Maintaining Quality at Scale with Leah Slaughter
- (00:34) – Background leading up to today
- (00:38) – Leah shares how she got started in the property management industry.
- (01:53) – Discussing OmniKey’s areas of focus when they first started.
- (02:17) – Where the business is today.
- (03:11) – Maintaining a human touch while scaling
- (03:11) – Leah shares her thoughts and feedback on the sensible way to grow through expansion markets.
- (03:41) – The importance of due diligence and research.
- (05:57) – Leah discusses how OmniKey approached expansion.
- (08:32) – How OmniKey structures its sales function.
- (10:14) – Leah’s role in communication with clients.
- (12:02) – Leah describes her role in the company and how it has changed over time.
- (13:42) – Discussing the challenges of delegating.
- (17:16) – Leah shares what she feels is unique about property management.
- (03:11) – Leah shares her thoughts and feedback on the sensible way to grow through expansion markets.
- (20:06) – Revenue Streams
- (20:17) – Leah shares whether or not OmniKey’s revenue model has changed as they’ve grown.
- (21:09) – Using in-house repair teams in expansion markets.
- (22:07) – Leah gives an example of how her traveling repairs team operates.
- (24:45) – Discussing what changes to their model, if any, OmniKey will have to make as they expand into Florida.
- (25:17) – Marketing
- (25:42) – Leah shares how OmniKey educates their owners and clients.
- (27:18) – How Leah handles the conversation of selling with her owners.
- (27:59) – Hosting educational classes.
- (27:18) – How Leah handles the conversation of selling with her owners.
- (29:15) – Addressing property managers who resist adding a brokerage to their business.
- (25:42) – Leah shares how OmniKey educates their owners and clients.
- (33:13) – Assorted details for success
- (33:33) – How Leah handles client expectations.
- (37:56) – Zero tolerance policy.
- (39:24) – How Leah handles documentation.
- (40:33) – Discussing reputation management.
- (41:24) – Soliciting reviews.
- (33:33) – How Leah handles client expectations.
- (41:48) – Who do you learn from?
- (43:10) – What books have impacted you the most?
- (44:36) – Are entrepreneurs born or bred?
- Educational classes – Video resource of classes hosted by OmniKey
- Facebook group- Facebook page of OmniKey Realty
Where to learn more:
If you want to learn more about OmniKey or get in touch with Leah personally, head on over to their flagship website OmniKeyTexas.com or tune into the show for their phone number.
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.
I’m your host, Jordan Muela, and every week I interview world-class property management entrepreneurs and industry experts who share actionable insights to help you grow your property management empire.
0:00:17.3 Today, I’m talking with Leah Slaughter of OmniKey Texas. 0:00:23.3 We’re going to talk shop about what makes them unique, and how they have grown to scale, while still maintaining a personal touch.
0:00:30.3 Leah, thanks for coming on the show today.
Leah: 0:00:32.3 Absolutely. Thanks so much for having me.
Jordan: 0:00:34.9 So, Leah, I always like to start out here: How did you get into property management?
Leah: 0:00:38.7 Well, I actually was raised in a real estate family, and so I kind of grew up around it. But, I was really thrown in when we got into real estate and first deal as an investor. And just kind of blossomed from there.
Jordan: 0:00:52.0 So, meaning that you were doing some deals yourself and you just kind of walked into it that way?
Leah: 0:00:56.8 Exactly. And it was right at, you know, right before the crash. And we got in in 2006, and really, we saw some changes coming, and started telling people we thought that things were going to crash.
0:01:06.4 And, you know, back then everyone thought we were crazy. But the first client we got was an investor, and we saw what had really happened just in the first few months in the business and a lot of the areas of Dallas that we thought were overvalued.
0:01:17.8 And so, we basically started our process of putting people into some of the outlying areas that weren’t so developed.
0:01:24.0 We felt like those areas would be better protected if the market fell, because they wouldn’t be something that could, you know, avoid growth because of the fact that it was already developed.
0:01:32.6 And so, anyway, all of that being said, we just kind of got thrown in day one and it just blossomed from there.
And, then we started doing a lot of flat-fee listings. We were one of the original flat-fee listing companies in Texas. 0:01:43.1 So we were doing Owners.com and ForSaleByOwner, back when nobody even knew what an FSBO was.
0:01:49.1 And we just – you know, one investor after the next after the next. And here we are 13 years later.
Jordan: 0:01:53.7 So what was the emphasis of the business? Was it property management from day one?
Or was it a dual, kind of brokerage and property management focus? Where did you emphasize out of the gate?
Leah: 0:02:03.1 It was property management and investment property day one. We started working for another brokerage who was dual licensed – mortgage broker, real estate broker.
0:02:10.7 And started our own company within about six months and we started the company with the focus on investment property only.
0:02:15.8 We already knew by that point that investments was what we wanted to be.
Jordan: 0:02:17.7 Got it. And where is the business at today in terms of size and scope?
Leah: 0:02:22.7 Well, we’ve got almost 40 employees. And we’ve got a little over 1000 properties. We go up to about 150 doors per property. Our sweet spot is single-family and small multi-family. 0:02:33.2 And we service about 70% of Texas at this time.
Jordan: 0:02:36.9 Got it. So like, what are the prime – you say 70%, but what are the primary big metros that you’re in?
Leah: 0:02:41.5 So, Dallas, Fort Worth, Austin, San Antonio, Houston, College Station. Those are, kind of our bread and butter.
Jordan: 0:02:48.4 Ok, great. So, started off in the Dallas market, what was your first expansion market?
Leah: 0:02:53.2 First expansion market was Houston. And then we were asked immediately to go into San Antonio. So we did that. And then we went into Austin. And most recently, North East Texas, and we’ve gone all the way done to the border now through Galveston and Abeline is our most recent acquisition area.
Jordan: 0:03:11.1 So having made this push, what is your advice or feedback on the sensible way to grow through expansion markets?
It’s always tempting to think that jumping into the next market is going to provide the key to growth, but there are some obvious challenges, pitfalls, etc..
0:03:25.6 Having gone done that path, what do you wish you had known from day one?
Leah: 0:03:31.7 Well, I’m a very analytical person. Anyone who knows my reputation and, you know, kind of knows how I run my business – I’m very Type A and I’m very OCD. So I don’t do anything eyes closed.
