Aaron Marshall on Making the Case for Franchising
They’re now one of the leading players in property management franchising, and they’re trying to use strategic thinking and cutting edge tech to deliver a better service to more owners.
In today’s episode, you’re going to hear a little bit about Aaron’s unique approach to building a profitable franchise, and how you can think more like a strategist.
- (01:01) – Background
- (01:27) – Aaron shares how he got into the property management industry.
- (03:58) – REO transactions.
- (04:47) – Sharing his experience with Keller Williams.
- (01:27) – Aaron shares how he got into the property management industry.
- (05:45) – Thinking Like a Strategist
- (06:34) – What separates a strategic thinker from a hardworking type.
- (08:16) – Franchising
- (09:33) – Aaron discusses how he handles people’s expectations and ensures he recruits the right people.
- (12:48) – Impressing upon franchisees the potential returns from operationalized sales and marketing.
- (17:01) – Aaron addresses why people should consider the franchise option rather than taking an independent route.
- (18:13) – Online marketing.
- (18:37) – Accounting and back office services.
- (20:24) – Discussing technology and data.
- (21:55) – Future ambitions for making use of key operational data.
- (25:34) – Cashflow
- (26:23) – Aaron discusses the importance of cashflow for achieving financial freedom.
- (29:41) – Mindset advice for property managers who may be stuck on the importance of cashflow.
- (30:30) – Lack of awareness of what’s possible.
- (34:57) – Focus
- (35:34) – Aaron shares how he manages his day to day focus.
- (35:48) – Scheduling.
- (37:56) – Entrepreneur Organization (EO) mastermind group.
- (38:37) – Work/Life balance.
- (35:34) – Aaron shares how he manages his day to day focus.
- (41:01) – Who do you learn from?
- (43:09) – If you could do it all over again, what is the one piece of advice you would give to yourself?
- (44:27) – In ten years, what’s going to be the same in this business?
- (44:47) – Are entrepreneurs born or bred?
- AppFolio (12:08) – Property management software used by Keyrenter.
- LeadSimple (14:16) – Property management lead tracking software used by Keyrenter.
- BNI; Business Network International (14:44)
- They Ask You Answer: A Revolutionary Approach to Inbound Sales, Content Marketing, and Today’s Digital Consumer; Marcus Sheridan (37:36) – Learning resource recommended by Aaron
- EO; Entrepreneur’s Organization (38:01) – Mastermind group recommended by Aaron.
- Solve for Happy: Engineer Your Path to Joy; Mo Gawdat (41:20) – Recommended by Aaron.
- Building a StoryBrand: Clarify Your Message So Customers Will Listen; Donald Miller (41:20) – Recommended by Aaron.
- Built to Sell: Creating a Business That Can Thrive Without You; John Warrillow and Bo Burlingham (41:20) – Recommended by Aaron.
- Crush It!: Why NOW Is the Time to Cash In on Your Passion; Gary Vaynerchuk (41:20) – Recommended by Aaron.
- Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life (Before 8AM); Hal Elrod (41:20) – Recommended by Aaron.
- Scaling Up: How a Few Companies Make It…and Why the Rest Don’t (Rockefeller Habits 2.0); Verne Harnish (41:20) – Recommended by Aaron.
- The Sale of a Lifetime: How the Great Bubble Burst of 2017-2019 Can Make You Rich; Harry S. Dent Jr. (42:01) – Recommended by Aaron.
Where to learn more:
If you want to get in touch with Aaron or learn more about what Keyrenter is up to, check him out on his LinkedIn profile or on their flagship website, KeyrenterFranchise.com. And make sure to tune into the show for Aaron’s personal email address.
Jordan: 0:00:00.0 Welcome closers, today we have another episode of The Profitable Property Management Podcast coming at you. This is Season Three on profit, and I’m your host Jordan Muela.
Every week I interview world-class property management entrepreneurs and industry experts who share actionable insights to help you grow your property management empire.
0:00:16.9 Whether you manage 100 or 10,000 units, this broadcast is designed to help you see the big picture and to give you the tools and tactics that you need to get to the next level.
0:00:26.4 Today I’m talking with Aaron Marshall, the CEO and Co-Founder of Keyrenter. A low-overhead, high profit technology-based property management business and franchise.
0:00:38.3 They’re now one of the leading players in property management franchising, and they’re trying to use strategic thinking and cutting edge tech to deliver a better service to more owners.
0:00:47.2 In today’s episode, you’re going to hear a little bit about Aaron’s unique approach to building a profitable franchise, and how you can think more like a strategist.
0:00:54.5 Welcome to the show Aaron.
Aaron: 0:00:56.4 Thank you, thank you for having me. And thank you for that awesome intro.
Jordan: 0:01:01.2 Yeah, absolutely. Well it’s well earned. Let’s get into the weeds of how you got into the industry?
Everybody always says they fell into property management. 0:01:09.5 I mean, honestly, I’ve never had a single person come on and say, “Yeah, I was doing my due diligence and it was about a year planning stage”.
0:01:18.2 For whatever reason everybody seems to back into it. What about you? How was your experience getting into the industry?
Aaron: 0:01:23.0 Exact same thing. Sorry to disappoint you.
Jordan: Lay it on me.
Aaron: 0:01:27.2 So, I started in real estate, 2001. I accidentally fell into real estate.
It was my senior year of college, I took this real estate course. I loved it.
I had one child and another child on the way.
0:01:40.7 And September 11th happened. 0:01:44.2 And I couldn’t get a job after. I was two months graduated from college and I told my wife, “You know what? I am going into real estate.”
