Eric Wetherington on The Discipline of Profit
Eric is also the current President-Elect of NARPM after serving as the South East RVP and National Treasurer.
After spending about 20 years in the business, Eric has started, acquired or managed dozens of companies and has built an incredible base of knowledge.
Eric’s a sharp entrepreneur and in today’s episode you’re going to learn how he made the move from operator to owner and how mindset shifts and strategic thinking can help you do the same.
- (01:10) – Background Leading up to Today
- (01:15) – Eric shares how he got into the property management industry.
- (01:56) – The different areas he has been involved in.
- (02:48) – Discussing how perceptions of the industry have changed over time.
- (03:45) – How Eric would describe the opportunities and benefits of the industry to an outsider.
- (04:09) – Recurring revenue as a central theme.
- (01:15) – Eric shares how he got into the property management industry.
- (05:30) – Building a Sustainable Business
- (06:17) – Eric discusses the challenges he sees operators having around knowing what type of business model suits them best.
- (08:11) – Advice for entrepreneurs to best perform in a management role and bring value to their company.
- (10:05) – How Eric approaches his role as a leader.
- (11:09) – Eric’s first key hire.
- (12:55) – Eric shares the details of how he plans for growth.
- (13:29) – Involving his team.
- (13:56) – The point and purpose of planning.
- (14:13) – The role of goal-setting in business growth.
- (17:25) – Profit Versus Growth
- (18:22) – Eric discusses the perils of deferring profit in the name of growth.
- (21:46) – The relationship between profit and discipline.
- (24:27) – On whether larger portfolios become more valuable simply because of scale.
- (25:11) – The challenges inherent in a large portfolio.
- (27:09) – Market Positioning
- (28:18) – Eric shares his thoughts on what operators can do to increase professionalism and market perception of the industry.
- (32:44) – Eric shares his views on what an operator can do to position themselves as a fiduciary involved in wealth creation.
- (38:07) – The opportunity and benefit offered by NARPM designations.
- (40:22) – What books have impacted you the most?
- (41:38) – If you could do it all over again, what is one piece of advice that you would have given yourself?
- (42:28) – If you could wave a magic wand and change one thing about our industry, what would it be?
- (42:42) – Are entrepreneurs born or bred?
- NARPM – National Association of Residential Property Managers.
- Florida State NARPM Convention (44:04) – NARPM convention Eric is speaking at.
- Getting Things Done; David Allen (40:30) – Impactful book recommended by Eric.
- The Five Levels of Leadership; John Maxwell (40:30) – Impactful book recommended by Eric.
- The Go Giver; John David Mann (40:30) – Impactful book recommended by Eric.
Where to learn more:
If you want to learn more about Eric’s business or get in touch with him personally, head on over to his website NewHeightsPM.com.
Jordan: 0:00:00.0 Welcome closers, today we have another episode of The Profitable Property Management Podcast coming at you. This is Season Three on profit, and I’m your host Jordan Muela.
0:00:08.4 Every week I interview world-class property management entrepreneurs and industry experts who share actionable insights to help you grow your property management empire.
0:00:18.7 Whether you manage 100 units or 1000, this broadcast is designed to help you see the big picture and give you the tools and tactics that you need to get to the next level.
0:00:28.6 Today I’m talking with Eric Wetherington, the director of New Heights Property Management, the only certified residential management company in South Carolina.
0:00:37.2 Eric is also the current President-Elect of NARPM after serving as the South East RVP and National Treasurer.
0:00:45.5 After spending about 20 years in the business, Eric has started, acquired or managed dozens of companies and has built a pretty solid base of knowledge.
0:00:54.2 Eric’s a pretty sharp entrepreneur, and in today’s episode you’re going to learn how he made the move from operator to owner and how mindset shifts and strategic thinking can help you do the same.
0:01:04.5 Welcome to the show Eric.
Eric: 0:01:07.1 Thanks Jordan, it’s great to be with you and your audience today.
Jordan: 0:01:10.1 So let’s start here: How did you get into the industry?
Eric: 0:01:15.0 So, I got into the property management industry in the end of 2008. I had been in real estate services for a long time previously to that and had a real estate broker’s license, and a large real estate firm here in the Charleston area.
Saw with the significant downtrend in opportunities to sell their homes for their clients, realized that managing those properties could be a positive alternative to folks who couldn’t come to a closing and bring 50 or 100,000 dollar cheque to the table for the privilege of selling their home to somebody else.
Jordan: 0:01:56.3 Got it. So let’s keep the story going.
Over time, what’s been the different flavors of the aspects of the industry that you’ve been involved in? Has it been all primarily single-family property management?
