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DGS 3: Buildium’s 2015 State of Property Management Report – Part 2

The second half of the interview with Michael Monteiro of Buildium. Hear some great book recommendations, discussion about customer service, hiring, and more. Be sure to listen to Part 1.

Show Notes:

  • Accuracy & Availability in Property Management [01:22]
  • Partnership & Advice in Property Management [04:00]
  • The Top Lead Sources for Property Managers [05:51]
  • Word of Mouth & Referrals are not enough – Diversify to Grow [06:45]
  • The Blindspot of Selling Property Management [08:24]
  • The Importance of Having Multiple Channels to Hit Growth Goals [09:18]
  • Get Clear on What The Owners Want [11:25]
  • To be Competitive – Leverage the Right Technology [11:46]
  • The Biggest Property Management Challenges [12:16]
  • GreatSchools – per Capita income as a Tool to Select Areas to Manage [12:56]
  • Technology is Critical to Success [15:19]
  • Hiring Is a Common Barrier to Growth & Helps You Focus on the Business [15:40]
  • The Painful Transition from Solopreneur to Having a Team [16:54]
  • Whenever you fail to inspire, you always control. [17:46]
  • Organizational Health: Cohesion, Clarity, Over Communicate, Continue to Over Communicate it [18:46]
  • The Importance of Having Clarity of Vision or a “Why” [20:32]
  • Incentivizing Good Behavior or Performance With Money vs. Inspiration [21:24]
  • When you share your purpose & values clients won’t worry about the specifics once they trust you. [22:53]
  • Even if some marketing channels aren’t performing as well they have different audiences [26:16]

Tweetables:

Resources:

FCC Disclaimer: Wherever possible we make our links to 3rd-party sites affiliate links, which may compensate us. This does not imply that we endorse them, we are just being helpful & smart.

Book: First Break All the Rules

State of Property Management Report

GreatSchools

Book: E-Myth Revisited

Book: The Advantage

Book: Start With Why

Buildium

Transcript:

Jason: Welcome! If this is your first time listening, then thanks for coming. DoorGrow Show is a podcast for residential property management entrepreneurs that are interested in growing their business and life. If that is you, be sure to subscribe and rate us in iTunes and join your fellow DoorGrow Hackers online at doorgrowclub.com, our free community for property management entrepreneurs. I’m your host Jason Hull, the founder of OpenPotion, GatherKudos, and of course, DoorGrow. Now, let’s get into the show. 

In today’s episode, we’re continuing on with our interview with Michael Montero of Buildium. You’ll notice during the interview that he drops out. There is an internet issue. I was freaking out. I was nervous it was live. He eventually comes back in and there’s some really great insights so stick around.  

Have you ever heard of the, there’s this great book. I think it’s called First, Break All The Rules and it was put out by Gallup Organization who did a bunch of surveying. In part, one of my great takeaways from the book was they have this customer satisfaction pyramid, at least that’s what they call it.  

They talked about, and just like your survey points out, the number one thing owners were writing as the most important quality for property management possessed was prompt communication. In that report, they call that availability. That’s what the foundation of the pyramid is accuracy and availability. Accuracy is the lowest rung on this pyramid of the four most important things for customer satisfaction. Accuracy is just doing what you actually say you’re gonna do.  

You say you’re gonna do inspections, do inspections. It seems really simple, just don’t lie. The next level beyond that was availability. The interesting thing they pointed out is that if you are perfectly accurate, and perfectly available, you’re not just screwing up is basically what they said. That’s [00:02:27] mandate.  

Michael: That’s the bar. 

Jason: That’s the bar. In fact, in property management, if you’re not available, they can’t reach you, and you’re not prompt at communication, you don’t answer phones, it’s always voicemails and stuff like that, the assumption instantly is you’re having trouble doing anything. 

Michael: It does sound so fundamentally basic. But as a consumer, we all have experience, many of us certainly, that homeowners have experienced hiring a contractor, a plumber, electrician, general contractor, and the number one complain that I hear, and the number one thing that I’ve experienced is lack of communication, lack of communication promptness. As crazy as it sounds, property managers can differentiate in their market just by doing those two things that you talked about, being prompt and being available. That is a way to stand out in this industry because so many property management companies, managers fall short.  

Jason: Yeah, it’s surprising. But it does seem to have kind of plagued the industry maybe more so than other industries. You can’t imagine a waiter at a restaurant if they were not available and not accurate with your order. They would not be in business or at that job very long. 

