Brad Larsen on Growing Your PM Company by a Door a Day
Today, I’m talking with Brad Larsen, host of the Property Management Mastermind Podcast and the owner of RentWerx San Antonio, the fastest growing property management company in San Antonio since 2011.
In our chat, we’re going to talk about why Brad is known as a monster implementer and how he went from real estate agent to property management empire builder.
Brad holds nothing back and shares the exact steps he followed to acquire his first 100 properties and talks in detail about how he scaled by handing off business development to another employee.
If closing one new single family home every day of the calendar year sounds like a pipedream, then this is the episode for you.
- (00:55) – The background on Brad’s property management company, RentWerx San Antonio.
- (01:03) – How Brad entered the property management business.
- (01:45) – Current stats; including number of doors and growth velocity.
- (02:23) – Brad discusses the long term vision for RentWerx.
- (03:13) – RentWerx’s growth in their early days.
- (03:24) – How they acquired their first 100 properties.
- (03:38) – The grind of doing everything himself.
- (04:06) – Their first ‘office’ and employees.
- (04:51) – The turning point where Brad no longer had to personally engage in handling sales.
- (05:01) – Hiring their first business developer.
- (05:01) – Discussing the transition from total engagement to making strategic hires for growth capacity.
- (06:12) – The importance of establishing programs and expectations for your business developers.
- (07:40) – The need for infrastructure, on-boarding and training to position your hire for success.
- (09:35) – The metrics for RentWerx for where they are today.
- (10:05) – Monthly signups.
- (10:30) – Whether or not closing ratios can be accurately measured.
- (03:24) – How they acquired their first 100 properties.
- (12:28) – Strategic positioning.
- (12:52) – How Brad positions RentWerx to stand out in an increasingly crowded and competitive field.
- (13:08) – Content is still king.
- Videos, podcasting and blogs.
- (14:38) – The importance of being on the first page of search results.
- (14:50) – Why reviews matter.
- (15:36) – How to deal with a negative review.
- (13:08) – Content is still king.
- (16:56) – How Brad has sculpted his content to address key points of anxiety and concern, and to answer the questions his customers have.
- (17:11) – Content strategy based on frequently asked questions.
- (19:01) – Embracing video content.
- (17:11) – Content strategy based on frequently asked questions.
- (21:44) – Discussing LeadSimple’s text messaging feature to nurture leads.
- (22:30) – The impact of ‘speed to call’.
- (23:15) – Whether or not email is still relevant as a marketing mechanism.
- (12:52) – How Brad positions RentWerx to stand out in an increasingly crowded and competitive field.
- (24:13) – Profit.
- (24:49) – RentWerx’s ideal client.
- (24:49) – Targeting the upper end of the market.
- (26:39) – How to position yourself so you have the freedom of choosing your clientele.
- (24:49) – RentWerx’s ideal client.
- (29:39) – Commercial Break.
- (29:49) – PM Grow Summit
- (30:03) – Coupon code for $100 discount on ticket price.
- (31:37) – Where Brad sees the industry is headed.
- (31:58) – More third-party showings and vacant home lock box deals.
- (33:07) – Increased customer ease in renting properties.
- (35:05) – Using operational efficiency for positioning and as a selling point.
- (36:23) – What advice do you wish someone had given you on the first day?
- (38:30) – What’s the number one thing you see property management entrepreneurs doing wrong?
- (41:23) – How much is too much to pay for a new property management contract?
- (44:38) – Who do you learn from?
- (47:08) – Are entrepreneurs born or bred?
Where to learn more:
If you want to hear more from Brad and check out his podcast, head on over to PropertyManagementMastermind.com. You can also track him down at RentWerx.com where you can make use of the vast video resource library he has created for property management entrepreneurs.
Jordan: 0:00:00.0 Welcome closers. Today we have another episode of the Profitable Property Management Podcast coming at you. Season one, on marketing. I’m your host Jordan Muela, and every week, I interview world-class property management entrepreneurs and industry experts who share actionable insights that help you grow your property management empire.
Whether you manage 100 or 1000 units, this is the show that’s going to help you see the big picture and get to the next level. So if you’re tired of hearing the same recycled strategies and you want something fresh, join with us now.
Because today I’m talking with Brad Larsen, the owner of RentWerx. The fastest growing property management company in San Antonio since 2011, and the host of the Property Management Mastermind Podcast. Today we’re going to talk about why Brad is know as a monster implementer and how he got from real estate agent to property management empire builder.
0:00:51.3 Welcome to the show Brad.
Brad: 0:00:52.2 Hey Jordan, thanks for having me on. Appreciate you being here.
Jordan: 0:00:55.8 It’s an absolute pleasure. Brad, let’s start here. Give us a little background on your company in terms of market, headcount, doors, growth velocity, etc.
Brad: 0:01:03.9 Sure, no problem. So we started back in 2011. I’m a former realtor. I was doing real estate sales here San Antonio. Slanging the homes for a long time and then kind of wanted to look around and actually run a real legitimate real estate business.
0:01:19.8 And property management had the combination of residual income and basically it has that thing that looks like a real business. Where real estate, in general, in the sales side, feels like a little bit of a treadmill. So the property management side really intrigued us, and in 2011 we focused – extremely focused, extremely hard on building the single family home property management game.
0:01:45.9 And to this point, five, six years later, we’re around 725+ homes, all single family homes. They rent for an average of $1600 – $1700 per month. We have 14, 15 different staff members here and a pretty good growing business. 0:02:01.3 It’s been a phenomenal year this year in 2017, so here’s some fun stats for you.
This year, we’ve grown one single family home every single calendar day this year. Do the math on that. We’re counting at 221 here on 9 August. 0:02:17.8 So it’s been a good growth year for us, and we hope to continue that trend.