Eric: 0:02:10.9 No. I started my real estate career really in the title insurance industry. So, that’s where I spent many years working in all the different aspects of the title industry. Working for agents, working for underwriters and all kinds of things related there.
0:02:30.6 Then I actually sold real estate for a couple of years when I lived in North Carolina.
0:02:36.4 And moved to the Charleston area in 2007 and got involved directly in property management at the end of 2008 when I started our company then.
Jordan: 0:02:48.3 So you’ve been around the block. Do you think the perception of property management has changed over time? You’ve been aware of the industry before you were actually involved in it.
Do you think there are any shifting perceptions from the outside of what has historically has been viewed as maybe kind of a second tier for real estate professionals?
Eric: 0:03:09.2 Well, I certainly hope so. And I think groups like NARPM and other groups that have tried to raise the level of service, raise the bar, so to speak, for the property management industry.
And I think that has been successful and is continuing to be successful. 0:03:24.8 And I think that is evidenced by the fact that now we’re seeing franchising and national brands coming into the property management industry.
0:03:33.6 Which, of course, you know, for the longest time, those things weren’t evident at all. Property management was really just done by the local mom and pops or the local real estate agent in a market.
Jordan: 0:03:45.0 Yeah, absolutely. So how would you describe the opportunity to an outsider?
There’s obviously so many different business models and a successful property management entrepreneur ultimately starts to get tempted and exposed by a lot of the ancillary business opportunities that exist.
How do you think about the benefits or the upsides specifically of the property management, kind of recurring revenue business model?
Eric: 0:04:09.4 Well, I think when you said recurring revenue, that really keys in on what the opportunity is.
It doesn’t matter, you know, a few months back we had a snow storm here in Charleston and the city was shut down for five days.
0:04:26.0 And, you know, I didn’t lose a dime of revenue in those five days in my property management business.
0:04:30.5 Now, the maintenance company, obviously we didn’t have trucks on the road so we weren’t making money on the maintenance side.
0:04:36.5 But, you know, the rent cheques still came in. Management fees still got charged out and everything was fine. 0:04:43.2 So, that was a positive thing.
And when you think about a doctor’s office or a chiropractic business or a, you know, an auto repair shop, or, you know, a lot of other places – a restaurant. You know, if people aren’t coming in the door, they’re not making money.
0:05:04.5 And in property management, once you have a sustainable level of properties built up – a portfolio of properties that you’re managing, you know, it doesn’t really matter if the office has to be closed for a few days because of a snow storm.
0:05:17.1 It doesn’t matter if you, as the owner, take a week off and go to, you know, go to Tahiti. The business is still there and you’re still making money.
Jordan: 0:05:27.5 That is the dream. But you qualified it. You said, once it is built up.
0:05:30.8 Let’s talk about some of the inflection points in the business.
0:05:33.8 My observation from the outside is that that first inflection point is just getting to the point where you can actually support yourself. 0:05:41.1 Let’s call it 100 doors.
And then you’ve got that inflection point of realizing – of determining whether or not you want to staff up and build a bit of an organization around it.
0:05:51.0 And then there are a series of additional inflection points where you continue to have to make decisions around what kind of business you’re wanting to run.
0:06:00.6 What are the challenges or the struggles that you see operators having around really knowing what type of business model suits them?
0:06:09.7 In light of the fact that there’s not necessarily a right or wrong answer here. 10,000 doors isn’t for everybody, nor is 100 doors.
Eric: 0:06:17.9 Well, Jordan, you hit exactly. And I think the biggest problem that operators make is they don’t know – they haven’t decided what they want to be.
0:06:25.7 So very early on, for me, as the only person working – when I started this company – you know, I very quickly decided that I had two options.
I either wanted to grow this to be big enough so that I could hire people to do the day to day things that needed to be done so that I could focus on things that I enjoy doing. Or, maybe this wasn’t the right thing for me.
0:06:50.3 And, so I very early on made that decision and decided what track I wanted to be in.
0:06:58.8 Because, when you get started, yeah, you’re the one answering the phone, you’re the one going and meeting with the prospective owner. You’re the one putting the ‘For Rent’ sign in their yard.
0:07:08.9 You’re the one entering that property in MLS and all the internet sights. You’re the one taking the calls from the prospective tenants and showing the property and you”re the one doing all of those things.
0:07:20.5 And it can be very time consuming, obviously, and demand a lot of time and a lot of commitment on your part.
0:07:26.9 I remember, you know, I was on call for the first, I don’t know, year and a half, two years of the time that we got started. I was on call 24 hours a day, seven days a week. You know, for any maintenance calls or anything at all. 0:07:42.0 And that’s the life of that independent operator.
And there are some people that have that as their business model and they only want to manage 80 or 100 doors. Or 120 doors, and they can do that by themselves and they are very effective at it. 0:07:58.3 And that’s great.
