bit about that, the challenge, and then maybe what you would do about that.

We've purchased books of business from other management companies in the past. But we've never bought a company outright that came with all the processes and the people. So I will let Matthew speak to that.

Yeah, look, this is one of the hardest things. When we first bought businesses, one of the big mistakes that we made was we tried to do like a bank where nobody knows that it's changed. And before you know it, that you've gone from ABC Management Company to Evernest. And what we found is that trying to run legacy processes with Evernest processes, that those, as hard as it is to not drop balls just in Evernest by itself, it was really hard not to drop balls when you're taking like a legacy, maybe a move-in process and then putting it into Evernest accounting processes. It was just way too much. So what we said is day one, we're going to be running Evernest processes. So the way we think about that now is we'll literally take the legacy team members out. We have an acquisition team. We take the legacy team members out, the acquisition team runs the business the Evernest way. So you can imagine, this is like when Chili's opens a new restaurant, they bring all the awesome Chili's people from all over the country into your hometown, into that Chili's. And it's like the most amazing Chili's experience ever. And then we reach— while we're doing that, we're retraining that other group on the legacy team on the Evernest processes. And then we reintroduce them back to the business after that. And look, that's a, that's way cleaner than it really is. We're still iterating and trying to improve that, but we have found that as, and that's the thing, like all, every property manager on here, it looks like there's a bunch of folks on here. Everybody thinks they do it the best way. And what we have found is you do it the best way for you. And we do it the best way for us. And Peter does it the best way. For him and, and the, and, and that's great, but the business as it grows, we talked about the pipe, right? And so if we bought a 300-house portfolio, their processes aren't going to work with Evernest processes at our size. And so we've got to change those over because we're running, running the business a little bit different with different needs and different demands, and it's still producing the same outcomes, but it's not done the exact same way. Graham, anything you'd add to that?

Yeah. Where we are now, there's just tremendous— we see tremendous value in doing things the same way. It's just not an option to acquire 3 different portfolios and then run different processes by portfolio. It's just highly impractical, obviously. I mean, Matthew, I would even take it a step further and say, There definitely have been companies that we've acquired that have done something in particular, probably better than Evernest, and we have changed them to do it worse. And that's the reality of integrating something. Like, we just have— we've changed it to do it worse on day one, make it worse, and then try to learn, okay, what were you doing? How are you doing it? Why are we doing it that way? And then try to apply that back to the whole company and then make it better after the fact in bits and pieces by changing the process. That's maybe a pretty transparent situation, but I think it's reality that boutique property managers can apply a different level of customer service in some areas than Evernest can.

I think you need to run a weekly process arena where you bring in these operators And you have them duke it out with your, someone, you know, be like someone from Evernest and then someone who's my process is better. And you have them like duke it out, you have some judge and then whoever wins, like that's the Evernest way from now on. Right. Like we do our lease renewals, like, yeah, like some sort of like a battle.

The battle royale. This is a great one for you, Peter.

Someone asked once you had— we do that here. We just do it internally. Because there are some managers of certain regions or certain markets that have kind of gone and changed some process or done something different. And when they feel pretty strongly about that, they're not shy about bringing it to the battle royale, to the, to the management team offsite and duking it out, shaking hands afterwards. And I do think that internally there is some of that happening already.

We had— I walked out, we were all eating dinner and I walked out and one of our regionals was passionately explaining to the crowd that had accumulated around him that we as leadership hadn't figured out that we've got to do this and then essentially break it up into smaller pieces, like essentially create the org chart for what it needs to look like. So point being is if you think we haven't figured out, we don't have it necessarily figured out yet either. And the people that are closest to it don't have it figured out. So just, I think some people would probably feel good about knowing. I think on, on LinkedIn, somewhat, or all these social media sites, sometimes it looks like everybody's got it more figured out than they really do. And everybody is struggling. Yeah. Peter was kind enough to send out a great— I think a few of his clients had fired him. And when he sent that, Peter, you don't know this, but I do an Ask Anything on Fridays. With my whole team. And I said, I basically copied and pasted out of your newsletter. You said, these are the reasons that we got fired. And I said, I basically put them up there. And I said, who do you think this was written about? And everybody's like us. And I said, nope, this was— and I didn't use your name, but I said, nope, this was written about one of our competitors. And he was kind enough to share that. And I said, my point to you is that we're all struggling with some of the same things. That's why webinars like this and our podcast makes it healthy for us to work through some of these challenges so that we can provide our clients better and better services.

