DGS 208: How to Deal with Bad Property Management Clients

Too many property management entrepreneurs tolerate bad clients. They subject their team to crappy owners and are often miserable.

In this episode, property management growth expert Jason Hull explains how entrepreneurs can deal with bad property management clients and prevent bringing them on in the first place.

You’ll Learn…

[04:03] What is a Bad Client?

[09:50] Why Bad Clients Lead to Bad Team Members

[10:43] You Need to Punch Your Clients! (Figuratively)

[15:36] How to Prevent Bad Clients

[24:57] Creating Processes to Get Better Clients

Tweetables

“If you cannot figure out how to make them into a good client, then you need to let them go.”

“You get what you tolerate.”

“If you just ate ramen, or you just tighten the belt a little bit, you might be able to let go of that bad client or those bad doors right now.”

“If you are tolerating a bad client and you have team members, then you’re not taking care of your team.”

Resources

DoorGrow and Scale Mastermind

DoorGrow Academy

DoorGrow on YouTube

DoorGrowClub

DoorGrowLive

TalkRoute Referral Link

Transcript

[00:00:00] If you are tolerating a bad client and you have team members, then you’re not taking care of your team.

[00:00:06] all right. Welcome Doorgrow Hackers to the DoorGrowShow. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing in business and life, and you’re open to doing things a bit differently, then you are a DoorGrow hacker. DoorGrow hackers love the opportunities, daily variety, unique challenges and freedom that property management brings. Many in real estate think you’re crazy for doing it. You think they’re crazy for not because you realize that property management is the ultimate, high trust gateway to real estate deals, relationships, and residual income.

[00:00:47] At DoorGrow, we are on a mission to transform property management, business owners and their businesses. We want to transform the industry, eliminate the bs, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I’m your host property management growth expert, Jason Hull, the founder, and CEO of DoorGrow. Now let’s get into the show.

[00:01:12] All right, so we just had here at DoorGrow, right here at DoorGrow Headquarters in the Austin, Texas area at the Kalahari Resort in Round Rock, Texas, we had DoorGrow Live, our DoorGrow Live event. It was super awesome, super cool, amazing to see everybody in person. It was really awesome, great experience. I highly recommend that if you want to get in momentum in your property management business, you want to get inspired, you want to be around people that are at operating at a different level than at typical property management conferences. Our clients are special. Our clients are special because they have upleveled their mindset. Just being around them will shift you as well. So come hang out with us. That’s one of the things we do is we install a different mindset into our clients. So they start functioning and thinking at different higher level than what’s typical. And then we start to teach them really good strategies and ideas for growth. One of our clients man– I’m so excited for some of these testimonial videos– one of our clients I think went from like 120 doors to like 400 and something doors. And like, I don’t know, he like doubled his doors in like four months and he was working with our acquisitions coach. Went and got like, went through a whole acquisition. Like he wouldn’t even have known how to look for a deal, let alone have handled the whole thing. He literally just did whatever he was told by his coach. Like, “say this. Send this email. Don’t do this.” He just did it and now he’s going to be adding a bunch of doors. Asked him if he thought he could get to a thousand doors and he said, “oh yeah I’ll do that in like maybe two or three years, no sweat.” we’ve laid out that roadmap, we have the DoorGrow code of what a company needs to do in order to get to a thousand doors.

[00:03:01] And those of you listening that you’re already a thousand doors, maybe your business could be optimized. Maybe it could be more fun for you. Maybe we can improve your team. Maybe you’re losing more doors than you’re getting on right now. Our clients are adding more doors than you’re getting on, and you don’t have to do it through acquisition necessarily. You can just add doors. And so if you’re having any of these issues, reach out. Like we would love to help you.

[00:03:26] So my topic that I wanted to talk about today, we, Sarah, my wife and COO of DoorGrow brought two clients up on stage and said, ” Jason doesn’t really know exactly totally what we’re going to be doing.”