For me, I decided that I wanted to build and grow and build teams that would be involved in those other aspects of the business so that I could do the higher level things that I enjoy doing.
Jordan: 0:08:11.4 So we’re leaning into the first big topic that I want to dive further into. And that is around the management function, or the management labor dollar, as it were.
0:08:23.0 Because, the truth is, it could be you acting in management, you could hire a professional manager and go pursue another venture.
0:08:29.6 The question I have for you is this: What direction or guidance would you provide an entrepreneur around thinking about what they need to be doing acting in a management capacity in order to be earning their keep?
0:08:44.2 And what I mean by that is this: When you get to, let’s say, 200 doors, whatever it may be, at the point that you hire somebody underneath you, and now you’re going to work ‘on’ the business instead of ‘in’ the business, there’s kind of an implicit assumption that a lot of great things are going to happen.
0:08:59.3 You’re going to be brainstorming, implementing things, systems, processes, etc.
But the truth is, there is so little guidance on how a professional manager actually adds value to the organization.
Without getting into the minutiae of talking about specific tasks, at the highest level, can you provide any guidance for how entrepreneurs can think about holding themselves accountable to actually using that management capacity well?
Eric: 0:09:28.0 Well, I think you have to go into it with a mindset of developing a plan for yourself. And having in your own mind, what is your typical day going to look like, what is your typical week going to look like.
0:09:41.0 Where is – what is the highest and best use of your time as the business owner, the business operator.
0:09:52.1 And once you decide what that highest and best use is, then you can begin to lay out a game plan for what you’re going to do in those moments of time in order to have the greatest impact on the organization.
0:10:05.9 I think everything rises and falls on leadership, John Maxwell teaches us.
And as the leader, you know, the – I break down my role as the key leader, is this: I’ve got to hire the right people. I’ve got to provide those people with the tools that they need to do their job.
I’ve got to provide those people with the training that they need to do their job.
0:10:36.1 I need to provide those people with a clear expectation of the desired outcome and then I need to get out of their way.
0:10:43.6 And if I do those five things effectively, then my operation will meet the objections that I want it to meet.
Jordan: 0:10:53.6 I like that. So there’s some implicit bias there. You’re really coming at it from making it more of a ‘who’ problem than a ‘what’ problem. That’s subtle.
0:11:01.6 But that’s actually a pretty big deal.
0:11:03.2 If you still view it as fundamentally being about the ‘what’, then it still is kind of on you to execute things.
0:11:09.3 In your experience, within your own organization, what was the first key hire that really moved the ball forward to you feeling like you were actually getting some significant leverage through that hire?
Eric: 0:11:26.6 I would say, I mean, you know, my first hire – remember, this was 2009, so early 2009 when the real estate market was very shaky, and so, you know, there wasn’t at that point, of course, any profits being produced. 0:11:44.6 And so, things were pretty tight.
And my first hire was a – was just a receptionist. Someone to help answer the phones, because we had such a weird – were creating such a high demand of prospects because of the large size of the real estate company that we’re affiliated with.
0:12:02.6 It was just overwhelming at that time and in that market.
0:12:06.2 But I think – and so, that just provided us a buffer for me to be able to focus on the important things of getting owners signed up. 0:12:16.9 And that really helped.
0:12:18.7 But for me, it was when I hired – really when I hired my first property manager. My first person who was licensed who could focus on the day to day issues of managing those properties.
I still went out and did the sales without signing the properties up. 0:12:41.3 But did the business development.
0:12:45.1 But they were focused on managing the property after it came in the door and that’s when things started to get a little better for me.
Jordan: 0:12:55.6 So, when you talked early on about wanting to grow the organization, how concrete was that?
In terms of goals, planning, leadership? How granular do you get with planning and to what degree do you involve the rest of your team in that exercise?
Eric: 0:13:14.9 I get pretty granular in the planning. I try to lay out the vision and make sure that we know where we want to be three to five years from now.
0:13:23.7 I look at my role as really that big picture thinking. Thinking down the road.
0:13:29.1 I get my team involved in setting our annual goals. And I do the budgeting but I do get the team involved in setting those annual goals.
0:13:38.8 And then, of course, the goals tie in to the budget.
0:13:40.1 And then, you know, I’m constantly looking at, “Ok where do we want to be? Where do we see ourselves three years from now? Where do we want to be three years from now? What does that look like and what do we need to be doing today to make sure that we’re following that path?”
Jordan: 0:13:56.8 So humor me with this question: What is the point of planning and goals?
If you’re working your hardest, if you’re going to the max and coming home tired every day, isn’t that enough? What is the point in burdening yourself with this additional stress of goals?