100%.

I do want to jump in. We had another question. Peter, this is a great one for you. Once you have processes in place, an issue I've seen is how you organize them so that the team knows where to find them. What have you done to organize processes so that employees can easily find the ones that they need?

Great question. And just real quick to follow up on what you said about we don't have it all figured out. Not only did I write a big article about how we lost over 100 units not too long ago and why I think that happened, I just wrote about a problem we were having with leasing. We were taking way too long to get units leased. Something wasn't working right with our leasing process and our turnover process. We're taking too long from the day we got possession until the day the unit was leased. And so I did a deep dive on what we found wrong and how we addressed that. But it's pretty, it feels very vulnerable to share this deep operational data because I know there's people in the business who are like, there's people on this call who have their average vacancy is like 7 days. And it's because some of them replied to my email and were like, do you need more help? But okay. So to answer your question about How do we know like where to go to do the processes? So in an ideal world, and it is possible to get here, processes are triggering automatically and LeadSimple just released Autopilot, which is a feature that lets them automatically trigger processes based on certain conditions. So if late rent exceeds $500 by the 5th of the month, it automatically triggers a delinquency process. And the beautiful thing is, and this isn't— you can do this with other software too. The beautiful thing here is it'll automatically assign that process to the person who's in charge of it, and it'll assign the individual tasks on that process to the right people who are supposed to be executing those tasks. So in that scenario, no one needs to know where that process lives because it just kicks off automatically and gets assigned automatically. Now, most processes aren't like that. Most processes do have to, at least for now, still get kicked off automatically. And so it, for us, our core process and workflow software is LeadSimple. And there's a finite number of processes in the left-hand column there. There's one that says lease renewal. There's one that says move in. There's one that says move out. So it's very clear where you would go to execute those. And again, I want to draw a distinction between those core processes living in your workflow software and then your sort of reference documents or your knowledge base, which for us is Notion. There's lots of other options as well, and those are not operation— there's not operational data in Notion. Notion is a static, static, I mean, it changes, but it's just like a reference document. Like we have a reference document on what's a good example? What's our company credit card policy, right? That's not a process. That's just something everyone needs to know, like where to send receipts every time they use their company card for an expense. I wouldn't want to run a process with multiple steps that they have to manually check off every single time they go to Starbucks on a business meeting or something. So trying to figure out what should be a process and what should just be a reference document is an interesting exercise in and of itself.

I think of it as what I— in kind of database terminology, like there's an object, whether it's an owner, a resident, a property, a work order, like something tangible is moving from one status to another, right? That's the process where you're through multiple statuses. And that's how LeadSimple— if you dug into their software, that's how it's architected versus Peter Lohmann's, we talked about the reference documentation, which is more just explaining here's, here's where you click and maybe importantly, like why this process exists. I think that the why and a lot of the stuff often get skipped over, why this is important. In particular, as you get more specialization, making sure that team members understand where they fit in the overall picture and why, why this is happening, why you're doing this. I think that, that starts to matter more and more.

Yeah. It's great practice to— Wolfgang Kroski turned me onto this. He's a— you think I'm good at process, you should see some of his stuff. He turned me onto this idea that at the beginning of every process, somewhere, like if there's a place in your workflow software, you should write a little bit about what the process is supposed to do. Why do we do this? What should the end state be? Just a general overview of how it works in plain English. And it could be like a little Loom video or just some bullet points. That's really helpful for someone who may be new to the industry and has never run a move-out process before, but now they're expected to do this. They're trying to understand like, Oh, okay. Like we have to do this and this when someone moves out. It gives them like the 30,000-foot view.

