My guest on this episode, Darren Hunter, is an expert in fee maximization. Just as importantly, as you’ll hear him describe in great detail, he understands the mindset challenges that need to be overcome to effectively implement fee maximization. For much of this conversation, we go behind talking about that implementation into the mindset of the company owner and staff members.
Darren started as a property manager in 1989 in Adelaide, South Australia. He went on to become a state property manager with a well-known Australian real estate brand, for which he impressively managed 28 other property managers over 18 offices spread over a third of the country.
For the last 11 years, Darren has been a full-time professional property management trainer and consultant. He runs the PM Power Nuts & Bolts Webinar Series, which addresses some of the topics we’ll cover in this episode along with many others.
Much of our focus will be on that question of mindset, which I mentioned at the beginning of this introduction. Darren, we learn, struggled for a couple years because of his own low self-esteem and poor confidence. From there, he learned about the law of the fee lid, which says that your mindset and level of belief determines your fees, and you cannot do any better than what you believe you’re worth.
It’s natural to be hesitant about raising fees over fear that you might lose business. In this episode, Darren also goes into important depth about why losing some business through fee maximization is actually a good thing, and he and I use several examples to illustrate this point.
You can find Darren here:
By email at Darren@darrenhunter.com
[01:59] - Darren gives us a glimpse into his background in real estate. He then shares two stories about what happened when he raised fees. Despite a couple of objections, he reveals, the profit margin doubled.
[08:44] - Brad and Darren discuss fee increases, and the lesson you can learn from this: “Would you lose $10 to make $10,000?” Darren then talks about the “autopsy” he does of lost business after fee increases.
[10:24] - Brad would rather lose an owner than a staff member, he says, and gives an example of what he means.
[11:31] - We hear what Darren does in terms of changing people’s mindsets. He talks about the law of the fee lid. He and Brad then discuss justification, or points of difference, as well as discounters and pricing structures.
[16:23] - Darren elaborates on what Brad has been saying about giving something of minimal value rather than discounting the management fee.
[19:13] - We learn more about the mindset in Australia, New Zealand, and the United States. Darren then uses Texas’ gun laws to illustrate a point about Australian culture. He then gives examples of tenant protection laws.
[25:30] - Darren digs deeper into the mindset questions he’s been talking about. He also talks about why the majority of owners will stay through a fee increase, which has to do with peace of mind.
[30:14] - We hear more about peace of mind among owners, and how that affects whether to raise fees.
[30:59] - There are five types of clients you shouldn’t increase fees with, which Darren lists here. He then gives an example of justifying a new fee.
[37:34] - Darren offers another story about a company he’s dealing with, this time in Oregon.
[39:58] - Darren talks more about his current time in the United States, including where he’s going next.
[42:27] - We learn more about Darren’s services. He suggests going to his website, and discusses the webinar series he offers: PM Power Nuts & Bolts Webinar Series. He also mentions his online store and his knowledge library.
[45:12] - Brad talks about having zero tolerance for not paying rent on time, and discusses how American fair housing laws apply to this. Darren then responds by sharing his stance on zero tolerance.
Links and Resources:
By email at Darren@darrenhunter.com
Tim Melton is the president and co-founder of SGI Property Management. Before getting into real estate, Tim worked in the automobile industry, where he gained experience working with dealerships and financing. As luck would have it, this correlates nicely to his work with property management companies.
Tim and SGI Property Management are based in Phoenix, but the company has worked its way up to several market locations. Tim started the company in Phoenix in 2011, but his goal was always to move into multiple markets, partly because Phoenix is a volatile market and expanding would allow for more stability. Now, SGI Property Management has grown into Memphis, Las Vegas, and Dallas.
In our conversation, Tim goes through quite a bit of the process of expanding into different market locations. He reveals the exact number of units necessary to make him consider a new location, and emphasizes the importance of understanding the local market dynamics in different areas. This includes not only the local culture and standards, but also practical details like the fact that some areas freeze and others don’t.
