The Property Management Mastermind Show

Today’s Guest: 

Today’s show is sponsored by the National Property Management Network, which provides insurance products and services such as tenant liability insurance to property managers. 

I’m excited to share this interview with Marc Cunningham, who will talk about some of his incredible systems and products. I’ve been very impressed with what he’s putting together, and can’t wait for you to hear all about it and decide whether his products might be right for you. 

Before digging into his products, though, you’ll get some background and insight into Marc himself (which will help explain why he’s so highly qualified to create these works). As he explains in the interview, he grew up in the world of property and real estate, and was dealing with various business aspects while still a child. This all came about because his father started Grace Management & Investment, so Marc had deep exposure from a young age. 

Marc also reveals “the big secret in the property management world,” which is that ”everybody thinks they’re the only ones that don’t get it.” Wow! Just take a moment to let that sink in. If you’re feeling like you’re a little bit lost or unsure of the best ways to do things, it’s not because you’re somehow the least-knowledgeable person around… but rather because we all feel that way sometimes.

Of course, that isn’t to say that you should be content with where you are and stop striving to be better. There’s always room for improvement, and this is where Marc’s products come into play. I’ll let him describe them for you himself in this conversation, but take it from me that these incredible tools are a direct investment in your business that can help you achieve your goals.

Best of all, Marc is offering a generous discount for listeners: 10% off any of his products when you use the promo code “Brad”!

Here’s where you can find Marc:

Marc Cunningham on LinkedIn

Grace Management & Investment

Grace Management & Investment Products

Show Notes

[02:08] - Marc grew up in the property management and real estate world, he explains, because his father started Grace Management. He then explains the progression of the company, and what they do today.

[03:43] - Brad points out that Marc, being in Colorado, has a seasonal leasing market. Marc then clarifies that other factors steady out the overall flow.

[04:26] - We learn about Marc’s degree in real estate.

[05:13] - The main reason Brad wanted Marc on the show was to talk about his educational products (specifically systems manuals) and how they can benefit companies. Marc then explains some of the background of why he and his father shifted the style of the business.

[07:49] - Marc explains that the products were originally made for Grace Management rather than to sell.

[09:14] - Marc mentions a survey he heard recently about employee engagement, in which employees rated this comment most highly: “I know what is expected of me at the office.” Brad then dives into how personalities play into this.

[11:09] - Brad has his MPM candidacy with NARPM completed (FIND AND LINK THESE). This allows one to test for the CRMC designation (FIND AND LINK THIS), for which the outline is near what Marc’s products are. Marc and Brad then discuss this.

[13:27] - Marc goes back a step, explaining how he and his father started sharing their creations and that people started asking to buy the full versions long before it occurred to them to sell them.

[15:36] - The products come in Word format. Marc talks about how people usually use them.

[17:37] - Brad offers an example: a medium-sized company comes to Marc wanting to put all his systems in place. Marc then walks us through how this situation plays out, generally in one of two ways.

[19:58] - Did Marc go to a pro or consultant to get the systems manuals set up, or did he do them himself?

[21:44] - Marc talks us through the cost of the various packages that Grace Management offers, which range from $497 to over $3,000. The larger packages, he explains, offer one-on-one time with him.

[25:31] - Marc is still a property management company owner, he explains, and the systems manuals are a side note.

[25:28] - Does Marc have any success stories he can share?

[26:32] - Brad brings up another product of Marc’s addressing ways to make money. In response, Marc explains how he identified the need for that other product.

[28:54] - We hear about how effective this product was for one user, who was able to go on a trip to Vegas after implementing the first idea.

[30:14] - How did Marc decide how to price his various products?

[32:34] - Marc tells us where to find the products he’s been discussing. They’re available at propertymanagementsystem.org. He then talks a bit more about these products.

[34:08] - Marc makes a special offer for Property Management Mastermind Show listeners. Enter the promo code “Brad” to get 10% off Marc’s products!

[36:29] - We learn one of the reasons that Marc believes that systems are so important: they “dramastically” (a word he coins here) increase the value of your business.

Links and Resources:

Marc Cunningham on LinkedIn

Grace Management & Investment

Grace Management & Investment Products

National Property Management Network

National Association of Residential Property Managers (NARPM)

DISC profile

CRMC Designation Candidacy Checklist

Amy Karns, who is intimately familiar with various aspects of property management thanks to having bought, sold, and started property management companies.

She got her introduction to property management in San Antonio, where she bought a company over the course of five years by purchasing 20% a year (while the previous owners played less and less of a role each year). Amy built that company up from 90 doors to 225 doors over the 10 years that she ran it.