0:03:41.0 So, research. Make sure you know the markets you’re going into.
But the biggest thing that I would tell people to consider is: What is your time worth?
0:03:49.3 Because, if you’re going to run a successful property management company, there’s a few things to keep in mind.
0:03:53.4 Number one: That middle growth phase is the most costly.
So in the beginning, it may be just you. Maybe you and a spouse. You can make a lot of money doing it yourself. You don’t have to have employees. So on and so on.
0:04:04.1 You get to that first growth phase and you take a huge chunk by hiring employees.
And so, when you get to that phase, it typically becomes – maybe even cash flow negative for quite some time.
0:04:13.6 And so, it’s that middle growth period where property management companies tend to go out.
0:04:17.6 One of our large competitors here, I heard couldn’t even make payroll a few months ago.
0:04:21.3 And so, it’s – you know, there’s things that can happen and things that – those that aren’t necessarily used to running a business can run into problems with.
0:04:29.3 I had my first business at the age of 16. So business was kind of always my mentality. And on top of that, I was blessed enough to be best friends with my childhood sweetheart. Married very young and started a company together. 0:04:40.3 And so, we tag team approached everything.
0:04:42.2 And so, the one thing that I would tell anyone looking to expand is make sure you have the drive, the will and the time to do it.
0:04:49.8 Because you’re not going to be able to hire someone in a submarket and then walk in day one and make it profitable, make it successful.
0:04:57.1 Making money and making a good business are two very different things.
0:04:59.3 Because we all can make money. The question is: Can we keep making money by retaining clients and keeping them happy and providing that same level of service that we’re able to provide in our home market.
0:05:09.2 So, for me, when we expanded, I was there every week. I was down there making sure things were being done.
Every owner has my cell phone number. That’s been that way from day one and it will be that way until this company’s no longer mine.
0:05:22.4 And so, the way that I run my business is very hands on.
And one of the big questions I get asked frequently on interviews is, “Well how do you do that as you scale?”
0:05:29.7 And I go back to time. You have to be willing to put in the time.
0:05:34.5 So yes, I work from home a lot. Yes, I make my own schedule, but there’s not a minute that I’m not working on my phone, thinking about work, taking care of my clients.
0:05:43.2 And so, you have to be prepared for that. The larger you get, you can’t delegate it out and stay successful. 0:05:47.5 The company is built on you.
Day one, it’s you and whoever your partners are. 0:05:51.5 And the moment those partners disappear, you’re no longer that handhold field, and that’s where companies fail.
Jordan: 0:05:57.8 So, specifically as it pertains what you just said, staying profitable, did you take the approach of acquisitions? Did you take the approach of trying to grow organically? How did you handle expansion?
Leah: 0:06:08.2 So, the first few years – really 2006 to 2009, we bought leads.
And we had a lot of organic growth coming in too, and we were charging very low fees and offering a lot of things that nobody else was doing at the time.
0:06:21.1 Like quarterly visits. Like discounted leasing fees. A lot of things that kind of went hand in hand with that flat fee approach, that we really had been doing since day one with all of our listings.
0:06:30.0 And so, by about 2010, we started working with a lot of investment networks. 2011, it got very large for us, where a lot of these turnkey providers were selling real estate and these were properties that they had bought at great prices in the crash.
0:06:44.1 Fixed them up a little bit and charged them at a huge premium to investors. And some of them were terrible deals, some of them were ok deals and some of them were good deals.
0:06:53.8 And so, a lot of these people were having trouble renting their properties. They had cut rate property management companies.
0:06:58.7 Many of them had expanded property management companies who weren’t based in the city that they were managing properties in.
0:07:04.9 And so, in a period of about six months, we took over about 200 accounts from one company alone.
0:07:10.9 And so, come 2011, 2012, we really were on a path of starting purchasing leads.
And as of today, you kick forward it’s, what? Almost 2019, and we really don’t do any advertising sources.
0:07:23.4 I have a couple investment firms I work with. Some of them we pay referral fees to, but beyond that, we really do no advertising. 0:07:29.8 And I haven’t in a long time.
0:07:31.9 And so, there comes a point – once you get through that hurdle, that initial phase of growth, and, you know, you get comfortable after that.
You’re real profitable, but then you sign on a bunch more and then you have to grow again and the profit kind of drops again.
0:07:44.6 And so, once you get to the point we’re at now, where the profit is so large and the company is so large, it all just grows organically.
0:07:52.4 For instance, my main sales guy who brings on our new accounts, he brings on about 70 a month.
And so, there’s just no reason to do advertising. 0:08:00.3 Any more than that I wouldn’t be able to give the level of service that I would want. And that’s in addition to the dozens of properties I sell every month to my investors.
0:08:07.3 So, you know, there is light at the end of the tunnel. 0:08:09.5 There is a day where you no longer have to market.
Between our fleet vehicles and our name and our reputation, and all the investment firms we work with, once you get to that phase, there really is no more growth that you have to do. Other than organic lead generation.
0:08:22.2 But in the beginning, we did, you know, pay per click, we did lead generation sources, which there’s tons of them out there. 0:08:28.7 We were doing marketing events, fairs, you name it. We did it all.
Jordan: 0:08:32.3 So am I hearing you say that you centralized the sales function for property management across markets?
Leah: 0:08:37.5 I did yes.
Jordan: 0:08:38.9 Got it. So how do you divvy that up? This person is responsible for the initial phone call, consult, follow up, but you have some boots on the ground that’s doing a belly to belly, meet at the table with property owners?
Leah: 0:08:50.7 So here’s the way we work. And from day one, we were a little bit different.
0:08:53.9 So, your typical property management company assigns an account to somebody and that one person has to be a jack of all trades. 0:09:00.0 A master of all trades.
0:09:00.7 And so, that property manager is going to be assigned John Doe’s account and they’re going to have to know how to do repairs, and do the leasing, and the whole history with that property.
0:09:08.3 And going into the business, what my husband and I felt was that, by doing that, everyone had to be a master of everything.
And so, moving forward with higher and new growth, it would be much harder to train and to get the consistency out of everyone who worked at the office.
0:09:21.6 And we always expected that we would be able to grow this large and we wanted to prepare for that day one.
0:09:25.9 So what we did instead is, as we hired, we hired for a function.
0:09:30.5 So, for example, I have one person who does nothing but city registrations and utilities. I have one person who does nothing but lease listings.
