Cornering the Market in a Small Town with Sarah Laidler
Prior to working in single-family, Sarah’s background was in the multi-family side, where she managed over 1000 apartment units.
Currently, Accolade manages over 450 single-family units as well as some multi-family and HOA in a city of fewer than 30,000 people.
In today’s episode, you’ll learn how Sarah’s experience with multi-family properties has translated into success on the single-family side and how you can have an outsized presence in a very small market.
- (01:19) – Background Leading up to Today
- (01:28) – Sarah explains how she got stared in the multi-family side of the industry.
- (02:37) – The highs and lows of multi-family.
- (02:57) – Why she transitioned out of multi-family and into single-family.
- (04:43) – Discussing the effects of the 2008 housing crisis.
- (06:07) – Sarah’s long-term vision after her move into the single-family industry.
- (07:41) – Starting a new business in a smaller, rural market.
- (08:58) – The arrangement with her first employee.
- (07:41) – Starting a new business in a smaller, rural market.
- (01:28) – Sarah explains how she got stared in the multi-family side of the industry.
- (11:06) – Property Management Journey
- (11:17) – Sarah discusses how she scaled her company and what roles she added over time.
- (12:19) – How her company was able to obtain a lucrative market share percentage.
- (15:52) – Accolade’s branding and positioning.
- (17:03) – How far Sarah thinks she can push her market share.
- (18:17) – Discussing the skills and knowledge Sarah learned in multi-family that she can apply to single-family.
- (19:41) – Sarah explains why she decided to expand to HOAs.
- (24:37) – Sarah’s thoughts about ancillary business opportunities.
- (26:58) – Lifestyle Creation
- (27:31) – Sarah shares her business goals as they relate to lifestyle.
- (28:43) – Whether or not growth is required.
- (29:59) – The need to rebrand in order to grow.
- (28:43) – Whether or not growth is required.
- (27:31) – Sarah shares her business goals as they relate to lifestyle.
- (30:50) – Profit
- (31:37) – Sarah discusses what makes it or breaks it for property managers.
- (32:18) – Managing labor and her scope of services.
- (34:45) – Handling maintenance at Accolade.
- (36:31) – Breaking down the portfolio.
- (42:13) – Who do you learn from?
- (43:58) – If you could do it all over again, what one piece of advice would you give yourself?
- (45:40) – If you could wave a magic wand and change one thing about our industry, what would it be?
- (47:55) – Are entrepreneurs born or bred?
- Traction: Get A Grip On Your Business; by Gino Wickman (42:53) – Recommended learning resource by Sarah.
- NARPM – Provides resources for residential property management professionals who desire to learn, grow, and build relationships.
- The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It; Michael Gerber (42:53) – Recommended learning resource by Sarah.
- Love Does: Discover a Secretly Incredible Life in an Ordinary World; Bob Goff (43:15)
Where to learn more:
If you want to get in touch with Sarah or find out how to operate successfully in a smaller, rural market, find her on her website Accolade-Rentals.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.
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.
0:00:18.8 Whether you manage 100 units or 10,000, this broadcast is designed to help you see the big picture and to give you the tools and tactics that you need to get to the next level.
0:00:38.1 Today, I’m talking with Sarah Laidler, managing broker at Accolade Property Management, based in Ellensburg, Washington.
0:00:46.2 Prior to working in single-family, Sarah’s background was in the multi-family side, where she managed over 1000 apartment units.
0:00:53.9 Currently, Accolade manages over 450 single-family units as well as some multi-family and HOA in a city of fewer than 30,000 people.
0:01:03.8 In today’s episode, you’ll learn how Sarah’s experience with multi-family properties has translated into success on the single-family side and how you can have an outsized presence in a very small market.
0:01:16.0 Welcome to the show Sarah.
Sarah: 0:01:18.1 Thanks for having me Jordan.
Jordan: 0:01:19.1 Well, it’s a pleasure to have you on. Let’s start here: Background. I mentioned that you had a background in multi-family, put some color in that.
0:01:25.7 How did you get into the multi-family side?
Sarah: 0:01:28.8 Definitely. So, I grew up in a family where my parents were developers. And so, as their portfolio grew and they started building larger projects, the banks and everyone else kind of started telling me, “You know, you really need to start hiring a professional property management company.”
0:01:41.8 And so, with that they did. We actually went to three big name professional property management companies.
And really just had a horrible experience with each one and in that, decided, “Nope. We’re taking it back in-house. We’re going to manage our own stuff,” and started there.
0:01:58.6 So, I just really started managing my parent’s properties. Their smallest property was 100 units, their largest was about 250.
0:02:07.0 So we had full-site teams and the whole nine yards. 0:02:09.7 So really, we’re just taking care of our own stuff and inadvertently built a property management company by accident.
Jordan: 0:02:16.3 By accident. Yeah. That’s a common story, right? In terms of how people get into it.
Apparently, there’s not a five-year olds right now out there telling themselves, “I can’t wait to grow up and be a property manager.” 0:02:28.6 So you dealt with multi-family for awhile, how’d you like it? What were your thoughts? What were some of the highs and lows on the multi-family side?
Sarah: 0:02:37.7 I loved multi-family. All of our properties were Class A properties. So I just loved the challenge. I loved the numbers. I loved the people.
Every day was different and you can’t beat that. I think it’s a great thing to go to work and not know really what’s going to happen for the day. 0:02:52.5 And it just was a good fit for me and I thought it was exciting.
Jordan: 0:02:57.3 So then why the transition eventually away from multi-family?
Sarah: 0:03:00.1 So, as our assets and portfolio grew, we really started getting recognized in the industry as an expert.
0:03:09.3 So we started winning some local awards, then some state-wide awards, then we won a national award.
0:03:14.5 And kind of thought, “Man, we’re this little family-operated company and we’re getting recognized.” I guess.
0:03:21.4 And so, we were also in a position where we were considering selling about 250 units. 0:03:29.1 And we’d never considered selling before, so we never really had an exit strategy.
0:03:33.7 But if we were going to sell those units, it was going to impact us on multiple levels. 0:03:38.3 We have the cashflow from the property that we would no longer have. 0:03:42.5 We have the cash flow from the property management. And then my salary was also being paid by the property. Which is customary in multi-family.