0:01:51.0 She’s like, “No you’re not.”
0:01:53.5 So it took me two years to convince my wife that real estate was the career that I wanted to go down.
0:02:00.5 She grew up with a father that worked 9-5. Her father did that, why can’t I? Or, why couldn’t her husband?
0:02:09.0 And that was the last thing I wanted to do. I got fired from a job about six months prior.
0:02:14.3 They asked me a question what I thought about the company, so I told them. And the first chance they got about two and a half, three months later, they let me go.
0:02:23.8 It wasn’t a pretty let go. But, after that I claimed to my wife and everybody around me, “I am never working for anybody again.”
And I tell my kids that all the time too, but I force them – I have a 12, 16 and 18 year old. I force them to go out and work for somebody. 0:02:43.7 And so far, everyone of them has hated it. 0:02:45.4 So, hopefully, I can grow some entrepreneurs.
0:02:51.2 So that was back in ’01 when that happened. And then in ’06, actually ’07 sorry – during that timeframe, I’ve done a lot of bank foreclosures. And the only thing different from property management and bank foreclosures is that I don’t have an occupant. 0:03:07.8 I do everything else. Or I don’t have a tenant. It’s vacant.
0:03:11.2 And so, in ’07 I started, kind of in a lull here in the Utah area. 0:03:20.0 Nobody was really buying, nobody was really selling, there was no bank foreclosures. It was right before the big wave came.
0:03:27.6 I started buying a few properties myself. I had two rentals. Didn’t know anybody else that could do property management well.
0:03:36.0 And so, I looked at Nate – Nate was an employee of mine at the time and looked to him and said, “Hey, we both don’t know who to pawn this off to and do property management. Both of our tenants are three, four weeks behind, why don’t we just kind of pull up our sleeves and figure this out and see what we can do to get into property management.” 0:03:56.1 So that’s really how it all started.
Jordan: 0:03:58.1 So when you say you did a lot of REO transactions, through some numbers at me. What does that look like?
Aaron: 0:04:02.9 Between 2002 and 2013, which I did my last REO in 2013 before selling my business to my team, did over about 1500 transactions.
Jordan: 0:04:17.1 Alright, some good velocity. Now was that an independent brokerage? Were you working under the big names?
Aaron: 0:04:24.2 So, yeah I was with a small independent for the first year. Then went to RE/MAX. Left RE/MAX when my broker was trying to sell my business and started my own brokerage. 0:04:37.2 Did that for a year and then went over to Keller Williams for 12 years. 0:04:41.5 And then have since been with Keyrenter, obviously my own brokerage since then.
Jordan: 0:04:47.3 Right on. A K-dub man. You know, it’s interesting about KW in Gary, is that there are so many folks that have – so many successful people that have interaction with that franchise somewhere in their background. 0:05:02.1 And the beauty about it is that it’s something you can graduate out of.
I’ve seen a lot of people that have gotten a ton from that and still pay respect to Gary. But they’re moved – absolutely moved on to do their own thing. 0:05:11.8 I’m curious, what stuck with you from your experience with Keller Williams?
Aaron: 0:05:16.4 I’ve been on stage with that man. He is a wonderful, wonderful man. I have nothing bad to say about Gary. 0:05:25.0 I loved the corporate organization. What it stood for, what they did, the value they brought to the agents. 0:05:33.4 Local politics and the local Keller Williams’s offices, I could not stand.
Jordan: Hit or miss. Yeah, no doubt. That’s hard for any decentralized organization. We’ll get into how you deal with that on the Keyrenter side yourself.
0:05:45.7 But before we dive into talking about franchising, I want to talk a little bit about what it means to think strategically.
Right now, anybody that’s currently running a property management company could have the gumption to think for themselves if they’re going to start another property management franchise. 0:06:00.6 And there’s already a number of them out there.
0:06:02.8 As you, right now – in the current position that you’re in, the landscape, the different brands, positioning, market movement, what do you feel like separates a strategic thinker in this industry from somebody else that has the protestant work ethic, is committed to working hard, grinding it out, being innovative?
At some point, the latter is incremental whereas the former has the possibility of being exponential. 0:06:29.5 What do you see as that bright line in terms of the stream of thought?
Aaron: 0:06:34.8 I can definitely outwork just about anybody out there. 0:06:37.1 And so, for me, I think it’s not really that. It’s what value – how are you going to, not necessarily change the property management industry, to me with Keyrenter, my thing – everyday coming to work – how can I make property management easier to manage. Easier to do.
0:06:59.4 There’s so many moving parts within property management, how can I make it a little easier for my franchisees?
And that’s really how and why we came up with the brand and came up with Keyrenter and came up with the franchise concept.
0:07:14.7 We were originally going to just have corporate offices out there. Mainly in the western US. 0:07:20.5 And we changed that focus to franchising.
And as we started franchising, we realized – I realized, coming from the KW background, I’ve got to create value. I gotta make this easier. What separates Keyrenter versus doing it yourself versus another property management franchise out there.
0:07:40.5 And I had to make sure that I could distinguish ourselves and be different. 0:07:46.8 And I think that we have done that, but we’re not done. 0:07:51.0 We still got to continue to do that. We’re continuing to change how we help our franchisees.
0:07:58.0 And I don’t think we’ll ever be done with that. At the end of the day, I tell each of my franchisees.
0:08:03.2 “My goal is to make it to where your job is easier. Managing those properties and doing property management. Where you can make more money in less time because of being with Keyrenter.”
Jordan: 0:08:16.6 At its core, at its best, the franchise model is recruiting top-tier talent. Entrepreneurs.