0:09:35.7 I have two people who do nothing but repairs. 0:09:38.8 I have three people in the field who do our quarterly walk throughs and our onsite repairs.
0:09:43.6 So, everyone is trained in their trade and they don’t step outside their wheelhouse.
0:09:48.4 And because of that, it allows us to limit the mistakes. But it also allows us to keep our employees happy. We don’t have to overwork them.
0:09:54.1 So although many of our employees are salaried, they don’t work past 40 hours. That means happier employees.
0:09:59.4 And so, it’s – for us it was very, very much about making sure that we had people who specialized. Kind of like a doctor.
If you have an eye problem, you go to someone who specializes in eyes. If you have a heart problem, you go to someone who specializes in the heart. 0:10:11.8 We handle property management the same way.
Jordan: 0:10:14.5 So it’s interesting that you’re saying you take a hardcore departmental approach. But I hear you saying that you augment that.
What I caught you said a second ago, is that every owner has your cell phone number. 0:10:24.2 Tell me how that works. How often do you get those calls?
Leah: 0:10:28.0 You know, I really don’t. It’s a few different things that we do. Number one: Any time there’s mass information I want to get out to the owners, that always comes from me.
So, industry updates, changes that we implement for the company, quarterly mixer events that we do. That all comes from me directly.
0:10:45.1 So the owners already feel like they have a lot of communication with me to begin with.
0:10:49.9 But then they also have the management level people at the office.
So, I have an office manager and an operations manager who the owners are in a lot of contact with. 0:10:57.0 Now, all of that said, it does generate a lot of contact from me by text and by email.
0:11:01.8 I manage between six and eight hundred emails a day.
0:11:04.8 So, as I mentioned, I am on my phone constantly. 0:11:07.6 But, again, to provide that level of service that I want, that’s what it takes. 0:11:12.5 And so, 0:11:12.7 0:11:20.4
0:11:20.5 other property management companies. And they’ve had a lot of issues. 0:11:23.4
0:11:23.7 And so, a lot of the accounts we take over have some pretty significant issues.
And so, that first year is really important to audit the leases and audit the ledgers and make sure that we’re doing the visits and getting the repairs taken care of.
0:11:35.7 And, you know, doing all the things that really should have been done up to that point.
0:11:39.5 So, for that first year, I’m in communication and I’m copied in all communication with those clients.
0:11:45.5 And so, by the time we get past that year, things are really so smooth that there’s just not a lot of discussion that has to happen.
0:11:51.0 Because of the fact that we do the quarterly visits. Because our staff is so well trained. Because we have such systems in place, we don’t have all the craziness that I think goes along with a lot of property management companies.
Jordan: 0:12:02.4 This is really interesting. This is something I want to zone in on.
So, at the scale that you’re at, the level of involvement that you have, could you describe right now, verbally, just give me a job profile for Leah within the organization. 0:12:15.7 And how has that kind of shifted over time?
Leah: 0:12:19.6 So, back in the day – let’s start day one.
Day one I did all my own walk throughs. Every quarter, every property. Day one I did all of our leasing, all of our showings.
0:12:27.6 Kick forward a few years, I retained running comps. I retained deciding what lease renewal pricing to do. Auditing the leases. But the repairs I started having other people handle. 0:12:38.9 Hired people to handle that. Hired people to handle the city registrations. All the little mundane work.
0:12:42.9 So, really, each time I have to take something off my plate, I have two different approaches I take. Number one is I hire an assistant to work with me.
And number two is I take the things that I can put someone else on that won’t suffer the level of service.
0:12:55.7 So, repairs was an easy thing for me to remove myself off of. And if there’s something that they need my assistance with, or they need my guidance on, and my staff comes to me, I tell them what to do, they handle it.
0:13:05.9 Now, most recently, running comps for properties. My staff runs the comps, they know what I expect and then they bring it to me to review and make sure I agree with what they’re doing.
0:13:15.0 Lease renewals. Up until about three months ago, I still contacted every single owner for every single lease renewal.
0:13:21.0 Now, my staff contacts them based on the recommendation I make off the spreadsheet for everything that’s coming up for renewal.
0:13:28.5 So, I just continue to take little things off my plate, but still have the oversight of it all so that it gets it done the way that I want it done with the feel of how I like it.
0:13:38.2 But it’s, kind of the behind the scenes work that we’re able to delegate out to new employees.
Jordan: 0:13:42.8 So has that been challenging to give up control over time? Or is that something that you really just kind of embraced from day one?
Leah: 0:13:49.4 You know, I’ve always embraced change, and I’ve always really kind of tried to be ahead of it.
I never want to be stuck having to hire and train when we don’t have the time and the ability to do so. 0:13:59.6 Because, in that case, the clients and the properties would suffer.
0:14:02.7 However, that being said, it’s very hard letting go of some things. 0:14:04.1 Number one, I love my clients. Many of them I’m very close friends with.
0:14:07.6 As I mentioned, we do quarterly mixers for all of our clients. And so, it’s hard losing that communication.
0:14:15.0 And so, it’s – you know, it’s a fine line between wanting to take care of the company and wanting to take care of the clients. But also knowing that in some cases, delegating those things out are in the client’s best interest.
0:14:24.4 And then, there’s this whole other piece of it, which is taking care of myself. 0:14:27.3 And in addition to oversight of all the property management functions, I also have a full investment sales and acquisitions team.
0:14:33.1 And most recently, a new construction team building property.
And so, you know, it’s a lot of hats that I have to wear and luckily I have my best friend and my husband to do that with.
0:14:45.1 And so, it’s always this fine line between wanting to be able to do it all and knowing that I can’t.
And then, on top of that I have three adopted children, and one just started college, two just started high school.
0:14:54.4 And so, there’s a lot of different things in life that we have to juggle.
0:14:58.0 And you just – you know, going back to what I said earlier about 0:15:00.0 [Inaudible] – you have to be ready to do what’s necessary to do that.
Now, in our case, we happened to expand into these markets at the same time that Dallas boomed. And so, it’s been crazy. 0:15:11.7 I won’t lie. And it’s been long weeks and long hours, but I love what I do.
0:15:17.0 So many people that I talk to in real estate, they do it because maybe the hours work for, you know, whatever their situation is. Being a single parent or because of travel, or whatever it may be.