0:03:51.2 And so I started thinking, “Uh oh, I’m going to sell my job. And this is a real bummer.” So I thought, “I’ll just go out and get a few more accounts. Seems easy enough. And I don’t want anything under 100 units.”
0:04:05.3 So I just started cold calling, and I was 27 years old then, and just started cold calling and meeting investors.
And now I think of them as the big boys, but at the time I just thought it was no big deal, I was going to go swoop myself up a few accounts. 0:04:19.3 Didn’t quite go as planned.
So, got two accounts and then right then was in 2008 so the market kind of fell out. Both accounts, after securing them, fell apart for financing on one, and another deal kind of went sideways. 0:04:36.4 So, I decided we needed to maybe try diversifying and doing some single-family property management.
Jordan: 0:04:43.3 Alright. So, diversification is definitely something that comes up.
In terms of those deals falling through, and I guess really just the market conditions overall, how were you feeling in ’08? How did that impact you?
Did that make you more or less optimistic about the viability of the business overall? There was obviously a lot of chaos going on at that time.
Sarah: 0:05:05.2 There was definitely a lot of chaos. So at the beginning I felt really optimistic. Like, “This is a great opportunity, I’ll go get a few good accounts.”
And then after about six or nine months, I just felt defeated and honestly, I just felt like I needed an easy win.
0:05:18.9 So that’s kind of why I decided, “You know what? I can go get a single-family house and secure a contract and feel good about myself and know I can provide a really good service to that person.”
0:05:32.1 But it was really interesting, just the family dynamic, because my parents were like, “What in the world are you thinking? How are you going to make any money with a single house? That’s going to be really hard.”
Jordan: 0:05:44.5 So did that sale go through? The sale, I think it was 250 units you mentioned.
Sarah: 0:05:49.8 I did end up going through. It actually took several years. It only went through many years later that it ended up going through.
0:05:57.0 So, it actually ended up not having any bearing on the immediate need to diversify. But it definitely started that ball rolling to considering what might be if we were to sell an asset.
Jordan: 0:06:07.3 Got it. So you wanted some diversification, so you’re focusing on single-family. Beyond that, was there a vision? Did you have an idea of what you wanted to grow it to? Like, how much forethought was there in terms of where you thought you could take it?
Sarah: 0:06:20.3 Yeah definitely. So I definitely knew that there was a market. I got a few single-family properties, and I was living in the Puget Sound area at the time.
0:06:29.4 And quickly realized I hated single-family. It was horrible, the traffic was awful. You’d drive to a property, the applicant wouldn’t show up, the deal would fall apart. I felt like I’d waste my whole day.
0:06:41.5 And so I just decided, you know I hate that, I don’t like that. But I still knew that there was a way that we could create a viable business, I just needed to reposition myself.
0:06:51.7 We had property that we owned. A hundred units in Ellensburg, Washington, which is central Washington. It’s where Central Washington University is located. So it’s a little college town.
0:07:01.9 And I’d managed that since ’98. So I was very familiar with that market. 0:07:07.0 It’s a small town – I started thinking about traffic. And there’s no traffic where I live, which is awesome.
0:07:13.9 So I thought, “Well, I can get all the way across town in less than ten minutes, and that’s even if I go way out in the country. And I think I should start a business there.”
0:07:23.3 But my biggest problem was I was living two and a half hours away. 0:07:27.5 So I needed to figure out how I could start a business in a town that I didn’t live in, but our ultimate goal was to be able to move to the east side of Ellensburg, Washington where the sun shines and it doesn’t rain.
Jordan: 0:07:37.6 So that was that a little bit of a life – you had some lifestyle ambitions.
Sarah: 0:07:41.3 Lifestyle ambitions.
Jordan: 0:07:41.3 Got it. So then, was this a situation where you had to cut the cord? Or like, how long were you able to do both? To do it remotely? How did you juggle that?
Sarah: 0:07:51.8 Nope. I ended up reaching out to a local realtor in Ellensburg and just said, “Hey, I’m starting this business here. I’m going to do property management.
My biggest hurdle right now is – I can get an account, that’s not problem, but when someone wants to see a property, they want to see it right away.
And they can’t wait a day or a couple hours for me to drive there to get it secured. Can I just pay you a flat fee to show the house and that’s all I need?”
0:08:22.0 And so she was like, “Well that’s kind of interesting. I just kind of – I just had someone ask me. I manage a few of their doors so I’m kind of looking into this two.”
0:08:32.1 So it really was a divine appointment where we started talking and I said, “You know, why don’t you just come on board with Accolade? We’ve got all our systems set up. We’ve got our processes set up. It’d be a win-win situation for both of us, let’s team up and build something great.”
0:08:46.1 And she took the plunge.
Jordan: 0:08:50.8 And it worked.
Sarah: 0:08:50.6 And it worked. Even better. Best decision she ever made. That’s what I tell her. I think she thinks so too.
Jordan: 0:08:58.6 Alright. So then, how did you actually – what was she doing? Was she doing the whole thing? Everything from BDM to managing? How did you get the initial list of accounts? How did all that work?
Sarah: 0:09:08.6 Yep. So she had about ten doors that she brought on when she joined. And then we have the apartments that we own there in town. So we turned one of the apartments into an office. For a temporary office space.
0:09:20.3 And then we just kind of started word of mouth saying, “You know, we’re doing property management.”
0:09:26.8 We have about three other competitors in town, but it’s definitely pretty old school they way they’re operating their businesses.
0:09:34.3 So we just kind of started showing up and answering the phone and returning phone calls.
0:09:39.4 And within about six months we realized we really needed a downtown presence and ended up leasing an office space downtown Ellensburg.
So we were on the main – you know, Ellensburg’s pretty exciting. There’s four main streets downtown. So we’re right in the middle on one of them. 0:09:52.6 And, you know, that’s just really, the snowball started.
Jordan: 0:09:57.9 And in terms of the remote relationship, how often were you getting down to Ellensburg before you made the commitment to fully move?
Sarah: 0:10:06.1 I was going down two to three times a week. So very regularly.