Eventually, an offer from another company interested in buying hers got her interested in the possibility of selling. While the original offer wasn’t one that would work for her, she soon found the right buyer and sold her company, as she describes in some detail here.

After that, Amy did what we all dream about: moved to a new market and started from scratch using all the lessons she had learned and her vast, valuable previous experience. As she explains in our conversation, her goal is to manage 50 properties from home and make the same income as she did from 250 properties.

You’ll hear how she plans to do this, as well as how she has turned unaccompanied showing systems into a giant revenue generator. She talks about the incredible value in doing everything online, and how her current business lets her work from Punta Cana.

Here’s where you can find Amy:

Amy Karns on realtor.com

Amy Karns on Facebook

Amy Karns on LinkedIn

Show Notes

[02:08] - Amy offers us a look into her background and history in property management. She explains how she acquired a company over a five-year period.

[03:43] - We hear in more detail how Amy found this five-year opportunity to take over the company.

[05:55] - Were there any control issues between the previous owners of the company and Amy during the transition period?

[07:24] - Amy ran that company for 10 years, growing the company from 90 doors to 225 doors over that period. She also discusses the company’s leanness.

[08:53] - What caused Amy to look at selling that company? She reveals that she hadn’t considered selling it until an offer came in. She then discusses the move from renting to buying her office space.

[13:05] - Amy explains the problem with the first offer she received, which was that the buying company wanted her to teach them to do property management. She then talks about the pricing strategy she used to set up the sale once she found the right buyer.

[16:08] - Once Amy had the right buyer lined up, how did they move forward? She and Brad then touch on non-compete agreements and exclusivity clauses.

[18:26] - Amy walks us through some of the terms of the purchase agreement she made when selling the company.

[21:33] - How did the closing work during Amy’s sale?

[24:03] - After the sale, Amy picked up and moved to a whole new market. She then reveals that if she could go anywhere, she would pick Phoenix or Colorado. She then talks us through how her move to Dallas worked out, and explains why she chose to stay in Texas.

[27:50] - Getting leads in a new market is very difficult, Amy reveals.

[28:53] - Amy discusses the difficulty of competing in Dallas as a new property management company.

[30:30] - We hear about Amy’s experience in going from having a team to being the one to do everything herself. She then shares her impressive goal.

[32:17] - Being small allows Amy to be selective about the properties and owners she takes on. She and Brad then discuss some of the factors involved in staying small.

[35:01] - It’s important to set up the expectation with clients that you’re going to do everything online, Amy explains.

{37:41] - Amy talks us through how she’s doing unassisted showings with two types of lock boxes. Brad then reiterates her point that you don’t need to meet every tenant any longer, and discusses the problems with doing showings 30 days before the current lease ends, as is currently standard practice.

[42:01] - Does Amy think she’s getting more for the homes based on the self-assisted showings?

[43:20] - Amy offers a last-minute suggestion: become a member of NARPM if you aren’t one already!

Links and Resources:

Amy Karns on realtor.com

Amy Karns on Facebook

Amy Karns on LinkedIn

Punta Cana

National Property Management Network

National Association of Residential Property Managers (NARPM)

Rently

Tenant Turner

ShowMojo

Joining me for this episode is Jason Waggoner, the Vice President of Marketing at ACUTRAQ. In case you aren’t familiar with it, ACUTRAQ is an application screening company that covers various types of screening.

As a result of this work, Jason is full of deep and detailed knowledge on just about every aspect of the application and screening process, dealing with HUD, dealing with fair housing, and all other related aspects of the application cycle. In this conversation, he shares that knowledge and offers great insight into these topics and more.

An example of what Jason has to offer is his balanced perspective on how to handle negative factors on an application, such as a low credit score or a criminal history. In both cases, he advises a personal rather than a kneejerk approach. For example, a potentially ideal tenant may have a low credit score simply due to medical bills, and have a perfect track record with every other bill and rent. Similarly, someone may have a criminal history for a minor crime such as marijuana possession a decade ago, in which case that alone may not indicate anything about how they would be as a tenant today.

With that said, he’s well aware of the risk factors involved for landlords. He suggests being very detailed and open with your screening criteria for reasons that he explains in the episode. When it comes to adverse action letters, he offers great advice such as denying for credit delinquencies instead of credit score.

Many of these subjects have been touchy hot-topics in the NARPM community lately, so let’s take a listen and hear what Jason has to say!

Show Notes

[02:01] - Jason gives us an introduction to who he is and the company he works for, as well as the types of screenings the company is able to cover.