0:15:26.5 And the one thing I would tell people, is property management is something you have to love. If you don’t love it, you’re going to get burned out.
And whether that’s talking about an individual property management company owner, or whether it’s talking about your employees.
0:15:39.8 If you have an employee who doesn’t actually love what they do and isn’t committed to you as a company, then that right there is going to be cancer in the office.
0:15:46.9 And so, it’s really, really important that you build a team that wants the company to succeed as much as you do.
0:15:52.1 And the ways you do that are by taking care of your staff, providing benefits, giving raises, giving time off, doing company events. Being friends and like family with your employees. 0:16:01.8 There’s a lot of things.
0:16:02.9 We believe in that kind of old mentality. The small-owned, family operated business. We get buy offers every single week.
0:16:10.9 And, I have to kind of chuckle to myself because if any of these companies knew me, they would know not to waste their time.
0:16:16.7 But, I think it’s a two-fold thing. Right? Number one, they want to get rid of me because I’m still doing it for cheaper than almost everybody else.
0:16:23.1 But, number two, they want to be able to absorb our growth and have that profit.
0:16:27.6 And so it’s, you know, it’s a balance act. 0:16:29.9 It’s a balance act of making sure that you don’t grow beyond what I can handle.
But it’s also a balance act to make sure that I grow so I can better support my clients. 0:16:37.1 Because, the bigger we get the more services I can offer. And so, it’s a double-edged sword.
Jordan: 0:16:42.0 Yeah, I hear ya. I want to actually talk more about the more services you can offer.
Before we do that, question for you: What is unique about property management? It’s really easy to get overly myopic or overly self-congratulatory about what’s special about this industry.
0:16:56.6 And yet, there is some meaningful differentiation.
0:16:59.5 For example, how would you address or speak to the realtor, the real estate agent, the “mega agent” that’s now thinking about getting into property management?
0:17:11.0 What is unique about this industry as opposed to any other, in your opinion?
Leah: 0:17:16.7 So, what is unique: it’s expensive. I’ll tell you that day one. 0:17:21.3 The insurances that you need, the cost of doing everything that goes in hand with doing it right. 0:17:28.9 It is a lot more expensive than being an individual agent.
0:17:32.3 Number two: a lot more broker involvement. If you’re an individual agent, you can’t do property management. The broker has to be the one to oversee and do the property management.
0:17:40.9 So, it’s a very different thing there as well. The other thing that I would say is: A lot of real estate agents say to me, “Oh yeah, you know, as a real estate agent, we work 24/7. We’re on-call 24/7.”
0:17:51.2 I promise you, if you are an individual agent doing regular real estate, you don’t know what being on-call 24/7 is until you get into property management.
Jordan: 0:18:03.6 Yeah, it’s more of a slow money play, for sure. I mean, that’s what I notice. And to the extent that we do service the traditional brokerage side, I find that property management, by contrast, is a little lower ego. Not ego free, but a little lower. A little bit more of a slow money play.
0:18:17.4 It provides more of an opportunity to build an actual functioning business model. As opposed to the business model of just being raw hustle. Right?
Leah: 0:18:27.4 Right. I mean, so let me give you an example. If I were a regular real estate agent, and tomorrow I wanted to take six months off? I would have no income for that six months.
0:18:37.5 In property management, and certainly when you get to the size that we are, I could take off indefinitely. I could take off forever and hire someone to come in my place and run the business.
0:18:46.1 And so, you know, with property management, there’s an end in sight. There is a residual income and guaranteed contracts and all these things that allow you to prepare for a future.
0:18:56.2 With a regular property management business, that’s something that I think a lot of people don’t realize. And that should always be the goal. Right?
0:19:03.0 It’s what all of our parents taught us, and I think that a lot of people have lost that. Is that the goal of having a business and being a small business owner is to prepare something for your future. To have a retirement, to have a nest egg, to have something to leave our kids.
0:19:15.6 That’s what we all are working towards. Or, at least, that’s what we all used to be working towards.
0:19:19.6 So many things now are instant gratification that I think a lot of business owners have lost sight of that.
0:19:25.2 As an individual real estate agent, there is no end in sight. You can save up and you can save up a retirement, but you’re not going to have a business that’s going to continue to return to you.
0:19:35.6 Now, you can create an Ebby Halliday 0:19:35.3 or a Coldwell Banker and have franchises and all those things and you might get down that road. 0:19:40.9 That’s a very difficult path and it’s also something that’s cyclical with the market.
The one thing I’ll say about property management is, as long as you build facets into the business like we’ve done with the investment team and the property management team and all the other things, it doesn’t matter what the market does, we have teams that build in a bad market, we have teams that build in a good market. 0:19:58.7 And, the teams don’t suffer either way.
0:20:01.1 And so, really, market fluctuations don’t affect us. It just changes where we focus our time.
Jordan: 0:20:06.3 So let’s talk about some of those alternative revenue streams. How has the revenue model changed over time in terms of ancillary sources of income? Aside from just the base management fee.
Leah: 0:20:17.5 For us, it really hasn’t. We really haven’t changed our model from day one. Day one we were selling investors investment property. Day one we were property managing.
0:20:28.9 You know, we’ve done 10-31 exchanges and kind of done the same model from day one. The only real thing that we’ve changed is bringing in-house repairs. 0:20:37.1 And that’s for small, you know, handyman type items.
0:20:40.8 And that’s something that we don’t really do for profit purposes. 0:20:42.6 We do it more to keep clients from having to pay GC prices.
0:20:47.6 And so, that team was added years ago and it continues to build, but really wasn’t a proper house purpose.
0:20:54.6 It was just because contractors were expensive and there’s a labor shortage right now.
0:20:57.7 And so, it’s very, very hard to get someone out to a property for a reasonable price. And so, we made the decision, when the market really went crazy, that we had to have a team in-house just to better support the clients.
Jordan: 0:21:09.4 Hmmm. So how does that work in the expansion markets? What is centralized and done at the home office versus what’s done boots on the ground and, you know, the next market that you open in?
Leah: 0:21:21.0 Right. So, the majority of our clients own in and across all of our markets. Or at least many of them.
And so, all core functions remain in corporate. 0:21:27.8 So billing, registration, repairs, all of that oversight is in office. 0:21:32.1 And then I have a rotating team who travels across the state.