Jordan: 0:10:09.5 And how long did you have that relationship before you ended up moving there?
Sarah: 0:10:14.1 Oh I bet, two years. Actually maybe one year. One year. It was a while.
Jordan: 0:10:21.2 Love it. So what I like about this piece of the story is the notion of a constraint. The constraint was you didn’t live there.
So, for example, micromanaging is just harder to do. There are certain things that you did as a result of the constraint of not having a physical presence there.
0:10:38.3 I think about that with expansion markets. When people are thinking about moving to a new market.
0:10:43.9 I know a number of folks that run companies and they don’t live in the same city as that company and that ends up being one of the best things that could happen because it requires them to engage – to let go more and to act more in that true management capacity, as opposed to being constantly tempted to get back down into the weeds.
0:10:58.3 – 0:11:01.6
Sarah: 0:11:02.3 Definitely focuses you on your processes.
Jordan: 0:11:06.1 So, then how did things kind of scale from there? You’re adding doors slowly over time. What were the roles that you added and in what order?
Sarah: 0:11:17.4 So, we opened up that office at the end of 2010 and it just was myself, Anne and then she actually had a gentleman who she was sharing an office space with, and so he came on too.
0:11:28.7 So it was the three of us that were all kind of operating it. And we did everything. 0:11:32.3 So, we did business development, we took tenant phone calls, we prepped leases, we dispatched maintenance, we did the move in report, we did the move out report. 0:11:41.4 You name it, we did the whole thing.
0:11:43.6 And then, as we grew, we have always led with profit. 0:11:49.3 So I didn’t, you know – we worked hard to be able to make sure that we had enough revenue coming in before we started hiring additional support staff.
0:11:59.8 And then our first support staff, we brought out, just like 16 to 20 hours a week. A college girl whose dad happened to be an investor and we are managing his property.
0:12:10.8 And so, she was going to college in Ellensburg there and brought her on. 0:12:14.9 Pretty cool, she’s with us today and one of our key players.
Jordan: 0:12:19.3 Awesome. So, progressively growing over time. And we kind of glossed over this in the intro, but if I’m listening to this, the thing that I’m really tuned in on is your percentage of market shares.
0:12:33.7 So, your door count relative to the size of the market that you’re in. So could you just kind of walk us through the stats on how big is this city?
We did some work ahead of time – you did some work related to the demographics of rental units, etc. Kind of walk me through where you guys are at from a market share perspective.
Sarah: 0:12:51.4 Definitely. So, Ellensburg, like I mentioned, is a college town. Population is just under 20,000 people. So, we’re a small, little town.
0:13:02.7 Of those 20,000 people – there’s 8,400 houses in Ellensburg total. 0:13:13.5 So, there’s not a ton of houses. Of those houses, we know that 5000 of them are renter occupied. 0:13:20.6
Jordan: 0:13:19.7 And so when we say houses, that includes multi-family and single-family, correct?
Sarah: 0:13:23.3 Correct.
Jordan: 0:13:24.8 Ok, got it.
Sarah: 0:13:26.0 And them, you know, 5000 of those are owner occupied and today we manage about 555 of those units. 0:13:34.9 Which is almost 11% market share.
Jordan: 0:13:37.6 Which is crazy. Absolutely bananas to have that kind of a market share. And who would think that that kind of growth would be viable in that kind of a market. 0:13:49.1 It’s definitely a little counter-intuitive.
0:13:49.8 I know a couple of other customers that are in markets like that. When you moved there, you mentioned that motivation – that lifestyle was part of the motivation.
0:13:59.3 Did you think that you were going to be able to get that much traction in a market that’s that small?
Sarah: 0:14:06.6 I definitely thought like I’d get traction, but like I said, when I first started, I didn’t realize how profitable single-family management could be.
0:14:14.9 So, I kind of thought, “Ok this will just be like a little supplement and make me feel good until I get another big account.”
Jordan: 0:14:21.9 Right.
Sarah: 0:14:23.7 But this turned into a pretty big account.
Jordan: 0:14:27.5 Yeah, yeah. Absolutely. So, that kind of market share – I mean, walk me through the mechanics of how you think about that. Do you think – is that a small city, word of mouth, everybody knows each other sort of thing? I mean, how would you break down being able to get to that kind of market penetration?
Sarah: 0:14:45.6 100%. So I really think it’s two factors. So, first of all, not very man people in small towns come out as professionals. And what I mean by that, we were already branded.
0:14:54.3 We knew what we looked like, our signs looked good, our – we had a company vehicle, it looks good. 0:15:04.4 We return phone calls.
0:15:04.8 So, we looked big. It was actually almost one of our – it’s kind of a catch 22, because sometimes people would be like, “Oh are you a franchise?”
Sarah: 0:15:12.6 Corporate. Like, they didn’t want corporate because it’s a small town. So, it played to our advantage because we looked good and we were professional, we had good marketing materials, but then also we had to explain, “No, we’re locally owned. We’re excited to be here and serving you. It’s just us.”
0:15:30.2 But then definitely word of mouth is just huge. Our town’s super small and everyone knows everyone.
And so, it’s not abnormal for us to, you know, walk in from our office to the coffeeshop, pass two clients and three tenants and someone who is inquiring for friends about us.
Jordan: 0:15:52.9 Love that. So, how would you describe the branding, your positioning of Accolade? From a consumer perspective relative to some of the other companies in your market?
Sarah: 0:16:02.6 Definitely we’re by far the most professional. Like I said. We have a presence, it’s clean, it looks good and we deliver on what we say we’re going to deliver on.
Jordan: 0:16:15.2 Got it. So you’re trying to avoid the mom and pop feel of Smith Management, where it’s Joe Smith, and if Joe Smith isn’t feeling well that day, then you ain’t getting any service.
Sarah: 0:16:27.3 We definitely avoid that, but we walk a really fine line. So if you come into my office, we’re not suited up. 0:16:34.9 That would just not fly in our town at all.
So, we’re still jeans and professional looking shirt. Put together, but we’re not – if for some reason I wear slacks or something to work, people think I’m heading to a funeral or something for the day.