[00:03:39] And I was like, “okay. I like a little chaos and a little risk,” so she brings them up and was like, “Hey, basically we’re going to coach them in front of everybody.” I was like, “okay, this could go really horribly wrong or really awesome,” but I didn’t think it’d go wrong. And it was great. So one of our clients got up and he was just talking about the biggest challenge in his business right now is just a really bad owner. And so we had this great discussion and coaching and conversation with the entire room about bad clients. And so the topic for this episode is how to deal with bad clients or firing. How property managers can deal with bad clients or fire bad clients, right? How do we deal with them?

[00:04:25] One thing that’s important is that you should fire some. If you cannot figure out how to make them into a good client, then you need to let them go. It’s important to let bad clients go and I think that’s the hallmark of a seasoned property manager is that you fired some shitty clients that you don’t want to have. Let’s chat a little bit about this. So bad clients, what they look like. They’re clients that do not respect you. They’re clients that do not value you. They’re clients that treat you poorly. And one of the things I want you to realize is that you get what you tolerate. And so if you have tolerated this kind of behavior, you may have created clients that don’t value you or trust you if you aren’t as effective in your sales pitch in creating trust, which is really what true sales is, it’s getting people to trust you. Not manipulating, not tricking them. You legitimately have a solution to a real problem that you can solve, and they want that, and you’re able to charge a fee for that, right? That is a real business. The big challenge though, is this was like 10% of his portfolio. This one owner. This would be painful to let go.

[00:05:49] So the usual way that I coach clients, if they have a, like sometimes when clients first come to us, especially if they’re in that first sand trap of maybe 50, 60 units or less than a hundred units, their whole portfolio might be bad. They might have a large percentage of accidental investors, people that waste their time, people that are pushing back that don’t respect their boundaries. And so it’s important to set a rule. So my usual recommendation is set some sort of rule. We want to get you growing and adding good doors to offset those and then set a rule like a three to one rule or a five to one rule that every time you get three bad doors or five, I mean, yeah, every time you get three new doors, three good ones, or five good doors, you and your team have permission to let go of a bad door. Or maybe you do it by owners. You just set a rule. Maybe you already know, like you knew the client he wanted to get rid of. You just need to figure out how do we let go of that person. Now, that’s one idea. That’s if you want to replace that income. But if you’re dealing with a shitty owner and the difficult situation, I want you to take a step behind that question because this is the question that a lot of people think superficially. They need answers. How do I replace this income? What I think is a better question is to take a look at, instead of trying to replace all that income before you let them go, is to figure out what amount of additional revenue would I have to be generating or additional clients or business would I have to be generating in order to be able to tolerate letting them go, which is different.

[00:07:29] So figure out what’s the minimum amount that I could scrape by with and survive with to get rid of them as soon as possible. Because as soon as you get rid of them, it’s going to free up a lot of attention, a lot of bandwidth. Your revenue will dip, but you just need to offset it. You might find that you could survive.

[00:07:49] If you just ate ramen, or you just tighten the belt a little bit, you might be able to let go of that bad client or those bad doors right now. And what that does is it frees up a lot of head space. It frees up a lot of time. It frees up bandwidth so that you can go replace those doors faster. This is similar to the advice that I gave to my clients that were there that now are full-time, like owning and running their business together. These business partners, when they first came to me though, they were starting a property management business and they wanted to quit their day job. They both had jobs and their dream was to start this business together and offset all their income. And I said, don’t try to offset all your income. Figure out what’s the bare minimum that you can each pay yourselves and survive on. Like tighten the belt, figure out what that is because if you can just get to that level and then quit your jobs and then go all in on this business, and we teach you all the growth strategies and you start to grow rapidly, this is exactly what they did, they then could grow a lot faster. So they let go of their jobs and they started growing a lot faster and they had to get some doors before they could do this, but once they hit that lower level that they decided they could survive on, then they were able to invest, go all into the business and grow a lot faster.

[00:09:11] Same thing with firing clients. Like don’t wait until you offset all of the income. I once had a client come to once and he wanted to offset all of his income and he was a pharmaceutical rep making like six figures and he was like, “well, I’m going to start adding some doors and build up this new business, but I’m going to do it kind of part-time and I’ll wait until I offset all my income.” and I was like, that’s not going to happen very easily, if at all. And I think he underestimated the amount of work it would take to start a business. He didn’t really want to spend time to do it. It was kind of a dream, and he was pretty comfortable in that job, right? Had a lot of freedom and was pretty comfortable and they paid him really well, so it was hard to give it up. So, let’s just keep that in mind.