Michael: That’s right.  

Jason: Property management seems to have kind of run rampant. The next two levels above that beyond accuracy and availability is the partnership and advice. Partnership is basically where they actually believe you’re in it with them. They believe that you’re on the same side of the fence as them. That kind of goes to that third point where it says understand the needs of today’s renters. That’s the third thing owners thought was a big deal.  

The second thing was a thorough understanding of landlord-tenant law. Number five was excellent customer service, use all the latest property management technologies. A lot of these things all relate to these four things. Availability, accuracy, partnership that you’re in it with them, they believe, and then highest rung is advice. When you get into the advice stage, that’s where you are not just with them, but you are an authority to them and they trust you. They trust you to know how to manage this investment and make them money.  

Michael: Yeah, that’s when you stop becoming commodity, offering commodity services. That’s where the intrinsic value lies. That’s how these managers can really differentiate themselves.  

Jason: Some of these are really simple. The ninth one was make spot check property inspections. That’s kind of flip [00:05:14] expect, like do some inspections. Have excellent vendors and contractors, this is seven [00:05:18]. You can take a look at this report, guys. You can download it again at buildium.com/blab and get that report. I thought these things were really interesting. Anybody can take a look at their business and look at these areas and figure out, “Am I doing these things that owners expect?” These are big deals.  

I was really curious about this figure 8, this next section. Tell me a little bit about this, the top 10 lead sources based on the likelihood to convert new business. Obviously, you have all property management which is probably the one you have here on number five, the leads are on my leads service. What’s the best way to get leads? 

Michael: That’s an interesting question. What is the best way. Property managers will tell you the number one channel, the number one source for them is referrals and in word-of-mouth which makes sense. It’s the way a lot of us buy things today. If we don’t hear from a friend of or a colleague, were looking online at reviews. It’s not surprising that that continues to be for many property managers the number one source. 

But what we’re finding is as you noted that property managers are having to diversify and look across multiple channels. It’s not enough to rely on just word-of-mouth and referrals. Many property managers are having to do diversify their channel mix in order to meet their growth goals.  

We’re seeing people now, they’re going online. They’re doing organic and content marketing and a bunch of other inbound marketing tactics to try to attract people to their website. People that are looking online not just for property management services but might be looking online for information about other things.  

Through inbound marketing, these property managers are investing so that they get discovered online. Organic is a channel. Paid is a channel. That could be managed AdWords or other paid online advertising. Online leads sources like AllProperty Management is another source for people going to find leads to grow their business.  

It’s a multi-pronged approach and property managers that really wanna grow their business or finding that they to explore all the channels. They have to be able to measure this so they can understand which channels are most effective so they can figure out where to invest more. They have to have some sort of measurement in place. 

Jason: Yeah, I think you’re dead on. One of the things I’ve noticed is that most property managers, that’s where they get most of their leads is through referrals. If you can really pin that down and get referrals in a good way, it’s gonna be a killer. Referrals are pretty much a slam dunk when it comes to sales.  

Usually, the close rates are incredibly high. They’re not having to really actually sell or convince them or pre-qualify. Referrals are awesome. Nothing’s gonna convert better than referrals. The mistake I see a lot of people make is they start doing either internet-based leads, pay-per-click leads or other channels. There are people that are coming in cold and they start to play that game. Then they assume because those leads are nowhere near as effective at closing. 

It takes much time to nurture them that they think it’s just that. They’re like, “Ugh, I tried pay-per-click or I tried this.” But the reality is they just don’t know how to sell because they never had to. That’s where the sales I think becomes this really big leaky stage in their process. That’s where that’s exposed is when they start trying to play this game of getting leads from APM or getting leads through pay-per-click or whatever then the problem is sales. But then they turn around and they don’t wanna internalize. They look at the lead sources and say, “Uh-oh, this must not be working.”  

Michael: Yeah, you’re right. I think another mistake that people make is or another challenge is that a lot of property managers aren’t sure how to measure the return on investment for those different channels. They don’t really know how to measure it. If they do know how to measure it, they make the mistake of only utilizing those channels that have the highest ROI.  

That works fine if that particular channel can deliver the number of leads that you’re looking for in order to meet your growth goals. But usually, you need to tap into multiple channels in order to get the volume of leads that you’re looking for in order to hit the growth objectives you have for your business. It’s not enough just to invest in the channel that’s providing the highest ROI.  