Eric: 0:14:13.1 Well what’s the point of getting in the car and turning it on and pushing the gas pedal if you’re not steering it in a direction?
Then, you could say, “Well I drove really hard and I did a really good job and the car performed really well for me, but I never made it home.” You know?
0:14:34.2 And so, that’s what goals are. Goals tell me whether I made it home or not.
And you can have a great car and you can have a great experience while you’re riding in the car, but if you don’t end up at the destination that you want to be at, then all you did was had a nice ride.
0:14:54.6 And so, that’s – I’m a big believer in business and in life, of having a goal. Have a vision.
Have a direction that you’re headed so that you are accomplishing rather than just going along for a ride.
Jordan: 0:15:11.4 So when we talk about the practical out-workings of that, the things that come to mind for me are – because the distinction between being the operator versus the owner.
The operator is satisfied, oftentimes, with working hard and earning a great income.
0:15:28.1 The owner, oftentimes, is far less represented.
In terms of the entrepreneur that is wearing both of those hats, it is the owner that is only compensated on the basis of either a distribution or the increase of the value of the underlying asset that they have equity in.
0:15:45.7 That’s the only time that that owner gets paid.
And it’s the owner that tends to really get the short end of the stick due to a lack of planning.
0:15:55.9 That forethought that you’re talking about there, in my mind, it really advocates for making sure that this was worth it as an owner.
0:16:06.8 Because if you’re just going to work hard, in some ways it’s kind of like you might as well have a job. It’s stressful. There’s an actual and meaningful liability of being a business owner.
0:16:16.4 And if that equity is not increasing in value, there’s a pretty big missed opportunity. 0:16:20.5 I assume that that’s part of what you’re getting at here.
Eric: 0:16:23.2 Absolutely right. You need to know why you’re in this business and what you’re ultimately trying to accomplish.
And this – and then what – and that’s good not only for the owner, it’s good for the operator, but it’s good for the team.
0:16:38.1 It’s good for everyone on the team to feel like, “Hey, I can work at this company for the next eight or ten years.”
Or, “I can achieve if I work for this company for the next eight or ten years and as a company we reach the goals that the owner wants to reach, then that means for me personally, I’m going to see this level of success financially. And therefore, that’s going to allow me to reach the goals and dreams that I have for my family.”
0:17:09.3 So, it all ties into, “Why are we here? Why are we doing what we’re doing? Let’s make sure that we have some clarity around what we’re trying to become, what we want to be, because then everyone can be pulling in the same direction. And you know when you get there.”
Jordan: 0:17:25.1 Absolutely. Let’s pivot now to talking about the dichotomy, or the potential dichotomy between profit versus growth.
I know that you have witnessed the magic and the light in people’s eyes when you talk about growth. Right? Sales, marketing, ways to either acquire a portfolio or add 100 doors within three months. It’s exciting.
0:17:48.2 In my mind, there is a tension between profit versus growth. If for no other reason than it relates to what you said previously, and that is intention.
0:17:57.5 The concern that I have as I work with more property management entrepreneurs on a consulting, and specifically consulting on the finance piece, is seeing profit oftentimes being deferred in the name of growth.
0:18:13.2 And then seeing that growth not always happen. 0:18:16.8 Have you observed something similar in the market? Or is that unique to my vantage point?
Eric: 0:18:22.4 No, absolutely. And I think what happens is people who don’t have a clear vision and don’t – aren’t real clear about what they want to accomplish, will often sacrifice profit for growth.
0:18:35.4 And say, “Well, we’re growing and we’re spending all this money on new offices or new locations or new geography, or whatever.” 0:18:45.7 And they set aside profits.
0:18:48.9 But I like to say, “Profit first”. Because if you don’t have profits, ultimately at some point, somebody’s going to stand up and say, “You can’t do this anymore.”
0:19:03.0 And whether that’s your banker, if you’re highly leveraged, or whether that’s your bank account if you are, as an owner if you’re funding everything out of your own pocket.
0:19:13.9 At some point, if you don’t have profits, there’s going to be an end. There’s going to be an end.
0:19:19.1 So you’ve got to get to a point where there is profitability, and sustainable profitability, which is a great thing in this business, in this recurring revenue business.
0:19:34.0 And I think sometimes people forget to look at what the value is for every door that I bring on.
And, “Am I maximizing the value potential out of every door?”
0:19:48.2 Because, a lot of times, people could just take the portfolio that they have and substantially increase their profits if they understood their profitability per door. And their ability to generate other revenue streams based on that door that they’re managing.
0:20:05.8 And so that’s what we really try to focus on, is keeping track of some of those key metrics so that we understand, “Are we continuing to derive more profit per door for the houses that we’re managing.”