He also shares some great insights into how to run a company, with an emphasis on creating a vibrant office culture and environment. You’ll have to listen to the episode to hear everything he has to say, but I’ll share one excerpt here: in the center of the main office, there’s a house that will hold around 10,000 ping pong balls. For each signed property, they drop in a ping pong ball that’s color coded by market. This is a fun visual way of marking their progress toward the large goal of reaching 10,000 units.
As you can gather from that excerpt, Tim is creative, original, and results-driven. Listen in to hear his brilliant insight and advice!
You can find Tim here:
[01:44] - Tim launches off by talking about how he got started.
[02:44] - We hear more about Tim’s experience at the Van Tuyl Group in the automotive industry, and how this experience relates to what he’s doing now.
[05:31] - Brad takes a moment to talk about economies of scale, touching on what the concept means. Tim then elaborates, talking about how this applies to his business.
[06:51] - Tim goes into more depth about the value created by combining forces in the automobile industry.
[07:37] - We learn how this relates to property management from Tim’s perspective.
[08:20] - Tim speaks enthusiastically about Wayne Huizenga, who eventually had the nation’s largest trash route business.
[09:48] - His experiences in the automobile industry helped him know the goal when he began his real estate company, Tim explains. He then walks us through the company’s early days.
[12:27] - What does Tim consider the first big breaks for his business?
[13:47] - Tim talks about the visual motivation tool in the office, and also discusses several aspects of office culture and environment that contribute to strengthening the business.
[15:59] - Their employee of the month contest, which Tim describes here, offers some great insight into how the company works.
[18:00] - We hear Tim’s thoughts on the importance of keeping things exciting and worthwhile for everyone involved.
[18:42] - Tim talks about some of the challenges involved in being in multiple markets.
[20:40] - What gets handled locally in the related market, and what gets taken care of at the main location in Phoenix? Tim answers, then addresses some of the challenges and benefits involved in this setup.
[23:59] - The company’s structure gives Tim the ability to deploy to any market quickly. The break-even point to consider going into a new market for is 150 units. In discussing this, Tim talks about their expansion to Memphis.
[26:31] - Tim offers some advice that he’s learned from his experience with expanding into other markets.
[27:42] - With the acquisition trends we’re seeing, where does Tim think the industry is heading?
[29:36] - Tim talks about some of the roadblocks he’s encountered in the acquisitions efforts. He reveals that it’s very rarely about the money.
[30:43] - We hear about the multiples Tim has been seeing in the industry.
[32:56] - Tim and Brad discuss the correlation between the examples of the automobile and the waste management industry as it relates to the property management industry. They also talk about reducing overhead by tying into something bigger.
[35:48] - Where does Tim think the industry as a whole is heading?
[38:48] - What’s the best way to reach Tim? He provides his email address to make it easy to get in touch directly.
Links and Resources:
This time, I’m joined by Steve Rosenberg from Empire Industries in Houston, Texas. In addition to being an expert property manager, Steve is a distinguished speaker and international trainer who has a passion for helping people -- especially other property managers -- grow their businesses.
Steve and Pete Neubig, whose name you may remember from the last episode, are co-founders of Empire Industries, which now has around 600 properties in the Houston area.
Thanks to the massive growth in the area, Steve has been working on setting up different satellite offices, as he calls them, around the Houston area. This is important in reducing windshield time, which can be a huge problem in such a big area.
In this episode, we talk quite a bit about these satellite offices. Topics we cover include the financial and expense questions to consider when setting up a satellite office as well as the SEO challenges of having these offices. We also talk about the challenges that come with quick growth. Steve explains that about 50% of people and systems break under this kind of pressure, and we talk about solutions and strategies for managing this.
We also spend a while discussing marketing. Again, the importance of SEO becomes clear, but Steve offers some great suggestions for ways to increase exposure, and we explore the fact that great, value-added content isn’t limited to blogs.
You can find Steve here:
[02:06] - Steve starts things off addressing the topic of setting up different management centers or pods.