It’s directing that entrepreneurial passion and drive and allowing it to have the quickest path to victory.
0:08:30.8 So rather than reinventing the wheel, rather than dealing with a lot of frustration that is simply avoidable if you have the right tools, experience and context.
0:08:40.8 At its worst, the franchise becomes mired in folks that simply were looking for a “turnkey” and I’m using air-quotes here, “turnkey” opportunity.
0:08:50.5 And as you and I both know, there is no such thing as a turnkey opportunity. 0:08:55.7 Business is hard.
When people ask me whether or not they should get into business, I say, “Don’t do it. It’s a bad idea. It’s not a great way to make money.”
0:09:04.7 An entrepreneur says, “Screw you I’m going to do it anyway.”
0:09:06.2 But, there’s a lot of truth in the fact that it is a struggle. And if we overpromise any kind of a turnkey opportunity, whether that’s me sending somebody a marketing PDF and blueprint, or you selling a franchise opportunity, you’re going to get a subset of folks that are starry eyed and looking for you to bear more of the burden than is reasonable.
0:09:26.7 How do you manage expectations on the frontside and recruit the right person into the organization?
Aaron: 0:09:33.9 Man, that’s a tough question. I tell people all the time, and I make sure sales guy tells people as well, “This is not a turnkey business. If you’re looking to come in and have it run like a McDonald’s, you can get it like that, but this is not a turnkey business and that’s going to take you years to do. If you’re looking for that, don’t join. Don’t buy in.”
0:09:59.5 So that’s one thing. The other thing, we’re really looking for people who create relationships. This is really a relationship business. 0:10:07.5
0:10:07.5 We help them on the marketing side, so I don’t care if they have marketing experience – we help them on the accounting side. And I say, by help we practically do it for them on both of those spectrums.
0:10:21.1 So I don’t care if they have the accounting background or if they have zero accounting numbers person. They have to be relationship based.
0:10:29.6 Their job is to create, strengthen and continue to improve the relationships with the owners and the tenants. That’s all I need them to do out there.
0:10:40.1 And so, we let them know from day one, even though we do the website and the marketing stuff for them, we tell them, “Do not count on getting any leads from your website for the first nine to twelve months.”
0:10:55.5 I don’t want them to go out – because we’ve had it happen – they join, we get the website up and going, they open and they’re waiting by the phone. And they get frustrated because the business isn’t growing.
0:11:13.2 I’m like, “No, you have to go out and create relationships. You gotta go out and pound the pavement. Do that for the first year, then you have earned the right to have the website work for you. Until then? Uh-uh. You need to go out and hit the pavement and work, then you can get the reward or reap the benefits from your actions and your hard work.”
Jordan: 0:11:39.5 I’m digging that. Let’s pause on this.
So let’s talk about the economic value that is created from the constituent activities, the constituent pieces of the business.
0:11:51.3 There’s a million things you can do within your business. You could focus on having an amazing email inbox system. Having all your tags just right.
0:11:59.9 You could focus on sales and marketing. You could focus on a realtor referral program. You could focus on making sure that AppFolio is set up just right. 0:12:08.6 And there is a 0:12:09.6 <Inaudible> economic return associated with each of these activities.
0:12:13.4 What you just outlined, was that starting off, there is one thing to do in this business and that is to hustle and grind and to build out the marketing machine. 0:12:21.4 No leads, no marketing, no clients, no dollars, no revenue.
0:12:26.6 The blessing and cursing of this industry is that once that’s ramped up, you can choose to focus elsewhere. You can pull back a little bit. Right? 0:12:33.4 Recurring revenue.
At the end of the day, when we talk about growth, for many people it’s aspirational. “I could do it. It would be amazing. Or I could not and things would kind of be ok too.”
That’s kind of the inertia that many folks work against in reality when they think about growth. 0:12:48.8 When you talk to your franchisees about all the places that they could focus in their business, how do you cast the vision for the return associated with sales and marketing activities versus the other operational areas of focus?
Aaron: 0:13:06.0 I probably just beat the hell out of it. That as well as bringing. Having our most successful franchisees sharing with them what they had to do to get their business up and going.
0:13:22.5 Yeah, we help them with the Google pay per click, and the 0:13:24.3 <inaudible>. We help them with the email campaigns.
0:13:28.7 But none of that at the beginning really – I don’t want to say it works, it does, but it’s not going to work the way going out and hustling and pounding the pavement works.
0:13:40.4 If you can do that, the first – if I can give anybody any advice, the first 12 months in your business, you’re working 40 hours a week to 60 hours a week and if you don’t have any phone calls, if you don’t have anything to do that day? Well, your whole 8 to 12 hours today is out hustling. 0:13:55.7 Going out and creating relationships.
I tell them, “If your phone’s not ringing, you go out and make somebody else’s phone ring. Start knocking on doors.”
0:14:04.0 “What doors do I knock on?”
It’s going to be who gets in contact with real estate investors or people that have rental properties. 0:14:13.0 Those are the doors you’re going to knock on. Those are the people you’re going to go out and visit.
0:14:16.6 And then, put them into a campaign. Get their business card and send them an email. Through LeadSimple, we – I mean, you’re part of LeadSimple or the owner of LeadSimple, with that we create a campaign with that.
0:14:30.2 They’re not the owners, but we create a campaign for them as referral partners so that they can refer us business.
0:14:38.7 That’s part of it, but it’s agents, it’s brokers, it’s going to BNI groups. 0:14:44.2 It’s not just going to the BNI group, you get out of that BNI group or the investor group, what you put into it.