0:21:35.2 And the reason I do that is because we work so many areas. We work hundreds of cities. 0:21:40.1 And we work a lot of outlying areas, as I mentioned earlier and so, there’s just no way to have an employee in every 500 person city.
0:21:48.2 It’s much better to have people constantly rotating across the metro and across the state.
0:21:52.1 And we have leasing agents in each of the major metros that travel to all of our outliers.
0:21:55.8 And then, we have our repairs team that is constantly traveling across the state at all times.
0:22:00.2 And so, for us, it allows us to continue to expand. And we just keep adding people into that rotation and we never have an area that we can’t service.
Jordan: 0:22:07.4 Ok, that’s really interesting. Tell me more about that. Can you give me, like, an actual example of what the schedule for rotation might be for one of these maintenance folks, for example?
Leah: 0:22:15.0 Yeah. So, for instance, Houston – we are in Houston once a week. And we have three people who rotate off between that schedule.
0:22:22.7 So, small repairs are done in Houston once every seven days. 0:22:24.9 Sometimes more frequently.
And every time they go down we have a corporate account with Hotels.com and they book their own room and they go down and they stay for two days. Knock everything out and then head on to their next area.
Jordan: 0:22:36.0 Wow. You’re kind of blowing my mind a little bit. That’s really interesting. So, for those who are not from the state of Texas, like you and I are, what is the relative proximity of Austin, Houston and Dallas, for example?
Leah: 0:22:49.1 Ok, so Dallas Ft. Worth, it’s kind of a misnomer. Dallas Ft. Worth is huge. 0:22:55.1 So, if you were to go from one side of our Dallas Ft. Worth territory to the other, that would be a three hour drive. 0:23:00.6 So, it’s huge. Texas is a huge state.
0:23:05.4 To go from Dallas to Houston, that’s about four hours. 0:23:07.4 To go from Dallas to Austin, that’s about three hours and to go from Dallas to San Antonio is about four and a half hours.
0:23:15.7 So, we’re talking a wide area. From us to North East Texas, Tyler Longview where we service, it’s about two and a half hours. To go north to the Oklahoma border where we service, it’s about an hour.
0:23:25.2 So, really, everything we do is driving. So that goes back to our fleet vehicles. All of our employees who are in field are provided vehicles, and then we have extra vehicles stored at the office. At least three at all times.
0:23:25.2 And so, any time our staff is doing something, there’s a vehicle available to them. We, of course, pay all expenses for that. 0:23:42.1 And, you know, carry all the necessary insurances and things to protect us.
Because a lot of people don’t realize how many different insurance policies you need to carry as a real estate firm and as a property management firm.
0:23:53.8 And Texas is really kind of lax about that. Because they don’t require for most companies that you even carry Errors and Mis-engine insurance.
And so, yeah there’s a lot of expenses people overlook. Whether you’re a real estate brokerage owner or whether you’re a property management firm owner.
0:24:06.4 And so, anyway, there’s a lot that goes into that, right?
And so, all of that said, it goes back to when you expand you tend to go negative. And so, we go into expansion territories expecting to lose money the first year. 0:24:18.1 We didn’t, but we budgeted to.
0:24:20.3 We didn’t expect to have the response that we did and have 200 owners in Houston in the first year. But, we did.
0:24:28.9 And we had been asked to expand for so many years, there eventually just came the point where I couldn’t say no anymore. 0:24:34.0 And there’s only a few parts of Texas I don’t intend to cover, and I think our next expansion is probably going to be Florida. And so, we’ll just keep trucking along.
Jordan: 0:24:42.1 You said Florida?
Leah: 0:24:43.6 Yeah, Florida’s on our radar right now.
Jordan: 0:24:45.2 So, will that kind of break the model? Because I’m really intrigued that you’re able to have this model.
Because of the geographic proximity, you’re spreading the existing labor over the largest number of units possible because they can thrive based on this schedule.
0:24:59.5 But nobody’s taking a company truck from Houston to Florida. 0:25:03.7 What’s going to need to shift to accommodate working a market that far away?
Leah: 0:25:07.6 Well, luckily for me I already have property in Florida and I’ve already got a team down there. Personally. So, expanding into the business model will be very easy.
Jordan: 0:25:17.0 Interesting. Alright. So, some other minutiae.
On the marketing side, in terms of owner education, staying in front of people, making the connection, this is an opportunity to participate in wealth creation through real estate, not just a glorified gopher.
It’s the basic dichotomy that a lot of management companies don’t fully get up on. 0:25:35.9 What do you do to educate your owners? What does that owner education look like for you?
Leah: 0:25:42.5 So, let’s talk about individually property by property first.
We do a two month re-renting period in all of our leases. 0:25:46.1 So, the last 60 days of every lease, we are marketing and showing the property to the next tenant and leasing it most of the time before that tenant ever leaves.
0:25:54.4 And because we do our quarterly visits inside the tenants to make repairs and take responsibility for the items they break during the lease, our properties show very well.
0:26:02.3 We do that across all of our single-family and multi-family properties.
0:26:06.9 And so, we approach our 90 days out. We let them know what the market is doing, how we’re going to handle their renewal, and basically say to them, “No need to respond to us unless you want to do something different.”
So we’re giving them the market information, but we’re not having them have to give any type of input or time allotment unless they want to.
0:26:23.7 And then, what we will do is send the notice out to the tenant of whatever we’re going to do with their lease.
And if they don’t agree, then we may give them notice. Or it may be a tenant we don’t want to keep. And so, we give them notice.
0:26:33.7 And so, we’re going to let the owners know we’re marketing the property. We use a task management system to keep them posted every week on showings.
0:26:39.4 Run comps every single week if they’re not leasing to tell them what we should do, what incentives to offer, all of those things.
0:26:45.7 And so, we’re in front of these owners at least once a week letting them know what the property’s doing, auditing the showings, making sure we’re looking at the feedback and doing all the things to stay on top of the listings.
0:26:55.2 We hold – this time of year we sit about 160 active listings at a time. In prime season, we can hit three or four hundred. And so, there’s one person who’s full time job is just that.
Jordan: 0:27:08.0 Is just what specifically?
Leah: 0:27:09.7 Running the comps, updating the owners, overseeing the lease listings.
Jordan: Across – got it. Across all of these markets. Ok.
Leah: 0:27:15.7 That’s correct. They are a master of all markets.