0:20:22.1 And then growth – and in property management, we’re counter-cyclical to the real estate sales industry.
So, in many cases, in many markets, when the the real estate sales are hot, our property management portfolios are going to shrink.
0:20:37.0 And when real estate sales are off, their averages, then our property management portfolios are going to grow.
0:20:45.0 But if an owner/operator is not focused on profitability per door then they could run into a lot of trouble in those changing markets.
Jordan: 0:20:53.5 Absolutely. Profit per door. You said it.
Let’s just flesh it out one step further. The specific flavor of rationale that I hear is that, “I know I’m not profitable right now, but I’m going to grow from…” – oftentimes it’s something like, “I want to grow from 300 doors to 700 doors over the next two years.” Right?
0:21:15.2 It’s predicated upon quite a bit of scale.
0:21:18.7 My observation is that profit requires discipline. And that trying to defer those hard conversations, and to defer that discipline to effectively make a balloon payment down the road is a recipe for disaster. To try to course correct all that stuff at once.
0:21:38.4 And to try course correct 700 owner agreements that have effectively put a lot of handcuffs on you for effectively monetizing your portfolio. Agree?
Eric: 0:21:46.5 Jordan, I think the key statement out of what you just said – I agree with everything you said – and the key statement is: Profit requires discipline.
0:21:55.6 And so many entrepreneurs are great idea folks, and in some cases they’re great at going out and doing something.
0:22:04.2 But sometimes, entrepreneurs are not the best at applying discipline to their idea. Or discipline to their work.
0:22:14.0 And that discipline is what is required if you’re going to build something that is profitable.
0:22:21.4 And as an entrepreneur, if discipline isn’t your gift, then maybe you need a coach, or maybe you need to hire someone that has that skill and that can bring that to the table.
0:22:31.8 Because, if you are not disciplined in understanding your numbers, disciplined in understanding the systems and processes that are required for this business, then you can go for months and years on end without making a profit.
0:22:46.6 And you might have a good – you might have a large portfolio, but you know, personally, I’m not as concerned about the size of my portfolio as I am concerned about the size of the cheque at the end of the year.
Jordan: 0:23:03.7 Yeah, absolutely. And some people, in hearing us have this conversation think like, “So are you saying don’t grow? Are you saying that you shouldn’t invest in sales and marketing?”
And particularly, I can be particularly backwards or belligerent in light of the fact that I host things like the PM Grow Summit and I run a sales focused CRM.
0:23:20.9 So, I’m absolutely a fan of responsible growth when it’s the right time.
0:23:25.6 But the caveat for me is that it really is a false dichotomy in the sense that profit enables growth.
0:23:33.5 If your goal is extreme growth, you need profit to get there. 0:23:38.6 Profit is the oxygen that the organization needs.
0:23:40.1 On the other end of the spectrum, for those folks that are trying to get to 1000, 2000, 5000 doors, I’m curious about your perspective on this notion that larger portfolios may become more valuable simply because of scale.
Like, are you sympathetic to the notion that the multiplier on a 4000 door portfolio versus a 5000 door portfolio is going to be dramatically different.
0:24:09.7 All things being equal in terms of the underlying properties, etc., I feel like there’s a subset of entrepreneurs, smaller no doubt, that are chasing that – what’s your gut kind of sense on how valuations may change for a larger asset if you do actually achieve getting to scale?
Eric: 0:24:27.3 Well, unfortunately, I guess, our industry has never been great on the valuation side. And the multiplier that’s paid for IBDA in property management companies is small relative to a lot of other – most every other industry that I’m aware of.
0:24:51.7 And the flip side of that, is there is this – there’s also a pay out that goes, “Well we’ll pay x amount of dollars per door.”
0:25:01.5 So there’s this idea that, “Well, if I just have a bunch of doors then I can get somebody to buy me out.”
You know, get a higher number because of a bunch of doors.
0:25:11.2 But the thing with a bunch of doors is you’ve got to think about what’s the geography that those doors encompass and what’s – what is it going to take to maintain the oversight across that geography.
0:25:26.7 So, if I’ve got 5000 doors and they’re all within my market area, and when I say market area I mean some place where I have a central office, maybe two offices, maybe one satellite office, but everything can be driven to and gotten to within a day.
0:25:44.6 I have a centralized team, it’s easy to have regular team meetings, and easy for me to set the vision and cast the vision with everybody, and have goals and all that kind of stuff.
0:25:54.8 Then getting to four or five thousand doors is maybe is a noble cause.
0:25:54.8 I’m not saying that you can’t have 5000 doors spread out across three or four states and be effective. You can. But it requires a whole different management style.