Then it becomes really important to understand what is the ratio between the cost to acquire a new client or particular channel and the total value over the lifetime of that potential client. For example, if referrals is gonna cost you next to nothing in acquisition cost, you didn’t pay for the referral, and the high ROI on the referrals is pretty darn good. But unfortunately, most people can’t satisfy their growth goals by relying on referrals alone. There’s a lucky few they can and that’s awesome but many can’t. They have to tap into other channels that aren’t gonna have that kind of ROI but that doesn’t mean they shouldn’t invest there. 

Jason: I think we lost you. I’m starting the recording here again. Michael’s internet seems to have blocked blab. Maybe there is just too much internet bandwidth being used to stream. But I spoke with him for a little bit. The second point he was talking about was really to maximize marketing and to make sure that you’re providing great service, marketing the business, excellent organization skills, all this stuff related to customer service. Then figuring out what the owners wants. I highly recommend you check out the report just to get clarity on what the owners want. All those red bars are what owners want. They want these things. You wanna make sure that you’re providing those things, that is what they’re interested in, what matters to them. The forefront of that like we talked about is availability and accuracy.  

The third point that Michael was gonna get into to make is that if you really wanna be competitive and know what’s going on with your competition, you want to leverage the right technology, said 81% of respondents identify technology as critical to what they’re doing. I thought this was really interesting, some of the main points. The top business challenges at the top of this were finding new clients in the survey. Most difficult thing, finding new clients, which is basically prospecting and marketing.  

The next thing was managing resident request which is just the fulfillment stuff like we had mentioned. After that is finding good tenants. Remember the ‘cycle suck’ thing that we talked about. A big factor, there’s finding good tenants, non-paying or uncooperative tenants, maintenance emergencies, tenants causing property damage, those are all the next ones.  

All of those things naturally get filtered out based on the type of demographics that you take on. I’ve noticed, if you check out GreatSchools in any market and you take a look at different areas and you look at demographics, you look at the per capita income in an area, it’s always directly correspondent to the GreatSchools rating on GreatSchools which is interesting. I see Michael popped back in here. We’re gonna bring him back in here. Michael. 

Michael: I don’t know that I can tell you we found a solution but we’re back. 

Jason: We’ll keep you as long as we can have you. I was looking at figure nine. I was going over these pieces and the point I was making is that I’ve noticed this correlation between when I was looking for a place, looking on GreatSchools to see which schools were the best. I wanted my kids to be in a really high-grade school, that’s important for parents. I’m sure renters look that way sometimes too.  

But I noticed it was always directly correlated to the per capita income. Even within a city, there was blotches, and if the per capita income income was higher on the GreatSchools things, the score for the school is higher. It was like always connected. Even in a single city market that you might target, there’s going to be areas that you know you will might wanna manage properties and where you might not. 

Depending on the demographics, you’re going to have all these major pain points, finding good tenants, non-paying, uncooperative tenants, maintenance emergencies, tenants causing property damage, all this stuff where you’re getting trapped into this cycle of suck. A lot of that is going to be caused simply by the demographics, I think, of the area and the types of properties that you’re taking on. 

Michael: Yeah, for sure. 

Jason: I thought that was interesting that all of those would be tied to some of the biggest challenges. If you could eliminate all of your biggest challenges and have a property management business that you love, this is the fun stuff that I like working with clients on when we get into more coaching and marketing type stuff. I already mentioned your point, technology 81% identified as critical. Technology can help with streamlining all this stuff. What do you wanna tell us about that? 

Michael: Yeah, you’re right. 81% of the people that responded to the survey, we asked them to identify the things that they believe are most critical to their success and technology was mentioned by 81%, but more than that, it showed up in the top five things as people identified as critical success factors among things like providing outstanding customer service and hiring great people.  

Hiring continues to be a challenge for people. That turns out that’s one of the barriers that a lot of property managers face when they’re looking to grow their business. Finding a business is a barrier. We talked about the importance of diversifying that channel mix, how to measure the ROI and to not just be looking at the channel that provides the highest ROI but to be ensuring that the ultimate value of that client exceeds how much you paid to acquire it. That’s important. That’s a big challenge for folks.  

But hiring awesome people is also hard. What ends up happening is property managers don’t know how to hire great people, and they end up stuck working. You’ve heard this old adage ‘working on the business versus working in the business.’ If you really wanna grow the business, you gotta be able to extract yourself from all of the day-to-day so you can think more strategically about what you’re trying to do with the business. That’s hard to do if you’re not able to hire people as you grow your portfolio. Hiring people is critical to success along with providing outstanding customer service that we already talked about in technology right there with them.  