0:14:49.9 If you’re coming on time and leaving on time, you ain’t going to get anything. 0:14:53.6 You’ve got to go at least 30 minutes early and leave at least 30 minutes late. After the meeting has closed. 0:15:01.4 And then, be a part of it.
0:15:02.7 If they need a board member, they need somebody to lead it for the next 12 months, make the commitment that you’re going to be a part of that and help that organization out. 0:15:17.0 Again, you get out of it what you put into it. That’s one thing my mom always told me growing up.
Jordan: 0:15:22.8 Absolutely. The market will always recognize value. There’s certain roles, sales is one of them, where the market will unabashedly bow down to the effort of value creation.
Sales, marketing if you’re approaching it from, “what I’m going to get?”, people are reticent. It takes longer. You’re always focused on what you don’t have.
0:15:42.4 When you focus on giving, when you focus on leading with that 10x 0:15:44.2 <inaudible> before you make the ask, doors open.
0:15:47.4 And ultimately, you’ve got to decide whether or not you want to be the flower or whether or not you want to be the bee.
0:15:52.7 Do you want to be reactive waiting? Or do you want to be proactive, making it happen?
0:15:56.5 And if you take that bee proactive strategy, it’s amazing how you can rub two sticks together and make something from nothing.
0:16:04.5 If you think just this basic thought of talking to ten people and in the course of that interaction, progressively learning more about their mutual wants and needs, making connections, by the time that you’re talking to that 10th person, you should have enough – as long as these people are similar enough, you should have enough context to be able to deliver some value simply in the course of those ten conversations.
0:16:24.7 There’s a lot of ways to bootstrap value. 0:16:26.8 When we think about the other aspects of the business, past sales and marketing, with operations, give me the skinny. Give me the straight talk.
I want you to address the skeptics that think about franchising as being – you know, the basic response is, “Well why would I do that? I can do it myself. I’ve already got my own operation.” 0:16:45.3 Particularly if somebody is already managing 2-300 doors.
What kind of value can somebody expect to receive from a well-run franchise that would even cause them to consider not doing the whole enchilada themselves?
Aaron: 0:17:01.5 That’s a fair question. I get that all the time. “Why go through you guys?” Or, “Why be with Keyrenter? You guys have 7%. You take 7% royalty from me, blah, blah, blah. Why would I ever do that?”
0:17:17.1 Well, just like I told you a few minutes ago. My goal is to help them make more money in less time because of being with Keyrenter.
0:17:26.4 I can get them from zero to 200 doors, I feel like, faster than anybody else can. 0:17:33.9 Or, I can get them maintaining 200 doors at a cheaper cost.
0:17:39.3 At the end of the day I don’t care how much gross revenue you make. How much net and how much money are you able to bring home and put in your own pocket, that’s really what matters.
0:17:49.4 And so, for us, with Keyrenter it’s about the value. Yes, you can do this whole business on your own.
0:17:54.8 Majority of the property management industry is mom and pop shops. It’s not franchises. It’s not big hedge funds or groups like that. 0:18:05.6 It’s mom and pop shops.
And so, what we do is we help and we partner with our franchisees. 0:18:13.6 Like I said, we do a good majority of the marketing. I would say probably 90-95% of the online marketing we do for them.
0:18:19.6 From the website to the SEO. We pay for the LeadSimple account with your company. 0:18:27.3 That comes out of my credit card. The franchisees don’t pay that. But it’s the value that I see in a CRM that I believe that they should have.
0:18:37.8 The other part of that is accounting. I’m trying to take some of the hardest or some of the parts that the business owner or the owner/broker doesn’t want to do, or they spend a lot of time trying to deal with.
0:18:54.5 Online marketing is one. 0:18:55.9 Accounting is another. We just brought in – well, not just. We hired a full time accountant about ten months ago.
And recently, over the last couple months, we’ve been doing some different testing and so forth and over the last, probably 30, 45 days, rolled out that we will do about 90-95% of the accounting and Appfolio work. 0:19:22.2 Because we use AppFolio, for our franchisees. 0:19:24.6 Everything from entering invoices, entering the bills, new tenants, new owners.
Jordan: 0:19:33.2 That’s great. I love it. So back office services.
Aaron: 0:19:37.0 All that stuff. The back office stuff. And at the end of the day, it’s about – I told you before, it’s about the relationship and the franchisees or the property manager needs to focus on the relationship.
0:19:52.2 What can we take off their plate? Essentially in the back office or in our office, that doesn’t matter who’s doing it, that can make their life easier. 0:20:01.6 That is where the value is.
Jordan: 0:20:05.1 Yeah, absolutely. I mean, the whole back office services seems like a big piece of the opportunity for franchises to actually come alongside the individual franchisees and say, “Hey, there’s some real concrete weight to it. It’s not just a PDF or a guide. There’s an actual functional service and infrastructure.” I love hearing that.
0:20:24.3 Let’s pivot to talking about some of the other topics. One thing I want to dive into is talking a little bit about technology, data.
0:20:31.2 Running a franchise, you have some weight, some velocity. You’re representing enough individual offices that you can start to think about some of these aspirational use cases.
0:20:42.8 For your average mom and pop shop, talking about big data, data scientist – not only is it pie in the sky, but it’s also greek.
0:20:51.9 In your case, in your situation, you’re getting to – presumably you’re getting to a place where some of those opportunities are things that are coming to mind.
0:21:00.5 My observation about the industry is that it’s pretty broken when it comes to the overall data structured, data modeled – what I mean by that is the data is essentially siloed.