Jordan: 0:02:23.8 Love it. That is some cause for celebration right there. That’s where you’re at today, what’s the long term vision and goal for RentWerx?
Brad: 0:02:32.6 Long term vision and goal is we want to be at a certain point of a number of homes that is running smooth and going well. We just re-branded from Larsen Properties to RentWerx San Antonio to get a more of a long term play. That way it’s not so much necessarily in my name, it’s more along the lines of a business name. And RentWerx had a great ring to it.
0:02:56.7 And so the long term goal with this is to expand and to potentially expand in other markets. And we’re getting that all going now.
Jordan: 0:03:05.1 Alright, I’m just looking at my notes here. 0:03:14.4 [Edit] 0:03:13.5 So you got the big picture vision, talk to me about growth in the early days. How did you get to your first 100 properties? Walk me through that early grind and hustle Brad.
Brad: 0:03:24.8 That was probably the most difficult part, because I was doing some leasing effort and I was with Keller Williams as a realtor. And leasing means you lease the home on behalf of an owner and then they deal with the tenant. So there was no real management involved.
0:03:38.8 And so getting to the first 100 was a bit of a grind. I mean, I had to do everything. At the time I was going to school, I was getting my MBA and I was doing the management side and selling homes and we have two small kids. I was working until 10:00 or 11:00 at night. I had gained 20, 30 pounds. It was a nightmare during that time frame to get up and going, because I was working from home.
0:04:06.5 And then when we got our first “office”, which was a PO Box on a main street here in San Antonio, that was our first legitimate office address and we really didn’t get an office in person until five years ago.
0:04:20.2 It was July/August, exactly five years ago we moved in, and when we moved in, we were around 80 homes under management and that’s when we started to realize, “Ok, we’re going to need to hire somebody to answer some phones and help with the office stuff and be around.”
And that was how we started the first 100. 0:04:40.5 And the 100 to 200 kind of seemed to be the toughest challenge because it felt like I was doing everything by myself until you start to get the systems going and the key personnel that’s going to help you grow.
Jordan: 0:04:51.9 So when was that turning point for you? In terms of handling the sales, talking to owner prospects, when did you stop doing that? How many doors were you at at that point?
Brad: 0:05:01.9 We were right around 150 to 200 doors, and I hired the first business development person that worked for us for almost a couple years. And that really kind of turned the page, turned the corner, if you will, because it got me away from having to do the grind of signing up new properties.
0:05:21.9 I was busy trying to help manage the properties, building a team that could manage the properties, and to do both and expect to grow is difficult. 0:05:30.3 Because if you’re going to grow fast, you have to dedicate your resources to putting things in place, not doing everything yourself.
Jordan: 0:05:39.2 So talk me through that rocky transition. We see this a lot. There’s a lot of talk about BDMs right now and for a lot of folks that are going from having a business largely based off referrals, touching the owner, handling everything themselves to making that first strategic hire in a growth capacity, a lot of times it’s a rocky transition.
0:06:01.1 What was that like for you and what did you have to do to actually get some inertia and escape velocity with having another person specifically to help you in that growth component of the business?
Brad: 0:06:12.5 Well a lot of it was developing the programs, developing the marketing, developing the reasons why somebody would want to call. You cannot expect business development people just to go out and get you business. As the owner of the company, you have to figure out a way to make it rain.
0:06:28.2 So you’ve got to figure out how to generate the leads, how to build the programs, how to build the points of difference to make the emails go off, to make the phone ring, to make people want to work with you. It’s the owner’s responsibility.
The marketing people, they’re there to help with some of the marketing issues, like I was mentioning, but the business developing person, they’re going to be the people that go out into the field and meet with the owners and try to sign the business.
0:06:56.2 You can’t expect them to make it rain and make them sign the business. So that’s where I think people go wrong. I hear stories from other management company owners. They call me and we talk about it. That’s the root of the podcast show that we have, is the masterminding.
And they call me and we talk about it, “Ok what are you doing right now, how are things working for you on the business development side.” And I hear stories of, “Well, I hired this gal and I paid her a salary, and she just didn’t work out. She wasn’t signing up properties.” Well, ok. That’s understandable why that didn’t work out, but you can’t expect them to do your job for you, you have to figure out a way to make it rain to bring in those leads.
What do you think about that? Am I speaking out of turn here? What are your thoughts?
Jordan: 0:07:40.2 Completely agree. I’ve seen that story. It’s sad to me. It’s sad to see an employee get hired and effectively sabotaged based on the expectations of the employer. Or the lack of expectations and clear structure.
A BDM, a lot of times can kind of be pixie dust for growth, but oftentimes, if there’s not infrastructure for on-boarding and training, that hire – that employee is not positioned for success. 0:08:04.7 But the other thing that you’re getting it is the difference between inbound versus outbound. That ISA that can nurture, that can handle inbound phone calls, that is not necessarily the same temperament from somebody that is willing to prospect and go hit the streets and shake the bushes.
Brad: 0:08:21.3 Prospecting is a good way to define that. So we have an inside sales person, and we have an outside sales person. And it’s so funny, the inside sales person is happy to do videos, happy to get on the phones and will even go into the field.
The outside sales person who is great one-on-one, she’s a little camera shy. So it’s kind of funny how personalities work. You would think just what you said would be the opposite, but sometimes you have to build it around the personalities versus hiring for that particular mold.
0:08:52.8 Because we interviewed a lot of people for these two positions and ended up getting a couple all-stars that are doing great for us. Clearly. 0:08:58.9 But it’s not as cut and dry as you would think. Like you mentioned. I think people have to maybe adjust the role that they’re in for the type of personality that they are.
