Dealing with natural disasters is a crucial part of property management. In this episode, we hear a first-hand account from those who dealt with the devastation to property that occurred when Hurricane Harvey hit Houston. There are all kinds of disasters that could happen in the future. Property management knows this first hand, as well as the importance of an effective disaster preparedness plan.
Steve Rozenberg and Pete Neubig from Empire Industries give their perspective on dealing with the devastation in Houston. They describe their emergency preparedness plans and the crucial steps they took to manage their properties during the devastation. They are able to give us a first-hand look at the things property managers need to consider in the event of natural disasters and how best to manage operations.
[05:09] Roles during a disaster: Steve took to Facebook to show people what happened, and Pete served as the backbone of the operation, coming up with a plan and delegating tasks.
[05:37] Systematically break down all the different problems. Houses were flooded, properties were vacant, can’t contact some people, people are calling in about damage, etc.
[06:48] Identify prerequisites, such as how to notify your clients about how you plan to communicate with them throughout the process. A Facebook group or email are two options.
[08:49] Are there staff members available to help? If yes, make them project managers for each project and provide available resources. For example, one project manager to handle a list of homes that were non-contacted homes.
[09:56] Determine how staff members are personally doing because they are going through the drama, as well. Make sure they are ok.
[14:12] Notify residents as soon as possible about whether their home is damaged and to what extent. Encourage them to contact their insurance company to determine what is covered and what isn’t.
[16:01] During a natural disaster, your property management company will probably not be receiving rent payments. Use leasing fees to sustain your company.
[16:30] Partner with an inspection company to know exactly what’s going on with a property and to allow the owner to make a good decision.
[17:56] Initially, strive for one-way communication to avoid property managers and assistants being inundated with residents or owners asking questions when you don’t have immediate answers.
[19:18] Realize that you are going to have a lot of tenants that need a place to live. As a convenience, compile a list of available properties.
[19:50] Provide good-to-know information on your Website. For example, who to call if your car is towed or phone numbers to popular insurance companies.
[20:24] Work with other companies to help out each other and your residents/owners. Utilize your resources. For example, waive application fees.
[24:15] At some point, someone has to be the leader. Run your business through leverage and team. Develop such a structure and culture.
[27:10] Grow your company as business owners and not doers. Focus a lot of time on working on your business and not in the business.
[30:25] If possible, keep your business open and running the whole time during a natural disaster.
[31:21] Hire someone knowing that they would make a good leader.
[33:45] The definition of a business is a profitable enterprise that runs without you. Your staff is there to support you and minimize chaos.
[35:55] Only one person can be a leader at a time. Know your strengths and weaknesses.
[41:53] Build relationships with everyone, even your competitors. They become invaluable during natural disasters.
[43:20] Invest in a business coach or mentor and training to gain knowledge that you can use during natural disasters. The more you grow, the more your company grows. Take care of yourself.
[48:27] Invest in marketing and try to get free publicity.
[59:17] Look at a VOIP system if you’re not on one. Look at having some assistance elsewhere to keep your business going. Also, have a communication plan for your residents, vendors, teammates, and owners before the natural disaster.
[59:45] Speed is key for property management companies dealing with a natural disaster. Get moving as quickly as possible, don’t overthink it, just do it, and get it done. Talk to your clients about not only the problem, but the solution.
Empire Industries phone number – 888-866-6727
Jason: Jason Hull here with The DoorGrow Show. I’m hanging out with Empire Industries. We’ve got Steve Rozenberg and Pete Neubig hanging out here with us. Say hello, gentlemen.
Steve: Hey, guys. How’re you doing?
Pete: Hello gentlemen.