Rather than what most industries operate under, which is a paradigm where you truly own your data, it’s successful, it’s portable, you can move it from hither and yonder, access it, report on it – for the most part our clients tend to work in a paradigm where that data is locked up and that’s just the premise that they accept.
0:21:29.7 There’s really not a lot of options. That’s just kind of the rules that they play by.
0:21:34.4 When you think about the opportunity with data, both today as well as where you’d like to take the franchise in the future to help your individual franchisees, how do you think about how data exists and the need for getting more access to really what is a key operational asset?
Aaron: 0:21:55.0 That’s a really good question. Just really quick with the reason – I just wanted to just quickly state the reason why I feel like it’s kind of shattered. Kind of what you just described.
0:22:07.1 Because of the mom and pop and gathering that data or piecing together that data, none of us, as single broker/owners and business operators have the cash or have the means to be able to bring that data together.
0:22:27.4 And so, yeah, we just freely kind of give up our data and none of us really have any control of that.
0:22:34.0 And so, with Keyrenter, that is something that I see can be a huge asset to us. We haven’t done anything yet, but to be able to capture and bring – kind of keep that data close to our chest.
But that is something that we are researching and seeing what we can do to be able to keep some of that data.
0:23:01.2 And so, give it the next year or two and we’ll have some different things that will allow us to be able to keep that data within our – I mean, if we’re using a third-party software company, such as AppFolio or any of these other third-party companies that allow us to have kind of ease and functionality of the property management industry, obviously we give it up to them. 0:23:27.9 But to be able to allow us to keep it on our own as well and be able to gather that data.
Jordan: 0:23:34.8 Yeah. And it’s really not about giving a third-party access. That was a proactive choice you made. It’s more about not having access yourself. 0:23:41.3 Right?
0:23:41.4 The problem isn’t that 0:23:42.6 <inaudible> has access, the problem is that you don’t. 0:23:47.4 Or if you want to pull and have 0:23:50.4 <inaudible> access to be able to report on do whatever you want, there are some pretty limited options.
0:23:55.2 So it sounds like even at your scale, that still is kind of a work in progress. I think that really represents how big of a nut this is to crack for the industry.
0:24:06.0 There are a couple of cracks in the surface. Rent Manager has a full-blown API. Propertyware is kind of talking about it.
Unclear to what degree that’s lip service versus something that is truly accessible. 0:24:20.1 Not just in terms of raw API, but actually functional integrations. I’m hopeful, but yet to be seen. 0:24:26.5 AppFolio is taking a close-fisted approach building 0:24:28.5 <inaudible>
Aaron: 0:24:28.7 Yeah they are. Listen to the AppFolio conference that’s coming up and I think there may be a few things coming up that way.
Jordan: 0:24:41.4 That should be interesting. They’ve been getting beat over the head recently.
Aaron: 0:24:47.8 They have. They’re a public company, and so some of that you can read between the lines with what they want to roll out. What they’re testing. 0:25:02.8 But, I’ll just kind of leave it at that.
But any AppFolio users out there, I would highly recommend attending the conference that’s coming up this September. Or, viewing the conference videos and listening to some of the roll-outs that happen from that conference.
Jordan: 0:25:24.5 Ok. Well we will keep a close eye. That should be interesting. By the way, shout out to Todd Breen for putting the heat lamp on that part of the industry.
0:25:34.9 Alright. So, moving on from technology. Let’s talk a little about the underlying asset. Let’s talk about cash flow, the financial opportunity.
People get into this business, at the end of the day. At least we hope so. 0:25:48.0 What it looks like is a lot of folks end up getting into it unknowingly, to have an income. Not necessarily to be building an asset. And that’s ok.
0:25:56.7 But, for those folks that are really trying to build that nut, that sellable asset, that milkable asset, there needs to be one thing, and that is cash flow. The C word.
0:26:07.4 I know that you have collected a cheque in more than one way. I know that you’ve been active with real estate investment yourself.
0:26:13.1 Talk me through the importance of cashflow in this business for achieving the kind of financial freedom that people really want.
Aaron: 0:26:23.6 I’m kind of stunned there. Because at the end of the day, why the hell would you be in business if you’re not getting cashflow.
But it’s so surprising to me, in property management, that people are, “Oh, as long as my property management business can pay for itself and break even, I’m ok. I make money on the real estate sales.” Or, “Hey I’m growing my business. I’m at 150, 200 doors. I’ll make money when I’m at 400 doors.”
0:26:53.0 No, no, no, no. At 100 doors, you should be making money. And you should be making decent money.
And if you’re not, re-evaluate how your structure is and how your business is and start making money. 0:27:06.0 I told you at the beginning of the call, I’m doing a book called, Cash Flow is King.
You’ve got to have cash flow. And if you don’t have cash flow in this business, how are you going to stay in it?
0:27:15.5 And that’s one of the things I push for my franchisees. And I grade them on and I share stats with each franchisee on how we’re all doing.
0:27:28.9 Because I want them to see how each other’s doing and if they think somebody’s doing great, hey pick up the phone and call and talk to that person.
0:27:41.2 But isn’t that why we’re self-employed and why we’re in business is for cash flow? 0:27:44.6 This business you can get some substantial cash flow.
I don’t want to be throwing out numbers and whatnot, but some of my franchisees, they make a pretty damn good living in property management and they don’t work more than, I’m going to say maybe 50 hours a week.
0:28:04.3 It’s not that they work 40 hours a week and some of them work 80 hours. It depends on how you want to set up and have your business run.