0:09:06.6 I can’t expect – like I was mentioning the video stuff. I can’t expect the outside girl, the outside gal, her name is Leslie, I can’t expect her to do all kinds of video content. That’s either going to be me or it’s going to be the outside – excuse me, the inside sales guy Brian. 0:09:20.6 You know, we’re more the video type people. But you put Leslie in a room with owners, man they love her. 0:09:28.8 So it’s a personality thing versus a role on paper thing. Does that make sense for ya?
Jordan: 0:09:35.7 Yeah, that absolutely makes sense. Let’s talk about, kind of the transition. You’re talking about some progressive revelations as you’ve been through this process. Early on, you ground out the first 100 properties, then you got some people leverage.
What about today? You mentioned some names, you got some people in that growth department. Either on the sales or marketing side. What kind of metrics do you look to to help guide your analysis of growth? Whether things are not working – what are you looking at on either a weekly or monthly basis related to growth?
Brad: 0:10:05.8 We’re looking at a monthly thing for how many potential signups we get each month. And then we look at which types of plans they’re grabbing. You know, we have a three-level pricing. The silver, gold, platinum and they’re flat-fee pricing. And I talk about that enough on my podcast show to make people sick. Everyone’s sick of hearing it.
But at the end of the day, the metrics that we’re concerned with aren’t necessarily cut and dry. 0:10:30.5 Because what you’re talking about, and I’ve heard you discuss this with me, is you want to hear about a closing ratio. Right? Well, that’s a difficult thing to pin down in my opinion, because the top part of the closing ratio is how many leads you’re getting.
0:10:48.6 Well, first you have to define a lead. And then you have to figure out there may be two or three different levels of a closing ratio. Closing within 30 days. So if a business development person goes out and they get an actual signed PMA, a Property Management Agreement, and then that person is ready to rent their home out today because it’s vacant, that’s a great close. That’s within 30.
0:11:11.6 But what about the owner at your meeting who’s thinking about hiring you, they’re six months from the current tenant moving out, or they’re six months from moving out, and that’s a great appointment, you’re probably going to get the business, but we don’t actually close them for six months, because we don’t actually rent their home out for six months.
0:11:29.6 So it’s kind of like those ratios, those metrics, on that level, defining leads and then defining closings, are a little fuzzy. I wish they were cleaner, but it’s really how you define them inside your own business.
Jordan: 0:11:42.4 You know Brad, you’re an interesting character, because you pay attention to the details. I agree with you, and what you’re getting at there is talking about making an apples to apples comparison. I’ve heard you talk about the same thing – for example, business owner to business owner.
If there was such a thing as a clearly standardized chart of accounts then we could have an apples to apples comparison on our expenditures in different categories of our businesses.
0:12:06.7 It does matter to pay attention to those deals, because otherwise it’s easy to go to the trade show and go to the convention, kind of cherry pick the numbers that you feel like reflect – well, and you’re doing somebody else a mis-service, because you’re either over or understating what your business is actually doing. When in reality, we need that apples to apples comparison.
0:12:28.0 Let’s talk a little bit about strategic positioning. I believe it was Jack Trout that said, “Marketing isn’t a battle of products, it’s a battle of perceptions.” You’re a guy that has paid attention to positioning within your business, so talk to me about how you’re positioning RentWerx, and how you try and have that brand stand out from what is increasingly a crowded and pretty competitive field.
Brad: 0:12:52.1 Yeah, we’re in probably in one of the most competitive markets in the country. I know I’m going to get hate mail for that one. But that’s what all the SEO people tell me. The folks I’ve talked to on the podcast show, my webmaster, they look at the stats and say, “Man, San Antonio is so competitive.”
0:13:08.8 But at the end of the day, what really does it is content. And content could be videos, it can be podcasting, it can be blogs. Here’s a cool idea I’ll throw to your audience. 0:13:22.0 So I saw a guy the other day on BiggerPockets, he was doing – he was a property management guy up in Ohio somewhere, and I know I’m getting on a side rail here for you, but this is such a cool thing I’m going to start doing this. Is, the guy mounted a camera in his vehicle, like an iPhone, and he was talking about property management related things while he was driving.
So he wasn’t like, you know, holding the camera, it was fixed in his dash. And he was just having a conversation with like you or me sitting shotgun and talking about different property management things. So I’m going to do this. I’m going to mount a camera in my truck and tonight on the drive home, I’m going to talk about how much I hate Jordan, and how much I want to come out there and attack you. Nah, I’m just kidding you. But what I’m going to do is drive home and film a couple things and see how that works.
0:14:06.5 And that is not difficult. I’m going to make a point, is that is not difficult. That’s on my commute home, 30 minutes a day, and you can put content on an iPhone, upload it to YouTube, and boom. That’s going to get you good content, which equals SEO juice. Search engine optimization juice, which is what you want to outshine your competitors.
0:14:38.1 Because you want to be in the pins. You want to be on the first page, organically. You’re going to want to be – have a good ratings on Google, on Yelp, on Angie’s List on ThumbTack, on every other thing that’s out there. I’m probably forgetting a bunch of them.
0:14:50.1 But those ratings matter as well, and they matter a lot. A lot, a lot, a lot. It’s disgusting or it will make you sick. If you get a bad review, or a series of bad reviews and now all of a sudden, you’re dipping into the 2, 3 star range, or worse. You don’t know what you’re missing, because those people won’t ever call you. If they’re looking for management companies and you have a really crappy rating, they will never call you.