Jason: Guys, I know you’ve been dealing with a lot of stuff down in Houston. Houston is the fourth largest city in the world. It’s massive. A lot of it just got doused with water like it’s underwater. I was really curious about having you on and finding out what’s been going on down there. What are you dealing with? What have you learned? I think the audience is especially interested in what can they get from you because to some other people, it looks like Florida might get hit. There’s been areas that have gotten hit with tornadoes in the past. California could have an earthquake. There are all kinds of disasters that could happen in the future. Proper management more than most industries gets heavily hit by this. This is something big for people to be prepared for and to deal with. First, tell us a little bit about what’s going on down there from your perspective.
Pete: Sure. Obviously, we’re day 10 now since the beginning of the hurricane. It’s still a complete mess down here. Lots of roads are closed. There’s traffic. People are still trying to get back to work. There are still properties that we manage that we cannot access because we still can’t get to the houses because of the water. We actually had people flooding days after the hurricane when the rain stopped. That’s because they were opening up all of the reservoirs and the dams to control the flooding. It’s really sad to see a lot of houses go down. I’ve heard anywhere from 10% to 20% of homes have been affected one way or the other in Houston.
Steve: One thing I’ll say, Jason, is I grew up in California, where you’re at, when an earthquake happens you don’t know when it’s coming. It just happens. And then, you’re dealing with the after effect of the disaster. I’ve noticed here when you have a hurricane coming, you’re kind of watching it. Everybody becomes an expert of tracking winds. They say, “Well, the winds are coming from the northwest now so it may not hit us.” I think deep down, everybody hopes that it’s not going to hit that or at least, they, deep down want to believe that the news is overhyping it, which we all know happens. You’re kind of hoping it’s not going to happen or not be as bad.
When that happens is you don’t have a disaster preparedness plan because you’re thinking, “How bad can it really be? I’ve been in a hurricane before. It wasn’t really that bad. It was overhyped.” As Pete and I can attest, what people saw on the news was legitimately that bad here. It wasn’t the wind and the hurricane that was ravaging. It was really the rain. It just pushed that much water into an area. There’s just nowhere for it to go. It doesn’t matter where you are.
We have a disaster plan, but like a lot of property management companies, it’s something we bought at one point. We’ve put it in a file. We’ve never looked at it. And then all of a sudden, when the hurricane was coming it was like, “Hey, where is that document that we had that we sent to owners, that we sent to tenants?” It’s still generalized. We need to make it empire-type where they actually have contact numbers. That’s what we went through dealing with that type of mental gymnastics of “Is it not gonna hit us? I think it’s gonna hit us. How bad is it gonna be?” When it actually hit, then it was like, “Okay, we need to spring into action and speed is gonna be the key of surviving this.”
I know that a lot of people on Facebook saw me and they saw the videos and stuff. That was kind of my role. Pete’s role in the company is really the backbone of the operation. He is the one that actually sat down that came up with a plan and started delegating tasks. When you have this huge elephant, how do you eat it? It’s the old saying, one bite at a time. What Pete did is Pete basically broke down systematically all the different problems that we had. We had houses that were flooded. We had vacant properties. We had people that we couldn’t contact. What else do we have?
Pete: Damaged properties. People called in and basically reported damage.
Steve: Pete kind of touched on this a little bit more but he basically stepped in and started dissecting these into smaller issues that we can tackle as opposed to saying, “Okay, we’ve got this huge behemoth of a problem, how do we handle it?” As property managers, he’s kind of the one that stepped in and said, “Okay, we’re gonna do this. We’re gonna do this. We’re gonna separate it out. This group is taking this task, this group is taking this task and so on.” Because that’s what you have to do. This was really day two. This was like in the heat of it all coming down. We were like,” Okay, we need to come up with a plan here because when we got pushed to the back side of this thing, it’s gonna be chaos.” We’re gonna have owners calling us. We’re gonna have tenants calling us. We’re gonna have vendors. We gotta have a plan.
Jason: A lot if this was divide and conquer. You’re like, “Alright, let’s take this. Let’s break it into separate things.” How did you divide this up?