[00:09:59] All right, so the other thing about firing, I think that’s really firing clients that I think is important to recognize is you need to protect your team. If you are tolerating a bad client and you have team members, then you’re not taking care of your team. You’re going to lose A players. B players will tolerate shitty behavior and they will tolerate shitty bosses and they will tolerate a bad environment. A players won’t. By keeping on bad clients, you are losing your best people. If you wonder why you have a lot of turnover, it might be because you’re not protecting and insulating your team from people mistreating them or treating them poorly. You haven’t set healthy boundaries with your clients and started to protect your team, so make sure you’re protecting your team. So fire, protect your team.

[00:10:51] Next item, punch them in the face. Okay, this is metaphorically, I am not recommending violence in this situation. What I am saying is that metaphorically or figuratively, you need to punch them in the face, sometimes these bad owners. Sometimes bad owners are high D personality types on the disc profile, which means they are drivers. They’re short, maybe quick. They want results. They want like information quickly. They want to see things moved fast. They do not care about stories or excuses. Let’s go! And in order for them to respect you, and a lot of investors or wealthy people might be high D. They’re driven. Just like a lot of entrepreneurs, and so if that is the case, you may need to punch them in the face. Like sometimes you’ll see two guys and they’re like, they have a beef with each other and they like, they’re arguing or whatever, and they get into a fight and then they’re best friends for forever, right? They respect each other after that. Sometimes you need to punch these crappy owners in the face in order for them to respect you. You need to set boundaries right at the beginning. Boom! And say, no, I’m not going to do that, Mr. Owner, and here’s why. They’re just waiting. A lot of these owners are just waiting for someone to set boundaries with them to show that they know what they’re doing. They cannot, high D cannot respect you if you give in to their demands. They cannot respect you if you cave to their bad behavior. Like they will test you.

[00:12:27] A lot of guys that have dated women or been in the dating scene know, have heard about shit tests, right? Like maybe your spouse does this to you, like they will test you to see if you really are who you say you are, or try to showcase that you are on the tint. They will challenge you. Your clients are going to challenge you. They’re going to test you to see if you really are going to stick to those fees. If you really are confident in your business, if you really are going to stick to your contractor agreements, right? They want to see if you have integrity. Integrity in a building is strength. How much integrity does the steel have? Do you have the integrity of steel? Are you strong? Can you maintain your boundaries? Do you know your limits? Can you punch them in the face? If you can punch them in the face in the beginning, a lot of times owners will say “finally, I’ve found a property manager that I can respect that I don’t have to tell what to do, that I don’t have to micromanage that owns their stuff.” they’re looking for that extreme ownership, which is a great book by the way. I love listening to the audiobook because these guys sounded like they gargled sand, like in the deserts of Ramadi, right? So they’re like, Jocko Willick and Leaf. They’re like, “you need to have extreme ownership. This is what we did in Ramadi, right?”

[00:13:53] I don’t know if that’s a pretty good impersonation, but I love listening to the audiobook. So I recommend the audiobook, but these guys know they take extreme ownership. They’re accountable for things, but they also probably are willing to punch somebody in the face. It’s like being shitty or mistreating or whatever, right? So make sure you punch them in the face and you do that early during the sales process, and you will be probably the most likely to get them as a client because they go to everybody else, they’re not going to find what they’re looking for, which what they want is peace of mind. They want safety and certainty, and you cannot feel safe with somebody that caves to the whims of everybody. That’s not a safe person. You’re not a safe property manager to manage their property. If they think you’re going to fold on every vendor saying, ” I’m going to charge way too much,” or you’re going to cave on every tenant that’s going to say, “well I want to paint the house purple,” or whatever they want to do. You’re like, “well, okay.” They’re not going to trust you. They need to know that you have what it takes. You need to show them that. And then they’re going to be like, oh my gosh. You’re the property manager for me. You just need to say, “no, Mr. Owner, we’re not going to do that. And here’s why. We know this. We know what to do. This is how we do it. Our way works better than yours. By your own admission, you’re coming to us for help because things aren’t going well as you have told me, and we don’t have that problem. Our clients don’t have that problem. We are better at this than you. So either you trust us and respect us to do our job, and we will not be perfect, but we’ll get it. We’ll fix it, we’ll make sure we get it right eventually, but we’re going to do this better than you. We’re good at this and you can trust us to take care of stuff.” And they’ll go, “that’s all I wanted. That’s all I needed. I just wanted that safety and certainty. Just wanted to know you had the strength to do what I would want to be done.”