[03:07] - The size of Houston is bigger than a lot of people realize. Steve explains how this contributed to their decision to open small satellite offices.
[04:55] - We hear more about the expenses involved in this strategy.
[07:41] - Did Steve have a break-even number, and is that for each satellite office? As he answers, Steve also talks about the point at which a BDM/marketing agent needs to pick one role or the other.
[11:34] - Steve talks about the SEO benefits of having satellite offices. He then talks about the SEO challenges.
[14:04] - We hear more about Steve’s strategy for SEO related to satellite offices. He then lists one of their biggest challenges: the mental hurdle of taking a big step and scaling up.
[15:27] - Brad steps in for a moment to talk about the structure of Empire Industries, which has two principals: Steve Rosenberg and Pete Neubig.
[16:09] - Steve shares more about Empire Industries and its growth process. He and Brad then discuss the necessity of changing things as a company expands.
[20:53] - We learn about making something scaleable and ensuring consistency. Steve offers an example using their 600 properties.
[23:34] - Brad offers an example of his own. He and Steve then talk about Pete Neubig, and how he implemented systems to work efficiently.
[25:23] - Most people’s challenge isn’t a toolset issue, but a mindset issue, Steve explains.
[28:26] - Steve talks about the marketing strategy at Empire Industries.
[29:00] - Brad talks specific numbers, using his company as an example. Steve then talks more about their marketing strategy, emphasizing the importance of keeping track of where money is being spent.
[32:17] - What’s one of the new, cool things Steve has done in marketing in the last few months?
[35:39] - Brad explores what constitutes good content, explaining that it’s not limited to a blog.
[36:25] - We hear about Steve’s company’s realtor referral programs.
[38:41] - Steve expands on dealing with brokers.
[40:42] - Steve is certified by the state of Texas to teach continuing education, and teaches around six classes. He touches on the things covered in these classes, then talks about the kind of momentum the classes generate.
[44:13] - How do you overcome some of the broker objections?
[47:54] - Steve explains that his strategy is to try to be top of mind, and goes into more depth about how to provide value and work with brokers.
[51:05] - Brad and Steve talk about the PM Grow Summit, where Steve will be speaking.
[52:52] - How can people reach Steve? He recommends the blog pages at Empire Industries.
Links and Resources:
For this episode, I had the pleasure of interviewing Deniz Yusuf, an expert business development coach from Australia. Since transitioning from being a real estate agent himself, Deniz’s focus has been on training other property managers on the best practices for attracting and signing up new business.
In our conversation, Deniz covers a wide range of topics of interest to any property manager who wants to excel in the industry. We start off by briefly discussing his background, and he touches on how the customer service skills he learned by selling fruit and vegetables have remained valuable throughout his career.
We spend a fair amount of time talking about business development managers. Hiring a BDM can be a great way to prevent burnout (or reduce it, if you’ve already reached that stage). In addition to hiring the right person, you need to make sure you compensate him or her effectively, so we talk about compensation best practices and whether it’s a good idea to hire a realtor as a BDM.
Deniz also emphasizes the importance of implementing a CRM system early on. He explains why you need to know your closing ratio, which is a vital piece of information that far too few property managers track accurately. We also spend some time talking about a couple issues that may seem counterintuitive at first, including cases in which it can be a good idea to take on business in a below-average area, and why it’s a bad idea to list a property as “no pets allowed.”
You can find Deniz here:
[01:24] - Deniz’s background isn’t in real estate, but rather in selling fruit and vegetables. He walks us through how he got from that to his success in real estate.
[03:30] - Eventually, Denif burned out on what he was doing. He discusses this as well as his experiences with authorization forms.
[05:53] - Brad steps in to discuss the problems of trying to do everything yourself, and talks about his mistakes with his first hire.
[07:14] - A business shouldn’t be paying a business development management the same bonus for leads generated by the office as for those that the BDM personally sourced.
[07:51] - If Deniz could have given Brad advice at 100 homes, what would it be?