Pete: For anybody who’s are watching or listening to the show, I think the first thing was there are some prerequisites that have to occur. For us, it was notifying our clients, which are owner clients and resident clients, on how are we were gonna communicate with them throughout the process. We felt that email was not the right communication because when we sent an email and people will reply, it will go to the person who sent that email. Then, you will be inundated with all of these emails so we chose to use our portal on our property management software and Facebook. We created a Facebook group for owners. We created a Facebook group for residents.
We’ve always had them but we’ve never as prevalent as we used them during this tragedy or during the storm. We also made sure that all of the team had a way to communicate. How are we gonna get our message to the team, if we’re gonna be open or not open? We decided to use Google Hangouts with an Uberconference so that everybody could get on. We found quickly that our free conference number that comes with our VOIP did not handle more than about 10-15 people connected to it. Our first conference call while the storm was going on was a mess. People texting each other saying I can’t get on so we quickly had to devise for a strategy.
Before a storm even hits, you want to make sure that you can one, communicate with your owners and residents and two, to communicate with your vendors and make sure to communicate with your team. Unfortunately for us, we didn’t do that until over the weekend when the storm touched down. Then, we quickly created those systems in place.
The next thing we did was we had a major conference call with 25 people on the call, which was too much. We realized very quickly that we had to create project managers for each project. For example, we had a list of homes that were non-contacted homes. Residents were in the house but they never contacted us. We actually gave that to one of our sales people. We basically said, “Hey, you’re gonna be this person. You’re gonna be in charge. You’re the project manager and these are the resources.” The first conference call we were asking for volunteers. We quickly realized that it was so chaotic. People were talking to each other. Nobody was really volunteering. I quickly took matters. Basically, when there’s an emergency, you don’t ask someone to call 911. You just point at somebody and you say, “You call 911.” And somebody will call. We decided, “Alvin, you’re this project manager. You, Megan, you, Margo, you are the resources for this project manager.”
Jason: Rather than asking for volunteering.
Pete: Absolutely. You can’t worry about people’s feelings at this point in time. You just have to make sure that you have the resources and that they have the resources to get things done. The first thing that we made sure is make sure everybody in your team is okay. We made sure everybody in the team was okay. Who is displaced? Who didn’t have a car? Who couldn’t get to their house? Who had flood damage? Whoever it was. Then we realized, okay, maybe those folks are out in the mix for a few days at least. Maybe those are the resources that we can tap into.
We had to understand what resources we actually had. Once we figured all that out, what I did is I took my properties from our property management software and I downloaded them to a spreadsheet. From there, we basically created some tabs. One is the occupied tab and then we had the vacant tab. We felt it was very important that we walk those vacants as soon as possible. We knew from how big the storm was gonna be that there was going to be a shortage of housing. We wanted to make sure that we can provide housing for people. If we could not get to those houses, those vacant homes and know whether they were high and dry or ready, we wouldn’t be useful in this time of tragedy.
We actually walked over 90 properties in four days to get them on the list. I’ll let Steve talk about how we communicated that list and how we partnered with other management companies. What I did on the back side was we started calling every resident. We then told all of our owners through the portal and through Facebook, “Please don’t call us right now as we are gathering information on your homes. We are still not open, but we’re working.” That bought us about a day to contact as many residents. Once resident were contacted, we moved them to another list. They went in the contacted and the list was reported damage. So they went into the damaged list or they were reported they were okay. And that went on the okay list. We then have project managers that call the okay list to let the owners know the good news. We have project managers that had a team that called the ‘Damage’ list. “We don’t know the extent. We know there’s damage. As soon as we can get out there, we’ll get out there.”
Steve: There’s a couple of things I just wanted to touch before we go too far away. A couple of things that Pete did that I would advise property managers is every time that we got on the conference line and got on the conference call, he made sure to ask each one of the team members how they were doing personally. Even though we got a full stack of compliment here at Houston, we have team members in Dallas who are operating operations. We have team members in Mexico and the Philippines. We understand they’re gonna be okay. But the people in Houston, they’re actually there dealing with it also, like Pete said. We have people that are our marketing eye. He got flooded. His car got flooded. One of our property managers, she was on the phone. She said, “I just got a notice that they have to do mandatory evacuation.