[04:22] - When you’re qualifying tenants, many people want to go by their gut feeling without understanding what they’re doing.

[05:05] - Brad offers a story related to what Jason has been saying. He explains that his director of leasing encountered a “property manager” who approves applicants depending on how they feel about them. Jason then explains when it really set in for him that your gut feeling isn’t a reliable standard.

[07:52] - Jason discusses the intricacies of the screening side of the application process. Hot topics include animals, felons, and decisions based on credit scores. He also emphasizes the importance of posting your screening criteria publicly so that unqualified applicants won’t waste their (or your) time.

[10:54] - Brad and Jason discuss the difficult process of declining applicants. Jason emphasizes the importance of making sure you’re doing everything by the book, because tenants know their rights and you can get in trouble if you don’t do things properly. He gives an example involving a service dog.

[14:59] - Brad points out that some DIY or home-based landlords forget why they hire management companies.

[15:33] - Jason goes into more detail about the adverse action letter.

[17:50] Brad brings up the topic of risk mitigation. Jason responds by discussing the necessity of digging deeper into a low credit score and giving people an opportunity. He and Brad then discuss how to do this.

[21:21] - We return to the topic of owners, who could be missing out on a great tenant because they denied someone based on a low credit score when they’re ideal in other ways.

[22:36] - Brad and Jason talk about another hot topic: felons. HUD is now saying that it’s important to look at the criminal history in more depth rather than just immediately reacting to it.

[25:15] - HUD is not trying to make criminals a protected class, Jason clarifies.

[26:16] - Jason returns from the pain point to the solution, which goes back to being clear about your intention to screen criminal history and saying “your criminal history may be cause for denial” upfront.

[28:15] - Brad brings up the business side of this, explaining briefly what ACUTRAQ is. Jason then talks about the popularity and benefits of outsourcing.

[31:58] - Is the application process integrated into a client’s potential website? After answering, Jason explains one of the things that sets ACUTRAQ apart from other companies, which is their personal touch.

[34:49] - Jason talks us through the services he goes through once an application comes in.

[38:09] - Jason offers an example of trying to establish someone’s criminal history when he or she may have had different names (due to marriages, nicknames, and so on).

[40:12] - We hear about some of what Jason is doing, including his involvement in the music scene and how the knowledge he got from that industry led to his creation of his music video, the Bad Tenant Blues.

[42:52] - Where can people find Jason? At [email protected] or by going to the ACUTRAQ website.

Links and Resources:

National Property Management Network

Jason Waggoner on LinkedIn

@ACUTRAQ on Twitter

Jason Waggoner at ACUTRAQ

ACUTRAQ

[email protected]

Bad Tenant Blues

First Class Realty on YouTube

If you’ve been a faithful listener of this show, you will already have heard of Pete Neubig of Empire Industries LLC, a property management company out of Houston, TX. Pete is partners with Steve Rozenberg, my guest on episode three of this podcast. In that episode, we went into great deal about satellite offices and marketing.

While Pete touches briefly on these topics, he spends more time on his areas of expertise. He’s the guy in the background who makes things run and ensures the systems at Empire Industries keep up with the growth.

Pete is also deeply knowledgeable about hiring and employee retention. He’s been using the framework of the DISC personality profile to ensure he hires the right people for the right roles, after realizing the reason he lost certain employees was because their personalities weren’t the right fit for their jobs. He’ll explain this in the interview, as well as offer insight into what personality types you should hire for certain roles within your own property management company.

We then take a deep dive into techniques for dealing with homes that have high days on market. He shares some tips and strategies for how to deal with a situation in which a home you’re trying to rent has high days on market and offers advice on how to get those rented. We cover, for example, the importance of keeping the owner in the loop, and of making the move-in process as simple and hassle-free as possible.

Show Notes

[02:18] - Pete starts things off by telling us that he comes from the investor side and needed to look for a management company himself at one point. He explains how this led to where he is today.

[03:55] - Brad gives listeners some background on Pete and his partner Steve Rosenberg. Brad then elaborates on their roles within the company.

[05:39] - Pete talks more about how the company handles the extreme growth that they’ve had.

[06:39] - The Property Management Mastermind Show was basically Brad and Pete chatting for the last couple years, Brad explains.

[07:19] - Pete brings up some challenges that may help listeners. One of his challenges is losing property managers, often from stress, so he’s been trying to figure out how to help them be stress-free.

[09:53] - Part of the challenge that Empire Industries had as a company was hiring a lot of inexperienced property managers. Pete then talks about the database he’s making for property managers within the company.

[11:16] - Pete discusses how he and Steve brought the concept of scripts in the sales world into the property management world.