Jason: Yeah. I think the biggest challenge I’ve noticed with business owners with hiring people, this is a really painful transition. Everybody that’s been a solopreneur that’s gone to having a team knows how painful that transition is. There’s a great book that kind of touches on that subject called The E-Myth Revisited.  

Michael: Yeah, I’ve read it.  

Jason: That transition, I’ve gone through it. But any business owner that’s gone from being a solopreneur to having a team, it’s really a painful transition and largely it’s because a lack of clarity. Clarity on processes, clarity on what you actually do, clarity on who you want on your team.  

I think, ultimately, where most property managers bleed or hemorrhage massively in that area is that they spend a lot of time controlling their team and staff instead of inspiring. I have this phrase that I love to share with clients is that whenever you fail to inspire, you always control by default.  

If you’re spending tons of time, energy, resources as a property manager controlling your team, then they don’t buy into you. They don’t buy into your message. They don’t buy into your purpose and it might just be that you aren’t clear on what it is and haven’t shared it.  

Michael: Yeah. Clarity is so critically important. It sounds intuitive but it’s amazing how much dysfunction can be tied to a lack of what you’re trying to do, a lack of clarity. I’ve read that book as well. The E-Myth stands for Entrepreneur Myth.  

One of the things that entrepreneurs under appreciate is the importance of writing stuff down, operationalizing things, and that’s critically important to create that clarity so that everybody on your team stays aligned.  

There’s another really good book called The Advantage. The Advantage talks about this notion of organizational health. The author, his assertion is you need four things for organizational health.  

Before I tell you what they are, if I were to ask you what three things do you need for overall health, what would you say? Not organizational health but just living as a person. What are the three things that you need to be healthy? I’m gonna put you on the spot. 

Jason: Really basic? 

Michael: Yeah, real basic. 

Jason: I say oxygen is a pretty essential one.  

Michael: That’s to live. But to be healthy, what do you need? What do you need to be healthy? 

Jason: I think, essentially, you need the mindset to want to. That’s kind of at the core. If you don’t want to, that’s kind of the first step.  

Michael: Yup, I would agree with that. You also need sleep. You need diet.  

Jason: Exercise. 

Michael: You need exercise. But when you ask people what do you need for organizational health, you get crickets because it’s not something people are used to talking about. Anyway, it’s cohesion, that’s the first thing. You need a cohesive team. A team that trusts each other. 

Jason: Works well together. 

Michael: That can engage in conflict and that’s accountable and those bunch of things. But cohesive team is number one. Number two is that clarity that you just talked about so everybody stays aligned. Number three is over communicate that clarity. Then four is to continue to over communicate that clarity. It’s not enough to write it down, to operationalize, but you gotta communicate it and continue to communicate it.  

Jason: Yeah, that’s great. I haven’t checked out that book. That’d be interesting. That thing I work with a lot with coaching clients that have this problem, they tell me that they have this problem. Their problem is spending a lot of time controlling their staff or they’ve got people on their team that aren’t doing things the way they want things to be done.  

Ultimately, I think that goes back to just whether or not they are inspiring or controlling. Whether or not they have a clear vision or purpose. I’m a big fan of Simon Sinek. He’s got this book Start with Why. He talks about this purpose, getting clarity on what the why or purpose is in the business. There’s other videos I’ve seen of books.  

But one key takeaway that I’ve gotten, and where I’ve realized is that to inspire people is a game-changer with your team and with your business. Because if you are trying to incentivize good behavior with dollars, it doesn’t work. You can try and throw money at them and, “I’ll pay you more money if you perform better.” It doesn’t work.  

But if they really believe in what you’re doing, and they feel that they are inspired by you and they feel they have a purpose at their job, people will work for less pay often. People will work in environments that may not even be ideal. But if they feel inspired or feel they have a cause beyond just making dollars and clicking off a checklist, then the whole business transforms.  

I woke up one day and I had this whole business that I didn’t like. I realized I need to get clarity on what my purpose is. When I got that clarity, to build awesome relationships and incredibly effective websites. The door grows to transform property management businesses. That’s what we’re all about. Then you get clarity.  