Jordan: 0:16:50.0 Yeah, that makes sense. So, in terms of scaling the company and growing over time, that’s again, a crazy level of market share in a pretty small town.
0:17:03.3 Are there adjacent markets nearby? I mean, when you think about the growth potential, do you think that it’s possible to push much higher than that 11% figure? 0:17:14.1 How far do you think that number could get pushed?
Sarah: 0:17:16.5 I definitely think in Ellensburg’s market we can double our figures in the next five years if we really start working towards getting new clients.
0:17:26.1 Right now it’s been so organic we just take them as they come. And we’ve also done lots of times where we’ve stopped and said, “Ok, we need to regroup and make sure that as we onboard people, we’re continuing to provide the service that we are proud of.”
0:17:38.1 But then, Yakima is an adjoining city. About 40 minutes away. That’s actually where I live. 0:17:45.9 And we’re definitely – for the last two years I’ve been watching that market, targeting that market.
0:17:51.6 We’ve got about 25 rentals, actually maybe more than that. Maybe about 40 rentals now in Yakima that we manage.
0:17:58.7 And it’s mainly just figuring out how to run another office and recreating the, I guess McDonald’s stamp that we already figured out in Ellensburg and stamping it down now in Yakima.
Jordan: 0:18:10.1 I love that you already have a repeatable playbook in that regard in terms of expanding to a market with no physical presence right out of the gate.
0:18:17.4 In terms of what you got from your background in multi-family, what leverage and cross application has there been there?
What do you think that you do currently that you value in managing the single-family business, that you wouldn’t do if you didn’t have that multi-family background?
Sarah: 0:18:36.5 Probably the biggest thing is just understanding numbers. 0:18:40.3 So, multi-family, for decades, has been figuring out ways to create revenue and other income streams.
0:18:48.3 The single-family market’s just now starting to figure that out. 0:18:51.0 And more and more people are doing it, but we started that from the beginning. 0:18:56.0 Which definitely put us an advantage.
0:18:57.7 I think the other thing too, is just being able to communicate to our owners. 0:19:03.0 Because a lot of our owners are accidental landlords, so they’re stressed out. They don’t really know what they’re doing.
0:19:07.3 So just being able to talk to them and walk them through, like, “Do you understand if you don’t hire me, and you let your property sit vacant for a month, how much per day you’re losing per day in vacancy loss?”
0:19:21.7 Well, they’re not thinking that. They’re thinking, “Oh my goodness, can I afford a management company.”
0:19:25.1 No, being able to walk them through the numbers – they’re the same numbers whether it’s 100 units or 1 unit, but it just – being able to communicate all those little numbers that end up making a really big difference to your bottom line at the end of the year.
Jordan: 0:19:38.0 Treating it like an asset.
Sarah: 0:19:39.5 Treating it like an asset.
Jordan: 0:19:41.8 So you’ve obviously moved in some other areas. You manage 100 multi-family doors, some HOA as well, how do you think about the other property types?
0:19:51.8 Obviously, you can kind of gloss over multi-family. I think it’s pretty clear what you think about that. But with the HOA, specifically, was that opportunism, was that strategic? How do you think about that unit type?
Sarah: 0:20:01.8 HOA was definitely opportunity based, but we had a good background. We had built and owned 150 apartments and then built 100 condos right next door in 2006.
0:20:13.1 And then the market crashed, so with that experience we were managing the apartments, managing the condos, managing the listing and then also managing the HOA.
0:20:23.9 And, homeowners are not very happy when they buy at the top of the market and then the market crashes.
0:20:32.3 So, really navigating that – that association back in 2006. 0:20:36.3 I managed, I think, until 2012 or ’15 ish.
0:20:40.2 It was just so valuable, what I learned through that. And at that time I thought, “I never want to do an HOA again,” because they’re hard and there’s lots of personalities and you can’t ever make anyone happy.
0:20:51.4 But, the opportunity just kept presenting itself and I really thought, “I need to rethink this and I won’t have the personal emotional attachment to it,” and the experience we gained there definitely provides a totally different opportunity.
0:21:08.0 So, with that portion of our business, I really started reaching out to developers. 0:21:11.3 So, we’re close to Suncadia and the Clayton Marina, which is a nice secondary housing community about an hour from Seattle.
0:21:23.1 So, a lot of the big money people buy a second or third home over there. And those are all HOA sites.
I reach out to the developers and say, “Hey, you know, you’re running an HOA but you’re a developer. Developers don’t know how to run HOAs. But there’s a lot of work that goes into setting one up properly from the beginning.”
0:21:39.1 And so, that’s been profitable and good and that’s kind of how we’ve built our HOA division. Is helping the developers through it and then earning their trust as the client.
Jordan: 0:21:52.0 This big fish, small pond strategy, could you see somebody leveraging any of this in a larger market? Possibly by picking up more specific niche?
Or do you think that it’s something that is somewhat unique to the geography that you’re in? It could be most easily exploited in a geographically smaller market.
Sarah: 0:22:20.1 You know, I’ve only done it really in a smaller market. So, to me, it just worked and was easy.
I haven’t been in a big city where you have, you know, 15 other management companies that actually provide a good service and you really have to compete. And that’s more of a dog eat dog world. 0:22:34.6 So, I honestly don’t know how to answer that.
Jordan: 0:22:39.5 No, that’s wisdom. When you don’t know, you don’t know. Fair enough.
0:22:45.4 So, when I think about that dog eat dog complaint, when I think about – like here, let’s just walk through some examples.
One, AllPropertyManagement. Getting that AllPropertyManagement lead, and as soon as you get it, it got sent to five other people and you’re scrapping to get that person on the phone and they want to beat you down on price.
0:23:05.3 There’s certainly a lot of angst regarding the competitive nature of being in the industry. 0:23:11.1 The more competitors in your market, potentially the more competitive it’s going to be. 0:23:14.9 Your brand positioning though, is obviously a meaningful point of differentiation.
0:23:18.4 So, in any market, whether it be large or small, the choice that you make in terms of the mindshare that you’re trying to occupy, whether that be choosing to be a low-cost vendor, you’re naturally going to have a higher percentage of your sales conversations around price.