[12:12] - Brad and Pete talk about one of Brad’s employees, “Rockstar” Ruby. Pete talks about his experience interviewing Ruby.

[14:16] - We hear more about what Pete has done in terms of opening multiple locations in Houston. They’ve opened six satellite offices at this point, in addition to the main office. Brad then talks about how this is important for showing up on Google.

[17:03] - Pete shares how important the internet has been for getting new leads, comparing it to agent referrals. He then talks about the challenge of keeping systems working with fast growth.

[19:25] - Brad brings up what Pete and Steve are doing in San Antonio today.

[22:00] - Pete mentions the last seminar he went to, which was the 10x Growth Con by Grant Cardone. Brad and Pete then talk about the products they’re developing, as well as why you should send a seven-page, heartfelt letter instead of a one-page letter.

[25:29] - When Pete does his marketing, he makes sure to hit each part of the DISC personality profile to appeal to everybody, not just one personality type.

[26:28] - Pete goes into more depth about the DISC personality profile, and explains how he has applied it to hiring managers.

[28:47] - Pete’s partner Steve is a very high I on the DISC profile, whereas Pete is a DC. Pete describes how this impacts their communication and interactions. He then talks about why a couple of CS portfolio managers have recently quit, and explains why they now hire CDs for that role.

[31:29] - Pete talks about the role of the DISC profile in his hiring process. He also offers suggestions for which personality type to hire for various roles.

[34:35] - We learn about Pete’s strategies for ensuring that days on market for his rentals aren’t getting too high.

[38:05] - Brad offers some techniques he’s heard of, including offering free TVs. Their internal strategy is to send owners a Monday morning update each week. He then dives into another of their strategies: getting more into the cash flow analysis.

[41:57] - Another strategy Brad uses is pointing out to owners how much they lose every month their property is vacant because they’re unwilling to lower the rent.

[42:46] - Pete talks about the strategy of lowering the entry point of how much a renter needs to bring in (for example, by offering two weeks free on the first month’s rent).

[44:07] - Pete explains how much of a detriment red tape can be when you’re renting out a house.

Links and Resources:

National Property Management Network

Empire Industries LLC

Steve Rozenberg on the Property Management Mastermind podcast

Pete Neubig on LinkedIn

10x Growth Con

Grant Cardone

DISC personality profile

Last week, I had a great conversation with Todd Breen, one of my cofounders at the National Property Management Network. This week, I’m bringing you a conversation with another of the cofounders, Dave Holt. One of the benefits of doing this is that I know these guys well and can personally vouch for their expertise in their niches.

In addition to his role at the National Property Management Network, Dave is the owner of a property management company in Minneapolis, Minnesota. He’s been involved in the property management industry for around 20 years and is a past NARPM president

In this episode, Dave will talk in great detail about investments. He shares his tips and strategies for how he does his own investments, and shares the techniques he uses to find and buy investment properties. He also explains that when you manage single-family homes, you have some unique advantages when it comes to investing in them.

I hope you enjoy and learn a lot from this episode, which we recorded on location in Las Vegas at the NARPM Broker/Owner Conference.

Show Notes

[02:39] - Dave’s claim to fame and niche of expertise is investing for property managers. He touches on the benefits of being a property manager when you get involved in investing.

[03:34] - Dave shares how long he’s been working in the industry, and he and Brad discuss the cycles of real estate. Dave then talks about investing and property management in relation to recessions.

[05:27] - We hear a bit about where Dave tends to pick up his properties.

[07:01] - Brad talks about the “where” of getting leads. He discusses off-market chasing, explaining what the term means. Dave then talks about where he gets his leads.

[10:00] - Dave and Brad walk us through a scenario in which an owner wants to cut and run.

[10:53] - Brad and Dave talk specific numbers to illustrate what they’ve been discussing. They reveal that 15% off the potential list price is a more realistic number for what the seller might actually receive, and therefore is a fair offer for the property. Dave also clarifies what the MAO (maximum allowable offer) is.

[18:01] - Another factor to take into account is profit, Dave explains. He suggests not using appreciation in your formula.

[20:12] - The key to this formula is that there needs to be no lien on the property that will overshadow the calculations, Brad explains. Dave then gives an example of a time when he bought an underwater property.

[24:10] - How much did Dave make on flipping the house he just described?

[24:53] - Dave presents another scenario, this time one that doesn’t involve flipping. Buying and holding is a great strategy for property managers, he explains.

[27:10] - We learn how Dave explains to sellers that he needs to take over their mortgage payments. He then talks about some ways to do this, and he and Dave discuss due-on-sale clauses.