If you do get bad reviews, you can treat them sometimes, like a ball of yarn. 0:15:21.8 Like you can smack it around like a cat playing with a ball of yarn. Because if an outgoing tenant who is disgruntled and hates the world leaves you a bad review, well turn it around and make it a talking point for what you do right as a management company.
0:15:36.6 Don’t try to refute that online. Turn it around to where, “I understand you’re an outgoing tenant and this is how our policies work. We enforce a lease agreement”, and go on and on and on, and turn it right around and say, “These are the good things we do.”
So I’m getting off on a tangent for you, but it all goes back to the search engine optimization to get seen online, because that is what really matters. And then once you’re seen, you have to look decent. And looking decent is good quality content on your site, and also keeping your ratings in check.
0:16:12.4 If you got to bribe people to remove reviews, do it. If you gotta bribe friends and family to leave you good reviews, do it! Because you have to look good. You have to look good, otherwise you’ll never get business.
Jordan: 0:16:23.9 So we’ve got two sides of the same coin here. We’re talking about lead gen, right? Demand generation. That’s what SEO relates to. And then we have conversion, and that’s what positioning, reputation relate to. On the conversion side, you have been prolific with content. You’ve created just a large volume of content.
But we don’t endorse this as being purely a shotgun type of shotgun. I’ve also noticed that you have sculpted and shaped your content to address key concerns. Going back to positioning. 0:16:56.2 Consumer expectations. Talk to me a little bit about how you have crafted content in relation to some of the key points of anxiety, concern, questions, etc., that your consumers or potential customers have.
Brad: 0:17:11.8 Real easy. It’s real easy. You take your 20 to 50 to 100 most frequently asked questions, and while you’re doing that online, question, “How do I pay my rent?” Answer. Do a minute long video. “You can pay your rent online. You can pay your rent in person. You can pay your rent via pigeon carrier – carrier pigeon.” You know, whatever you decide that is right for you, that’s the content you put out. And that’s video one.
The next question is, “Where – what office address are you? What are your hours?” You know, “Why do you charge this?” All those frequently asked questions you can think of instantly turn into a video. And you just have to do videos a minute to two minutes long.
0:17:53.6 This is not meant to be a podcast to be pro video, but content, good content, is often the route of doing that. And real easy. The low hanging fruit is the 20 frequently asked questions that a lot of people carry on their website. 0:18:08.7 And that would be the easiest one to turn into one video for each question.
Jordan: 0:18:12.6 I love it. So I’m looking at your website right now and I’m seeing some different examples of where you’ve done this. These are all landing pages with the video at the top with the text content down below.
“Video marketing for your San Antonio rental property”. “San Antonio property management”. “Using video to keep owners informed”. “An international presence”. “Single owner point of contact”. “Instant free market estimate for your rental home”. “All of the guarantees”, you have videos affirming and backing up all of these points.
Was it always this easy? Was there ever a change in your mental orientation towards this? Were you ever camera shy? Or just gutterly, did this always make sense and did you embrace this strategy from day one?
Brad: 0:19:01.8 I would say I embraced it from day one. And it’s not – you just get up there and start talking. I don’t mean to over-simplify that. Some people get a little bit camera shy. They get stuck on themselves having an ‘and’ or an ‘ah’ or a ‘you know’ or a ‘like’.
I say the same things in conversation as you may as well. They can’t be shy about those things. Just get up there and go through what you want to say. 0:19:27.4 If you don’t sound completely horrible, it’s ok.
You know, if you get up there and freeze, that’s not something you want to put out there, but as you do this more you get better at it and it’s been going on like this for ten plus years. 0:19:42.9 Because YouTube came out really in what, 07? 06? Somewhere in there.
And I was doing the video walk throughs on my own with my own little video camera and using those instead of virtual tours. 0:19:55.0 You know the virtual tours where they take a picture and it moves and there’s really lame music in the background. You know, that virtual tour thing?
0:20:04.1 Well, that’s old school real estate, and I started not doing that ten years ago. With the invention of YouTube, I would just do a walk through of a home. 0:20:11.4 So, I think today, we’re in the 1500 -1600 video range on our YouTube channel, and there are videos from walk throughs that are set to private. There are videos that are public that are the marketing walk throughs, where, “Hey this is a three-bedroom home, and you’re going to love it. And here’s the backyard, all that good stuff there.”
Those are piling up, along with the talking head videos that we do, to talk about what we do, who we are, how it works, and all the programs you just mentioned. 0:20:41.0 Those things add up, because that’s the real, real good content that you want to put on your website to build your presence on Google to get you on the first page, to get you leads, to drive the leads into LeadSimple. And I would love to go on a tangent on LeadSimple if I could.
Jordan: 0:21:02.3 – 0:21:06.8 [Edit Out] Sorry, you broke up there for a second, say that last thing one more time.
Brad: 0:21:10.8 I would love to go on a tangent with you about LeadSimple, how the leads flow into there.
Jordan: 0:21:17.4 Yeah, absolutely! Absolutely. And I would too. Before we jump into that, I do just want to mention that the proof is in the pudding. I’m checking what you’re telling me Brad, because you’re saying you’re prolific with it, and I know you are, but I wanted to just check. 12,000 videos. In fact, you’re three short. I don’t want to give you too much credit, but 12,000 videos on the RentWerx San Antonio channel. Hats off my friend. That’s impressive.
Brad: 0:21:44.3 It’s been a compilation of four or five years. And as I was mentioning, those turn into good content on your site. Good content turns into first page hits. First page hits equal leads. Tracking leads go into LeadSimple, and one of the coolest things that you just put out, and I think within weeks, is the text messaging thing.