0:28:14.3 But that’s like one of the most important things, is cash flow. And making sure that you can pay yourselves. Or pay ourselves.
0:28:24.1 I mean, I have gone through this business and starting the franchise business. I don’t have any outside investors. I don’t have anybody helping fund that.
0:28:35.0 And after putting a million dollars into that, I’ve got to be making my money somewhere. 0:28:41.5 And I make my money off of – here in our Salt Lake office.
0:28:45.6 And, so yeah, there has to be cash flow that comes in to property management – your property management business. 0:28:53.8 There’s so many ways and angles that we can talk about how to get cash flow if you’re not getting it. But yeah.
Jordan: 0:29:02.9 So what would you say to somebody that’s stuck in the story, Aaron? And being stuck in the story looks like this: “Well, you know, you can’t make money on maintenance. I’d love to be profitable with that. I’d love to make a little money, but all you can do is lose money on maintenance.”
0:29:18.8 Or the inverse, which I’ve absolutely heard. “Well, you can’t make money on property management. You can only make money on maintenance.”
Or, “Well, I’d love to charge for x, y, z but all my owners would fire me.”
0:29:29.5 You know, there’s so many stories as to why this business has to be an income rather than the actual value creation of an asset.
0:29:38.1 What would you say to somebody that’s stuck in that story?
Aaron: 0:29:41.5 Most of the time, it’s going to be a mindset. There are some parts of the country to where that can be true. 0:29:50.7 But most of the time it’s going to be mindset.
If it’s not mindset, it’s going to be, “How are you selling your services to the owners? Or to the tenants?”
0:30:02.7 We make money on the owners, we make money off the tenants as well. It depends upon if the tenants are doing everything that they should be doing and then all they have to pay is rent. Because it’s what’s in the lease.
0:30:12.5 If they’re not doing what they’re supposed to be doing, yeah, we make some money off of them. Depending on what it is. Lease violation. Three day 0:30:21.8 <inaudible> so forth. 0:30:25.0
So, I’d say part of that is going to be mindset.
Other part, they just don’t know. 0:30:30.5 So, I remember one of our first franchisees came on board three years ago. He had about 100 doors and he was a conversion.
0:30:40.8 Comes in and Nate and I, my partner Nate and myself, about a month after he opens we’re like, “Brandon, you’re really selling yourself – sorry, if you could dump that out. I don’t want his name being said.
Jordan: He’s a client, I’ll scrub it. 0:30:56.8
Aaron: 0:31:01.3 So I said to our franchisee, “Look you really should be making more money. You’re managing 100 doors, your numbers just don’t look right.”
0:31:11.2 “Oh yeah, Aaron, Nate, we just can’t do that here in my market.”
And we’re like, “Just try it.”
0:31:18.6 So he went off. About two, three weeks later he’s like, he comes back and he’s like, “You wouldn’t believe it. The owner didn’t even flinch. I raised my rates to this and I haven’t had anybody say anything.”
0:31:31.3 So we go back and about two, three months later we’re like, “Hey give it a shot again.”
And so he changes some of his fees and so forth and he comes back and he’s like, “You wouldn’t believe it. Nobody flinched. I raised my rates and man, I can’t believe it. There’s no way I can do that again.”
0:31:49.8 And we’re like, “Well your services are still a little cheap here.”
0:31:53.8 And we don’t try to be the cheapest guy on the block, but for us, for Keyrenter, we want to be the most experienced and the best value.
0:32:00.7 And we want to make sure that we can take care of the property. 0:32:04.3 And it’s tough to be the cheapest guy on the block and be able to have the resources and the income to be able to service that property the best.
0:32:13.1 And so, he raised his rates again and he’s done that probably six, seven times since. 0:32:20.7 And he is one of the most profitable property management companies in our franchise system. By far. 0:32:28.4 Does an awesome job.
0:32:29.6 But he had to get over that hurdle with his mindset of, “Oh not in my area. Oh I can’t do that. It’s just me. It’s just me and one assistant.”
0:32:41.6 And now he’s got five, six, maybe seven people on his team. 0:32:45.3 But he believes in the product that he’s giving.
And that’s the thing. Most of these property management companies – you’ve got to believe in your product.
Do you really believe that you’ve got a good product? If you do, stand behind it. 0:32:59.9 For me, I mean, I manage my own properties as well here. I own ten properties locally. 0:33:07.4 And so, I’m managing these properties as if I was managing my own.
Jordan: 0:33:13.4 I love that. So, when I think about the whole conversation of fee maxing, there’s really two ways to look at it.
The cynical view is that you’re charging more for what they’re already getting.
0:33:21.9 The optimistic view is that you’re trying to add more value and charging people accordingly.
0:33:26.7 At the end of the day, if you’re in a situation where you’re either losing money, your business is suffering, it’s on life support, you have an income but you know you’re getting underpaid.
That’s not long term viable for the business and if it’s not viable for the business, it means it’s not viable for your clients.
0:33:41.9 And even if you can make it work, what that means is that you’re offering subpar service as a result of those margins.
0:33:48.6 So, it’s absolutely worth questioning the assumption. And it’s not even worth having the conversation about the specific types of fees.
0:33:56.8 There’s value in that, but in many ways, it undersells or it short sells the real issue, which is mindset.
0:34:03.8 Which is the belief in charging what you’re worth. Which is about leaning into hard conversations and being willing to find out what’s on the other side.
0:34:11.9 I know you come from the same place on that, so I appreciate your perspective.
Aaron: 0:34:17.1 Oh yeah. I love a part of fee maximization. I’m not a nickel and dime. And I think there’s a difference there.