[00:15:44] Okay, the next step is you need to figure out after you’ve dealt with a bad client, maybe you forgot to punch somebody in the face. Maybe you forgot to protect your team. Maybe you didn’t fire them soon enough. Now you need to make sure you learn and prevent this situation in the future. So how do we learn? And how do we prevent? Well, when you need to take inventory, what did we do to create this situation? What did we do to allow a client like this into our portfolio? Why did we allow this? What happened? Where was the breakdown? Do we need to or can we improve our agreements? Do we need to improve the conversation or during the sales process when we review the agreement and tell them so they can hear and see what it is we’re going to do, so, Instead of just sending the agreement, can we go through the agreement with them to align them towards our way and make them a better client? Can we filter better? Can we qualify during the sales process and prevent bad clients from coming in or set better expectations during the sales process? All of these things, Allow you to qualify and get your clients potential clients to level up. You can turn them into better clients during the sales process. So learn and prevent. Can we create new processes and procedures that insulate and protect us from owner situations like this, right? You need to learn. So we want to make sure that our clients feel safe and they might need to be punched in the face, and they might need better boundaries, and they might need better guidelines, and they might need better training or education during the sales process on how to be a good client.

[00:17:30] We have this in our agreement with our clients, how to be a good client. And there’s a list, right? And during our sales pitch, one of our slides in our pitch deck is the three commitments we require of people that come into our program of what’s required. Like do you measure up? Do you qualify to be with us, right? You need to set boundaries and you need to use that, that sales tactic of qualifying and of prising yourself. You’re the prize. You solve their problem, they have problems. They’re paying you to solve those problems, which means you’re the prize, not them. Mindset. That’s a mindset shift.

[00:18:12] Okay, so the next thing, get clear on your boundaries, right? So after you learn and prevent, get clear what are our boundaries? And recognize people will test these boundaries. So how do you pass the test instead of fail the test? So if somebody’s setting boundaries, you will either pass or you will fail a test. If somebody’s trying to test your boundaries you’ll either pass or fail. So make sure you set your boundaries. What are their boundaries, right? So make sure you’re passing the tests. It is it’s so helpful to recognize that everybody that matters, or your spouse, your kids, your clients, tenants, they’re all going to test your boundaries, so you need to get clear on what those boundaries are, and when a boundary is crossed, you’ll know it because your nervous system will not be happy. You will not feel good in your body. You’ll feel guilt or shame or embarrassment, humiliation, lack of power. Whatever, gross, icky, right? These are when people order situations overstep or go over your boundaries, or you aren’t respecting or take taking care of yourself. You need to take care of that little you on the inside. It needs your protection. You need to take care of you. You need to know that you will protect you no matter what. Just like your team needs to feel safe. Your heart needs to feel safe. Your mind needs to feel safe. Your body needs to feel safe. These are like three children that you control. You are not your mind. You are the person that thinks the thoughts. You are not the thoughts. You are not your mind. You are also not your emotions. You are the person that feels the feelings. This is another vehicle. Your mind is a vehicle. Your heart is a vehicle, and you are also not your body. You are the person that moves the body and uses the body and experiences the body. These are like three unruly children on the bus, and you should be driving the bus, and if you let any of these drive the bus, it can be a bit chaotic, right?