0:23:35.3 Whereas, if your positioning was around service, if it’s around that fiduciary, high-authority role, then you’re going to be haggling and talking about a different subset of issues.
0:23:44.5 So, maybe that’s kind of the parallel to some degree. 0:23:48.1 One of the things that I’m curious about is, in your market, where you’re developing these relationships over – how many years has it been now?
Sarah: 0:23:58.7 Eight.
Jordan: 0:23:59.0 Eight years. So it’s not like you grew up there. Right? I mean, there is still – you definitely had to work your way and claw it through.
Have you been able to see more biz dev opportunities that have come from a result of having these relationships? I don’t necessarily just mean referring new business.
0:24:17.2 But, in terms of – like, in my career, the more velocity and traction that I’ve got, the more opportunities I’ve seen to monetize – basically to create new business units and opportunities on the fly that only come through having a sufficient of brand velocity, relationship, etc.
0:24:37.4 Are you thinking about any other ancillary business opportunities? Or do you think it’s more about expanding the existing lines of business that you already have? How are you more inclined to go? Horizontal or vertical?
Sarah: 0:24:50.5 I don’t know horizontal or vertical but there’s definitely opportunities. You know, as you get more established in your market and as people recognize you as the industry expert, the opportunities that are presented to you, literally daily, are amazing.
0:25:04.5 So now it becomes more of, “Ok, which opportunity am I going to take?” And what makes the most sense financially and then also most sense – just from what we want to create as a business.
0:25:15.5 And then, you know, jumping back a little bit to what you were saying previously – is like, when you’re competing, I think just being true to who you are. 0:25:22.8 What are you good at? What do you like to do? All of that.
So when these opportunities are coming in, it might be a really financially beneficial opportunity, but if it’s not something that’s going to drive you and motivate you and get you excited to wake up every day, please pass.
0:25:38.8 Because the money’s only good for so long and then it’s no fun.
0:25:44.2 So, definitely seen lots of those opportunities. And also just kind of being in that small town, it’s been really shocking to me to see how people have been watching us, and I’m not realizing that we’re being watched.
0:25:57.5 So, we had a gentleman who has a very well established commercial business that he’s had for decades and started to come in to visit our office a couple years ago and just come and saying hi and seeing what’s going on, and then started dropping emails, “Some day I’m going to retire and I need someone to take my business over.”
0:26:18.6 And I kind of thought he was blowing smoke, or just calls us kids and I like that, it’s great. And sure as heck, he’s done retired and we’re taking over his whole business for him.
0:26:32.8 And, you know, that’s not something – I didn’t go knock on his door and ask for that, he watched us and then started coming in to see if it was real and found out there’s no one else he’d rather partner with when he starts his retirement journey.
Jordan: 0:26:48.7 Love it. So yeah, perfect example. Opportunity that comes just kind of organically by staying in your lane, but when the right opportunity comes, you’re able to pluck it out of the air.
Jordan: 0:26:58.1 I love that. So, let’s talk a little bit more about the lifestyle side of things. You mentioned that Ellensburg was a just great place to live. Haven’t been there, but I’ve driven through the Yakima Valley, lived in Portland for a couple of years. 0:27:11.5 I think the furthest north I’ve been is Winthrop. Do you know where Winthrop, Washington is?
Jordan: 0:27:19.1 Yeah. So I went up there once actually, to visit the AllPropertyManagement offices, oddly enough. 0:27:24.4 But, you know, nice area. For whatever reason, good schools, for whatever reason, that’s where you wanted to be.
0:27:31.2 What are the other kind of goals that you have for the business as it relates to lifestyle? What is an ideal situation look like for you and how do you – what do you do to not get thrown off that ideal?
Sarah: 0:27:45.8 As far as lifestyle goes, I guess what’s really important to me is I want to create a business that has just a synergy and excitement that people are wanting to come to work everyday.
And with that, with them wanting to be there, they’re creating additional roles and positions for themselves to be able to grow into.
0:28:04.1 And so, if I can continue to build a business where everyone in the company can continue to rise up and fulfill their own career goals, I think there’s nothing better than see everyone flourish.
0:28:16.1 And if everyone’s that committed and that focused and that excited about being a part of something and knowing that they can get skin in the game and they can learn more, earn more and have more fun, that’s what we’re looking to do.
Jordan: 0:28:31.5 So you want to come to work in an exciting environment where there’s real energy flowing.
Sarah: 0:28:36.0 Yeah, definitely. I just want to continue to create that and be a part of like, letting people be all that they can be, I guess.
Jordan: 0:28:43.8 So do you feel that growth is required? I mean, that tends to be the general premise. Right? For people to be able to move up the ladder, the ladder has to have like more than three pegs, right? It’s got to like progressively kind of expand over time.
Sarah: Right. 0:28:56.1 I do feel.
Jordan: You feel some burden then to continue to grow the business? You’re not looking to cap it out where you’re at right now?
Sarah: 0:29:01.9 I’m definitely not looking to cap it out right now. There’s just too many opportunities and exciting things. I lay in bed at night and wonder what I missed out on.
Jordan: 0:29:10.3 And there’s no right or wrong answer here right? I mean, this is the beauty of the industry.
Some folks get to 500 doors and they realize that they do not want to go through what is required to get to 1000 doors. 0:29:22.5 There is no judgement in that.
0:29:24.7 Recurring revenue is a beautiful thing. The business – two of the businesses that I’ve started have recurring revenue. One I choose to work on actively, the other is passive. And the one that’s passive, it’s awesome.
0:29:38.6 To some degree, I’d love to have – hey wouldn’t we all love to have more of those passive businesses?
0:29:45.7 But the ones that are active, that optionality of knowing that I want to leverage that recurring revenue to grow it further, but at the same time, if there’s a life circumstance, or maybe you go on vacation, just to know that there’s some steadiness is really nice as well.
Sarah: 0:29:59.7 It is interesting though. As you grow and make that decisions, because when we first started, our whole premise was we’re a boutique brokerage. That’s what we do.
0:30:10.1 It’s like this hands on experience and we’ll customize everything and so that’s probably been one of the hardest things, is that we recognize that we want to grow, we recognize that we’ve got more to offer to more people.