[08:42] - Deniz and Brad discuss the 20% of the company’s homes that were lost during 2016. Deniz then offers advice for compensating a BDM based on the homes they’ve brought in.
[10:29 - At Brad’s company, there are now two hires: one inside person and one outside person. He and Deniz discuss this in light of advice from Andrew Reece.
[12:32] - Deniz expands on the concept of a business health check that he had mentioned earlier.
[14:46] - The 10-10 rule is worth following when you’re in the field.
[16:18] - Getting your face out there has become more of an electronic thing these days.
[17:14] - What success stories have Deniz had with his business health check?
[19:49] - Deniz is partly looking at the implementation for a CRM during these health checks. He and Brad discuss the topic.
[20:19] - Knowing your closing ratio is very important, Deniz explains, yet many companies don’t know what theirs is.
[23:00] - What would Deniz do in terms of helping a new business development manager? Brad then discusses his initial training of his BDMs.
[26:04] - Do realtors make good BDMs?
[30:05] - Deniz talks about having properties in less-than-perfect areas with owners willing to put in the necessary work.
[31:18] - What are some of the key indicators at a listing appointment that you might be talking to a class-C landlord?
[32:59] - There have been a couple of occasions when Deniz has needed to turn around and walk away from a property.
[35:28] - Deniz talks about conversion rates again. His was 88%, and reached a high of 92% in one year. He then defines how he’s calculating these rates, and explains what an “opportunity” is in the sense he’s talking about.
[37:29] - Where can people reach Deniz?
[37:51] - Deniz talks us through the products he has for sale on his website.
Links and Resources:
Welcome to the first episode of the Property Management Mastermind podcast!
Let me take a moment to introduce myself. I’m your host, Brad Larsen, the owner and real estate broker of one of the fastest-growing property management companies in the San Antonio, Texas region. I grew up in a small town in Iowa, and both of my parents were schoolteachers. Before I got involved in real estate, I was an army infantry officer.
The book Rich Dad Poor Dad completely changed my perspective on life, work, and careers, and it became clear that it was time for me to make a change. I decided to enter the real estate business, and started Larsen Properties from scratch in 2011. Today my company manages over 600 single-family homes, and it generated over $2 million in revenue in 2016.
I’ll be straight with you: despite these accomplishments, I’m not someone famous, and I know I still have more to learn. With this podcast, I’m here to facilitate conversations with some of the best property managers in the industry so you (and I!) can benefit from their experience, insight, and expertise.
This podcast is for property managers, by property managers. It’s your opportunity to learn about the latest industry buzz surrounding property management, as well as tips and strategies to improve your business. In this introductory episode, you’ll learn a few details about the techniques my company has used to achieve its fast growth and success. More than that, I’ll cover the intent of the show and the direction it will take in future episodes.
Thanks for joining me in this first episode, and I look forward to sharing real estate industry insights with you now and in the future!
[00:51] - We hear the goal of the show: to facilitate conversations with great property managers.
[01:29] - Brad introduces himself, explaining his background and how the book Rich Dad Poor Dad inspired him to change his life.
[02:54] - We learn more about the intent of the show.
[05:03] - Brad shares more about the company he runs to give context on himself as a host.
[08:04] - Some of the techniques Brad’s company uses to do so well include, for example, custom lease agreements and custom management agreements.
[09:07] - Brad’s company uses a three-tiered pricing model, he explains, then talks more about pricing using the example of how car buying has changed in recent years. He also discusses why he doesn’t use a discounting structure.
[12:10] - Videos and fee maximization are important topics that will be covered in future episodes. Acquisitions, mergers, partnerships, and selling companies will feature as well.
[13:46] - Brad talks about his other affiliation, as a cofounder of National Property Management Network (NPM). He also touches on the qualifications and backgrounds of the other cofounders.
[15:40] - The Tenant Liability Insurance product offered by NPM generated over $15,000 in additional revenue in 2016 after Brad implemented it in his company.
[16:24] - We hear a bit more about the upcoming interviews on the podcast.
Links and Resources: