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Dan Butler on Being An Investor First Property Management Company

Dan Butler on Being An Investor First Property Management Company

Today, we have a special guest.  We are fortunate to have none other than Dan Butler with us, one half of CrestCore Realty.

We had his partner in crime on the podcast just recently, Douglas Skipworth, and I want to have Dan on to share the other half of the perspective of what drives CrestCore.

CrestCore is a little bit of a different animal in that these are folks that have been really focused on doing real estate investment themselves.

Out of that knowledge, awareness, and DNA they’ve scaled a management company.  

Some people that run management companies have no experience doing first-hand real estate investment themselves.  These guys are about as far on the other end of the spectrum as you can get.

Today, we’re going to talk about how they make this strategy work for them, some of the downsides, and everything in between.

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Topics covered:

  • (01:24) – Background Leading up to Today
      • (01:33) – Dan shares the numbers that comprise CrestCore’s current business.
      • (02:12) – How Dan first got into real estate investing.
        • (03:34) – Explaining the BRRR Strategy.
        • (04:28) – Discussing how big his personal portfolio got before he became engaged full time in the business.
  • (07:08) –  CrestCore’s Business Model
      • (07:55) – Dan discusses CrestCore’s positioning, marketing, and branding.
      • (09:41) – How CrestCore goes about finding potential investors.
        • (15:07) – Sourcing for investors.
      • (12:14) – Dan’s views on the turnkey model.
        • (13:07) – What differentiates a ‘good’ turnkey.
        • (16:15) – Breaking down ‘turnkey alternative’.
          • (16:39) – Finding properties.
          • (17:29) – Discussing pricing and the financial model.
            • (18:44) – Applying a management fee.
            • (20:25) – The potential reasons why there isn’t more infrastructure investment in property management companies.
      • (21:54) – Discussing CrestCore’s management structure.
        • (24:41) – Client focus with the efficiency of scale.
        • (26:00) – Portfolio reviews with a focus on numbers.
      • (27:31) – Dan discusses his views on maintenance and the details of their maintenance company.
        • (29:31) – Where some companies go wrong with maintenance.
  • (35:53) – Priorities Going Forward
    • (36:05) – Goal planning and setting for the future.
      • (37:04) – Using the Entrepreneurial Operating System (EOS).
        • (39:08) – How long it took CrestCore to buy into the system.

Rapid-fire Questions:

  • (41:14) – Who do you learn from?
  • (42:44) – What books have been impactful on you?
  • (44:39) – Are entrepreneurs born or bred?
  • (47:02) – What would you tell yourself to understand when you started your business?

Resources mentioned:

Where to learn more:

To find out more about CrestCore and what they’re up to, visit them on their flagship site, CrestCore Realty.  And tune into the show to get Dan’s personal email to contact him directly.

Transcript:

Jordan: 0:00:00.1 Welcome ladies and gentlemen, this is another episode of The Profitable Property Management Podcast.

I’m your host, Jordan Muela, and this podcast is designed to help you learn everything that you need to know to scale your operation. 0:00:13.8 Whether you manage 100 or 8000 units. This is Season Three on profit.

0:00:19.1 Today, we have a special guest. We are fortunate to have none other than Dan Butler with us. Dan Butler is one half of CrestCore Realty.

0:00:28.5 We had his partner in crime on the podcast just recently, Douglas Skipworth.

0:00:34.1 And I want to have Dan on to hear the other half of the perspective of what drives CrestCore, what makes it special. 0:00:40.8

0:00:40.9 So, some background and context, CrestCore is a little bit of a different animal in that these are folks that have been really focused on doing real estate investment themselves. 0:00:50.8 That’s their jam. They’ve scaled it.

And out of that knowledge and awareness and DNA, they’ve scaled a management company. 0:00:58.7 You would think that these things would be fairly related, but honestly, sometimes they’re not.

Some people that run management companies have no experience doing first-hand real estate investment themselves. 0:01:07.1 These guys are about as far on the other end of the spectrum as you can get.

0:01:10.4 So we’re going to be talking about what works with that strategy. The downsides potentially of that strategy and just diving into the details. 0:01:18.7 So welcome to the show Dan.

Dan: 0:01:20.6 Thanks for having me. Glad to be on.

Jordan: 0:01:24.1 So let’s start here, fill in some gaps for me. I just told this story that you do a lot of real estate investment. Quantify it. Like put some numbers and parameters around what that looks like.

Dan: 0:01:33.6 So, we have a core business is the property management company, which was started to really manage our own properties.

So, we manage 2500 units, mostly single-family duplexes. And then small multi-family, kind of that 20 to 40 unit apartment. 0:01:51.4 We probably do four or five hundred like that.

0:01:54.0 We have a sales brokerage, which is huge, that drives a lot of our business to help investors help buy and rehab and then manage those properties.

0:02:01.7 And then we created a maintenance company a couple of years ago, which has been a phenomenal part of the business where we have all of our licenses to handle all the needs for maintenance.

Jordan: 0:02:12.7 Got it. So let’s talk specifically about your own portfolio though. You got into the business making your own investments. How did you get into real estate investing? What was the allure? What was it like to walk through the first stages of that process?

Dan: 0:02:26.4 Well, yeah, so I started actually – my journey started in high school and college. I helped a mentor of mine, Al Wills, in Greenville, South Carolina.

He owned real estate and I was kind of the grunt guy. You know what I mean? Like, I was cutting the grass, boarding up windows. Whatever he needed me to do. You know, hand him the tools.

0:02:47.0 And in those driving around from house to house and building to building, he just taught me about wealth creation.

0:02:53.0 And so it stuck with me all through college. And then I moved to Memphis, Tennessee back in 1998. And knew right when I landed that I wanted to get in real estate.

0:03:03.4 I was in operations and manufacturing, but just had that bug and just knew that’s where I wanted to go.

0:03:11.0 And what the beauty of it is, I didn’t realize I was landing in one of the best cities in the country to invest in real estate. I had no idea. You know what I mean? I still didn’t’ really realize it until it really became on social media and news several years later.

Because you’re just in your zone in Memphis, Tennessee buying and holding. You just thought, wow I think the whole world’s like this, but it really isn’t.

0:03:34.3 So I was just buying and holding. And I did the BRRRR strategy. That was my m.o.

Jordan: 0:03:41.9 Ah, BRRRR. Popularized by – I’ve seen that on the Bigger Pockets.

Dan: 0:03:44.0 Bigger Pockets, that’s right.

Jordan: 0:03:45.7 Do you just want to explain briefly what that is?

Dan: 0:03:47.3 Yeah. So, I was lucky – fortunate enough – I had a lawn care business in high school, so I was able to buy my first property right out of college. Moved to Memphis.

0:03:57.2 Back in the early 2000s, things were just appreciating like crazy. Created a lot of credit off of my first townhouse here in Memphis, Tennessee.

And I would just buy one house, then buy the second. I’d be fixing up the first one while I was looking for that second one.

0:04:12.2 Get it rented, refinance with the bank and then just get the money back and leap frog. 0:04:17.8 And I just kept doing that over and over again one after the other and got it to where I was doing a couple a year to ten a year to 20 a year. 0:04:27.3 And just built it from there.

Jordan: 0:04:28.4 And how long were you in it? Or how big did the portfolio get before you jumped from part time to full time?

Dan: 0:04:35.8 Wow. So 2001 I was by myself.

2006 Douglas and I partnered together through tax sales. And we play off real well with each other. Our strengths versus our weaknesses.

0:04:52.1 And we like different parts of the business and so we started doing that in 2006.

Started managing for others in 2010 and buying for others kind of in that same range.

0:05:04.0 We actually created CrestCore in December 2012. And I didn’t quit until September of ’14. 0:05:12.1 And by that time, we owned probably, I don’t know four or five hundred houses.

0:05:16.2 We were managing, you know, 1200 properties and I just – Douglas and I were working on a strategy for me to quit my full time job.

I was over at Ten Plants and manufacturing, so that was a big leap of faith for me to quit that. A good job. I was very autonomous in my job. Good benefits and all that kind of stuff.

0:05:34.5 But we knew that if we were going to take it to the next level I needed to quit that job and go full time in real estate.

0:05:40.8 So, working 90 plus hours a week. Grinding out seven days a week. Between manufacturing and real estate. I haven’t looked back though, man, I haven’t looked back. It’s been an awesome journey.

0:05:54.2 Wish I had done it sooner, but things happen for a reason, and stars align. I was being – getting that corporate experience. 0:06:01.8 I worked at Georgia Pacific. Operations. And we’re able to apply a lot of that learning to our current operations.

Jordan: 0:06:07.8 Got it. So what I’m hearing is that you built the quite enviable portfolio and business just on the side. Kind of a part-time thing. A bit of a hobby.

Dan: 0:06:18.8 Yeah, I mean people joke with us about that. I mean, that’s literally how we did it to be honest with you.

We just – Douglas and I just love to work. We’re just built to work and build and just – we enjoyed working with each other and just – again, what we learned really early on when we partnered, was that one plus one equals three.

0:06:42.1 And so, kind of like in a marriage, you don’t keep score. Have you ever heard that? 0:06:45.6 That was one of the first pieces of advice I got. It’s like a football game, don’t keep score.

0:06:50.5 And so, some days he’d be working harder than me and he’d know I was – because I was travelling and managing plants.

The next day I’d be working until the midnight oil, getting something out we needed for a package we were buying or whatever that was. 0:07:02.2 And so, we just didn’t keep score. We just kept our heads down and focused on building a portfolio.

Jordan: 0:07:08.5 Got it. Makes sense.

So, let’s talk a little bit about the distinctiveness of CrestCore. This came up a lot on the podcast that I did with Douglas.

But if I was going to sum it up, I would say that the fact that you have a DNA that is so investor centric, having done it yourself, I assume that that creates a fluidity conversationally, where when people talk about attraction based branding or marketing.

0:07:33.4 There’s a pull and a magnetism, not only through the relationships, but also because of how you’re able to facilitate a conversation. Just really project the needs and desires of other investors.

0:07:45.2 That’s what I’m seeing from the outside. But I’m also observing that you’re going to a lot of industry events, etc.

0:07:50.1 Talk to me about how you think about CrestCore’s marketing positioning and branding.

Dan: 0:07:55.0 I think you hit the nail on the head. We were investors first. And so that’s a great conversation piece. You know, we eat our own cooking. And that’s just where we start.

0:08:08.0 Have you ever heard of the book, Pleased but not Satisfied?

Jordan: No.

Dan: 0:08:11.6 That’s a great little book. Real quick read but basically, every day we’ve improved, so we’re pleased but we’re not satisfied.

0:08:19.0 And so, because we own a large portion of what we manage, until our business is 100% leased, 100% collected and zero maintenance, we’re not satisfied. Does that make sense?

Jordan: 0:08:31.7 It does make sense. So what I’m hearing you say is that your own properties are integrated in your portfolio and you treat them the same way that you treat any other investor’s portfolio.

0:08:40.4 So rather than saying, “We treat your properties like we would treat our own.” You’re saying, “We treat your properties like we do actually treat our own.”

Dan: 0:08:48.0 We do actually. That’s right.

Like Douglas and I, we ran this morning – I think you know that we run every other day and that’s our strategy business meetings. 0:08:54.8 We’ve been doing that four 14 plus years.

But this morning we were just talking about that. 0:09:00.2 We’re at mid-month, we’re at 90% collected. We’re not talking about our properties, we’re talking about everybody’s properties.

0:09:08.2 So we know if we’re getting 95%, 95%, 98% of the businesses, then ours are also in that mix as well. Does that make sense?

We’re managing – so we look at those numbers, there’s nobody in our departments or in our business 0:09:23.1 Inaudible — “Well how are Dan and Douglas’s portfolio?” You know?

0:09:27.3 We don’t have a separate score card. Maybe we should for our own benefit, but we try to drive the business to drive our results for our own properties.

Jordan: 0:09:39.8 Got it. That makes sense.

0:09:41.0 So let’s walk through what a conversation may look like with a potential investor.

The conversation I had with Douglas kind of indicated that a lot of the influx of new properties comes through the brokerage side of the business.

But how do people find you currently? Are you guys just known in the market as deal hounds? What does that infrastructure look like?

Dan: 0:10:05.0 You know, it’s – I do radio, Facebook, this morning actually. We do it every Tuesday. We’ve been doing it two years in June and that’s part of creating that content.

The whole point is we’re constantly talking to people. My sales manger was joking with me this morning. I had a lunch with a wholesaler yesterday and then we’re meeting a banker tomorrow.

And just part of our gig is being in front of people and creating those relationships.

0:10:33.6 It’s not just what can you do for me, it’s a win-win type relationship. Does that make sense?

Like yesterday, the wholesaler, I was trying to help him create systems and processes to get his – he was doing everything so I’m trying to help him build his business. Tomorrow it might be the banker.

And it’s like, “What customers can I bring to you to help build your business?”

0:10:52.6 And so, we’re not just out there saying, “Got any houses for me?” or “Do you have any clients you know?” That’s not how we start our conversation.

0:10:59.8 Our conversation is more about, “What can we do for you to help further your business?” Does that make sense?

Jordan: 0:11:06.4 Totally. So you’re approaching this as a peer relationship. And it sounds like some of the common thread there is just relating to entrepreneurs as entrepreneurs.

Just kind of exploring relationships that can come out of that, knowing that what you do is similar enough that there’s going to be some natural synergy.

Dan: 0:11:21.2 That’s right. And they’re going to think of you first. Right?

When something does come up that they know is related to either our maintenance or our brokerage or our property management, then they’re going to think of us first.

0:11:34.7 I mean, Douglas literally was just at lunch an hour ago and met a guy at lunch that we are friends with and he happened to be managed by somebody else.

He’s like, “Ah he’s not quite satisfied.” Boom. We’re in there with talking to him about three to five houses and it’s all because we know this guy and we keep in contact with him and he’s a local turnkey provider.

0:11:53.2 So you just never know where those conversations are going to lead and just so…

0:11:59.1 To your point, I think Douglas and I about being at seminars and different things, we’re just constantly talking to people. You know? We’re just constantly, “How can we help?” You know?

And then, “How do we build each other up?” You know? And that’s kind of our philosophy and how we go after it.

Jordan: 0:12:14.0 What are your views on turnkey? What’s the good and the bad that you’ve seen with the turnkey model?

Dan: 0:12:20.7 Turnkey is, you know – we do turnkey alternative. We do a lot of – that’s one of the bigger reasons we started property management – how it grew so fast early was we partnered with turnkey providers and wholesalers. Because they didn’t have a good property management solution.

0:12:36.9 And so, 0:12:36.3 [Inaudible] just want to sell. And so – but to answer your question, I mean, turnkey to me is just if you really want to be passive, if you just want to click a button and buy a house and it’s cash flow on day one, that’s the route to go.

0:12:50.8 I think that the downside is you’re going to pay a “premium” either at retail or above. Because they’re selling it at a return multiple.

Jordan: Right.

Dan: 0:13:03.0 you know, versus other strategies that could leave some equity in it and that kind of thing.

Jordan: 0:13:07.4 So do you have any commentary on what a good – what would differentiate a good turnkey provider?

Because some of the winds and whisperings of what I hear is that there’s turnkey and then there’s turnkey.

0:13:19.1 In the sense that anybody that is attracted to the promise of an experience – basically anybody that’s attracted to any kind of a turnkey offering is willing to 0:13:29.5 [Inaudible] a certain level of operational due diligence within the good or service.

And that can be exploited by a provider that basically says, “Hey, it’s turnkey”, but somewhere on the backside there are gaps in their process.

0:13:43.6 There are gaps in their infrastructure. 0:13:45.9 So if you were doing due diligence as a consumer on a turnkey operator, what would you look for?

Dan: 0:13:53.8 So, I think that a couple things. Kind of the same thing with the property management we talked about. Are they investing in their own product? You know? How many turnkey providers do you talk to that they actually buy their own product and they’re filling up their own portfolio. 0:14:08.3 Or are they actually just selling to others just a product and moving on. Does that make sense?

Jordan: Yeah.

Dan: 0:14:14.1 Are they keeping some for themselves and selling some? Or are they just totally selling. I think the level – I think that where people get in trouble is the level of the rehab.

You know, there’s turnkey providers that just put lipstick on a pig. 0:14:29.1 Versus, “No sir, we put a new roof, we put new HVC, put new plumbing, the floors are all new.” You know what I mean?

Like, what’s the deepness of the level of that rehab. 0:14:40.6 And that’s going to make a huge difference, short term and long term, on the performance of that property.

0:14:45.8 You know, if you put lipstick on a pig, you’re going to be having maintenance issues within six months. You know.

0:14:51.2 If you’re full – and we’ve got some friends in town that do the full, and they don’t mind putting a one-year warranty on turnkey on their services because everything’s brand new. 0:15:02.2 So, that – to me that’s some of the differences that I see.

Jordan: 0:15:07.3 Got it. So, deal flow. Inventory.

For your existing client base, many of whom are investors, how do you facilitate putting new deals for them? Where do you source inventory? And how involved do you get in that process of putting inventory out there?

Dan: 0:15:28.3 So how do we find deal flow? Is that what you’re asking?

Jordan: And how involved do you get in putting it in front of clients to purchase?

0:15:34.4

Dan: 0:15:34.5 You know, basically we’ve worked hard to put a sales process and a sales team together.

So, basically Douglas and I just pass off any lead listing or buyer lead right into our sales process and immediately they’re going to get an email template telling about who CrestCore is, our turnkey alternative process, videos explaining step by step how it works.

0:16:03.4 You know, strategic partners that will be involved with insurance and accounting and those kind of things. 0:16:08.9 So we just pass that on. We basically dump it in the funnel and let the system take care of it.

Jordan: 0:16:15.7 Break down ‘turnkey alternative’ for me.

Dan: 0:16:17.6 It’s basically that BRRRR strategy that we grew up on. You know, just we are helping – we walk alongside the investor.

And so, we will help that investor find that property. We’ll get it under contract. We’ll get our construction company to do a rehab bid.

0:16:31.8 And then, if they close it, we’ll immediately start the rehab and then turn it right over to the property management as soon as we have this done.

Jordan: 0:16:39.6 And how do you work with them to find the property?

Dan: 0:16:44.1 Wholesalers, banks, Craigslist, MLS, you know, any source that we can find. 0:16:50.7 We are blasting out emails to property management companies, real estate agents. 0:16:57.3 Anybody – wholesalers. “Hey we’ve got an investor looking for a 3/2, 1500 square foot, rents for $900. Send me everything you’ve got.”

0:17:06.8 And we’re constantly – what we’ve learned, in all aspects of the business, you can’t wait for it to come to you.

Jordan: Right.

Dan: 0:17:15.0 You know. There’s a lot of agents that are probably sitting on something or are about to get something. You’ve got to prick that lead and get that lead coming to you so that you can get it and run with it. If that makes sense.

Jordan: 0:17:29.3 How does the pricing, the financial model, work in situations like that for the turnkey alternative model where you’re sourcing the deal?

As opposed to the management fee, etc. if somebody just brings you three properties and they have no interest in purchasing any additional ones.

Dan: 0:17:45.1 Yeah. So for us, on the turnkey alternative model, and which – like you said, Douglas alluded to, that’s a big portion of our business that drives our growth.

And property management is helping buyers buy more. 0:17:58.2 That’s who we really align with versus the accidental landlord.

0:18:01.0 But we charge a flat fee commission to help them buy and we charge a flat fee commission, or rehab fee to oversee the rehab.

0:18:09.3 So very transparent, they know what the numbers are and we explain what you’re getting with that, and so it’s a pretty easy “sell” because they realize that we’re going to get them into that property for less than they would a turnkey.

0:18:25.9 Because we’ve got flat rates and we’re not charging a premium to buy it.

0:18:30.7 Because when you buy it and you do a turnkey, you’ve got the holding cost and you’ve got the premium, the value add of all the team, and the overheads you’ve got to own that property. 0:18:40.7 Versus just helping purchase and rehab along the way.

Jordan: 0:18:44.7 Got it. So, is the management fee though, 0:18:44.7 [inaudible] different for – if somebody does the turnkey alternative model and they end up purchasing and now you’re managing, is that management fee going to be significantly different than if somebody that just brought you three existing properties?

Dan: 0:19:00.5 No, it’s basically the same. We try to stick to the same. We try to just stick to the same rate for everybody and go with that.

I mean, that’s a tough part of this business, because everybody’s looking for a deal, right? 0:19:14.5 But as you probably now, I think we’ve talked about this, we do a lot of technology, try to be at the forefront of the things out there that are up and coming with services.

0:19:26.8 So we spend a lot of money on infrastructure and software and all that kind of stuff to be proactive in how we manage a property. 0:19:35.5

Jordan: 0:19:36.1 Let’s lean into that. Because you just started talking about cost and expenses. I’m trying to understand, frankly, why more people don’t do this.

Because as a consumer, this sounds so attractive. The fact that we would have infrastructure around delivering on the promise of wealth creation.

0:19:55.2 Property management, by nature, the words property management, what does it imply? What it implies is that you’re preventing something bad from happening.

0:20:01.5 [inaudible] name that implies that you’re helping facilitate wealth creation through real estate. Which is really the only interesting story that exists in our industry.

0:20:11.8 You guys are actually putting some muscle behind that. We’re seeing some talk about pocket listing inventory, putting that in front of existing owners and some folks trying to polish that up, but what you’re doing is even more proactive than that.

0:20:25.7 Why do you think that there’s not more infrastructure investment in these kinds of programs, given the potential upside and how conducive it is for getting the right kind of client, i.e., investors?

Dan: 0:20:38.2 You know, I think that people are just hesitant to change. You know, and one of our core values is change.

And so, everyday – and again, it was part going back to we’re investors first. You know? We’re always looking for the cutting edge piece that’s going to separate us.

0:20:53.7 And I was telling somebody this the other day. I don’t want to be the biggest property management company, I want to be the best. 0:20:58.0

And so, with the best – because when you’re the best, then you can start charging more for your services.

0:21:02.8 I mean, like, you know, that’s where people get lost in trudging along and this is how property management’s always been done.

But if you can be the best by automation and being proactive and being communicative with the tenants and the clients and just going above and beyond.

0:21:20.8 Not just average and answer the question when it comes in. No, answer the question before they ask you. 0:21:24.2

Both on the tenant side and the client side. 0:21:27.7 You create a real value there. Right?

0:21:30.6 I had lunch with a client last week where we talked about that. Because he loves how we’re pushing out information to him.

We’re pushing out how leasing is going on his particular house. How many calls, how many showings, what was the comments on the property.

0:21:42.1 Then he can make some more decisions on, “Should we lower the rent? Should we offer a special?”

0:21:45.4 And so, when you start doing that, you’re building the building blocks to be able to charge more in management fees down the road. Does that make sense?

Jordan: 0:21:54.9 Yeah, totally. Let’s talk about what is the management structure look like. Are you portfolio? Departmental? Presumably you’re a hybrid like everybody.

What are the nuts and bolts of who manages, client based communications look like?

Dan: 0:22:05.4 So with us, we’ve really split it into tenant focus, client focus and then getting things done with the maintenance side. 0:22:17.6 Which really is departmental focus.

You’ve got the maintenance team that’s making sure – basically a call center for maintenance and for mainline and that kind of stuff.

0:22:28.3 And then we have client – we have seven people, that’s all they do is help clients all day every day. 0:22:33.8 We went over the top. And we probably could get it done – if we were a reactive model, we probably could get it done with two or three people.

0:22:39.4 But we’ve chosen to go six, seven deep to just go over the top and push out communication versus just waiting for a question. Does that make sense?

Jordan: 0:22:46.1 Yeah, I love it.

Dan: 0:22:49.3 So we’re really more – to answer your main question, I think we’re more department focused than we are – we don’t do portfolio management. Does that make sense?

Jordan: 0:22:57.1 So if I call in, I’m not necessarily going to talk to John each time. It’s going to be John or Tom or whoever.

Dan: 0:23:06.7 Actually, let me back that up. The functions are – so for client services, they are more client based.

So we do try to – because we’re trying to have one point of contact. So if you do call in and Jordan has houses with us, he’s going to go to one specific person every time.

So we get to know you and we get to know the specifics of what you like. So that’s your client liaison. But they’re not managing your properties on the back end.

Jordan: 0:23:30.9 I see. Got it. So you’re trying to have the best of both worlds. The fundamental argument in favour of the portfolio model, is it’s the touch.

It’s the one to one relationship instead of being a conveyor belt of people that you’re just handed between and have no relationship with.

0:23:46.2 So you’re trying to preserve that experience while still getting the efficiencies associated with the departmental structure. Is that a fair summary?

Dan: 0:23:54.6 That is a great summary. That’s dead on. I think – you know we just – and there’s plusses and minuses to it. I mean, you can – pros and cons to each.

We just – this has worked well for us so far and that’s what we’re going to keep pushing for.

0:24:08.5 We believe people solely focused on collections are going to get awesome at collections. And people that solely focus on leasing get awesome at leasing.

0:24:18.1 And you’ve heard us talk about culture index and all the things we use for putting the right people. 0:24:22.4

Jordan: Hey you there?

Dan: Did I lose you?

Jordan: We broke up for a second.

Dan: Aw man. Gosh. The best of both worlds. With client focus and the departments. 0:24:41.0

Jordan: 0:24:41.8 So Dan, what I’m hearing you say is you’re really interested in trying to get the best of both worlds.

With having that client focus of one to one relationships and yet the efficiency of scale. Is that more or less accurate?

Dan: 0:24:52.5 Yeah, that’s a good way to say it. I think, kind of like in maintenance. You can be – do you want a jack of all trades or do you want a specialist?

0:25:01.1 And so, we want people specialized in collections that have the personality type and skills and detail to do that.

Same thing in leasing. Leasing needs to be more of a bubbly, a closer, you know, a socializer. 0:25:11.9 So we try to put – I think you’ve heard us talk about culture index before. That’s our survey we use to align peoples inherent behaviours.

0:25:22.1 We try to put the right people in the right seats. Even client services. We know what that person needs to look like that needs to be in that client services role.

0:25:29.7 They need to get answers. So they need to be very buttoned-up, very detailed. Because owners don’t really care about sugar coating and having a nice conversation. They want answers. Do you know what I mean? 0:25:41.1

Jordan: 0:25:42.0 Especially your owners. Investors.

Dan: 0:25:43.9 Investors, that’s right. That’s right. I could see an accidental landlord wants to be more touchy feely and feel warm about what’s going on.

0:25:52.3 No our guys are entrepreneurs. They want answers and they want it quickly and that’s all they care about. 0:25:59.6

Jordan: 0:26:00.0 What is the cadence of a portfolio review that is numbers focused? How often do you do those with your clients? What does that look like?

Dan: 0:26:08.2 So, what we do right now is weekly updates. We email the owners leasing updates. Both are automated and a personal touch.

Jordan: 0:26:18.3 Every week?

Dan: 0:26:19.4 Every week, yeah.

Jordan: Wow.

Dan: 0:26:21.6 Rehab updates. So if your house is in a turn status, we tell you, “Hey it’s still scheduled for completion tomorrow 0:26:28.7 [Inaudible]” Or, “No sorry, we had to delay.”

0:26:34.2 Again, that’s stuff that people are going to want to know. They went vacant last week, they want to know when it’s back on the market.

0:26:38.7 So we try to push that information out every week to our clients. And that’s what we’re striving for. For even collections, maintenance, all that.

Jordan: 0:26:46.7 Do you do any deeper review than that on like an annual basis? Or any less infrequently? Just kind of talking about the growth of their portfolio, etc.

Dan: 0:26:57.5 No, that’s a great question. We are building to that. This is the steps.

Giving leasing updates, giving rent ready updates, giving – eventually everybody’ll have their own dashboard to where they’ll see month to day cash flow, return on their investment, year to date, month to date.

All that kind of stuff that we’re working towards to – so that you can sit there at your computer. 0:27:18.0 Because 90% of our investors are out of country or out of state.

You know, there’s not many from Memphis. 0:27:24.5 So we want them to be able to push a button and just know their asset in Memphis, Tennessee is doing well.

Jordan: 0:27:31.8 Talk to me about maintenance. Why did you do it when you did do it? Why not sooner? Why not later? And how do you think that your client type of primarily investors think differently about maintenance?

Dan: 0:27:43.0 So, you know, it’s funny. I did a radio show a couple weeks ago. There’s a contract or triangle, speed, quality and price.

Jordan: Pick two.

Dan: 0:27:51.9 Pick two. Now Douglas wants all three. And I tell him you only get two.

But you really can have all three but it’s just going to be a balance of what that triangle looks like. Does that make sense?

You can have an average of all three but you’re giving up something if there’s absolutely one that you gotta have, another one’s going to suffer.

0:28:14.6 And if you’ve got time I’ll tell you a quick story. Back in 2002, it was December. This is very painful, that’s why I bring it up.

0:28:19.0 I was at the office in December ’15. I’d just quit not too long ago and we thought our mechanical contractor had pulled gas permits for about ten people that were moving in that month.

0:28:32.8 Because back then foreclosures were big and that kind of thing. And so we had ten tenants moving in with no gas. In December. Not fun.

0:28:44.4 So we’ve just learned, Douglas and I’ve just learned over the years. If we want to make it better we gotta control it.

0:28:51.8 And so we immediately – by January we had started City Light Commercial Services, our maintenance wing.

I started getting my plumbing license, my HVAC licence and just got after it and created that experience.

0:29:04.6 So we offer wholesale pricing with the speed we want and the quality that we want for the rental market. 0:29:10.8 That was the cusp.

You know, we had to control it because we couldn’t wait on third-party vendors. If I need to pull a permit now, I’ve just got them sitting in a drawer, literally. Fill it out and we can have it down there at code enforcement in 30 minutes versus – years ago I was told that, you know, they were going and then two days later they still hadn’t pulled it. Does that make sense?

Jordan: 0:29:31.4 What do you think goes wrong for folks that don’t get over the hump. There’s a lot of – I find maintenance to be fairly polarizing.

People tend to have strong opinions and either believe that it’s a significant profit center or it’s a total pain, avoid it as much as you can and just try to skim a little bit of profit, cream off the top, if you can.

0:29:49.7 For the folks that have that negative connotation, do you think that maybe they just didn’t get over the hump? Because what you’re saying implicitly makes a ton of sense.

0:30:00.1 Maintenance is going to happen and the person that does it is going to represent you. Period. You don’t want to send a bunch of clowns to somebody’s house and be like, “Hey, it wasn’t my company.” Right?

0:30:10.3 You’re associated either way. So what you’re saying is, you’re just going to take full responsibility by managing the whole thing.

0:30:19.3 What do you think happens for folks that won’t quite get over the hump there? What’s the secret?

Dan: 0:30:24.5 I think it’s managing people. I mean, I think you’ve got to have a system and a software.

I think, you know, that software piece is a big component that I probably think that holds people back.

0:30:36.3 When we first started this journey, we tried some stuff that was with our software, our property management software. It didn’t’ work really well.

0:30:45.2 So I just started searching the big maintenance companies. What did they use? I didn’t want to reinvent the wheel so I just found that and paid for it.

0:30:51.6 I mean, it’s a big expense up front, but now we text the tenant we’re on the way. We text the tenant it’s scheduled. We text them when they’re working. We text them when it’s finished. 0:30:59.5 We’ve got this communication module.

0:31:02.4 And so, guess what, less calls coming in to us because we’ve created a system that’s pushing information out to the tenants.

So not calling every two minutes on every extension in your office. And that’s probably where people get hung up.

0:31:15.1 Now they’re owning the maintenance versus, “Oh well I’m waiting on the contractor.” You know what I mean?

0:31:19.5 Pushing it off on somebody else. When you start doing it yourself, you’re responsible. You’ve got to perform and give those guys answers. So. I just think that.

Jordan: 0:31:30.3 So are the maintenance – is the busy managed? Are the maintenance folks treated as first-class citizens in the same way that your PMs are?

I think part of the attitude has to do with the nature of the work. White collar versus blue collar work. 0:31:45.2 How do you manage? In terms of management and culture, how does City Lights look similar or any different than Crest Core?

Dan: 0:31:53.6 Only in name.

Jordan: 0:31:56.1 That’s it? Otherwise it’s just a …

Dan: 0:31:57.3 Core values are the same. They talk about the same six core values we have as a company.

Integrity, personal accountability, character, service.

I mean, we actually poll every work order the day after its closed. We call them back and ask them how their experience was.

0:32:15.2 And so we take them. If it’s less than an eight, we take that and the maintenance company’s going back to those technicians and having a group meeting and saying, “Hey guys, we need to clean up after ourselves. We’re getting a few complaints about not being clean enough.”

Or not giving them enough notice or whatever those, you know – and so we’re tightening that belt, and you know

Jordan: 0:32:33.2 Got it.

Dan: 0:32:35.8 I think to your point, it’s just a lot of work. You’ve got to put in a lot of work on the front end.

Because this is not retail business. I think that’s where people probably get stuck too. The margins are a lot slimmer no matter what your clients think.

And that’s probably why you heard that a lot on your podcast. The margins are slimmer. 0:32:52.4 I can’t charge $90 dollars an hour to go change a 0:32:54.2 [Inaudible]. You know what I mean?

I’ve got to be much, much less than that because that’s what the investors expect. 0:33:01.8 You’re coming from an environment where people expect the man in a truck.

But that cost model – so you’ve got to be somewhere in between, because we’ve got to provide insurance, liability insurance, workers comp, all that kind of stuff.

0:33:17.2 So you’ve got to be somewhere in the middle and you’ve got to do volume. 0:33:20.5 So that’s the two keys to getting the maintenance piece to work.

Jordan: 0:33:23.5 Now do you guys work for external companies as well? Or do you just service your own portfolio on the maintenance side?

Dan: 0:33:29.4 Well that’s a great question. That’s exactly why we named it something different.

Jordan: That’s what I though, yeah.

Dan: 0:33:33.9 Yeah so, we’re on our fifth property management company outside of our own that we’re doing maintenance.

So we manage 2500 and we’re close to 5000 units doing maintenance for other companies.

Jordan: 0:33:47.5 So that’s how you’re getting some of that velocity.

Dan: 0:33:49.2 The velocity, that’s right. That’s exactly right. And it makes you stronger. Right? Because you’ve got this outside influence now, not just Crest Core pushing you, which I would argue Crest Core is the hardest customer because they’re right across the street. You know.

0:34:04.3 But now you’ve got 5000 units with five customers and they all want something different. You know. Slight variations.

0:34:09.2 So now you’re really honing in your system and getting tight as possible and that’s what creates the margin that you’re trying to create.

Jordan: 0:34:18.1 So here’s what interesting to me about what you’re describing. I find in general, that entrepreneurs, small business owners, property managers in particular, tend to struggle when dabbling. It’s common sense, right?

0:34:31.8 Where you have a diluted focus, it’s just going to be tough to get off the ground. Maintenance is one of those areas where you can kind of dabble with it but not fully commit.

0:34:41.3 Because it’s effectively non-operationalized. Same thing with sales and marketing.

You get folks that come to maybe a PM Grow type of event and they’re really excited about growth but when they go about pursuing it, they don’t operationalize that work in the same way that they operationalize rent collection, leasing, tenant screening, etc.

0:34:59.3 So as result, they’re throwing some money at it, but they’re not all in on owning it and driving it to the same level of conclusion as they are with what they’ve used their core competency.

0:35:10.3 That to me is a really determining factor.

0:35:12.8 Now what’s interesting as it relates to growth, is that you guys chose a growth model that was really adjacently related to what you did.

0:35:24.6 Because your growth model could have nothing to do with investors and it could have been that you were a master of digital marketing and Douglas was a master of organic search. You know?

0:35:36.9 There’s a lot of different ways to skin the cat. But the truth is that is – couldn’t be further divorced from real estate investing.

0:35:44.3 I like just the inherent synergy in what you doubled down in to actually drive that growth. 0:35:51.4 So hats off to you there.

35:53 When you think about the growth going forward, how do you think about goal planning, goal setting? What are you and Douglas aware of? What is the team aware of of what’s on the horizon?

Dan: 0:36:05.4 I think, you know, for us it’s each business – and it kind of goes back to what you were talking about, about being all in. We – and I’ve heard several people in your podcast had – there’s such a wide varying opinion – we chose a separate company name, separate PNL.

If you have a separate PNL and a separate company name, and then a separate leadership that’s running it, they’re held accountable to make that think profitable. They’ve got to figure it out.

0:36:30.9 And so, to answer your question, each person has their own vision, strategy. Each property management brokerage and maintenance, they all have their own. Does that make sense?

0:36:43.0 They’re tied together. You know, we make sure they’re synergized and tied together, but they all have their own plan, own plans for growth, own margin. Does that make sense?

Jordan: 0:36:54.4 Yeah, that totally makes sense. I want to hear more about it though. Because you’ve mentioned the concept of – I think what I’m hearing is some EOS language.

Dan: 0:37:03.4 Yes, that’s right.

Jordan: 0:37:04.0 Alright. So walk me through that. How long have you been doing EOS? What were some hiccups? I’m hearing more and more clients and folks that – honestly outside of the industry that are pretty enamoured with it.

What’s been your experience thus far and what does it look like day to day?

Dan: 0:37:22.6 You know, we’ve been doing it going on at least 18 months. I’d have to go back and look at the original file but, you know, I think the key to it is – and I tell this to our people all the time, the harder you work on the front end, the easier it will get long term.

0:37:38.8 And so, when we made that commitment, we’re going to Traction, we had to go all in. 0:37:41.2 That means the scored cards, the weekly meetings.

We literally – my calendar, you know, on Wednesdays and Tuesdays for the different businesses, it’s blocked out.

0:37:49.3 I cannot put anything else in those time slots. I am there for that Level Ten Traction meeting with the brokerage or the maintenance or the property management.

0:37:59.2 So, that’s driving that focus every week and it’s it got a very specific type of – scorecards and to-do lists and the discussion section where we’re solving problems.

0:38:11.8 So every week it’s moving forward in that business. But it’s got to be consistent. I mean, that’s where it’s at. I mean, I think that’s where people start it and it’s hard to be consistent. You know?

It’s hard to make sure that you don’t plan anything else on that Wednesday from 8:00 to 9:30. Does that make sense?

Jordan: Yeah.

Dan: 0:38:27.4 So the building block has to be that we’re committed and you have that consistency and it’s just not checking a box. “Oh we have weekly meetings.” You know.

Having a weekly meeting is one thing. Having a very focused and intentional weekly meeting is a whole other ball game that’s – you know, to making the change and growth and fixing mistakes and moving you forward.

0:38:48.9 So we are all in and Traction, that’s one of our core building blocks. Every business that we have, even the supply company that supplies the maintenance company, they even have their own traction meetings.

0:39:00.0 You know, no matter how big or small the company is, it’s going to have the scorecard and the Level Ten weekly meetings as part of it.

Jordan: 0:39:08.2 How long did it take you to get buy in? And to have the cadence of things really clicking with it?

Dan: 0:39:13.6 It was very quick because once people saw that we were solving problems every week and that we all had to-do lists. You know, action items.

You know, I might have something I had to go get done. You know, the sales manger the same thing. 0:39:27.1 And so everybody – and then you came back and you had to show up for that meeting without that piece either done or an update that was acceptable for everybody to keep moving things forward.

0:39:36.0 Next thing you know – I mean the sales – I’ll give you a prime example. Sales made a commitment to do all these things to get us to 30 units a month of sales.

0:39:45.7 And guess what? They’re hitting it. You know, and they’re hitting it early. 0:39:47.9 And now we’re trying – now our level tens and our Traction vision meetings, we’re thinking about bumping it to 40 the next couple months.

0:39:56.4 “What do we need to do to get to 40?” Does that make sense? 0:39:58.4 So, they get buy in because they see the numbers and see everything start moving and see everything get tighter and tighter. And it makes their job easier. Right?

0:40:07.7 Because you start automating things. You start delegating things. You’re leveraging others. Put systems in place.

So it actually gets easier versus harder and that’s what people don’t get sometimes.

0:40:18.8 They just want to trudge along. You know, that whole E-Myth, just in the business, not on the business. And so, anyway.

Jordan: 0:40:26.2 Now did you guys have an implementer that helped you turn that into reality? Or did you do it on your own?

Dan: 0:40:31.9 Douglas.

Jordan: 0:40:33.5 Douglas was the …

Dan: 0:40:37.0 That’s one of his strong suits, so we appreciate Douglas is going to make sure we’re going to be at that meeting every week and have the agenda lined out. So early on.

But now the business unit leaders do it themselves, but we just read the book, 0:40:49.8 [Inaudible] Team. Chapter by chapter actually. Was how we started.

0:40:55.2 And just reviewed what that chapter meant to each one of us and how would apply that chapter into our business.

Jordan: 0:41:01.4 Got it. Amazing. Awesome. I love it. That’s actually worked for you. I want to kind of take things full circle here.

I’d like to ask some rapid-fire section questions at the end of the interview. 0:41:14.5 And the first question I have for you is this, who do you learn from? Are there any entrepreneurs or media figures that you’ve really gleaned a lot from?

Dan: 0:41:26.4 You know, this is something that as you get older you get wiser and one of the big things that I’m actually learning more from it coaching others.

You know, because think about this. You’ve got to be a teacher and a seeker. And you’re both at the same time.

0:41:45.1 So, as I’m teaching others and coaching others about things, you learn about their questions. They’re asking you questions that you might not have thought about and you’re like, “Wow, I didn’t think about that before.”

And now you’re mind is churning on. Because they’re coming at it from a different angle.

Same thing when I’m coaching somebody, they ask me a question and I teach them how I do this or Douglas and I do this or whatever.

0:42:07.7 And then you realize, wait a second I’m not doing that anymore, or I’m not doing it like I was. And so it’s a hold yourself accountable mechanism that I’ve learned by helping others by coaching.

Because you just learn that – where your shortfalls are by coaching others. And you look back and reflect.

Jordan: 0:42:26.4 Great answer. I think you’re the first one that’s run that one by me. It makes sense. It totally makes sense.

I think it’s in part that’s the concept of the ways that you can learn something. You can learn it by studying or you can learn it by teaching others. By teaching another you have to really intuit things.

0:42:44.1 Next question would be books. So, you can’t – there’s no cop out here. You can’t tell me you only read books that you’ve written. What books have you read by others that have been impactful for you?

Dan: 0:42:55.6 Oh man. So, early on I was in manufacturing. I was 23 years old and I was managing 50 year old mechanics, machinists and I was a young punk out of college. And it wasn’t working for me that I was the boss. 0:43:08.7 And so, How to Win Friends and Influence People, which I know there’s been several of your guests…

Jordan: It’s classic.

Dan: 0:43:15.7 It’s classic. But I just learned to listen and learned to gain respect and that’s what I learned from that.

The next most influential book is a quick read but I’ve had every staff that I’ve ever managed read this book. It’s called, QBQ. Ever heard of that book?

Jordan: No, never heard of it.

Dan: 0:43:31.2 Question behind the question. Personal accountability. So, basically, in a premise, we own how we react right? And so, instead of asking questions like, “Why did you do that?” Change it to, “What can I do to help?”

Jordan: That sounds great man, love it.

Dan: 0:43:51.0 So you spin the defensive off right? And you say, Jordan, “Why’d you do that?” Versus, “Jordan, I saw this happen, what can I do to help fix that situation?”

And so, if I give you that resource to help you fix it, then nothing’s left but for you to go execute.

Jordan: Love it. Love it.

Dan: 0:44:07.4 So I would highly recommend that. I’ve been to his seminars. I read every book that he’s ever written. John Miller, QBQ. Question behind the question.

Jordan: 0:44:15.8 Got it. So we’re definitely going to check that out.

We’re hearing some more focus on mindset and this is stuff that in theory, has nothing to do with property management, but all good thoughts ideas don’t, right?

0:44:25.8 They transcend the category. They transcend the vertical. 0:44:31.1 So, I have another question and I ask every entrepreneur that I have on the show this question. Pretty much. I think like 99% at least.

0:44:39.2 And that is this, in your opinion, are entrepreneurs born or bred.

Dan: 0:44:46.3 Man. I’ve listened to all the answers on this. It’s so funny to listen to the varied answers.

But I truly believe that we are born entrepreneurs. That we all have innate characteristics of ourselves. Just who we are. Our DNA.

0:45:02.9 I’m an introvert. You can’t make me an extrovert. You know, I can do it, but it’s going to take a lot of energy to be that way.

And so, but I do believe that they are bred in the sense of – you can have somebody that could be an entrepreneur but they’ve got to be in the right environment to foster that growth into an entrepreneur.

0:45:22.0 And I learned that a lot through the inner city. So I do a lot of mentoring and coaching in the inner city and you see somebody that’s been on the streets, that’s never had a chance and been taught to be entitled. You know what I mean? Like blaming others.

And you start coaching and mentoring that person? I’ve seen people turn the corner and now they’re owning their own landscaping business. They own a housekeeping business. They own a Bouncy Bounce rental business.

I mean, I can name off dozens and dozens of businesses like that that they wouldn’t – you never would have thought that person would be an entrepreneur but obviously they had something in them that was pulled out by putting them in the right environment to create that opportunity.

Jordan: 0:46:03.4 Ok. I’m with you on that. I mean, the way I think about it is that when we think about what is determining of success, we tend to reduce things down to circumstances.

And when we tend to reduce things down to decisions right? At least if you’re successful, that’s really tempting. I am successful because I make great decisions and others don’t.

But the reality is, there’s a reason that I made really good decisions that in large part, was based on other people’s decisions. What was modelled for me. My circumstances.

And poverty, if anything – to the extent that poverty is deterministic of your future, it probably has more to do with poverty of mindset and poverty of thought than actual poverty of tangible goods.

Dan: 0:46:43.6 Oh absolutely. I totally agree. Goods, to me, has nothing to do with it. It’s all mindset.

Jordan: 0:46:51.2 So, mindset for yourself. When you think about the career that you’ve had since you got into this business. A change or transformation in how you’re seeing things now versus when you – at the beginning of your career.

0:47:02.0 What would you have told the early you and just really with passion, conviction, tried to get that person to understand early on in the business?

Dan: 0:47:12.7 Two things jump out at me. I think that one is stop focusing on your weaknesses.

You know, I think that I spent a lot of time early in my career trying to fix those weaknesses that I had as a manager and a leader versus working through others and let them shore up my weaknesses.

0:47:32.7 Which leads to part two. I would say leveraging others. I didn’t do that early on. I was doing everything myself when – we talked about my early career in real estate.

0:47:39.4 I was collecting rent, I was placing out signs, I was writing receipts and cheques and doing leases. And looking back on it, I could have so automated and so leveraged others if I’d sought out some more mentoring and some guidance early on. Versus it was all on me.

0:48:00.1 And I would have probably built it stronger, faster, quicker if I had done that.

Jordan: 0:48:04.1 Did you – was that a conscious thought that got you out of that circumstance or were you forced out of it due to scale?

Dan: 0:48:11.4 I was forced out of it because of scale. Yep. The pain.

I think Tony Robbins talks about that. Pain will make a lot of things happen. A lot of choices, a lot of action. And I had a lot of pain. You know?

From time and just mental anguish and so I had to figure out something so that’s when that path and that process started to happen for me.

Jordan: 0:48:33.4 Got it. Love it. Well hey, I appreciate you coming on the show. For folks that want to find out more about CrestCore and what you guys are up to, what’s one of the best places for them to go?

Dan: 0:48:42.5 They can go to CrestCoreRealty.com. They can email me at Dan@CrestCore.com. Either way. So I’d be glad to help in any way that I can to any of your listeners.

Jordan: 0:48:54.0 Alright. Here’s why I want to summarize a potential reason to contact Dan. If you’re interested in furthering the idea of facilitating wealth creation through real estate.

0:49:00.6 If you’re interested in positioning around that in terms of a brand and actually putting the rubber to the road and having some infrastructure behind that, I think Dan and Douglas are both great guys to contact.

They’ve doubled down and invested in that area and I think that’s the magic sauce. 0:49:17.7 I think it’s what’s going to continue to cause their business to grow and grow, decade after decade.

I really appreciate you coming on and sharing your wisdom with us. We’ll be following your career Dan.

Dan: Thanks so much for having me.

 

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