Yeah, that's good. Let's— we've got another question here. What is the tipping point of when you need to put in a policy or process? Have you ever experienced paralysis by process, meaning you have overprocessed to a point where your tasks are inefficient?

Yeah, I, I was thinking about because one of the questions that you had, Spencer, is like, how do you identify a process that needs to be improved or updated? And this is along these same lines. It is possible to over-index on process. And I talked about this a little while ago. You can go a little crazy here and it's hard to articulate. It's more of a gut feel. If you're immersed in your business and you're staying close to your team and getting feedback from them, you're going to hear, hey, this is just taking way too long. And I think it's going to manifest as people not using the process software anymore. They're just going to— they're going to ignore it, right? They're just going to— they're going to do what they know needs to be done. And they may go back later and check things off or they may just ignore it completely. And so what I've identified is like when you're noticing that processes aren't getting aren't getting completed, like tasks, or aren't getting checked off, or processes are showing up overdue, it's usually not the employee's fault unless there's just like a one-off employee and everyone else is doing great. It usually means there's something going on with the process and it's a hindrance for them, not a help. It should be a help. It should be useful. It should be easy. And that's my cue to dig in and chat with the team about Hey, I'm really noticing that you guys aren't like using the lease renewal process. So why don't we grab lunch and let's walk through it and tell me what's broken. Cause you guys know more than me about how to do it at this point. What should this look like? Is this out of order? Can we just delete this? Cause it doesn't make sense to do it anymore. Get them involved and, and you should notice that like they're using the software consistently. And if they're not, part of this is you need to enforce a culture of task completion. I think this is important that at the end of every day you review your workflow software, and if there's 50 tasks that are undone at the end of every day, that's a big problem and you need to like hammer that on your team until that's normal that everything's done at the end of every day, 98%. But on the other flip side of that same coin is what I was just describing. There may be issues with the processes that are causing them to not want to or not be able to get everything done at the end of every day. So you have to attack both of those at the same time.

I think that's a great point. And this kind of, this goes into an exercise that you did not long ago, cause I went and read one of your newsletters. You actually, you've been working on the business a lot and you decided I need to do a deep dive of what's going on in the business. So what you did was like set up yourself a little cubicle out with all the operations people in your company. Talk about that experience and what you discovered, because it goes along with asking your people, how are these processes working?

Yeah, exactly. So I had taken a year or two where I was operating from a pretty high level. I had hired a COO, and then last year I took like the whole month of June off, and that was the whole thing. And I had decided partially because it had been a while and partially because we were frankly having an issue with churn that I needed to get a little closer to the metal again. And so I stepped out of my corner office and I set up a cubicle in the middle of our office so I could overhear everything. And I spent a whole week, I cleared my calendar spent a whole week out there and every day I spent with a different person, sometimes two people, and I shadowed them and really got, got into it with them. Not in a, I want to find out if you're doing your job right way, but in a, I want to find out like what's taking up a lot of your time that's not important, or what processes aren't working for you right now, or where are you seeing that things aren't going the way they should. And it was super fun and really valuable, I think, both for me and from the team, from the feedback I got through my COO, to get down and dirty and metaphorically turn some wrenches. And even like to the level of like, what's in your inbox? Like, who's emailing you?

Why?

Like, it's crazy where the time goes at a management company. And that gets back to the owner wanting to do some weird tax thing in courthouse, right? They're always coming up with weird stuff. And I think what ends up happening is when you hire great people, they're just by nature really helpful and really friendly and they want to do good. And so when tenants and clients and even vendors and random neighbors who aren't even customers of ours are emailing and calling, they're like burning up all this time, which is super frustrating for me as someone who pays their salary. But they're not, they're not really doing anything wrong morally. They're just trying to be helpful, right? So it's like, all right, who's emailing you? What, why is your phone ringing right now? You shouldn't even be on like the main line, right? Like just random stuff like that. That was really valuable. And I encourage anyone who that resonates with to, it's worth the time to do that.

Yeah. And guess what? And you, I think you mentioned this in your findings. You wouldn't have been able to do that if everybody was remote, right? So that, that creates challenges if you have all remote team, like having people in the office is highly valuable.

Agreed. I know it's possible to run remote companies extremely successfully. I don't think I've got that figured out. We're mostly in the office here. We do have a good number of remote team members, but that's probably a whole other discussion of like how you do that successfully. Processes certainly make that easier. Once you have your processes nailed, it becomes much easier to take advantage of global talent. There's no, no question in my mind. And we do that.

How many people do we have that are remote, do you think?

It's probably about half.

Yeah, that's what I was thinking. Or 95% is remote from here in Birmingham because different markets.

So not people I can go sit out in the bullpen with.

Yeah. One thing I think, just a strategy I think Peter hit on, which I think is important to double-click on, is getting your team to take ownership of the processes. That's something we're really pushing You don't want them to think, oh, corporate does processes and then I just run them. You want them to essentially go take ownership of the process because like Peter said, like as you move further and further away from these things, unless you're going to go sit in the bullpen on a regular basis, you're going to have to trust them to continue to improve on those processes. That's another plug for hiring the right people. But getting them to take ownership of the processes so that they're not just checking the boxes. A couple of questions that came through the chat channel. One was, how well is LeadSimple working for you as such a large company now? Any problems at scale, Spencer? LeadSimple?

Yeah.

We don't use LeadSimple for processes. Peter does. We use LeadSimple for sales CRM.

Yeah.

And we just did a podcast all about sales. We had Jordan Whalen on, we talked about LeadSimple. I actually pulled up our LeadSimple dashboard and looked at some of the things.

I'm gonna have to go back and take a look at that. Maybe Columbus was on there.

It was.

I had a number of leads, a number of your clients I was cold calling.

Yeah.

I knew that was probably your next question. We're actually writing our, so we, So up until, up until about 6 months ago, we were using Asana. And so we had all, every house had its own like checklist associated with it based on move in, move out, those types of things. What we're doing now, and Graham's running point on this is we are writing our own software. The property management is 3 things. It's property accounting, it's communication, and it is It is workflows and tasks, what we're talking about, processes. So we're not changing from AppFolio, but we are writing our own processes into what we call Open, which is our operating platform for Evernest. And we're also moving some of those communication rails into there so that our— currently our property managers go to 3 different places to find things, and we're going to consolidate that to just AppFolio and then Open.

Yeah, that we're on a similar path, although we do use LeadSimple Process, but I've had this saying around the office for a while, which is like everything without a dollar sign, I want out of Buildium. And all love to Buildium, it got me where I am. We've used it for over 10 years. It works quite well, but it's not set up for workflow and process. And so everything that has a dollar sign, great, leave it in Buildium, all the 1099 stuff and obviously rent payments and owner distributions and reporting and accounting and all that good stuff. But all the, the tenant comms and the vendors and just the work orders and all that stuff, I want it out of Buildium because it's locked in Buildium and very limited with what we can do with that data when it's in there. And it limits your ability to take advantage of processes if you're, if you're not able to leverage your own data, right? About like how many units. Do we have under management and what are they and who owns them and all that stuff. Now, Buildium does have an API. I'm not sophisticated enough to write software to take advantage of that. Luckily, at least for us, LeadSimple did and has that direct integration. But there's, there's a million ways to skin this cat. I'm trying to keep this broad enough that it's valid and useful for anyone who's using any software.

Yeah, great. Just answering kind of like, where do you guys put everything else and and maybe this is to you, Peter, but for Evernest in the past, if the checklist of the process has been A through E, A through E was like, go to 5 different softwares and accomplish these 5 different things, 5 different places, these different point solutions. And so that was really the impetus and the motivation to try to bring some of these, these things outside of that folio into one solution and not many.

Let's hit some of these questions because we've got about 10 minutes left and we want to be respectful of everybody's time. Especially Peter's time. So go ahead, Matthew.