These people are going through their own drama as they were trying to help out the company. Pete did really a good job of asking them. “Do you need anything? Do you need any resources personally?” That was a big help. The other thing he mentioned about the owners and speed of contacting them. We knew that they were gonna contact us pretty soon especially if they have a vacant property. Our main thing that we wanted to do was we wanted to be proactive and get to them first. We wanted to make sure that we were the ones reaching out to them even if we didn’t have an answer. We were still reaching out to them saying, “We don’t know.”
Some of them, they would see the news and they would say, “Oh, it stopped raining.” Well, that doesn’t mean that we could get to any of the properties because anyone that’s been in the flooded area, there’s this kind of residual and it takes a couple days for that. After effects happened. Roads that weren’t flooded were now flooded. Pete would send me daily updates that I would blast on Facebook, on the company portal and all that stuff to owners saying, “Look, the storm is not over. We understand your properties got damaged. However, we can’t get to them nor can our vendors. Nobody can get to them.”
The other thing that we did, that Pete was really good at is we identified the properties that were damaged. Let’s say a house took on some water. We called the tenant and we got an update or Pete walked the property or one of the agents or somebody walked the property. I was the one to call the owners. That was my job, calling the owners and giving them the bad news like, “Hey, sorry to tell you this but your house is flooded.” Then they’re going through the mental gymnastics of what are they gonna do.
Some of the owners we’ve called we’d say, “Look, the tenants said your property took on water. It’s leaking in the ceiling.” I would say, ”We don’t know how much water came in. You may want to start the claim process now. I don’t know if there is a claim of there isn’t, but I don’t want to be the one to tell you don’t file the claim.” I went here on the side of caution just because there was so much water coming in on that day. Just because it’s a roof leak, we don’t know where else it leaked. So I would just tell the owner, “You know what, you may want to start the process if it was me.” Even if they didn’t have flood insurance, I would tell them, “Talk to your insurance provider because they could call it flood storm damage.” I’m not an insurance agent. I’m not trying to tell them what to do, but I’m trying to let them know, “Look, you gotta think a little outside the box and be creative to talk to your agent and say, “Look, is there any insurance that is covered or is there not?”
Don’t just assume that because you don’t have flood insurance, that your house isn’t covered. Those are just two things I wanted to bring up that was important that we got out in front of it these owners.
Pete: We believe, as a company, to walk the vacants as quickly as possible because we knew there was gonna be a shortage. We wanted to take advantage of two things. One, goodwill to let residents or displaced folks move in to ready homes. Two, to take advantage of getting our homes all these stuff.
As a management company, we make our money when rent is collected. I can promise you that we’re not gonna collect as much rent this month as we did in August or July. Just because people are out of work or they’re not back in their house yet or whatever it is, it’s gonna take us that while to get that rent. The leasing fees that you get will help sustain your business as you’re moving forward.
We felt that that was more important walking any kind of flooded or damaged homes because there’s nothing we can do for those homes anyway. We did partner with an inspection company. I would recommend that anybody out there can partner with an inspection company. Instead of creating a claim, the inspection company could go out for a small fee. As you do a complete inspection of the property, doing a thermal diagnostic, as what they call it. From there, you know exactly what’s going on with the property so now, you can have an owner who can make a very good decision. Because you don’t wanna have to follow on that claim right away. I’d say that those are a couple of things. That’s the reason behind we thought why we had to walk the vacants before we walk any damaged properties.
Jason: Let’s recap some of the stuff. You mentioned you had to make sure that you had communication channels in place. You didn’t have those in preparation. A question about that, Facebook photos [inaudible [0:17:22]. All the tenants were all in the same group. Will they be able to communicate with each other? Is that gonna be a problem?