[29:28] - Brad talks us through some of the things he’s done with taking over loans. Dave then shares his method.

[31:55] - Brad explains that he’s using a series LLC for his properties, and shares the reasons he chose to go this route. Dave responds by talking about risk mitigation and exploring other options.

[35:11] - The important part of these strategies is the separation between personal and business finances, Dave explains. He and Brad then discuss owner financing deals.

[39:38] - Dave takes us through a few other examples and options. In the process, he talks about master leasing, and recommends looking up David Tilney to learn more about it.

[42:13] - Brad brings up depreciation, and he and Dave spend a moment discussing its importance.

[44:57] - What recommendations would Dave give someone on where to start? Some recommendations are Lou Brown (in Atlanta) and the BiggerPockets site and podcast.

[47:05] - Dave gives his final advice to property managers about how to start investing.

Links and Resources:

National Property Management Network

NARPM

NARPM Broker/Owner Conference.

Series LLC

David Tilney

Lou Brown

BiggerPockets

As you may know, I’m one of the founders of the National Property Management Network. Todd Breen, today’s guest, is another. Thanks to this close working experience with him, I’m deeply familiar with his expertise in the property management industry, and am glad to have him on the show to share that expertise with you! We’re actually recording this episode on location in Las Vegas at the NARPM Broker/Owner Conference.

Todd has been the owner of a property management company for over 30 years, but he has been involved in the industry from an early age. His dad was a real estate broker, so he began his unofficial training while working in various capacities for his father from the time he was young. Today, Todd is the owner of Virtually Incredible.

In this interview, Todd will talk about outsourcing and why it’s vital to keeping your rates competitive and being able to scale effectively. He also shares brilliant (and sometimes counterintuitive) advice, experiences, and techniques. For example, he explains how he actually increased his income when he reduced his doors from 300 to 140 in 1994.

Show Notes

[02:25] - Todd turns the standard script on its head by plugging Brad instead of letting Brad plug him. He and Brad then talk about the cost of putting things off instead of doing them right now.

[03:40] - Todd takes us back to his beginnings in real estate and property management. He also shares the problem with thinking that any money is good money.

[06:29] - We learn how Todd’s income actually increased when he reduced his total number of doors in half.

[07:16] - Todd explains how he handled reducing his number of doors, mentioning his book The Manager’s Manual.

[10:50] - Virtually Incredible focuses on three main tasks, Todd explains. He describes his shift from working in his business to working on it, and talks about how SEO factored into this. As part of this story, we learn how he met his wife.

[15:04] - Brad talks about his choice to make videos when YouTube came out.

[16:09] - Todd talks more about what Virtually Incredible does, and what he expects it to do in the future.

[18:24] - Brad jumps in for a moment to elaborate on what Todd has been saying about verification.

[20:12] - We hear about a secret shopping campaign that Virtually Incredible performs every so often to evaluate management companies in a specific geographic area. He then explains how having people answering phones 85 hours a week dramatically reduced his vacancy list and days on market.

[22:53] - The property management has largely ignored the consumer experience for too long, Todd says, then explains what he means.

[26:46] - Todd and Brad talk about DocuSign briefly, then move on to discuss the preference of today’s tenants to text rather than come in and talk face-to-face. At least 75% of people choose to pay a convenience fee for lockbox entry than to come into the office to get the key, Brad reveals.

[28:46] - The checklist Todd’s company uses for the leasing cycle has 72 steps.

[31:25] - Todd discusses outsourcing, and explains why many property management companies tend to stagnate at a certain number of doors.

[32:28] - We hear Todd’s thoughts on where he sees Virtually Incredible going in the future.

[34:13] - Brad talks about top-down pressure and capped out (or falling) management fees.

[35:53] - Todd offers a story about his grandfather, a pharmacist, to illustrate the risk of thinking you’re irreplaceable.

[38:24] - Brad and Todd move on to talking about their venture together, National Property Management Network.

[40:12] - Todd shares his closing thoughts for the interview, expressing his excitement at seeing people coming up in the industry. He then shares his email address to make it easy to stay in touch.

Links and Resources:

NARPM Broker/Owner Conference

Virtually Incredible

National Property Management Network

The Manager’s Manual

DocuSign

[email protected]

In this episode, we hear from Justin Bajema, a property management company owner from Michigan who recently moved to Texas. In this powerful interview, he talks not only about property management, but also his experiences in the Marine Corps.

In 2003, Justin was coming back from Iraq and got a care package from his aunt and uncle. Inside was a copy of Rich Dad, Poor Dad. From that book, he got the real estate bug, and got involved in the industry when he got out of the army in 2005.