Yeah, the question was asked, preferred property management software. I think Peter said Buildium is what he uses. We're AppFolio users. And then going into the Q&A section here, sometimes starting and following processes in softwares like LeadSimple becomes very time-consuming. For example, a process on how to handle work orders when you have 10 to 15 work orders coming in every day. Following and checking off all the tasks might take a lot of time. I do think having a process for things like work orders is valuable. However, what do you do when the solution might be worse than the problem? Any other options available?

Yeah, we don't— we use PropertyMeld for work orders. Work order, the work order process, which is a new tenant request comes in for a maintenance-related item, we could probably do 90 minutes on that alone. Not an easy solve. And the question of, I'll say for us, it's, we don't have a work order process to the extent that PropertyMeld does. We do, but what we have is a written sort of guidance document on here's what you do when a work order comes in. First, you check the owner's maintenance approval limit. Then you see if we recently had a vendor there. Then you see if a tenant responsibility item, right? There's like all these things. Someone's not checking something off in software when they do that. They're actually just like visually going through, right? And it may result in a work order getting put in. It may not. But the general question of like when you feel like the processes are overwhelming you and it's taking more time than it's worth just to keep up with the processes, that gets back to what I was saying earlier about that may be where you just have a reference document, not a like process that's getting tracked.

In software. Peter mentioned something I want to— and thank you for popping that in there, McKenna— go ahead and promote the next webinar is in a month.

It's the—

we do these the first Thursday of every month at 3 o'clock Central. We're going to do technology and property management, like what's the future of technology as relates to property management. We're gonna have the CEO of Findigs, Steve Carroll, We're going to have the CEO of PropertyMeld, Ray Hespman, and then we're going to have an exec from Appfolio, Matthew Kaditz, who runs the small business section of Appfolio. So we're going to have some really cool guests on and we're going to talk about how does technology play a part in the future of property management. All right. Next question is, are there any books that we'd recommend to improve your ability to identify gaps in processes? As well as how to write them, or do you just rely on pain points within the business and prior experience?

I read a textbook on building business processes one time. It's probably back here somewhere. A textbook? Literally a textbook.

I don't think an engineer would read a textbook. Graham could do that too.

He's an engineer. But there's a whole, there's a whole, this is like a thing. There's a whole section of literature that's on business process automation, BPA. And there's a whole language they use and they've got these fancy block diagrams and stuff. And they've got all these like philosophies about how, when you should have a process that breaks between departments here and here. And that's way, even for me, I couldn't even make it through the textbook. It was just too academic. In terms of like resources, I don't have great answers here. Part of this is mindset. Right? There's a mindset that you need to internalize in order to be successful with process. And The E-Myth is a great one for that. It helps you understand about needing to move from being a technician and who's actually doing the work to being a manager, business owner who is overseeing the work getting done and viewing like when you come into work, do you think of your job as replying to customer emails and signing leases and doing appointments? Or do you think of your job as how do I design a system such that our property owners are successful with their investment properties? That's the difference between being a technician and a business owner. So that's the mindset piece. And there's actually tons of great books on how to develop like a systems mindset or process, like a business owner mindset around systems and process. But in terms of practical, tactical, how do you actually design good processes? I haven't seen a lot of great books or read many books. Maybe anyone who has, I'd love to see comments. If anyone has read like that, a book that really helped them with process.

I'm going to jump in here because Peter is not going to do a bunch of self-promotion, but if you don't follow him and his videos and all the things— Peter thinks about that. There's a reason we had Peter on.

And so my—

I don't know who asked that question, but my first thing would be to go watch Peter. Peter's very transparent about his Notion processes and how he thinks about it. Like he's got video. I'm telling you, if you want to learn, Peter's not a, not a textbook, but you can go watch a bunch of videos and get on his mailing list because he, again, he's the process guru and—

Oh, I thought of one. Thank you, Matthew. I'm going to cut you off from complimenting me because you've done enough of that. So I did think of one. There's a book called The Checklist Manifesto. Really good book about process and checklists and the value of it.