0:30:23.2 But we’re having to kind of rebrand ourselves. Because now when people come in and say, “Oh can you do x, y, z cause – just swing by my property once a week and change the little sprinkler filter, do you mind?”
We suddenly mind, where at ten doors, “We’d love to swing by and change out your filter for you. No big deal, no extra charge.”
0:30:42.4 So, it’s definitely interesting to see, kind of as you make those decisions as far as what you’re going to do, how you have to flex and grow with that.
Jordan: 0:30:50.9 Yeah, for sure. So you’re talking about managing labor. Let’s dive right into talking about profit.
0:30:55.2 In your mind, what is the bright line, psychologically, mindset-wise, what is the bright line that either steers somebody towards or away from profit?
0:31:04.9 And this is a fair question to ask because a lot of folks in the money are not making money on property management.
0:31:12.3 Average operating profit margin is around 6% in this industry. Which doesn’t leave a lot of room – a lot of margin for error.
0:31:20.8 So, we’ll get into the minutiae of best practices on a technical level, but high-level, 50,000 foot view, what do you think differentiates those owners that hit the mark with profit versus those that consistently miss?
Sarah: 0:31:37.7 I think, really, it’s understanding where your income is coming from and managing your expenses.
0:31:43.5 So I think it is really easy for – sometimes I hear about companies that are in the smaller growth size and looking to expand and I hear them say, “Oh, I’m going to hire a BD or I’m going to hire a maintenance co-ordinator. I’m going to hire whoever, because I’ve got 50 doors.”
0:32:00.6 And in my mind I’m thinking, “Man, you’re crazy. Like, you have to put in the work to be able to make sure there’s the income coming in before you spend the money.”
Because if you start spending money before the money’s coming in, I can only imagine how stressful that gets.
Jordan: 0:32:18.6 Yeah. So managing labor is the thing you’re talking about there. Obviously labor is a huge expense.
I mean, what does that look like in practice? You just mentioned a second ago that we’re not going to go check your sprinkler covers once a week.
Do you have a scope of services? 0:32:34.2 How do you not make that question of, “Will you do x, y, z” a one-off conversation and dialogue as opposed to just a standard answer?
Sarah: 0:32:45.6 I was about to give you my standard answer, but you just tricked me by saying, “No give me your standard answer.” What do you mean by that?
Jordan: 0:32:56.0 So, you could have a scope of services, the scope of services says, “This is what we do. This is what we don’t.” And when the owner calls in and says, “Will you do x, y, z and it’s on the Don’t list,” do you say, “Mr. Owner. Do you remember that document that I sent you, please refer to exhibit A.”
Or you could haggle back and forth from every conversation or be somewhere in between. 0:33:16.8 How do you maintain those healthy boundaries that ultimately relate to a labor expenditure so as to not go in the red chasing your tail doing things that aren’t going to make the money? 0:33:26.3
Sarah: 0:33:28.3 You know, I think it really comes down to setting expectations from the get go.
And then also, we should probably be a little bit more structured and formalized with, “We’re going to do this and we’re not going to do that.” 0:33:40.3 But a lot of times it’s kind of case by case.
So, and then also depending on the owner. 0:33:43.6 So, if I have an owner that’s just super awesome and needs a quick favor, “Ok great, we’ll swing over and do that for you this one time. Just so you know, the next time there’s going to be a service charge for that.”
0:33:54.2 But just building those relationships and then explaining them why you have to charge them an extra dollar figure.
0:34:00.4 Because a lot of times, people don’t realize what goes into it. 0:34:03.8 So, I think just, you know, setting expectations and communicating why it’s costing extra money.
0:34:08.3 And then also communicating that, “Ultimately, we want to provide the best service to you as possible. 0:34:13.3 And when you start doing all these little one-offs, it creates so much opportunity for error. And we don’t want you to become disappointed in us. Because we think we’re helping you, but we’re not helping you because it’s something so abnormal or out of the ordinary, we’re going to forget about it in six months and then you’re going to be disappointed. So, we’d rather have it where, ok this is more of a service contract, this is something we’re going to do, here’s the fee associated with it, and then let’s make sure we do that, document it and you get the end result that you’re wanting and we can manage that properly for you.”
Jordan: 0:34:45.7 How do you guys handle maintenance?
Sarah: 0:34:49.7 So, we do have a separate in-house maintenance company. I know lots of people have found out how to be very profitable in that. We have not figured out how to be overly profitable. 0:34:57.6 It has enabled us to grow our company. But most of our maintenance is outsourced.
0:35:04.7 It is a little bit unique though because we’re in such a small town the individual handyman, it’s very difficult to compete with their rate because they are just so far behind the times and they don’t understand the value of their time and their expertise.
0:35:21.9 A lot of times I can outsource it and save my owner more money than I can if I was to do it through our handyman service.
Jordan: 0:35:29.2 Yeah, I could see that being even further compounded in terms of competing against a guy three doors down that people know or have some level of traction in the market. 0:35:42.6
So in terms of what you guys choose to, insource versus outsource, does that fall along the lines of specific types of work orders, or types of jobs?
Sarah: 0:35:54.0 Types of work orders, types of jobs, then also the time of year. So, our market’s a very cyclical market. Being it’s a college community.
0:36:03.1 So, with that, we only allow our leases to expire June, July, August. 0:36:07.6 So, in the summer time we call it controlled chaos.
0:36:11.2 The rest of the year it’s a little bit more mellow and low key. So, obviously, for nine months of the year we like to funnel as much work to us as possible and the summertime, we just want to get it to the vendor who can get done the fastest for the best rates so that our owners aren’t losing vacancy loss.
Jordan: 0:36:31.1 Alright, makes sense. So, in terms of the make of the portfolio, what percentage of your owners would you define as intentional investors?
Sarah: 0:36:41.5 Really surprising actually. Not as many as you would think. Only about 20% of our clients are intentional investors.
Jordan: 0:36:50.6 And how many of those, let’s call it 550 properties excluding HOA correct? So of that 550, how many owners are represented there?
Sarah: 0:37:05.8 152.
Jordan: 0:37:08.0 Alright, so you sent some stats over earlier, kind of documenting the growth from both the door count and the owner count over time. I’m just going to read off some of these numbers, because there’s a little bit of a mismatch between the doors and the owners.
0:37:22.1 Obviously it doesn’t perfectly match, it’s not one door per owner, but in 2010, at the end of the year, you’re managing 15 doors. More than tripled by 2012, you were at 48. 2014, two years later, at 98. 2016, 149, and 2018 152.
That’s the number of owners. The door count is obviously dramatically more than that. 0:37:53.1 When you think about these different constituencies, do you have an inherent preference for one or the other? Do you intentionally solicit one or the other? Or are you happy to take a owner 0:38:04.6 Inaudible ?
Sarah: 0:38:08.3 You know, we prefer investors. Mainly just because they’re not emotional. And it’s more bottom line driven. So typically, their assets are easier to manage and you can do a more efficient job.
0:38:17.8 We also like the investors because we like to help them find other properties to purchase, or like to help them sell assets to buy other things, so we like the ancillary income that we get off of those. 0:38:34.6 But, we’ll work with any owner that’s fun and easy – I shouldn’t say easy. X that. Cut that out. Got it?
Sarah: Note. Done.
Jordan: Note easy? So what’s the hangup with easy? Easy sounds like a nice actual starting point.
Sarah: 0:38:56.0 I guess easy does sound good, it just makes us sound kind of lazy. 0:38:58.2
0:38:59.2 But we do like owners that are easy in the fact that they understand that we’re the experts and they’re willing to take our advice and willing to listen.
0:39:10.7 It’s the accidental landlords that are uptight because we sent a plumber over to change out the flapper and they’re all worked up about the $75 dollar plumbing fee and you know, it’ll only take them 10 minutes to do it.
0:39:25.4 I understand that, but I can’t go do it for you and the tenant can’t do it, so it’s a legal responsibility here.
0:39:29.5 So those are the owners that you’re kind of, “Can you just understand that you’re running a business? I know you didn’t want a business, but that’s what you got now.”
Jordan: So how do you sniff those folks out on the front side?
Sarah: 0:39:41.2 Typically, they’re all price driven. And, you know, they want to work on your price, work on your price. And we just don’t – that’s not how we do it.
0:39:51.6 So we have a fee structure that we have in place, and take it or leave it, but we never flex on that. We have an owner who probably owns about ten units and he was buying another three and he just started trying to beat us up on price because he added three units.
0:40:11.3 And, I kept explaining to him. I appreciate the three more doors, but it’s not reducing the work load for us. And then with this particular owner, he has very specific guidelines on different things that he wants. 0:40:24.3 So it’s actually more work for us.
So when that type thing comes up, we try and actually delve into the numbers and send them the numbers so they can say, “Hey I understand they’re more than my competitor, but find out how often your competitor raises rent prices, because with the market the way it is right now? Last year we were raising rent prices, almost 6%.” That’s a big increase. 0:40:46.8 But the market can bear it.
Most of my competitors were just renewing at the same rate. And so, you know, we’re willing to work hard for our money, but we need to make sure that we’re communicating that to the owners so that then when they start to beat us over the head to cut our fees here or there, letting them know, you think you’re paying us, but we’re actually earning this.
0:41:13.2 And we’re making you more than we’re taking.
Jordan: 0:41:15.3 Absolutely. Uncommunicated values. Unacknowledged value. In light of what you just described, what is your relationship like with your other competitors? It’s a small town, do you get around? Are you friendly with these folks?
Sarah: 0:41:27.2 Yeah, we’re definitely friendly with the folks. Like, you know, we run into them at the hardware store and see them at the coffeeshop.
0:41:32.7 Probably, I mean, at least weekly. Three of our – or four of our doors are all within one block of each other, so we’re very close. 0:41:43.5 So literally, there’ll be people who’ll pop into our office and say, “Oh, I’m here to pay this rent.” And, “Oh, your landlord’s across the street go over there.”
0:41:49.9 So definitely friendly and nice, but yeah, we all just run very different businesses, so we’re not the ma and pa shop.
Jordan: 0:41:59.4 Fair enough. Alright, so I’d like to transition to the rapid-fire section of the interview. And when we go through this section, I’m really just looking for quick, guttural answers on a series of questions.
0:42:13.6 And the first question is this: Sarah, who do you learn from?
Sarah: 0:42:17.9 I learn – most of my connections are through NARPM, and I just have been so blessed by that association, so when I go to the conferences, I typically sit back, I find someone who I think’s smarter than me, and then my mission is to get to know them for the week and build that relationship.
0:42:34.1 And then, I got a buddy I can pick up a phone and say, “Hey, thinking about this, what do you think? How’d you do it?” And those are the best people to learn from, I think.
Jordan: 0:42:43.1 Absolutely. Yeah. NARPM is pure gold. Especially for the folks that are newer in the industry.
0:42:50.5 What business books have impacted you the most?
Sarah: 0:42:53.3 Traction is a great one. But also The E-Myth. I don’t know if you’ve read the E-Myth before?
Jordan: 0:42:58.5 Yeah. Michael Gerber. It’s like required if you’ve been in business for more than five years.
Sarah: 0:43:04.4 So simple but so good.
Jordan: 0:43:07.2 Yeah, yeah. I think those books have dovetailed pretty well with one another. I’m halfway through Traction. I read E-Myth probably a decade ago. I should probably revisit it.
Sarah: 0:43:15.8 Yep. One other book too that’s really great, and it’s not really a business book, but you can apply it to business, is a book called, Love Does by Bob Goff. Have you heard about it before?
Jordan: 0:43:26.7 I have yeah.
Sarah: Have you read it?
Jordan: 0:43:28.3 I have not. Isn’t in that in like the Faith genre?
Sarah: 0:43:33.7 It is in the Faith genre, but that particular book, each chapter talks about a different business and how that business started.
So, it really goes back to why are you doing it and what service are you providing? And if you really love what you’re doing and passionate about it, it doesn’t matter what it is. If you can bring value to someone, the value will come back to you. 0:43:55.2 Definitely awesome. Highly recommend it.