A whole different set of problems and a whole different set of overhead expenses that a person managing 1500 doors in their local city can be probably, in a lot of cases, just as profitable as someone managing twice as many doors that are spread out over, you know, five cities.
Jordan: 0:26:38.9 Absolutely. So part of what I’m getting there is, just again, that re-acknowledgement that it’s a really different playbook.
0:26:46.5 Scale is its own playbook.
So, if you’re managing 300 doors right now, and a multi-market operator comes into your market and you’re seeing what they’re doing, that, in many ways, may not be the playbook for you to feel like you need to copy or mirror.
0:27:04.9 The context of what you’re trying to accomplish is critical.
0:27:09.4 I want to transition to talk a little bit about the market positioning, and specifically this topic of how do we as an industry build more trust with the end consumer?
0:27:20.8 Every time you go to a regional NARPM event, there’s always a little bit of touch on legal issues.
0:27:26.2 I’m thinking in my mind, mentally back to the last time I was at the last Florida State convention. Harry Heist, topics of regulation, legislation come up. And sometimes people are divided.
0:27:41.0 There’s a subset of people that welcome that sort of thing because they believe that they’re the cream that’s going to rise to the top.
And there’s another subset of folks that are very leery of any kind of influence in that regard, and would prefer to self-regulate.
0:27:56.2 All that being equal, what we know is, as an industry, what we can do collectively to improve trust with the end consumer is going to serve everybody.
But especially those operators that are at the upper end of the spectrum.
0:28:12.2 What are your thoughts about market positioning and just professionalism for the category that we’re in?
Eric: 0:28:18.3 Well, unfortunately we, in my opinion, the property management industry has a lot of opportunity for growth as it relates to professionalism and market perception.
0:28:33.2 When I spend time with the real estate commission in South Carolina, the commissioners tell me that 60-70% of all complaints that come before the real estate commission involve property management.
Eric: 0:28:51.9 And that is, I think that’s pretty typical, you know, across the states. At least as I travel and speak to folks that I hear similar statistics anecdotally from others as well.
0:29:06.2 And, you know, property management is a business that requires trust from the consumer, from the client, because, you know – I mean, we have clients, you know, we’re based here in Charleston, South Carolina in the greater Charleston area.
0:29:22.9 Our office is in Summerville, but we service the greater Charleston market. 0:29:27.3 And we have clients all over the world. As many property management companies do.
We have a big military presence here in our area and so we have clients that come to us when they get deployed to go overseas. And we manage their properties.
0:29:43.0 We have clients that are in a submarine for six months. They could have no access to the outside world and they’re trusting us to make good decisions, to take care of their property and to do the right things.
0:29:54.8 And, when operators of property management companies violate that trust by taking money from escrow accounts or by telling an owner, “Well, you know, yeah we need to repair your roof and so we’re not going to pay you your monthly owner draws because we’re saving that money up to buy your new roof.” When really that money is being used in some other area.
0:30:18.6 I mean, the damage is trust.
And so, I think it’s something that we as an industry need to continue to be mindful of, need to keep working to improve our standards, our levels of professionalism.
0:30:38.4 Improve the way that we handle things and hopefully, you know, the great operators will choke out those who are just notorious for not returning phone calls and not responding and not doing their job.
0:30:54.1 I’m not a big fan of regulation, government regulation, but you know – and I think the free market should prevail and the cream should rise to the top.
0:31:05.5 And the folks who maybe aren’t the cream can maybe decide to change and become – ride up with the cream or they need to get out of the business and let folks who want to be true professionals about what they do who want to take care of their clients and take care of their customers to succeed.
Jordan: 0:31:24.6 So the idea of the lemons market theory, is essentially that when a consumer is faced with an unknown quality variable, they’re looking at three vendors and they cannot distinguish quality between these vendors, they’re inclined, rationally, to pay an average. Right?
0:31:44.3 You’re not going to pay a premium because you can’t distinguish if that person’s worth it.
0:31:47.5 So what that does is, that forces out the higher end providers out of the marketplace.
0:31:53.6 What you just alluded to, kind of what I picked up on that, is the big picture distinction, in terms of a view of self.
0:32:01.8 If you think about the lowest view of this industry, it is professional gophers, professional order takers, you’re essentially organizing maintenance. Big whoop.
0:32:11.7 On the other end of the spectrum, is a fiduciary. You have money invested in an asset, it happens to be real estate and this fiduciary is here to walk you through the journey of wealth creation, wealth protection, capital enrichment, etc.
0:32:28.3 And there’s a pretty wide chasm between that.
0:32:32.1 In your experience, what are some of the things that your average operator can do to kind of move themselves away from the former category and closer to the latter?