[00:20:21] If your brain’s driving the bus, everything’s scary because the brain’s job it’s to avoid pain and scare the shit out of you and protect you. So it’s going to like look at every logical angle. How can I avoid feeling these uncomfortable feelings? And the heart and the emotions needs to feel everything. It’s the only thing you can do with the feeling. You need to feel the uncomfortable feelings. You need to feel the sorrow of the sadness, the crap, the happiness, the joy. You need to feel it all. That’s part of being human, that’s life, that’s feeling alive. The full breadth of human experience. We need to feel it all, but the brain doesn’t want us to fill it all because the brain’s like, well that didn’t, I don’t know if I liked that last time. That was uncomfortable. And it judges everything. And then we have our body, and our body wants like sex and it wants to taste stuff and it wants to get rest. And like our body has these needs. So we can’t let our body be in control, right? Like our life can be really strong chaos. We’re just letting our tongue and our genitals and our physical needs like take complete control of the bus, that would be a really bad life, bad situation, right? If our heart and emotions were in control of everything, we’d be kicking holes in the wall. Like we would just be emotional about things. We would be up and down, right? We would get way too excited about some stuff, right? And logic then steps in and like controls a little bit of that, right? And we have some reason, and some logic we’re like, how much would it cost to kick a hole in the wall? How much would it cost to repair that? So we start to make logical choices. What would be the ramifications of this relationship or doing this thing or taking this risk, right? So, Then we have our intuition, right?

[00:22:00] Another vehicle that I didn’t mention, but we have another vehicle, our intuition, some might call it gut, some might call it God, source, whatever. Our spiritual side that we need to tap into that is a higher faculty than our logical mind that gives us clues and lets us know things that need to be done that sometimes don’t make logical sense, but they end up being right and deep down they’re right. A lot of really logical people cannot listen to intuition, which is a higher faculty. That’s why the intuitive people have a one up on some of the most logical people. They’re too logical, they’re too logical, and a lot of times they’re too logical because they’re really just trying to avoid feelings and it cuts off their intuition.

[00:22:41] So going back what I was why I’m going over this is we need to set really good boundaries and we need to take care of these four vehicles, our intuition, our mental, our emotional, our physical. We need to take care of these vehicles, these little children that we kind of manage. We need to be listening to all of them, and we need to figure out what our boundaries are. What are we willing to do? What are we not willing to do? And then we need to figure out how to avoid the temptations that cause us to fail at that. And sometimes one of the things that came up is one of our clients was very transparent during one of our awesome speakers and said that sometimes when there’s conflict with vendors and some of the vendors are his friends, like doing stuff, he’s kind of a pleaser and it’s hard to set boundaries with them or to let them know, have uncomfortable conversations that they’re not doing things right or something needs to be done faster or stuff like this. And so what within ourselves, the kind of question that she asked was like, what within ourselves thinks that we. Deserve to have those things happen to us, or why within ourselves are we so concerned with being liked, and a lot of times it’s from when we were young. People overstepped our boundaries. People treat us poorly and we had to like fawn or please to get people to like us in order to feel safe. And so, there’s a great book I read recently I really enjoyed, called The Courage to Be Disliked. All about Adler, Adlerian psychology and which is different than Freud and young. Really interesting. I think he was way ahead of his time. The world wasn’t ready for him back then. He was a contemporary of both of those young and Freud. But Adlerian psychology has become very popular in Japan, and I believe the authors of the book are both from Japan, and it was translated to English, I think.

[00:24:41] So really awesome book. The Courage to Be Disliked. And the sequel is the Courage to Be Happy or something like that. Great books. We need to have courage, the courage, the willingness to feel those uncomfortable feelings and be disliked in order to respect our boundaries. And so that’s something else that we could do a whole episode on this, right?

[00:25:05] So the next piece is to build process, right? So take a look at your process. This might be connected to learning and preventing. This might be connected to getting clear on boundaries and what you want, protecting the team, but coming together as a team. We had Errol Allen at this event. He’s a process expert and he talks about getting the entire team together to work on a process. Like who feeds the process, who works on the process, and who is affected later, or what, the output affects of the process affects them, right? So we want to make sure that we get all the stakeholders involved and we develop a really good process. So that we can, as part of that learning and preventing and avoiding the temptation and passing the tests is creating a really good process. And so these are the main things that we discussed in relation to dealing with this challenge of letting go of clients that are not treating you well and setting really good boundaries. Now, If you don’t, then you will get caught in the cycle of suck. Everybody’s heard me talk about this before, which means you take on crappy owners, you then have crappy properties, you then have crappy residents because they’re frustrated about the crappy property and the crappy owner, and then you’re going to have crappy reviews. Then you’re going to attract more crappy clients, right? And this sums up the property management industry in aggregate. This is the challenge in why most property managers suck. Most of your competitors you probably believe suck. It’s because they’re taking on any client. You need to set some rules, set some boundaries, and let go of some bad clients and that will get you out of the cycle of suck. Why do you want to be out of that? Some of you think, well, that’s just property management. That is not very profitable property management. This is why the average property management business has like 4% or 6% profit margin and makes very little money.