Steve: To me, that’s a by-product. If you’re giving a good product and you’re doing good service, people are gonna talk to each other if they want to. If you are a crappy company and people don’t like you, you can’t stop them. It’s like serving bad Italian food. Eventually, people are gonna know that you have a bad Italian restaurant. We’re not concerned about that. Obviously, you can check the page now or whatever you wanna do but that was not a concern of ours.
Pete: We wanted one-way communication. We didn’t want two-way communication at this point. We didn’t want our property managers and our assistants get inundated with a bunch of residents or owners asking questions that we don’t have answers to right now. We just needed to do due diligence. Our discovery phase was probably about four days. Hurricane Harvey hit over the weekend. Monday, nothing. We were shut down. We were like everybody else, hunkered down. Tuesday, it was still raining. It was still flooding. We started working. From Tuesday to Friday, we walked 90 properties. We talked to over 600 residents and we talked to majority of our owners, if not all of our owners.
Now, we have updates of 75% to 80% of our properties. Maybe not a full update, but we had some updates and everybody was touched within those four days. We felt Facebook was the way to go and our portal was the way to go because if you send an email from your management software, let’s say, I send an email from my management software, everybody that replies to that email goes to my email box. Now, I have 1000 emails that I’m never gonna get through.
Steve: You can’t go on a massive level. The other part that Pete was saying is we knew that we we’re gonna have a lot of these tenants that were gonna need a place to live. We had 40 something properties go underwater and a lot of other properties that were just damaged. I first got in touch with Rich Drake. Rich Drake and I talked with Midas Warehouse about sharing a list. We had already gotten proactive. Speed to me is the key. We got out there with the videos. We got out there being proactive so we came up with the idea of creating a Hurricane Harvey landing page. It’s not pretty, but it’s functional. That’s where we started throwing good-to-know information on our website of like if your car is towed, what is the number to call the towing company that towed your car? FEMA numbers, insurance.
Pete: Whatever information that we were getting from owners or from other property management companies or from TAR and HAR, whatever we got, we would dump it in there. How to get up to $1000 from FEMA or something.
Steve: We’re trying to be a portal. Then we came up the idea of hey, let’s utilize our resources. We’ve got our agents. We’re using Facebook and social media to promote the fact that we have properties so then we combined forces. We created a list of properties with our properties and their properties. We took it a step further that we waived all of our application fees.
Obviously, we don’t want to look like we’re gouging people. Not that we’re doing that by charging the application fee but by easing that barrier of entry, telling people, “Look, we will waive all the application fees, we’ll eat that cost at the background. We’re still keeping our standards up, but we’ll waive that to get you in the property. We’re doing a better service for our owner clients and we’re doing a service for the tenants because they need a place to live. We basically doubled our size. We reached to a couple of Tera and RPN and some other guys we know here in Houston. We basically kept combining forces building this list which is basically a Google Doc. Again, it’s not pretty, but its functional.
We talked to Brad Larsen over at San Antonio the other day. He gave us a list of his properties. I don’t know if you caught what Pete said earlier, 20% or so, or maybe more, properties are taken out of inventory. It’s not like these people have a place to go now. They don’t have any housing here in Houston for them to rent. A lot of these people are gonna have to relocate at least temporarily to another city. There’s nowhere for me to move the apartment and others. There’s full of apartment complexes that are being condemned because they’re saying “The mold is gonna be so bad. You can’t fix it.”
They’re older properties or whatever the case may be, but there’s a lot of inventory that is now out of the market. Getting people like Brad, and we’re gonna get some people with Dallas as well. We’ll just keep compiling that on our list so that people can just go to one place to find properties and not have to go all over the place looking.
Pete: I just like to add. When we waived our application fee, we called our application processor and we asked them to lower their fee as well, which they did. They lowered their fee. We covered a small cost for people to apply. That’s kind of our way of giving back. Normally, in crisis everybody wants to donate time and they want to help people. I told my team the way we help people this week and next week is by doing our job.