0:22:06.3 Man, I’ve gotta tell ya, this is not a plug for you, this is super darn cool. The text messaging thing as a lead comes in, the lead gets an automatic text message from us saying basically whatever you want, but paraphrasing it as, “Thank you, I’ve got your information, I’ll be calling you here shortly” type stuff. And people get really impressed with that. We tested it, we’ve done it, it works. And maybe you can expand on how that works and how it’s intended.
Jordan: 0:22:30.4 Yeah sure. We just wanted to make sure people felt acknowledged. And speed to call, as we both know, has a huge impact. You just cannot deny the gap between, “Well I tried to respond as quick as I could” versus literally calling somebody within 20 seconds. Your best effort and actually calling somebody within 10 to 20 seconds is a world of different outcome.
We’re very much an advocate for calling people immediately. And if you can’t call immediately, respond immediately. And a text, at the end of the day, it has that human connection that email has lost. Email, for better or for worse, is a medium that has been so abused that people fail to believe that there’s actually a human behind it. Whereas with text, that human connection still exists. 0:23:13.1
Brad: 0:23:15.1 Yeah, email is turning into white noise right now. I mean, it’s just – there’s so much of it, you know, the newsletters that people put out, and the junk we get and the offers from the Prince of Africa to send me 10 billion dollars. I mean, I’m just so sick of email sometimes.
I go through my email and I’m cleaning out 100 to 200 crap every day out of my junk. Then it goes into clutter if it’s not junk. It’s just like, 300 to 400 messages a day of just worthlessness. So, you know, the stuff that’s important, I like to look out.
0:23:51.7 I mean you guys put out decent stuff. I like to look at that stuff. But you know everybody gets filled up with emails to where it is that white noise thing any longer. And it’s kind of a sad things how it’s just kind of reduced to that. Unfortunately.
Jordan: 0:24:03.0 Yeah, I mean there’s definitely still an opportunity with email when it’s done right. But if you can incorporate text into the mix, I’m a big believer in it.
0:24:13.0 One of the things I wanted to talk to you about is profit. When we think about growth, when we think about marketing, it can become this kind of, vacuous growth machine. Growth monster. More doors! More doors! And doors matter. Growth matters. But at the same time, smart growth, profitable growth is obviously a huge priority over all. I know it’s something you’ve prioritized.
Talk to me a little bit about how your orientation around the type of property that you’re willing to take on has changed over the last five years? Who’s your target customer right now?
Brad: 0:24:49.3 We target the upper end of the market. We’re looking at – we want the $2000 home on a – which is not the top of the market, but on up is. So you can get up to $3500, $4000, $4500, $5000 a month in this market. We want that top end player.
And our management systems are management programs as far as the pricing models are geared to that. And that makes it of quality 0:25:16.7 [Inaudible]. Like I mentioned, average we’re getting $1600 – $1700 per month in rent, which is the middle to upper end of the market. You know, the base to get a livable home is gonna be $1000. So we’re well above you know, that modern – the minimum type of a living standard. We’re well above that.
0:25:36.7 So in comparison, so I can blah, blah, blah about that all day long, but the comparison metric is, we’re managing homes that are around $400 to $500 dollars more per month than all of our competitors. And that’s a multiple listing statistic that we can pull up and show people.
0:25:52.6 So, on average, Company X next to us manages homes at $1200 a month. On average, Company Y next to us on the right averages homes at $1250 a month. And then we’re pushing in the $1650 – $1700 barrier and it’s just getting better and better.
0:26:09.8 So the top end of the market is where we’ve angled and we’ve been successful in getting there.
Jordan: 0:26:12.3 So in that regard, this is not a wish. Of course, everybody would like to manage high-end properties. You’re actually doing it. The fact that you’ve made it a stat that you can actually show owners means that you’ve been able to pull it off.
Was there a critical mass, or was there an escape velocity that you had to kind of hit in order to be that choosey? Or was it just a mental switch of you just saying I’m not going to manage junk properties anymore.
Brad: 0:26:39.1 A little bit of a mental switch and also the design of your management programs. You may have to give a little bit away to manage that high end home, but at the end of the day, it should cost you no more money to manage a $3000 home than it would a $1000 home. 0:26:58.6
Which would you rather have? You know. As far as headache free, hassle free, paying on time, I’ll take the high end market all day long, because that’s – you’re going to hear that from any property management guru, is that’s the angle you want to go towards.
0:27:14.7 Funny, we had an owner walk in yesterday – this morning, excuse me, it was this morning. The lady had 20 units, and of course we’re salivating and we sat down with here and the 20 units are all quadplexes, fourplexes and duplexes that are renting for $500 a side. $500 a unit. And, you know, she looked at our management programs and said, “This isn’t going to work.” And we looked at her and it’s like, “Yeah, because we don’t want your business.”
And of course we weren’t rude and we were very kind. She’s a super nice lady, but we can’t manage that type of home, because those types of tenants don’t rent from quality property management companies who pull credit, and check employment history and check background history, and find out if they’re criminals and don’t allow 27 pit bulls. We’re not the company for them.
0:28:03.2 So she says, it’s the funniest part Jordan, she said that most of her tenants don’t even have bank accounts. And that is not for us. 92-93% of our tenants pay online. They pay through the software that we use. They don’t ever come to the office.
Now, I know that there’s companies out there that say, “We are 100% online and we have a virtual office.” You know, we haven’t been able to get there yet. It sounds like a cool concept. It also sounds, you know, you might have seen this on listserve and some of the other things that are out there for NARPM members.
Is you see some of the specialists that may have a handful of homes, let’s say 75 to 100 homes, but they’re really nichey about it. They’re real focused on what they only want to manage and then they try to break those leases over the summer period so they’re not dealing with a lease rollover in November, which is good, common sense, but they really focus on that.