In the process of learning about the industry, Justin’s wife actually went to work for a competitor (where she was open about their interest in getting into property management). From there, they transitioned into owning single-family homes. After finding out about the National Association of Residential Property Managers (NARPM), they set up their own chapter.

After learning about Justin’s background in property management, we’ll explore how his experiences in the Marine Corps contributed to what he’s doing today. He’s deeply involved with an organization called Warriors Heart, which helps members of the “military class” (including law enforcement and first responders as well) heal. We talk an important way in which property managers can contribute to this vital and life-changing program.

Show Notes

[02:09] - Justin talks about how he got into property management.

[04:00] - We hear more about Justin’s choice to start a property management company. He also talks about conferences in general, and the National Association of Residential Property Managers (NARPM) specifically.

[07:19] - Justin discusses owning their company from a distance. He talks about Michael Gerber’s book The E Myth. He then explains that he hated managing people, so he had to clarify what he did (and didn’t) want from a company.

[10:52] - What were some of the keys that allowed Justin to break away from being in the office on a regular basis? He and Brad then discuss employees in terms of hiring decisions and necessary roles, and talk about outsourcing bookkeeping.

[15:22] - Justin recently got rid of his in-house accounting, he reveals, in response to Brad’s advice about outsourcing certain services.

[18:35] - Justin talks about going completely electronic with all of their accounts payable. This is both more convenient and less of a security risk.

[20:11] - We hear about Justin’s choices in software and banking.

[22:32] - Brad takes a moment to tell the story of how he and Justin met.

[23:33] - Justin went into the Marine Corps in May of 2001. 9/11 happened during his training. He served two tours in Iraq, and shares some of his experiences there.

[29:22] - We learn why Justin offered this information about his time in the military. He explains that a deep part of him still feels the need to take care of the guys in the military.

[32:03] - Justin talks about charities for veterans, and recommends going to an organization like Charity Navigator to assess a charity’s financials before donating to it.

[35:15] - We hear more about Justin’s move to Texas and his partnership with Warriors Heart. He then talks more about the program, what it does, and why it’s so vital.

[27:47] - There are two requirements for applicants to get into the program: PTSD and a chemical dependency. After discussing this, Justin explains in more depth why this program in particular was necessary, related to the story of what he saw happening to one of his close friends.

[40:26] - Justin touches on the possibility of the program expanding into more locations.

[40:55] - Brad and Justin came up with an idea for supporting the program through a referral system, which they discuss here.

[43:11] - Justin offers an invitation to visit the Warriors Heart property and program in San Antonio.

[45:32] - The program isn’t just for military, but rather for the “military class,” as Justin puts it. In addition to military, this also includes law enforcement and first responders.

[47:35] - What are Justin’s long-term goals for his involvement with Warriors Heart? In his answer, Justin explains the cost of the program, and where financial contributions go.

[49:14] - Justin lists ways to get in touch with him and learn more about the foundation. He also expresses that his biggest goal is awareness. He then invites listeners to email him directly at [email protected].

Links and Resources:

Justin Bajema on LinkedIn

Warriors Heart

Rich Dad, Poor Dad

National Association of Residential Property Managers (NARPM)

The E Myth

Charity Navigator

First, a quick note: today’s show is sponsored by the National Property Management Network, which provides insurance products and services to property managers.

Today, I’m joined by one of my clients, Mark Clayton. He’s a successful long-term single-family home investor who will teach us about investing and working with property management. Best of all, he’s a landlord with a heart. That is, he isn’t in the real estate game just to make money, but also to make his tenants happy.

Before he got into property investing, Mark was the CEO of several hospitals. As a hospital administrator, he had to move from town to town relatively often. This led indirectly to his involvement in property management, as he bought various homes during this process. Once Mark got up to three homes, he started looking into property management and we began working together.

In this conversation, Mark talks about why he got into the single-family home game, explaining that these homes diversify him from a risk standpoint. If you own multi-family properties instead, a single issue or problem (such as a fire) could impact much more of your overall investment.

We’ll also talk about Mark’s financing techniques, why depreciation is a good thing, what Mark looks for when deciding on whether to invest in a particular property, a valuable tool Mark uses for establishing metrics, and finally, his end game and ultimate goal for his business.

Show Notes

[02:09] - Mark starts us off by talking about his background, and how this background led him into property management.

[03:50] - We learn more about how Mark got into single-family home ownership.

[08:55] - Why did Mark choose to go into single-family homes? In his answer, he explains that he asks himself whether he can see his mother living there as part of what he looks for.