Simon writes in his book, Start with Why, talks about all the hows which are all the values that your team espouses. Really, ultimately, your company, Michael has values. I have values. The team members that we like the most on our teams are usually the people that have the same value set as us. They’re the people that are cohesive, that fit in the environment, and they’re the people that naturally want to deliver what you want.  

Then the types of client that you attract when you have that clarity and you say, “This is why I’m in business. This is how we go about operating our business.” Sometimes the client won’t even ask you what you specifically will do. They won’t be like, “Are you doing tenants screening and evictions?” They really don’t care what you do if there’s that level of partnership and trust where you’re like, “I believe in you and your values and what you’re putting out there. Here’s my money.”  

I think that’s the game-changer with the team. They’re looking for leadership and they need somebody that can inspire them and that means you need to have a clear set of what your values are and put that out there to your team. Then if they don’t have the same values, once you’re clear on your values, you can look at your team and just fire the people that don’t have the same values as you. Because it’ll be pretty clear if you look their name on paper, you’ll know if you know the team member at all, “Oh, they don’t have these values.”  

Michael: Right. Whether they share them or not.  

Jason: I think that’s a game-changer. It changes the types of clients you attract. That changes the types of tenants you’d be working with. Everything. If when you’re clear on your value set. Michael, what else do you want us to take away from this report and then tell us again how we can access to it? 

Michael: Well, what I would say is it’s a report that we’re gonna go ahead and release annually. We’re gonna continue to do it so that we can stay on top of trends as they change and continue to provide insight. If people wanna download it, it’s available for free. You can go to it at buildium.com/blab.  

There’s lots of good data, lots of stuff that we didn’t talk about today. There are 16 pages of really useful insights and nuggets. We hope that folks that download it and read it will learn something, be able to take something away from it that ultimately helps them be more competitive and be more successful.  

Jason: Michael, we have a question. I don’t think we ever got back to number three and four for organizational health. 

Michael: Yeah. It was subtle. Number one is a cohesive team. Number two is clarity. Number three is over communicating that clarity. Number four, is again, communicating that clarity. It just reinforces. There’s really three but if you read the advantage, you’ll see that they framed it as four because it sounds obvious but that is a place where so many people fall short of is the communication. They say, “I’ve written it down. I went over it with my staff and my team then I forget about it.” They never talk about it again.  

It takes human beings a number of times before they begin to internalize things. If people wanna learn more about the advantage there’s a book I highly recommend it. There’s also a website you can go check out and learn a lot more about organizational health.  

Jason: Cool. Awesome. First, they need to get to if you’re a property manager that doesn’t have an organization yet, you’re a solopreneur, then marketing maybe the luxury that you can’t afford yet. I would challenge you to go out and start prospecting.  

Everybody wants to start with marketing. If you’re ready to get some leads, usually everybody starts with APM. I always hear it. Start will All Property Management and start buying the leads. You get them right away and then you can have other buckets.  

Real quick, I wanna touch on the other channels. I think, like you said, it’s a big mistake to put all your eggs in one basket. Even if you are killing it with pay-per-click, it would still make sense to buy leads from All Property Management. It would still make sense to do local SEO. It would still make sense to do organic SEO. Because each of these have different people that we’d be connecting with and they’re different leads that will be coming in.  

If it’s making you money, if the return on investment is there, some will be higher than others, but I will never trade one that’s really high for one that’s lower if they’re both attracting different leads. Because it’s just more money. Why not just have lots of buckets to capture the rain?  

Michael: That’s right. 

Jason: Cool. Really cool stuff. Get the report. Get all this cool data. Get on their list so that you’re getting their reports each year. Again, you can go to doorgrow.com if you wanna learn more about leveling up property management, if you need help with websites, marketing or coaching in your business and you want to improve, and escape the cycle suck. Michael, we hope to have you again with your future reports or with any other topics that might be interesting.  

Michael: Yeah, I’d love to do it. Thanks for having me, Jason.  

Jason: You just listened to the DoorGrowShow. I love the feeling of contributing, I’m sure you do too. Support the DoorGrowShow by leaving us a real review in iTunes. It not only helps us, but helps others. Thank you.  

Be sure to join the discussion and community with our other DoorGrowHackers like yourself inside doorgrowclub.com. Find any show notes or links from today’s episode on our blog at doorgrow.com, the best place to get a property management website and marketing. To get notified of future episodes, live shows, and events, go to doorgrow.com/subscribe. Until next time, be sure to take what you learned and start DoorGrowHacking your business and your life.