Scaling Challenges
Well, thanks for coming back. We appreciate it. This is kind of video number two in the, series that we're doing called Built to Scale. And we described in our first video, the big problem is what works at 30 miles an hour doesn't work at a hundred miles an hour, meaning you don't manage 300 doors the way you manage 50 doors. And in order to help people along, there are some of us who have scaled from zero doors to a thousand and can identify processes and systems that we had to change to in order to scale.
In other words, where we might be able to help a little bit is to help you set up a business model so that if you double next year, your systems won't be broke. In other words, we're gonna kind of step on your toes and tell you're doing some things that maybe you shouldn't be doing. Maybe you should do showing a different way. Maybe you should do maintenance or risk rent collection a different way. Why?
Because if you go from 500 doors to 800 doors in the next year, your systems are gonna be broken. And so the problem is you gotta build, most people run their businesses for where they are today, and that's a problem. And you gotta figure out, if I'm gonna be double the size in two years, what systems and processes do I have to change today in order to accommodate that growth?
Collaboration Issues
So number one problem, number one thing that'll prevent you from scaling ready, here we go, is reducing collaboration with the owner. Okay? Now, we've talked about this in many different forms, in many different ways on our website, but collaborating with the owner, collaborating with the owner, doing what the sales industry does, and let the owner tell you how to do things. Talking to the owner and having signing up an owner that says, now when an application comes in, you pull the information, call me so we can qualify the guy. I wanna pick and choose, right?
When maintenance comes in, you gotta call me. And before you renew a lease, before you terminate a lease, before you reinstate a lease, you're gotta talk to me first. And if there's anything wrong with you, gotta call me first. It's kind of a low, kind of small a agency model, right? Collaborating with the owner is the number one thing that's gonna prevent you from scaling.
Now, somebody gonna come to me and say, Robert, we manage a thousand doors and we talk to the owner and let the owner make all the decisions. That's fine. I'm telling you the norm that the out of a thousand managers, okay, 980 of 'em have figured out they can't do co-management. They cannot let the owner micromanage 'em. So let's move forward.
So you start with getting your thinking right? And, and the anchor kind of the idea that I want you to settle on, put this on your, write this on your sheet rock in your in your office, okay? We don't co-manage when an owner in a presentation starts saying, well, do you call me for this?
Professional Independence
You know, we don't co-manage. it's not like, it's not like sales where the owner's in charge. We've got licenses and, and this is very highly litigious business and we're gonna try to keep the tenant from naming you in a lawsuit. And so we're gonna be your body armor. We're gonna go out on the fighting line and you're gonna be one of the colonels and, hide in the bunker 20 miles behind the firing line and let me
have the bulletproof vest and take the machine gun and get the blood all over it. Okay? I'll beat your stand in. You go hide in the shadows. Don't stick your head out too far.
Might get shot off. So the anchor for this whole idea of disconnect, stop collaborating with the owner, stop doing co-management is we don't do co-management. Now, property management disconnecting from the owner is like giving your tax return information to A CPA. I love the illustrations. The best illustration I've gone to kind of explain this to the owners.
This, when you turn your paperwork over to your CPA to do the tax return, you don't stand over their shoulder as they fill out your return and tell 'em how to do it. See, we, we all know how to pull that data together, but where it goes on the tax return, you hire a professional for, it's the same thing with property management. It is your house. I know it's your house and, and you've personalized it and you've cared for it and it's important to you. But when you turn it over to a property manager, you can't, you can't tell the property manager how to manage it.
That's my profession. Just like a CPA. You cannot, you, you cannot go to a closing attorney and tell 'em how to do the closing. You give it to the professional and you let 'em do it. Best illustration I can find to give the owner the understanding that manage co-management doesn't work.
You know, either you do it, Mr. Owner or we do it, but here are the parameters that we need to be working within. Why? Because property management, I know we've said this a hundred times, property management is a nickel dime. Penny Annie business, okay?
Volume and Speed
Now, in order to make a Penny Annie business work, you, you to make money that you need in property management, you need volume to make property management work, you need volume. Really hard to make a living at 50 doors really hard to make a living at 30 or 70 doors. You, you're building it up. You're maybe covering some of your overhead, but you're really not making any money. And this is such a nickel dime business.