[00:27:00] Our clients sometimes have 10 times those amounts, a profit margin. We’ve got clients doing 20, 30, 40, sometimes 50 or 60% profit margin, right? And so to have really good profit margin, you cannot have really bad owners and really bad systems and you can’t be caught in the cycle of suck. You’ve got to let go and clean your portfolio up and you’ll be a lot more profitable. because one bad property can take easily 10 times, just maybe even a hundred times the amount of work as a good door, as a good property. Okay. All right, so hopefully this gave you some ideas. You’re probably thinking right now about a client. I know you. You’re thinking about a client right now. You’re like, I’d be so happy if I could just get rid of that. My team would love if we could just get rid of that person, if we could just get rid of that one property, that would be great. This is your business. It can be the business of your dreams, or it could be like your master and you could be a slave to it. Which one do you want? Any business at? Any size could be either one. You get to decide this is your business, so be the entrepreneur, not the property manager. Protect yourself and let go of some of those bad clients. And that’s it for today.

[00:28:17] So, if you are a property management entrepreneur and you want to get your either add doors or you want to finally dial in the operational side, you’re curious maybe about how does DoorGrow help with process and their, what’s their DoorGrow flow software and how do they help with sales and what’s their CRM software, DoorGrow CRM, and how do they help with operations and what is this DoorGrow os and why is it so much better than eos? And how are they helping property managers get their teams in a alignment so that they can go from pretty good growth to having like 300% growth in a year, like some rapid growth where the team are all moving the business forward, like and thinking like an entrepreneur. How do we finally get great team members? Our client that just doubled his doors I was telling you about, since joining DoorGrow, he fired most of his team and replaced most of his team because he realized by getting clarity in working with us and getting the hiring stuff going and vetting his team, he realized he did not have the right team. He didnt have the A players, he didn’t have believers. So we need to help you get a really great team and then install DoorGrow os and then make sure you have processes and if you have those three system people, system, process, system. And planning system, you then have a scalable business. So now this client he has a business that can scale, right? We want you to have a scalable business, a business that if you lost team members, you could get back up to speed very quickly, right? Whereas most of you probably just did Russian roulette hiring until you eventually got enough team members and fired enough team members that you had a good team and you finally installed decent culture and then you were finally able to break 600 doors. You can’t break 600 doors with a crappy team.

[00:30:04] You’ll last see so many people in that two to 400 door range struggling. You get to 500 and it’s painful. If you feel like right now, if you’re honest with yourself, deep down that if you added more doors right now, if you added another a hundred doors this month, your life would get shittier and worse then your business is not set up to be scalable. The business owner’s life should get better the bigger the business gets and the more money you have. And that means your business is not set up to be scalable. Let’s get your business to be scalable. Reach out to DoorGrow. You can check us out at doorgrow.com. Go to our homepage, the big pink button. “I want to grow.” click that and there’s a free training. You can book a call with our team and you can watch our testimonials and case studies and we’re going to blow your mind. And we’re going to help you realize why marketing doesn’t work very well generally, advertising generally doesn’t work very well for growth, and why you’ve been struggling to get your team and business in alignment so that you enjoy your day to day. Let’s get you there.

[00:31:02] Until next time, to our mutual growth, I’m Jason Hull. Bye everyone.

[00:31:06] Jason Hull: You just listened to the #DoorGrowShow. We are building a community of the savviest property management entrepreneurs on the planet in the DoorGrowClub. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead content, social direct mail, and they still struggle to grow!

[00:31:33] At DoorGrow, we solve your biggest challenge: getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today’s episode on our blog doorgrow.com, and to get notified of future events and news subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow Hacking your business and your life.

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