Jordan: 0:43:58.0 Ok. Right on. So we’ll link up those in the show notes. If you could do it all over again, if you could go back to day one of making that connection with the realtor in Ellensburg that ended up being your first employee, what one piece of advice would you give yourself?
Sarah: 0:44:17.0 I wish I would’ve known about NARPM then. I didn’t know about NARPM and so now for some of my older owners who are kind of grandfathered in, there’s some additional income streams that I feel like I could be giving that I drag my feet a little more than I probably should.
0:44:32.5 And so, I just think, man if I would’ve connected better with industry experts and realized how it to structure my contracts a little bit differently and stuff. Man, I left a lot of money on the table.
Jordan: 0:44:45.3 So, you bring that up, so let’s just dig more. When you think about those contracts, is that a lost cause? Have you ever gone back and considered repricing, renegotiating the contract? Changing terms? Etc.
Sarah: 0:44:57.8 Definitely. So, you know, we have definitely gone back and changed terms and stuff like that. But then there’s some income streams that I’m really intrigued by.
So like, the eviction protection plan, for instance. I think that’s a super awesome idea, I am working on implementing it right now.
0:45:14.2 But for an owner that’s been with you for eight years and has never had an eviction, it’s a lot harder to be like, “Hey sign up for this!” 0:45:19.5 Because they already think that we’re awesome and like, why would they waste their money on it.
0:45:23.7 So yeah, things like that I’m like, man — like some I don’t know if you can go back and redo, but definitely as far as other fee structures, you know, we’ve built the trust and have definitely gone through and reconfigured and become more competitive.
Jordan: 0:45:38.1 Yeah, as it should be right? It’s a work in progress. 0:45:40.9 If you could wave a magic wand and change one thing about our industry, what would it be?
Sarah: 0:45:46.8 Ooh, that’s a good one. I would probably say just increasing the level of professionalism.
0:45:56.7 It just kind of makes me cringe sometimes if I have to tell someone I’m a property manager. Because there a lot of property managers that aren’t running a business professionally.
So I just don’t want to be lumped into a category that I think that I’m more excellent in than what is always represented.
Jordan: 0:46:19.1 Yeah, any thoughts on what might drive change in that perception? Because it certainly is needed. But, do you think that’s potentially going to happen through regulation? Is that one-off, providers just positioning themselves through operational excellence? Any hope for change?
Sarah: 0:46:37.3 Oh, I definitely think so. I mean, I think legislation’s going to drive that. Increased education.
0:46:44.8 The more professionals that we have out there, people are going to start watching and noticing and saying, “Oh this is a really viable business and something that is considered more of a profession versus a, “I do this as a side hobby.”
0:46:57.1 And then, also, you know, the big boys that are coming in and buying hundreds and hundreds of thousands of houses up, that’s seriously going to change our industry.
Jordan: 0:47:11.4 Tell me more. What are your thoughts there? How do you see that changing things?
Sarah: 0:47:13.6 I think it’s going to become much more like the multi-family industry. So, the big boys that come in and buy a thousand houses, they have a different expectation for how things are to be ran.
And what they expect from an owner perspective as far as reporting and standards and processes.
0:47:32.8 So, the little guys who are running the mom and pop shops are going to have a much harder time competing. They’re not going to be able to play that game.
So, I think, with that, they’re opportunities will go down, so they’re going to have to increase their professionalism to be able to continue their business if that’s what they choose to do.
Jordan: 0:47:53.9 The cream rises to the top.
Sarah: 0:47:55.3 That’s right.
Jordan: 0:47:55.3 Final question of the interview. You know this one was coming. Sarah, in your opinion, are entrepreneurs born or bred?
Sarah: 0:48:06.4 Ooh. I think they’re born. But also bred. But there’s something in the DNA personality trait that’s just different than – it’s born into you. You can’t squelch it. You can try and like – you can try and create it, but at the end of the day, there’s a different DNA thread that you have to have to be able to endure the low lows so you can enjoy the high highs.
Jordan: 0:48:37.0 Do you think some people have it but it’s dormant. It never activated through life circumstances?
Sarah: 0:48:44.3 Possibly. But if it’s really, truly there I just don’t know how they can sleep at night without trying something. Like, if it’s there, it’s like crying to get out.
Jordan: 0:48:57.6 Yeah. Goes back to what you were saying earlier about getting in alignment. So I fall on the born side as well.
That said, I definitely, particularly as I’ve gotten older, had kids, etc. give more credence to – I guess I have appreciation for the bred side on the level of that which is modeled for you is incredibly impactful.
0:49:19.8 You described it in your family. You grew up with parents who were entrepreneurs. I had a dad that was an entrepreneur. So for me it was like, “Yeah. I’m going to go do that. How hard can it be. Sounds great.”
Sarah: 0:49:30.6 Why would you want to work for someone else?
Jordan: 0:49:32.7 So the modeling is there, at the same time, the argument in favor of the bred side is the risk tolerance and the willingness to embrace long-term suffering and just to not know how long – when it’s going to let up.
There’s no promises, there’s no guarantees. Nobody tells you what to do, you tell yourself, “I’m going to figure this out and it’s going to be great.” And that is absolutely – how can you teach that, you know?
Sarah: 0:50:04.7 I don’t know. That’s why it’s born. I’m glad we can agree on this.
Jordan: 0:50:07.1 Yeah. We’re on the same page. Well, it was great to have you on the show. If anyone wants to get in touch or learn a little bit more about the business, what’s the best way for them to connect with you?
Sarah: 0:50:15.5 The best way to connect with us is through our website, which is Accolade-Rentals.com. And don’t judge my website because I’m in the process of redoing it, but that would be the best place to connect.
Jordan: 0:50:28.4 Alright. Love that caveat. So guys, if you would like to learn more about the strategy. If you’re in a rural market and you’re wondering about the potential of that market, if you’re in a larger market but you’re thinking about expanding to a nearby rural market, Sarah’s a great person to connect with. I mean, 10% market share. Again, that’s just like bananas. So, hopefully that turns into 20% and then 30%. Thanks for coming on, let’s stay in touch.
Sarah: Thanks Jordan.