Eric: 0:32:44.7 Well here’s a challenge in that, Jordan. Going right along with what you said. A lot of people get into the property management business from a career in real estate sales.
0:32:57.5 And a lot of people who are in real estate sales don’t have a professional mindset in this manner.
I’ll give you an example. 0:33:08.4 They think that if a customer calls them at 8:00 at night, they need to answer the phone.
They think if a customer calls at 10:00 Saturday morning and says, “I’m sitting in front of this house and I want to see it, can you be here in five minutes?” they jump in their car and they drive over there.
0:33:20.7 Now, counter that with your attorney or your accountant. Would you even think about calling your attorney at home at 9:00 at night on a Thursday?
Jordan: Not unless my house is burning down.
Eric: 0:33:37.0 Right. Exactly. And would you call your accountant on Saturday at 2:00 in the afternoon and expect him to come meet you at the office in fifteen minutes.
Eric: 0:33:47.8 No, you wouldn’t.
And yet, in real estate sales, so many people have fallen into the trap of thinking, “Well if I don’t answer the phone, or if I don’t jump when the customer says jump, then I’m going to lose the customer.”
0:34:03.7 And so, they come into property management and they carry that mentality in and so I think it actually degrades the professionalism of the property manager.
0:34:16.3 Because then the property manager just does become – right, like you said, they answer the phone, they dispatch the vendor, they go meet the UPS guy when the UPS guy wants to drop off a package.
0:34:28.9 They do all this stuff and it’s like, “Wait a minute, what are you – what is the real role of a professional property manager?”
0:34:37.1 We’re managing a huge asset for our client and in many cases, you know, a lot of our clients, these homes that we’re managing, these are – these make up the balance of their net worth. They make up their largest assets.
0:34:52.9 And so, how can we be a professional asset manager instead of just the person that answers the phone when there’s a water leak.
Jordan: 0:35:01.6 Well, how would you respond to the person that says, “Well Eric that’s all well and good, but there are ten other guys in my market that are willing to do that. How can I afford not to offer a similar service quality as somebody that manages 50 doors for a really cheap rate and is willing to come at every beck and call?”
Eric: 0:35:20.5 Well, I think you have to, first of all, have a really clear path in mind of what you want to be. What you want your company to be.
0:35:29.3 What service you want to provide, and you have to be able to articulate that to the customer.
0:35:35.1 And so, you have to be able to understand what is it that the customer really wants?
If the customer really wants someone who is going to answer the phone at 9:00 o’clock at night, or is the customer interested in putting an extra $100 dollars a month in their pocket?
0:35:53.6 You know, does the customer really want someone who is going to go and pick up the UPS package on Saturday afternoon, or is the customer concerned about making sure that if a tenant brings pets into their home, that the property manager has a means of you know, ensuring that that tenant that that owner isn’t going to pay a lot of money at the end of the tenancy if that pet causes damage to the house.
0:36:24.1 So, it’s really about having a clear understanding of what the value is that I want to bring to may clients. And then being able to differentiate myself and my services in a meaningful way.
0:36:40.7 So then, the customer truly is – yes, the customer needs to make a choice. Absolutely.
0:36:44.3 They can choose which of those two things they want.
0:36:47.8 There are customers that are always going to want to choose to drive a Fiat. And that’s fine. There’s nothing inherently wrong with that choice if that’s what the customer wants to choose.
0:37:04.6 But there’s a lot of people that look at a Fiat driving down the road and saying, “I’d rather drive something else.”
Jordan: 0:37:10.5 That’s great. So what’s clarifying about that, Eric, is that you’re – what I hear you saying is that it’s connected to the ambition of the service that you want to offer.
It’s not – if you look at it purely from the lens of it being about what you want, what you’re going to get, what you’re not going to do, that’s shallow.
0:37:31.3 I think it gets more depth and legs when it is connected to the ambition to the quality of service that you would like to offer the end consumer.
0:37:39.2 So, if in the process of not doing those things, you’re – you’re fundamentally reconstituting things, something that actually does have a higher value to the end user as opposed to purely just thinking about the spread in your margins.
0:37:54.7 I think that’s where it really starts to become more tangible and palpable for people.
0:38:00.0 I do think that there is also an opportunity related to market positioning around designation.
0:38:07.1 So, quick plug. I can’t have you on the show without talking a little bit about NARPM.
0:38:10.9 Professional designations – this is not the section of the show where I say, “Join NARPM.” 0:38:15.3 If you haven’t done it, go do it.
But the truth is, if you’re listening to this right now, there’s a pretty good chance that you’re a member. 0:38:22.1 I want to address folks that are already a part of NARPM.
0:38:26.5 Eric, how do you think about the opportunity around designations as a way to distinguish yourself in your market and to put yourself out there as a real professional?