So they run an excellent business at a smaller scale. 0:29:10.6 So they have no overhead, necessarily. And it’s actually a really good way to run a business, there’s nothing wrong with it. So it’s kind of a niche group on the NARPM listserve that do that.
And then most of the others are just trying to get, you know, improved. They’re trying to get to a point where they’re not running around with their head cut off. They can take a vacation and as you’ve always heard other people say, is they don’t own a job, they run and own a business. A performing asset.
Jordan: 0:29:39.3 Yeah. I get it. I like how you’re segmenting out the market. I want to talk more about that segmentation and where the industry is headed. But before we go on, I want to mention our show sponsor.
0:29:49.3 The PM Grow Summit, which is happening at the end of January in 2018. If you consider yourself a growth minded property management entrepreneur. If you’re interested in levelling up your sales and marketing game, if you want to go pro and network with other best in class entrepreneurs and stay on the cutting edge of the industry, you need to be at the PM Grow Summit.
0:30:03.3 We truly bring the best of the best, and you can get your ticket now by going to PMGrowSummit.com and you can use the coupon code: Jordan. That’s J-O-R-D-A-N, my name, to get $100 off your ticket. This year, one of our speakers is none other than Brad Larsen. And Brad, you’ve attended, you’re speaking, what’s all the fuss about with this event?
Brad: 0:30:36.0 I think it’s a graduate level, doctorate level of property management conferences. I’ve gone to all the NARPM ones, and this is not meant to be a commercial for you, but I go to all the NARPM ones and I love NARPM and I think it’s a great organization, and it leaves me wanting more, because I’m in that educational mindset.
And I look at this conference that you guys are putting on and I’m like this is the doctorate level. You know, this is the next graduate level stuff of the education that we can get involving property management and what’s coming up, what’s the newest thing, how are people running.
And you’re going to get people from all perspectives on that particular conference, which is really cool. You might be talking to somebody who has 100 homes and is just starting, or you might be talking to the 30 year veteran who’s got 500 homes and has been at 500 homes for 30 years but they run a fantastic business, always looking to improve. And the experience level that they have is just phenomenal. 0:30:36.0 So I love it. I thought it was a great conference last year and I’m looking forward to it this year.
Jordan: 0:31:37.0 So Brad, let’s talk about some of the winds of change in the industry. What are you seeing over the last 12-24 months that is different? Where is the industry headed? What forces are being brought to bare upon this industry that may not have been present on day one when you first got into the business?
Brad: 0:31:58.8 Yeah, one of the things we’re doing right now is we’re getting more into the third-party showing and vacant home lock box type deals. I could mention vendors but I’ve think everybody’s heard of them. And if you find a vendor that you like, to where you can show unoccupied, vacant homes, unaccompanied to where nobody goes out there and sees them, where the trend is, is more and more owners are getting used to this with VRBO and AirBnB being so prevalent.
And also more tenants are getting to expect that to where they’re able to visit a home in person, without waiting for a realtor, without waiting for a leasing agent. They see the home, they apply for the home online, they pay for everything online, they sign a lease agreement online and they move in via lock box. 0:32:48.7 So they never have to go to the office. That is the trend.
And you know, of course you get the one person out there who’s, “I’ve been doing this for 20 years. You guys are way behind.” Yeah, but the technology wasn’t there 20 years ago. Now it is, and now the consumers are basically expecting that. 0:33:07.0 They’re expecting an easy time to rent a home with minimum barriers put in front of them.
0:33:14.9 Like, bring me a security deposit in certified funds before I even shake your hand. Well that’s a giant barrier to leasing. How are you representing your owners very well? Or, “Come to my office in San Antonio, at 4:00, Friday afternoon traffic to come pick up keys.”
How is that making life easy for your tenants? It’s not. And your tenants are going to resent that. I know they’re people and they could care less if you give them a billion dollars, they’re still going to resent you for something.
But at the end of the day, this is the trend – circling back, this is the trend that you asked for. Is the technology is becoming more and more readily available to make this happen, more securely, to give people more of a comfort factor in doing this.
0:33:58.5 Because in doing this, as I was talking to another person this morning up in Oklahoma, we were talking about this exact scenario, to where my market, I’m saving the co-brokering fees. What that means, is I wouldn’t necessarily have to pay out a commission to a realtor to show the home. Where I can save that. In house.
0:34:20.2 So the person I was talking to this morning, in his market, they hire a full-time leasing agent, but the leasing agent doesn’t necessarily have to leave the office, and they can lease more homes. Because of the technology, the leasing agent’s production has gone through the roof the last month because of this technology.
0:34:41.2 So, any way you slice it, this has been the coolest thing I’ve seen in the last 12 months. Other than a few technology things that have popped up, the trend that we’ve gone to is to do more and more unaccompanied vacant home showings. And the technology with the lock boxes that are out there are supporting it.
Jordan: 0:34:58.0 Let’s get a shout out. In terms of your actual 0:35:00.0 [Inaudible] using a third-party vendor for that?
Brad: 0:35:03.8 Yes, I do.
Jordan: 0:35:04.8 Who do you use and what’s working for you?
Brad: 0:35:05.2 I’m happily using Tenant Turner. I think those guys have been great. There’s several others out there. I don’t have any negatives about them, it’s just Tenant Turner fit me and fit our company how we want it. We tied in the leasing line into that.
So now we have – this is the cool part – through Tenant Tuner’s leasing line, we now have 85 hours of leasing line coverage a week. 85 hours. Which is like 8:00 in the morning til 9:00 at night, Monday through Friday. And 9-5 Saturday and Sunday.