That's funny. Cause we were actually, so we've written this thing called the success checklist, Peter, for our, for our operate, the people that run our markets. And it's like a daily checklist. It is a weekly checklist and a monthly checklist that we need them to go through. And Matt, our COO, was presenting it to everybody and he used the book. So I, we should have come up with that too, but he used the book Checklist Manifesto, which is a great book. And I think Todd Orscheid also also mentioned it because in a very passive way, because he— Todd's a pilot and he talks about how important checklists are with pilots. And the Checklist Manifesto actually talks about why pilots use checklists. And a pilot may have taken off 1,000 times, but they still are required to go through the checklist to make sure nothing gets missed, because the pain for missing one thing is great, right? So they're motivated to, to— but to make sure that the, the air, uh, that the pilot, or that the plane flies correctly. The challenge is how do you motivate somebody to make sure that the renewal fee gets charged out, it's not auto-charged out or whatever. But because it's not like they're gonna die— if they died if the renewal fee didn't get charged out, then they would definitely get on the checklist every time.

That book is really good, and it has the— most of the book is actually about hospitals and surgeons and creating a culture within the operating room of nurses being comfortable enough to speak up when the doctor doesn't use the checklist, because there's— they did a bunch of studies showing that when doctors and surgeons use checklists in a surgery, it cuts like the error rate and the infection rate like in half. It's drastic, drastic. It's not like 5%. And they were doing— and no hospitals use this. It was a pilot program that they did, and it And I think it's been like slowly adopted through the medical system since. But I was thinking about this recently because my daughter, my 3-month-old daughter, recently had surgery. This was just a couple weeks ago. It was like a 5-hour surgery. It was a big deal. She's great, by the way. So we're—

she's home.

We're happy. But it took everything in me to not pull the surgeon aside before the surgery and be like, have you read The Checklist Manifesto? Can I see your checklist? Are you using a checklist when you're operating on my 3-month-old daughter? I didn't do it because I just couldn't bring myself myself too, but I was really close to grilling the surgeon.

That's good. Like everybody, that all learned that from the airline industry. Yes. The difference was, Peter, that they found— not to, not to be the spoiler alert— is the surgeon is not on the operating table. The pilot is actually in the air with you. So if the pilot makes an error, then the pilot's good. He or she is going down with the plane. The surgeon, they make an error, not that they're not upset about it, but, but they're not, if they were laying on the operating table, they would definitely focus on the checklist.

This is a can't go a whole 90 minutes without a Warren Buffett quote. Show me the incentives. I'll show you the outcome situation.

Anything you want to wrap up, Graham? Any final thoughts before we let everybody go write all their processes?

You're giving it to me to wrap up. Just a final thought. I learned some stuff. I learned some stuff here. I loved automate the ordinary and personalize the extraordinary. I think, Peter, your point of— or I guess it's Jordan's point— that processes downstream of policy is very sharp. And so I was just thinking about in one of those questions, like, when's it time to go in there and fix it or try to make it better or write a process? Defining your policies first and define the universe of what's possible and what's not possible And then really using quantitative and qualitative feedback to figure out what's working and what's not working, whether it's broken KPIs and you're doing root cause analysis, or you're just getting feedback from stakeholders. What is it that needs to get better here? And where do we need a process where there isn't one, or where is the process broken is super important. And then and only then, once it's very clear what needs to happen, and that's when you then write out, how do we do this? And you document. The manual, the reference documentation. I think that going in that order will save people a lot of headaches, a lot of, a lot of revisions along the way.

Peter, any final thoughts? My final thought is that technology will not save you here. There is no tech magic wand that's going to solve your process issues. Your process issues are upstream of the technology, right? So policy is upstream of process. Which is upstream of the technology itself. If you can't articulate in words or in writing what your process should be, don't expect technology to solve that for you. I think I see people trip there sometimes, so I wanted to just give that. I hope that's helpful for somebody. Thank you guys for having me on here. This was a lot of fun.

Peter, man, thanks for showing up. You're— yeah, you're great.

Fantastic.

Graham, thank you very much for agreeing to do this, even though you weren't very comfortable at first when I mentioned it. I'm just kidding.

You did great.

And I can do it.

Yeah, that's right. 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.