I think there’s some property management companies that do the nickel and dime for everything, so I think there’s a fine line there.
0:34:35.2 And you’ve got to figure out for yourself, with your morals, with how you do business, how do I want to do business and be able to maximize these fees? And you’ve got to find where that is for you. 0:34:47.4 Everybody’s going to be a little bit different, but you’ve just got to find out what are you ok with and you’ve got to believe in your product and service.
Jordan: 0:34:57.8 Let’s talk a little bit about focus. When we talk about fee maxing, we’ve entered the category of shiny objects.
Whether that be fee maxing or giving into, you know, starting a title company, this new insurance scheme, whatever it may be. There’s so much opportunity for distraction in this business.
0:35:16.7 How do you think about focus in your own life? In light of the fact that not only are you running an operation, but you actually have all these other franchisees that you’re taking a certain level of responsibility for.
How do you manage your day to day focus? Do you have any morning or daily rituals? How do you stay on your game?
Aaron: 0:35:34.0 Good question. I am a total entrepreneur. I work my frickin’ butt off every single week, but at the same time, I try to vacation. I try to get time out of the office.
0:35:48.4 So with that, I go in phases. Right now, I’m not so much in the morning phase. Even though today I came in about six in the morning. 0:35:56.9 I’m usually more of an evening.
And so, I’ll stay until midnight, one o’clock in the morning. Work 15, 18 hour days. 0:36:07.2 And those are only a couple days a week because I have a family. A wife that wants to see me as well.
0:36:12.1 And so, for me I – those are – I have set schedules. Monday, Wednesday, Friday’s for me it’s more about 8:30 – 5:30. Right in there.
And then Tuesday, Thursday I work from 8:30 to about 1:00 in the morning. 0:36:30.8 So it’s long days. And then Saturdays I try to come in for a half day.
0:36:36.6 And then in those work days, I try to break it up. Not so much like on my schedule, or letting my team know, but just me mentally. On what I’m doing first. And for me, I dive into my emails.
0:36:52.5 Sometimes it’s like, “Ok I really got to get this done.” If there’s a project or something I need to get done, I won’t even go to my email because the email will just – once you dive into that, that’s at least a half hour.
Jordan: Black hole.
Aaron: 0:37:03.8 Oh totally. Because you dive in, it’s like, “Oh this needed to be done yesterday.”
And hey, nobody’s – the phone isn’t ringing off the hook and so, everything can wait at least a little bit.
0:37:16.3 So focus on what you’ve got to do. So I do that. 0:37:21.1 When I’m out on trips, vacations, wherever, I try – if I’m on a leisurely trip, I try to read a book. 0:37:29.1 Right now I’m in the middle of what is it, Ask the Answer?
Jordan: 0:37:36.9 Marcus Sheridan, You Ask They Answer.
Aaron: 0:37:39.0 Yes. I’m in the middle of that. But I try to also listen to to audio books a month. That helps me kind of stay on my game to see where, kind of where the market is, what’s going on that I need to pay attention to.
0:37:56.9 I’m part of an EO group, an entrepreneur group called, EO. 0:38:01.5 I attend that every single month.
That group keeps me in line as well, and keeps me on my toes with just the long-term planning thinking that we do as a group. 0:38:14.9 I love it.
If I can recommend anybody out there, if you’re looking for a group that thinks similar like you and you’re an entrepreneur, not that you think is crazy, then I definitely would join.
0:38:30.5 It is kind of expensive, about $5000 a year. But definitely would do that.
0:38:37.3 And then just making sure that I can have family time as well. 0:38:41.0 I have a goal and vision of where the franchise should be. By the end of the year, three years, five, ten years down the road.
0:38:50.9 And so, it’s my job, I feel like, to do that. You talked about shiny objects. 0:38:55.3 For my franchisees, I don’t want them to go out and investigate and check out all these shiny objects. I want them to be sending them to me and Nate.
Most likely we’ve already investigated, looked into them, checked out the software, checked out the service. 0:39:13.0 We want to do that for them. That’s another thing that we do.
And so that they can focus on the business and not so much focusing on these shiny objects. 0:39:22.4 And the other thing with that, with shiny objects, is just – don’t change your business so much with so many shiny objects out there.
And you’re like, “Oh here’s another maintenance pack is that I should try this.”
0:39:37.4 And then three months later or two months later you change to this maintenance package or maintenance call center. Two, three months later you change it to another one.
0:39:46.9 At the end of the day, do your homework, do your research. 0:39:50.9 If it’s really that bad, definitely change.
0:39:54.3 But both your staff as well as your owners kind of get tired of you changing and switching things up all the time. 0:40:02.7 So, be careful with all that change within your business. Especially with your staff.
Jordan: 0:40:10.2 The levers is what we need to be thinking about. What are the levers that we have available to move?
What is the prioritization of those levers relative to where my business is at? And what activities that I could embrace map to those levers.
0:40:21.9 Do I have a cost problem? I.e., is it a labor issue? Does that mean that I need to fire somebody? Does that mean I need some incremental efficiencies? Do I have a revenue issue? Is my revenue per door low and I need to either raise and or defend my base management fee, come up with ancillary fees.
0:40:38.6 That context is really a first principles way of ordering and prioritizing the endless stream of activities. 0:40:46.1 I love what you just said there. Focus and priority is the name of the game.
0:40:52.3 Let’s move on to talking about some rapid-fire questions. I ask these pretty much to every guest. A similar list of questions. I want quick, guttural answers from you. 0:41:01.4 And the first question is this, Aaron, who do you learn from?