Jordan: 0:27:18.5 Totally makes sense.
When somebody comes to you – when an owner comes to you and says that they want to sell, do you do anything to frame the conversation around selling versus holding?
More generally, how do you speak to the owner being able to wrap their mind around the financial performance of their asset?
Leah: 0:27:39.1 So, we are a full-service real estate investment brokerage. So, from day one we are talking to them about the benefits of sale.
And so, my specific model for the investment properties I sell, is a two to four year hold in a prime market and a four to six year hold in a low market. 0:27:53.1 And so, our clients know from day one that that conversation is going to happen every single year.
Jordan: Love it.
Leah: 0:27:59.4 And in addition to that, I do classes every single week. We have lots of local clients who attend. But a huge portion of our clients are international. Australia specifically.
0:28:08.2 And so, we also put all of our classes, starting a couple months ago, on YouTube. 0:28:11.8 Because that was a whole lot easier than having to email out those giant piles and pieces.
0:28:16.7 And so, they know what the market’s doing. They listen to my interviews. And I go on TV and radio and talk about the market a lot and our model of this flip plan that we do.
0:28:25.8 And so, for our clients, it’s a very easy thing to have those discussions with them. And they kind of already know what the market is doing.
0:28:32.0 Because we send market updates, employment updates, all those types of things about all the markets that we’re in.
0:28:35.8 And we’re very active on Facebook.
0:28:38.3 Now, that said, for the clients that are new and come into it. The minute they come on board, the start getting the marketing information. They start seeing the class schedules. They start doing all those things. 0:28:47.3 So, it’s real easy to integrate them.
And by being in front of those clients and having that system, it’s just a great way to not only keep and retain clients, but also have them trust in you.
0:28:59.1 And so, when you make a recommendation – like when I tell a client, “Look, it’s really time to sell this asset. I’m worried it’s a top value,” it’s not so much of an argument.
Because they know what I’m talking about. They know that this is what I do and that, you know, lots of our clients have huge success with that.
0:29:11.6 And so, there’s not the pushback that I think a lot of companies that take a passive approach would have.
Jordan: 0:29:15.9 I’m curious. What would you say to the smaller property manager that says something along the lines of, “Yeah, we’re property management only. We choose not to do brokerage. That way we can tell the owner that we have the owner that we have a clear, 100% property management only focus. And so that we can really do our best to get realtor referrals.”
0:29:32.5 You’re obviously not taking that strategy. 0:29:35.2 How would you address that thought process?
Leah: 0:29:39.7 How would I address that thought process.
Jordan: 0:29:43.4 It’s a revenue exchange. Right? I mean, you’re capturing money from the brokerage and it’s just – it’s just swapping things out.
Leah: 0:29:50.0 How much time do you want to invest? And how rich do you want to get? Those are the two questions to ask yourself.
0:29:53.9 How successful do you want to be? And how much time do you want to devote?
0:29:58.4 A property management only model is something that is simple. You know?
0:30:03.2 Once you have it running and it’s successful and it’s something you can keep building and just work with long term. 0:30:10.8 But it’s not going to get you to that huge end level.
0:30:15.1 You look at all the companies that have sold. All the companies that have gone corporate. They all have facets. We all have facets.
0:30:21.7 All us big players, that’s what we do. 0:30:23.9 Not everyone is cut out for that. Not everyone can run a business like that. Not everyone can be pulled in a thousand different directions.
0:30:30.5 We are in a society where people really don’t handle stress well, and so, you know, that’s something I think people have to keep in mind.
0:30:37.6 You have to be able to come home at night and go home to your kids and go home to your spouse and let it go. 0:30:43.1 And it took me a long time to learn that. 0:30:45.1 I won’t lie. There were years that I really felt stressed 24/7.
0:30:49.0 We were growing so fast and I had so much on my plate and I had my own medical stuff with having lupus. And my adopted kids.
0:30:55.9 And I just – there were days I came home and I felt defeated.
0:31:01.1 And you will never be able to build something long term and build something that you can feel comfortable expanding and doing all these things until you can come home, you can take a deep breath and you can let it go.
0:31:14.8 And in property management, that’s really, really hard. It is. Because every single thing feels like a ten. 0:31:20.6 Every ceiling that caves in. Every fire. Every flood. Every break in. Every eviction.
0:31:26.4 You take them personal and you feel like it’s a reflection on you or on what work you’ve done, or what you’ve recommended.
0:31:34.2 So, the best advice I can give people on trying to decide whether they want the facets or they don’t, is first learn to let things go.
0:31:41.6 Learn to come home, learn to separate work and home. 0:31:44.5 And once you can do that, then maybe you want that step.
0:31:48.8 But if a big company and big success and that’s what you’re looking for, the facets are the way to get there, without the stress.
Because that’s what allows different revenue streams, so that no matter what the market does, whether it’s slow season or prime season – because, like, for me, we tier all of our leases to prime season.
0:32:06.0 So all of our leases come up in summer. 0:32:08.9 So we’ve got nine months where there’s kind of a lull.
And, you know, we’re successful and big enough that we can afford that. 0:32:16.4 But a lot of small companies, to do the best service to their clients would be to tier their leases to prime season. 0:32:20.4 Have everything up in summer.
But how many people can afford nine months with very little renting income. 0:32:25.8 And so, there’s a lot of things that having those facets allow you to do to better serve your clients to.
Jordan: 0:32:30.3 Great answer. So what I hear you saying is: In terms of the financial model, it’s there. It’s the way to go.
But you’re also providing the caveat around quality of lifestyle. If you’re wanting a slow, lower stress business, adding a bunch of ancillary business units probably isn’t the way to go. 0:32:46.6 Makes sense to me.
I have no doubt, in terms of the numbers that we see, and the clients that we work with, that having these ancillary business units is a huge disproportionate impact on bottom line profit.
0:33:00.5 This is why car dealerships make money on the sale of the car. But they also make a huge amount of money from the finance department, from the insurance department, from the maintenance department, the service center, etc. 0:33:12.0 It’s an all-in-one business model.
0:33:13.3 I do want to pivot to ask you about some of things that are a little bit more of kind of minutiae here.
0:33:17.9 Starting off with just managing unreasonable expectations.
They come from tenants, they come from owners. How do you handle and work with unreasonable expectations and can you give me an example of anything that may have come up within the last six months?