0:35:41.6 So if you really wanted to be different in your market, that’s a cool technique to employ like we have. To say we offer a leasing line to where we’re monitoring the phones every day, 85 hours a week. And when an owner hears that. An owner hears you talk about that, they’re going to say, “Wow, you really are going max effort to try and rent my home. Kudos to you, I want to hire you.” That’s what it does for you. It gets you more management agreements.
Jordan: 0:36:07.7 Absolutely. So again, you’re turning the operational efficiency into something you can actually use in terms of positioning and as a selling point. It makes a ton of sense.
0:36:17.0 I want to transition now into the rapid-fire section of the interview. We’re just quickly going to go through some questions, and I want to start here, 0:36:23.2 what advice do you wish someone had given you on the first day that you started this property management business?
Brad: 0:36:29.8 Don’t name your company after you.
Jordan: Ok, I think a lot of people could take that advice. That’s pretty broadly applicable in this industry.
Brad: 0:36:41.4 It is. It’s a positioning thing, it’s a marketing thing. I guess what irks me the most about what used to be called Larsen Properties was when people get mad or you see your name used in vain.
And that just, I don’t know, maybe I’m just a little bit too – I take it personal potentially, but that really kind of got to me and I just wanted to make a neutral name. I love the name RentWerx. We’ve rebranded to RentWerx San Antonio. I really like the name, the website is nice and simple. And that seems to be a bit more on the professional side.
There’s nothing wrong with naming it, you know, “Jordan Properties”. You know, there’s nothing wrong with that, or whatever name spinoff you can think of, but if you’re asking me on a rapid-fire question and answer deal, that’s the first thing that comes to mind, is something I wish I had not done.
0:37:35.3 Was it great for branding in the beginning? Sure, because when you’re sitting in front of people, and you have 50 homes or 100 homes and you tell somebody that you’re wanting to hire your say look, “I’m your point of contact, I’m your guy. The name’s on the door. I’m it. I’m the broker. I’m this, I’m that.”
But as you grow into the management as a business as a whole, you’re not going to be that one person. You can’t. You can’t get passed 200 homes if you’re doing everything yourself. If you want to grow into more of a business, then I think it’s better to be more of a neutral name.
Jordan: 0:38:10.1 So if it’s not a lifestyle operation, really think twice about just doing the easy thing. That really is the path of least resistance. That’s why people end up naming their company after themselves. Everybody else does it. Path of least resistance, don’t have to think about any big picture branding considerations outside of that.
0:38:30.7 What else? Next question is, what’s the number one thing you see property management entrepreneurs doing wrong? You just mentioned the name, but beyond that. On an operational or on a growth level, what’s like the one mistake that as you talk to other friends in the industry, you see happening over and over again and really handicapping people?
Brad: 0:38:51.8 Not implementing any sort of a fee-max campaign. And not implementing would be the first mistake. So they go to a conference, they spend thousands of dollars, they see a good idea, they look at it and say, “Oh, that’s cool, I”m going to write that down.” And then they go back to their office and don’t ever implement it. They’ll never put it into action. And that’s one of the biggest mistakes, and tying into that is not fee-maxing your company.
0:39:16.0 You know, there’s a guy here in San Antonio, and his name is Brian Felt [Confirm] I’ll give him a shout. He’s a really good up and coming property management company owner. His dad started the business 30 some years ago with a Remax franchise here and they didn’t charge anything. No fees. Nothing. 0:39:34.1 No renewal fees, nothing. And so, to drill down on a renewal fee – they didn’t charge a renewal fee, ever.
And his dad was like, he was blowing up. His head was steaming when Brian his son, who’s a real sharp guy says, “Hey dad, we need to start charging a renewal fee. I mean, look at what we’re saving these owners by getting them a tenant to renew their lease agreement. At $1500 a month, we just made that owner $18,000 in a year. Don’t you think we should get a little bit of that?”
And that’s a big mistake. If you don’t implement things like that, and I know most people are doing a leasing and a renewal fee, this is not something new, but a lot of other things could be implemented to make them a little bit more per door, per month, per year to where they can go out and hire more staff members and or employ the use of different software things that will help them grow their business.
0:40:28.8 Because notoriously, I see property management owners are just uber cheap and it baffles me. They’re concerned about 50 bucks a month here, 100 bucks a month there. At the end of the day, none of that matters if you can go out and get one more home to make you $3000 a year.
Jordan: 0:40:45.9 Absolutely. Fee-maximization is a massive lever. Everybody hears about fee-maximization and what do they think, they think more revenue. But that’s not what it is. It’s actually a lever. A massive form of scalable leverage in your business.
But the other wrong-headed orientation is that it’s greedy. “Ah you’re just asking for more money. You’re just chintzing, nickel and diming these people.” It has to be done in a value added way. And we’re going to hear more from Brad about that when he speaks at the PM Grow Summit. This is somebody who’s done it, implemented it, has the data and stats to represent it. I’m super excited to hear more about that.
0:41:23.9 The next question that I have for you is, how much is too much to pay for a new property management contract? We’re talking about customer acquisition cost in your market for an average property. How much is too much to pay for a new owner?
Brad: 0:41:40.7 I would say anything north of let’s say $1500 for one particular contract. But that is so tough to quantify. Oh my goodness. How do you actually quantify what it costs to get that particular contract?
You sure can on Google Ads. You sure can on what your salaries are, but what about the intrinsic costs? What about the costs of signs? What about the costs of overhead? The cost of my office space, the cost of a desk, the cost of a computer, the cost of business cards. All those intrinsic little things, you’re never going to get a really accurate cost for what it’s going to pay for.
0:42:21.2 One of the gentlemen that you have going to your conference is Bob Walters who is the basically the head of Leading Property Managers of Australia. Now I believe he’s going – he’s going to MC for you, is that correct?