[10:48] - Mark elaborates on how important it is to him to make sure his tenants are happy. He then gives an example of doing a repair right the first time around.

[13:48] - Mark talks us through financing, especially for his early properties.

[15:05] - We hear more about the nuts and bolts of Mark’s process, including his views on repairs and renovations.

[17:58] - The first three homes Mark bought, before meeting Brad, weren’t bought at a discount. He then talks more about these properties.

[21:19] - Brad points out that some homes may cash flow well, while others don’t, creating an averaging effect. Mark elaborates on this, and touches on his portfolio pruning process. He also describes the experience of working with A+ Federal Credit Union.

[24:58] - Mark talks more about the benefits of working with the credit union. He and Brad then talk about the challenges of moving beyond 10 single-family homes. Mark then recommends not giving up your steady full-time job before you transition toward a commercial lender.

[29:52] - Having professional property management in place was a big part of getting commercial loans, Mark explains.

[30:53] - Brad talks about the necessity of renting a home quickly, even if that means you have to drop the price. Mark then moves on to talking about why he finds Texas a good place to invest, and suggests being “regionally agnostic” to those in less ideal locations.

[34:53] - We hear about some methods that allow people to view homes from a distance.

[35:22] - Brad talks about a story of a home Mark bought in Georgetown. Mark doesn’t remember this particular home offhand, but talks about learning from his mistakes.

[38:15] - Mark talks about the tool he uses for metrics: Property Tracker. He talks in depth about how he uses this program, and also explains what he looks for when considering a new property.

[41:46] - Mark explains why depreciation can be a great thing.

[44:07] - What is Mark’s end game? That is, does he want to build up the business and sell it, or nurse the cash flow with no end in sight?

[45:58] - Mark ends the episode by expressing appreciation for Brad and his company, going into detail about what makes Brad and his team stand out.

Links and Resources:

National Property Management Network

A+ Federal Credit Union

NOI (Net Operating Income)

Property Tracker

My guest on this episode, Darren Hunter, is an expert in fee maximization. Just as importantly, as you’ll hear him describe in great detail, he understands the mindset challenges that need to be overcome to effectively implement fee maximization. For much of this conversation, we go behind talking about that implementation into the mindset of the company owner and staff members.

Darren started as a property manager in 1989 in Adelaide, South Australia. He went on to become a state property manager with a well-known Australian real estate brand, for which he impressively managed 28 other property managers over 18 offices spread over a third of the country.

For the last 11 years, Darren has been a full-time professional property management trainer and consultant. He runs the PM Power Nuts & Bolts Webinar Series, which addresses some of the topics we’ll cover in this episode along with many others.

Much of our focus will be on that question of mindset, which I mentioned at the beginning of this introduction. Darren, we learn, struggled for a couple years because of his own low self-esteem and poor confidence. From there, he learned about the law of the fee lid, which says that your mindset and level of belief determines your fees, and you cannot do any better than what you believe you’re worth.

It’s natural to be hesitant about raising fees over fear that you might lose business. In this episode, Darren also goes into important depth about why losing some business through fee maximization is actually a good thing, and he and I use several examples to illustrate this point.

You can find Darren here:

DarrenHunter.com

Darren Hunter on LinkedIn

@darrenhuntercom on Facebook

@darrenhuntercom on Twitter

By email at [email protected]

Show Notes

[01:59] - Darren gives us a glimpse into his background in real estate. He then shares two stories about what happened when he raised fees. Despite a couple of objections, he reveals, the profit margin doubled.

[08:44] - Brad and Darren discuss fee increases, and the lesson you can learn from this: “Would you lose $10 to make $10,000?” Darren then talks about the “autopsy” he does of lost business after fee increases.

[10:24] - Brad would rather lose an owner than a staff member, he says, and gives an example of what he means.

[11:31] - We hear what Darren does in terms of changing people’s mindsets. He talks about the law of the fee lid. He and Brad then discuss justification, or points of difference, as well as discounters and pricing structures.

[16:23] - Darren elaborates on what Brad has been saying about giving something of minimal value rather than discounting the management fee.

[19:13] - We learn more about the mindset in Australia, New Zealand, and the United States. Darren then uses Texas’ gun laws to illustrate a point about Australian culture. He then gives examples of tenant protection laws.

[25:30] - Darren digs deeper into the mindset questions he’s been talking about. He also talks about why the majority of owners will stay through a fee increase, which has to do with peace of mind.

[30:14] - We hear more about peace of mind among owners, and how that affects whether to raise fees.

[30:59] - There are five types of clients you shouldn’t increase fees with, which Darren lists here. He then gives an example of justifying a new fee.