Leah: 0:33:33.3 So, going back to my reputation preceding me, I am huge on firing clients.
And a lot of people would say, “No, no no, you never fire a client.”
Well no, that’s not true. 0:33:43.0 And let me tell you why.
One bad client can take up 99% of your time. 0:33:47.0 So we call it the 90/10 rule. And people hear me talk about this a lot. And it works in all facets of life.
0:33:55.6 But 90% of your time is going to be taken up by 10% of the people.
0:33:59.6 So I’m a big believer – and if you can cut that 10% out, then you’re going to be a lot happier and a lot more successful.
0:34:04.8 Now, let me give you the caveat to that. I mentioned earlier, a lot of the properties we take over are in dire, dire straits. 0:34:12.3 I have multi-family projects that come to me with 50% vacancy. Which is dumbfounding, but it happens.
0:34:17.3 And so, those are, by nature, going to take up a lot more time. 0:34:21.7 That’s not what I’m talking about.
I’m talking about the owner that you hire and that you work with, and that comes to you six months in and has a slab leak, and there’s mold all on the baseboards and they say, “Well, I’m not fixing it.”
0:34:32.8 That is someone that there is no benefit in continuing a relationship with.
I had an owner, and I could give a thousand examples, but I had an owner whose tenant had no keys. 0:34:44.3 And they didn’t want to fix it because they said the tenant could just use the fire escape.
That is an owner – you know, you wouldn’t even believe some of my stories, but that is an owner that there is no benefit to your business to have.
0:34:54.5 It does not matter how much you make in management fees, anyone who does not care about human decency, and that’s what it really boils down to. 0:35:03.6 I don’t have to please every tenant. 0:35:05.6 It’s never going to happen.
Tenants, by nature, and especially when you’re doing visits and you’re making them fix stuff, you’re going to make a lot of people upset.
0:35:14.5 But the benefit here is that the goal is not to make everybody happy. The benefit and the goal is to make sure you’re treating everyone equally, everyone with respect and you’re giving them a safe and comfortable place to live.
0:35:26.3 Does everything have to be perfect? Absolutely not. But my rule of thumb is: if I won’t let my child live in that property – and I’m not talking about the area and the quality of upgrades, I’m not talking about that.
0:35:37.3 I’m talking about if it is not habitable, then I’m not going to manage it.
0:35:41.5 And so, people know when they come onboard to me, and I sign these accounts that – you know, these crazy multi-family accounts that are in such dire straits, we don’t really make money the first year.
I kind of call it my charity cases, but those are going to become the clients that are the most loyal and those are the ones that are the most rewarding.
0:35:58.2 And that’s where we made our niche. Is helping all these people that nobody else would help. 0:36:02.4 And so, I know going in what to expect.
But I set expectations with my clients too. 0:36:07.2 I set expectations with the tenants, knowing that we’re going to do our visits. But knowing that in return, they’re going to have a safe, clean property to live in.
0:36:14.9 I set expectations with my owners that yeah, we’re walking into 50% vacancy, you need to be prepared.
We’re going to do our initial walk throughs, we’re going to find a lot of repairs. I don’t expect you to fix them all, I expect you to come up with the timeline of what you can manage so we can get this property better for your tenants, which in turn is better for you.
0:36:31.8 We can raise rents, do all the things we need to do.
0:36:34.1 So, as long as people work with us and there’s communication and we’re treated with respect, that’s an important piece.
0:36:41.0 But if I have a client, I have many, many people who love to yell at my repairs team. It’s just is – by nature what happens in property management.
0:36:48.9 And I had an owner in my office a few weeks ago who really was trying to lie about having been told about a lot of repairs that we were recommending and we told them that we were no longer going to work them.
0:37:00.1 And they just blasted our repairs team. And our repairs team had done nothing wrong.
0:37:03.8 I’m the first one to throw people under the bus if they make a mistake. My employees all know. As long as you’re honest, I’ll back you. In this case, they did nothing wrong. The owner just didn’t want to fix anything. 0
:37:13.3 The owner has dozens and dozens of properties, but their excuse is that they have no money. Well, my answer is: If you have no money to fix these properties, then you need to sell one and use that money to fix them. Because they’re deplorable. They’re condemnable.
0:37:25.5 And so, it’s a fine line between having happy clients, but also having successful real estate investments.
0:37:32.1 And I tell people all the time. The two most important things in a real estate investment. Number one, you have to be comfortable with it. It doesn’t matter how good the numbers are, if you’re not comfortable with your investment, if it’s going to keep you up at night, don’t do it.
0:37:43.9 And number two is, take care of your property and it’s going to take care of you. 0:37:48.3 And for the people that don’t understand what that means, they shouldn’t buy real estate.
Jordan: 0:37:52.8 Preventative maintenance. Yeah.
Jordan: 0:37:56.5 I hear you. So, do you have a zero tolerance policy in place surrounding owners contacting tenants directly?
Leah: 0:38:03.2 I do. Actually, the state contract has that in place. Where owners really shouldn’t contact tenants directly.
Now, there are some times where owners do. They either already knew them from previous management, which most of the time when they hire us, they’re hiring us because they don’t want to talk to the tenants anymore.
0:38:17.6 But, by nature, when you take over that type of account, the tenants are – they’re going to go cry to mommy.
0:38:23.6 And so, I warn all the clients we take over that, “Hey look, we’re going to start implementing all this new stuff, your tenants are going to maybe get upset. Especially the ones that we’re really, you know, cracking down the whip on. So be prepared, they’re going to contact you.”
0:38:35.0 So, you know, setting expectations up front with your clients will help alleviate that.
0:38:38.6 But yes, we have a zero tolerance policy for that.
0:38:40.8 And, you know, there are some owners, your mom and pop owners, where maybe that was their house for 20 years and now they’re renting it out.
0:38:47.1 They’re going to be more likely to get to know their tenants and interact with their tenants. And I’m fine with that.
0:38:52.3 But I just warn my clients, “Once you have a relationship with that tenant, a tenant can always use that against you.”
0:38:57.6 And so, it’s something that, again, double-edged sword. The client’s got to be warned about that and then they’re going to make their decision on what they’re going to do.
And, you know, nine times out of ten they come back and say, “God, I wish I’d listened to you. This tenant blows up my phone 24/7.”