It requires volume in order to work. Now, watch volume requires speed. When you're, when you're 50 doors, a hundred doors and you're doing two applications a month, you don't have to be on speed. You can take the whole thing and do an application in a couple of days all by yourself when you get a thousand doors. And our high point, we were, we had 120 doors on the market for rent.
We were processing a hundred applications a month. We were moving 50 and 60 tenants into houses every single month. You can't scale unless you ha can develop speed. So if you're at a hundred doors, you do it differently than when you're at 300 doors. 'cause you're, now you're processing two or three applications a week.
It's different. You gotta develop speed.
Scaling Processes
And so in this process of how to scale, we're gonna show you how you can develop speed and process of, of processing applications because that should take you about an hour, hour and a half at the very most before you get back to lieutenant and say, yes, we can make this work, or No, we can't make this work. And you say, oh, Robert, that's impossible. No, it is possible. I told you're gonna, you know, you, you will defend what you've decided in the past.
I get that. But listen, I know how to scale. I know how to go from a hundred to 1,300 to a thousand. I know how to do that and I can help you examine, put a magnifying glass on your business so you can look at some of these processes and say, I can't do it that way if I'm gonna scale. Right?
So you must have speed to be scalable and, and we'll talk about this more later time. Small, A agency prevents scalability. This some small agent we talking about. Another video is the agent who, who is kinda like a sales agent, right? They talk to the owner about everything.
They make no decisions on their own. A big a agent is one that kind of says, I'll run the ads, I'll approve the tenant, I'll handle the move in, I'll handle maintenance calls, maintenance issues under 500 bucks. I'll decide when to, to terminate the lease and reinstate the lease. I'll make these decisions. Thank you very much.
Scaling Property Management
That's a big a agent. There are parameters and limits in that, but we got a great video that'll help you with that. Small, a agency prevents scalability. Okay? So the formula, if you want to put something on, on the wall, make a poster out of it, cur it, right?
The formula for making money in property management goes like this. It's a nickel dime business. How do you make money in a nickel dime business? Well, number one, it requires that you have volume really hard to sell a lot of pencils and make money, isn't it? Yeah.
Nickel dime. It requires volume. You gotta get the volume up if you're gonna make any money. Volume requires speed. You can't do a thousand doors the way you do.
300 doors doesn't work. Speed. You need to be scalable. That's the formula right there. You should take a poster of that and put it up on the wall because if you want scale, you gotta develop speed, you gotta build volume.
It's the only way to make it work. Why it's penny. Any business, just sales. Okay?
Preventing Owner Micromanagement
Now, how to prevent the owner from micromanaging. How do you prevent an owner from micromanaging? Now we know the answer to that 'cause we fought that back in the beginning I used the standard association form, the owner's name was on the lease. The owner signed the lease, I signed the lease. We did it kind of the archaic way and we engaged the owner a lot of this stuff.
The question is, how do you prevent that? Okay? How do you break the habit of letting the owner make the decision? Some of you, some of you have, are bogged down because every time something happens, you feel you need to call the owner and have a conversation. Most of us got there by being in the sales business.
'cause in the sales business, you're a small agent, you don't make any decisions and that's normal. But you've come out of that into property management.
Transitioning Mindset
You cannot carry over that mindset. You know, call the owner, get the owner involved. If you're gonna do any kind of volume in property management, don't think you're gonna make money in this business unless you, unless you scale, unless you grow it up. And to grow it up, you gotta disconnect from the owner. You gotta be the manager.
You gotta make the decisions. You gotta operate as a big agent. Now we got a great series on that and I want to point it to you. Okay? Go to training property managers.com/agency.
Now agency is kind of a boring topic, but in this context, agency and property management's very, very different than agency in sales. And so you gotta make that transition and it's a really good series, especially for your staff to watch. If you can't find it as an extension, go to our products page, find that graphic, click on it, it'll take you to that series. Again, it's a free series. I'm ly thing.
I just want you to have the information because it'll change the way you think and it'll prepare you that ultimately to scale. Thanks for listening.