Eric: 0:38:38.1 Well, I think it does – the designation process exposes you to a lot of information. A lot of great information.
0:38:46.4 And the education that you get from going through those trainings, and doing the things that are involved in getting a designation, more than bring back more value to you then you could ever understand or even quantify until you’ve been through it and done it.
0:39:07.6 I think, to the marketplace, the designation is good for you to be able to say that, “I’m a master property manager.”
0:39:18.6 That’s great, and there’s only 250 of those around the country.
0:39:22.1 Or to be able to say that, “Hey, New Heights Property Management is a CRMC. A Certified Residential Management Company.”
There’s only 47 active CRMCs in the nation. 0:39:32.7 And that means that as a company, we have met up a very high standard of excellence that is demanded by the association, by NARPM, and that provides – that should provide a level of trust in the mind of the customer when they are making those choices.
0:39:52.9 So I think that the designations do provide a point of differentiation when you’re out there competing with all the different lemons, shall we say, that you might run across in the marketplace.
Jordan: 0:40:07.2 I do want to transition now to the rapid-fire section of the interview. Pivoting off of what we just spoke about.
I just want to get some quick answers from you. Kind of shooting from the hip. We go through this with every guest on the show.
0:40:22.7 And the first question is this: Eric, what books have impacted you the most?
Eric: 0:40:30.8 Getting Things Done, by David Allen. And The Five Levels of Leadership, by John Maxwell. And The Go Giver, by John David Mann, and I can’t remember the co-author of that book off the top of my head.
Jordan: 0:40:51.1 I got to ask. You mentioned Getting Things Done, David Allen. Are you an inbox zero kind of guy? How do you manage your email?
Eric: 0:41:00.5 Yeah, I like to have an inbox of zero. Definitely. I use a lot of the principles out of Getting Things Done.
And so, generally, when an email comes in, you know – I only try to look at emails a few times a day and then deal with the ones that can be dealt with quickly.
The ones that can’t be done with quickly, I try to create a task for and then come back to them and deal with them at a later time. 0:41:30.0 So, I wouldn’t say I’m 100% perfect at inbox zero, but it’s certainly where I strive to be.
Jordan: 0:41:35.9 Yeah, same here. I’m totally an inbox zero guy.
0:41:38.8 Next question: If you could do it all over again and go back to your first day in the business, what is one piece of advice that you would have given yourself?
Eric: 0:41:53.7 I would say, “It’s going to take some time. It’s going to take a little more time than you think to get where you want to be. And so, have some patience.”
And understanding that, we grew so fast it was difficult to keep up with everything. Because we were at the right time, the right place, the right market conditions.
0:42:22.5 So, “Give yourself a little more space. Give yourself a little more patience to get everything worked out.”
Jordan: 0:42:27.8 Patience. I like that. 0:42:28.7 If you could wave a magic wand and change one thing about our industry, what would it be?
Eric: 0:42:36.2 I would say the perception among the customer on the level of professionalism.
Jordan: 0:42:42.1 Final question of the interview. Eric, I ask this to every guest and my question to you is, are entrepreneurs born or bred?
Eric: 0:42:51.0 I think entrepreneurs are bred. I think that while there is a bent for entrepreneurship that comes intrinsically or is born in, I think successful entrepreneurs are people are willing to learn, who are willing to be students of learning and are willing to grow and develop the innate skills that they have, that they’ve been blessed with, to refine them and develop them to their fullest potential.
0:43:20.2 So, while I think there is some aspect of entrepreneurship that is inborn, I think the successful entrepreneurs are ones who work at it.
Jordan: 0:43:30.2 Who cultivate it. Love it.
Jordan: 0:43:33.2 Eric, well I appreciate you coming on the show. If folks want to learn more about your company and what you’re up to, what’s the best place for them to go?
Jordan: 0:43:41.0 Well thanks Jordan, it’s been a pleasure being with you and with your audience today. NewHeightsPM.com is our website, and that’s a great place to learn more about our company and connect with us there. And in our various social media points as well. They can be found there at NewHeightsPM.com.
Jordan: 0:44:01.1 What’s the next even that you’re speaking at?
Eric: 0:44:04.0 I will be speaking at the Florida State NARPM convention coming up in September. So looking forward to seeing a bunch of my NARPM friends from the south east and from Florida down in Orlando at The Hilton Lake Buena Vista.
0:44:24.4 And I think that’s the third week of September. September 20th and 21st I believe are the dates for that.
Jordan: 0:44:28.5 Alright guys, if you can make it, go check him out. Going to be a bunch of great speakers there. Eric, thanks again for coming on, let’s stay in touch.
Eric: Thanks Jordan. Have a great day.