[37:34] - Darren offers another story about a company he’s dealing with, this time in Oregon.

[39:58] - Darren talks more about his current time in the United States, including where he’s going next.

[42:27] - We learn more about Darren’s services. He suggests going to his website, and discusses the webinar series he offers: PM Power Nuts & Bolts Webinar Series. He also mentions his online store and his knowledge library.

[45:12] - Brad talks about having zero tolerance for not paying rent on time, and discusses how American fair housing laws apply to this. Darren then responds by sharing his stance on zero tolerance.

Links and Resources:

DarrenHunter.com

Darren Hunter on LinkedIn

@darrenhuntercom on Facebook

@darrenhuntercom on Twitter

By email at [email protected]

Points of difference

PM Power Nuts & Bolts Webinar Series

Darren’s online store

Tim Melton is the president and co-founder of SGI Property Management. Before getting into real estate, Tim worked in the automobile industry, where he gained experience working with dealerships and financing. As luck would have it, this correlates nicely to his work with property management companies.

Tim and SGI Property Management are based in Phoenix, but the company has worked its way up to several market locations. Tim started the company in Phoenix in 2011, but his goal was always to move into multiple markets, partly because Phoenix is a volatile market and expanding would allow for more stability. Now, SGI Property Management has grown into Memphis, Las Vegas, and Dallas.

In our conversation, Tim goes through quite a bit of the process of expanding into different market locations. He reveals the exact number of units necessary to make him consider a new location, and emphasizes the importance of understanding the local market dynamics in different areas. This includes not only the local culture and standards, but also practical details like the fact that some areas freeze and others don’t.

He also shares some great insights into how to run a company, with an emphasis on creating a vibrant office culture and environment. You’ll have to listen to the episode to hear everything he has to say, but I’ll share one excerpt here: in the center of the main office, there’s a house that will hold around 10,000 ping pong balls. For each signed property, they drop in a ping pong ball that’s color coded by market. This is a fun visual way of marking their progress toward the large goal of reaching 10,000 units.

As you can gather from that excerpt, Tim is creative, original, and results-driven. Listen in to hear his brilliant insight and advice!

You can find Tim here:

[email protected]

SGI Property Management

Show Notes

[01:44] - Tim launches off by talking about how he got started.

[02:44] - We hear more about Tim’s experience at the Van Tuyl Group in the automotive industry, and how this experience relates to what he’s doing now.

[05:31] - Brad takes a moment to talk about economies of scale, touching on what the concept means. Tim then elaborates, talking about how this applies to his business.

[06:51] - Tim goes into more depth about the value created by combining forces in the automobile industry.

[07:37] - We learn how this relates to property management from Tim’s perspective.

[08:20] - Tim speaks enthusiastically about Wayne Huizenga, who eventually had the nation’s largest trash route business.

[09:48] - His experiences in the automobile industry helped him know the goal when he began his real estate company, Tim explains. He then walks us through the company’s early days.

[12:27] - What does Tim consider the first big breaks for his business?

[13:47] - Tim talks about the visual motivation tool in the office, and also discusses several aspects of office culture and environment that contribute to strengthening the business.

[15:59] - Their employee of the month contest, which Tim describes here, offers some great insight into how the company works.

[18:00] - We hear Tim’s thoughts on the importance of keeping things exciting and worthwhile for everyone involved.

[18:42] - Tim talks about some of the challenges involved in being in multiple markets.

[20:40] - What gets handled locally in the related market, and what gets taken care of at the main location in Phoenix? Tim answers, then addresses some of the challenges and benefits involved in this setup.

[23:59] - The company’s structure gives Tim the ability to deploy to any market quickly. The break-even point to consider going into a new market for is 150 units. In discussing this, Tim talks about their expansion to Memphis.

[26:31] - Tim offers some advice that he’s learned from his experience with expanding into other markets.

[27:42] - With the acquisition trends we’re seeing, where does Tim think the industry is heading?

[29:36] - Tim talks about some of the roadblocks he’s encountered in the acquisitions efforts. He reveals that it’s very rarely about the money.

[30:43] - We hear about the multiples Tim has been seeing in the industry.

[32:56] - Tim and Brad discuss the correlation between the examples of the automobile and the waste management industry as it relates to the property management industry. They also talk about reducing overhead by tying into something bigger.

[35:48] - Where does Tim think the industry as a whole is heading?

[38:48] - What’s the best way to reach Tim? He provides his email address to make it easy to get in touch directly.

Links and Resources:

[email protected]

SGI Property Management

Van Tuyl Group

Wayne Huizenga