Aaron: 0:41:06.5 From audio books. That as well as other entrepreneurs that are in the trenches doing it now. Those two things.
Jordan: 0:41:14.1 Alright. Give me a couple names of some books. You brought it up. Give me like your top three. Or a few you’ve read recently.
Aaron: 0:41:20.5 Alright. Right now I’m reading, Solve for Happy. Love it. Also reading, Building a StoryBrand. I love – just finished reading, Built to Sell the entrepreneur roller coaster. Crush It!. Hal Elrod’s, Miracle Morning. Scaling Up. Those are all awesome, excellent books that I’ve read recently.
Jordan: 0:41:46.3 Love it. So, StoryBrand, Donald Miller. Talking about branding. Positioning the narrative. Built to Sell, kind of self-explanatory. But by John Warrillow? Or something like that.
Aaron: 0:42:01.0 Another one I just finished reading, The Sale of a Lifetime. I love that book by Harry Dent. If you haven’t read it, I would recommend it.
It’s about – I think it was done early 2016. So if you’re going to read it, read it probably within the next six – 12 months. By then it may be out dated.
Jordan: 0:42:18.0 Everybody has their preference in terms of medium. I’m an Audible guy too. I still love the physicality, the smell of a book in my hands, particularly if I’m on vacation. But that drive time, is value.
I don’t know what your drive is. Mine is short. My driver’s time is under ten minutes, but I’m still hacking away at books, slowly but surely via Audible. 0:42:39.0 Now the real question is, are you a 2X speed guy or a 1X speed guy on Audible?
Aaron: 0:42:44.0 I am, on the most of it, I’m a 1.5 or 2. Solve for Happy, he has a really bad accent, or an accent, and so for that I’m doing it 1.25.
Jordan: 0:42:58.1 I’m actually with you on that. There’s like a small handful of people that actually talk as fast as I do, and I listen to those people at much slower speeds.
Aaron: 0:43:05.3 But most of the podcasts that I listen to, every time: 2X.
Jordan: 0:43:08.9 Love it. Next question. 0:43:09.0 If you could do it all over again, if you could talk to yourself on Day 01 of starting Keyrenter, what is the one piece of advice that you would have done everything within your power to get that version of yourself to understand?
Aaron: 0:43:24.4 Wow. Good question. Probably, one – not go into franchising. And I say that kind of sarcastically.
0:43:37.6 But holy cow, did I not see what franchising was all about. It has nothing to do with property management.
But take that aside, probably at the end of the day, focus on relationships. 0:43:52.8 Nothing that you can do with your website is going to bring business in. The biggest driver that can and will bring business in is you or me. Go out and sell yourself and build the business.
0:44:07.3 If I was to do it all over again, I wouldn’t spend so much money on all this other marketing crap and everybody that’s emailing me and calling me and wanting $300 to $1500 dollars a month to help me bring in leads.
Jordan: 0:44:20.4 Alright. Fair enough. So, a lot of people ask what’s going to be different in the future. The D word. Disruption.
0:44:27.0 My question for you is this, in ten years, what’s going to be the same in this business? What can we – what is predictable enough that we can optimize for and bank on? What do you believe is not going to change in a decade?
Aaron: 0:44:38.8 This is still going to be a relationship business. How we do the business will definitely change, but it will still be a relationship business.
Jordan: 0:44:47.0 Couldn’t agree more. I’m with you. Final question of the interview. Aaron Marshall, in your opinion, are entrepreneurs born or bred?
Aaron: 0:44:58.0 I hear this question a lot. From you asking it with all your interview podcasts. I am going to say both, but partly it is born, but the other part has got to be bred as well.
You just can’t be born with it and really not have the – I guess the playground to build, or exercise or see the entrepreneurial power.
0:45:25.9 For me, I give my entrepreneur spirit back to my grandfather who was an entrepreneur. I always wanted to be like him. He had a box business. A cardboard box business out of Denver, Colorado. 0:45:39.1 That he started back in the ’50s. And I never actually saw him do it. So that’s part of it.
My other grandfather was an entrepreneur. A sales entrepreneur with rabbit meat. He always tried to get rabbit meat out in the supermarkets. Clear from the early ’60s clear up to the mid-90’s. And he could never really get it out there in the mass quantities. 0:46:08.9 It tastes similar to chicken. I’m not sure if you’ve ever had rabbit meat.
0:46:13.0 So I would say a little of both but there needs to be an environment to where the entrepreneur’s spirit or that born entrepreneur’s spirit can develop within.
Jordan: 0:46:24.6 And I don’t know if those answers are incompatible. You could say it’s born into a certain group of people. But it only – only a subset of those folks actually fully manifest it based on what was modeled for them.
0:46:35.7 I definitely hear where you’re coming from. That which was modeled for you becomes infinitely more reasonable for you to aspire to do, simply because you saw somebody else do it. Particularly if that person was in your immediate family. 0:46:48.0 So, love that answer.
0:46:50.1 Aaron, if folks want to get in touch, if they want to learn a little bit more about you, Keyrenter as a company, what’s the best place for them to go?
Aaron: 0:46:56.3 I’d say go to LinkedIn. Aaron Marshall, or go to the website, KeyrenterFranchise.com. You can hear and view some videos that I have on there. 0:47:07.4 But I’m readily available. You can also email me, Aaron@Keyrenter.com.
Jordan: 0:47:12.1 Love it. Thanks for coming on the show. Aaron, if you’re ever in Austin, let’s break bread.
Aaron: Excellent. Thank you.