Jordan: That’s right.
Brad: He is experienced to the hilt on acquisition and acquisition costs. And one of the things he said, and I hope he brings it up at this conference, is that he has spun numbers every which way through Sunday that it’s not worth buying a management company unless you’re getting 200 or 250 doors.
0:42:52.4 And that was one thing he said. Because you can go out and grow that organically cheaper than you could go out and purchase it for. And he’s done all the math. Again, six ways from Sunday this guy’s done it. So he’s going to be able to talk about that at your conference. 0:43:08.4 And why he came up with that metric. This is a guy that is a business broker for management companies, he knows the ins and outs of the numbers both in every single way direction.
0:43:18.1 So, the acquisition costs, going back to that. Too much, what’s too much? It really depends on that particular portfolio. There is no magic bullet to that. But I remember thinking about this five, six years ago and I talked to a friend of mine who was a mortgage guy. 0:43:37.6 He had 30 rental properties.
And I said, “What do you think I should do? Should I go out and try to acquire a management company or should I go out and build it organically?” And without even thinking he said, “Grow it organically.”
Because look at the cost of what it may get to get X number of doors. I mean, I could go through my metrics and show you what I spend in salaries and what I spend in leads to get that number of doors organically versus buying that number of doors on the open market.
0:44:07.8 There is no comparison. None. It was just – it would be four times as much to do the same amount of work.
Jordan: 0:44:13.1 A very nuanced answer. You’re talking about loading up sales labour and operational labour on top of just the marketing costs. I think that’s the right way to look at it. And obviously there’s a lot of finesse that can go into calculating that.
That is the highest number that I’ve heard yet. It’s always interesting to hear how people orient and dissect that issue. Because it relates directly to growth – what you’re willing to spend. 0:44:38.0 Next question Brad, who do you learn from?
Brad: 0:44:42.0 Who do I learn from? Wow, good question. Ok. I love listening to other podcasts and I – audio books while I’m driving. I’ve typically got a 30 minute commute back to the house and I come into the office four or five times a week so I’ve got an hour long commute each day, 30 minutes each way. I like that audio stuff. I listen to that when I run, I listen to it when I’m doing workouts, whatever. That’s how I learn a lot, is listening to podcasts and audiobooks.
Jordan: 0:45:15.0 What books have impacted you the most?
Brad: 0:45:20.9 Oh yeah, I’ve got a couple good ones. Just recently, I’m getting a few more. I’m pulling up my iBooks as we talk. 0:45:29.6 [Edit Out]. The one that was really cool, “The 40 Hour Work Year” and if you remember, that gentleman spoke at the conference.
Scott Fritz, his name was Scott Fritz. He spoke at the NARPM Broker a couple years ago. “The 40 Hour Work Year” is really an awesome playbook on how to set up a company to kind of run itself. So that’s been one of the coolest ones I’ve seen.
There’s a couple others out there. I like “Built to Sell”. That’s one. 0:46:00.0 “Pitch Anything” by Oren Klaff, that was a really cool one as well. Those three are on the top of my list, and I keep going back to “The 40 Hour Work Year” starting at track 10 and listening to that over and over on how Mr. Fritz set up his companies — his payroll provider company, how he set it up to run itself and then he sold it for seven, eight figures. Somewhere in there. It was a high eight figures maybe. He did a really good job in doing that.
Jordan: 0:46:27.5 Brad, I love that you’re a consummate scholar and student. That’s not the first time that you’ve told me that you’ve taken a specific piece of audio and listened to it over and over and over again to squeeze as much juice out of the grape. Makes a ton of sense.
I’ve done the same thing myself with key resources that I may have read it once or twice, but at some point, at some point you realize you may not have crossed the bridge between cognition and cognation. Cognition meaning understanding it intellectually, cognation meaning it understanding it at a gutteral, experiential level. And I think it’s an important distinction.
0:47:08.4 The last question that I have for you today, Brad, are entrepreneurs born or bred?
Brad: 0:47:16.3 I feel they’re, I feel they’re bred. I feel there’s just something about it. I get teased all the time by my wife because my parents were both school teachers, growing up in small town Iowa. And she thinks I was poor.
She grew up in San Fransisco and her dad was a dentist, and my parents were school teachers. At catholic schools nonetheless. 0:47:41.3 So growing up less than privileged made me hungry. And it gave me a lot of drive. I would say I was bred into that.
Because if I had been born into a life of privilege, I may not have been as hungry and wanting to do more the entrepreneurial stuff that we’ve been doing. But I guess to answer your question, I think it can be learned trait to go along with it.
Jordan: 0:48:03.7 Everybody has a different and interesting answer on that one. I always love to hear people’s perspectives. Brad, I really appreciate you coming on the show today. I’m excited to be with you and hear you speak in January on a host of really useful topics.
If, between now and then, people want to learn more about you, what you’re up to – if they want to check out your podcast, what’s the best place for people to go?
Brad: 0:48:29.0 Yeah, they can find it on PropertyManagementMastermind.com. They can get into the podcast from there and listen to some of the pre-recordings we have had. I had some great guys and gals from NARPM.
There’s a lot of good information in there that’s going to get better as I get more guests on. And they can find us at RentWerx.com and that’s Werx.com. RentWerx.com. They can find us there. If you want to track us down, I’m happy to assist. And I really appreciate you having me on the show.
Jordan: 0:48:57.5 Guys, go check out the podcast, it’s worthwhile. Really interesting perspectives and I love the fact that Brad is putting himself out there. He’s doing the work to benefit you guys. Check it out. Brad, thanks again for coming on.
Brad: Been a pleasure. Appreciate it.