0:39:12.1 Because, you know, inevitably that’s going to be the property that has a slab leak or the roof caves in, or whatever it may be.
0:39:17.2 But, you know, it’s, again, back to managing expectations and just giving them as much information as you can to make an informed decision.
Jordan: 0:39:24.9 How do you handle documentation? Obviously, this is a huge thing to maintain. Protect yourself against legal liability, etc.
How do you stay on top of managing staff communication, such that if you are called into a hearing or proceeding, that you have a bullet proof documentation as to what did or didn’t happen, and what was or wasn’t said.
Leah: 0:39:47.4 Going back to my reputation preceding me. We used task management notes for everything. Everything is timestamped and documented in our system. Every call log.
I literally can type in phone number and see who talked to them, who transferred the call, who took the call, how long they were on the call, what happened. Everything is documented.
0:40:06.1 In terms of paperwork, paper trails, all of that, between our quarterly visits, our notes with owners, our updates to owners, everything all being timestamped and sealed, our records are pretty impeccable.
Jordan: 0:40:16.6 What task management system do you use?
Leah: 0:40:19.5 We use Buildium and we utilize their repair task system for everything in office. From quarterly visits to rental registrations, to repairs, to showing updates. 0:40:27.1 We have finagled the repair system for task management to be used for everything. 0:40:33.2
Jordan: 0:40:33.0 Interesting. Ok. So going back to taking things personally, what about reputation management? How do you handle the nasty Yelp review that invariably, regardless of whatever your service quality may be, is going to come up from time to time.
Leah: 0:40:47.0 Humiliate them. Honestly. I know that’s a bad answer, but it’s the truth.
You have a tenant that goes on there slamming you because you billed them for their deposit? Post the pictures of the damage they did. You know, they opened that door.
0:40:59.2 And so, it does deter. But it’s going to happen. Especially when you’re as strict as we are with the walk throughs and the billing. You know, they’re going to go and they’re going to complain.
0:41:08.2 So, prove what you did and make sure that you are soliciting reviews from everyone else who’s happy.
0:41:12.4 Because the 1% who are angry are going to be the ones who scream out, but you’ve got to get in front of the 99%.
And if you’re close enough with your clients, and like us with having a relationship with them, they’re more than happy to go on there and review.
Jordan: 0:41:24.7 Got it. So the bulk of what I heard there, just glossing over the humiliate them part, was drowning it out. How do you actually do that? How do you actually proactively solicit reviews from the right people?
Leah: 0:41:37.4 We just tell people. You know, we ask them to go on and review. 0:41:39.7 And most of the time they do.
Jordan: 0:41:43.7 Got it. So, a couple of closing questions here that I ask every guest. 0:41:48.0 And the first one is this: Leah, who do you learn from?
Leah: 0:41:52.8 Who do I learn from? You know, honestly, I kind of did all this without knowing anyone in the business who did property management. I didn’t have someone to sit in front of and ask questions to.
0:42:05.9 I learned from trial and error. So my answer is really not a person, it’s life experience.
0:42:05.9 And so, I come up with an idea that I think is awesome and I implement it.
And a week and a half later I call a staff meeting, I’m like, “Screw that, we’re done. That was a bad idea, I don’t know what I was thinking. And let’s just start all over.”
0:42:23.7 And so, trial and experience is what I’ve learned from.
I didn’t have someone that I could go ask 100 questions to. 0:42:30.8 I read a lot. I stay in front of the news, I stay in front of the industry.
0:42:36.3 My husband serves on lots of boards and we really make sure that we know everything that we need to know.
0:42:41.5 And so, I think that, you know, being, again, a master of your trade is very important. But also being humble enough to say, “My idea sucked. Let’s try something else.”
0:42:51.1 I think too many people get stuck in a pattern and then a habit that they really don’t look at maybe things that they could tweak to do better.
0:42:58.8 And I’m someone that – I make change all the time. I will change a policy, I’ll change a procedure without a second thought.
0:43:05.2 And the worst thing that happens is it’s a really bad idea. But if I don’t try it, I don’t know that it can’t succeed.
Jordan: 0:43:10.7 Speaking of reading, what books have impacted you specifically in the area of business?
Leah: 0:43:17.0 So I don’t read business books. I really never have. I read the news. And I study the news.
And so, for me – I don’t know anyone else who’s done what I’ve done. And I don’t say that to sound conceited. I really don’t mean it to, but it is the truth.
0:43:32.5 I haven’t found another property management owner and investment firm owner who has done anything close to what we’ve done.
0:43:38.7 And so, you know, I don’t have time to go write a book. I’ve been offered many times. I don’t have time.
0:43:43.8 So, for me, going to go find a book to read, to learn about something, it just doesn’t do it for me.
0:43:49.4 I did at one point, pick up a book on stocks thinking I could become a master of that trade, and I gave up on that really quickly.
Jordan: 0:43:57.7 You know your limitations.
Leah: 0:43:58.7 Yeah, yeah. But no, really, it’s watching the market.
0:44:01.8 Because I think that having market knowledge is probably the most important thing to be able to guide clients.
Especially if you’re selling investment property and you’re trying to help people understand when to hold, when to sell. You’ve got to know what’s going on politically and economically.
0:44:14.2 And I think too many people get so tired of the politics system that they just ignore it completely. Like with these upcoming mid-terms. It is going to decide what our market does. And so many people are just so tired of politics they totally ignore it.
0:44:28.4 As an owner of a real estate firm and a property management firm, you can’t ignore it.
Jordan: 0:44:32.9 Interesting perspective. 0:44:33.2 Final question of the interview. I ask this to every guest. 0:44:36.8 Leah, in your opinion, are entrepreneurs born or bred?
Leah: 0:44:41.4 Born. Absolutely born.
Jordan: 0:44:45.3 Definitive. That’s pretty clear. Alright. Fair enough. So everybody tends to fall in one camp or the other. I, myself, fall into the born category as well. I appreciate you coming on.
For folks that want to learn more about your company, what’s the best place for them to go?
Leah: 0:45:02.0 So they can go to our website. That’s OmniKeyTexas.com. Or they can feel free to give us a call at 833-OMNIKEY.
Jordan: 0:45:11.8 Alright. Hey, Leah, I appreciate you coming on, and next time you’re in Austin let’s break bread.
Leah: Absolutely. Thanks so much.