My wife was out of work for a week. She went and helped some people with donations. She cut down some sheet rock and she was helping people. We’d love to all give back that way. We’re property management people. We’re in real estate. Our job is to walk properties, to take care of our residents, to take care of our owners. The better we can do that, the better we are helping our fellow residents, our fellow Houstonians.
Steve: It’s more of a massive level than a singular level. We’ve gotten 43 properties rented in the last week. Instead of us going out, Pete and I going out and helping clean up what property, we’ve been able to give housing to 43 and we’ll probably have all of our vacants full in the next week or so. Obviously, we’re helping other property managers get various lease and all that.. We feel, by us doing our role and property managers out there, you guys in Florida, on the East Coast, your per minute time is better spent working on the massive not on the minor.
Pete: I have a tendency to get into the very details of stuff like I was walking property. As the CEO of the company, you still need to do that on a small level to show everybody I’m also in this. I walk the properties. But at some point, I had to pull myself out of the details and be the leader on a grander scale. If you’re a property management company and this is happening, don’t get caught up and you’re the one who has to do everything. If you’re that owner of that company, you need to utilize your resources.
My time was better spent chopping that spreadsheet up, creating project manager roles, giving them resources and then hold the people accountable. And because of that, that was much better spent than me walking properties, which I still did but that was much better spent. You have to think of that, what Steve says, that per minute time.
Steve: Property managers out there that are smaller, they may say they only have one or two people, you will be amazed if you grab people and say, “Hey, I need you to help me do this.” You will be amazed at how many people would step in and help you. They’re not necessarily employees but that should give you an indication of how you’re going to be able to grow your own company by having that team concept.
Pete and I are very big at leveraging our time and having that team. That’s another conversation. This just goes to show you that there’s no way that we could have gotten 700 properties under control that were flooding all this if it was just Peter and myself. We’ve got realtors. We’ve got property managers. We have a team in Mexico. We have a team in the Philippines. We’ve got our property managers up in Dallas. We used every resource we could think of. We reached out to everybody. We even leveraged other management companies by saying, “Can we use some of your properties?” We even reached out to do-it-yourself landlords and say, “Hey, if you have a property and you want us to lease it for you, we’ll throw it on our list.”
They’re using the leverage of us getting their property leased. But we’re using them cause we’re getting volume. It’s kind of a good lesson for the small do-it-yourself property managers that the only way you can grow especially when dealing with an emergency is to use that leverage.
Jason: Absolutely. I love how you approached it with your team. It sounds like an overall principle that you employed with putting your own oxygen mask on first before trying to take care of everybody else. First, it was like, “Are we okay as a team? What are the resources that we have? Now, let’s go see who we can help.” You guys are like a really prominent leadership role in this space. Why do you think you guys did this and led this movement, and not other companies? What do you have in place that enabled you to do this?
Pete: My theory is, we actually dedicated somebody to do that. Steve became our Communications Project Manager. Under that role, he was not only making sure of communication to our residents, to our owners and even our vendors but also to get out there, to everybody out there. We actually dedicated a resource for that role.
Steve: I think, Jason, you and I talked about this a little bit last time. Pete and I look at ourselves as business owners, not just property managers. Because we’re coached by a business just like people would go to you for coaching, we’ve learned to grow our company as business owners and not doers.
Pete and I focus a lot of time of working on the business and not in the business. When it came to this issue or this disaster, we just kind of said, “Okay, I’m not gonna be the one doing it. I’m gonna be the one delegating it.” That’s just what the years of being coached and learning self development stuff of going, “Okay, if I’m gonna be a leader, how does a leader do it?” A leader leads by leading and being that person.
Like Pete said, in the time of disaster, everybody is looking for that leader. They’re looking for that person to say, “Somebody tell me what to do.” If Pete was knee-deep running around and stuff and they were like, “Where is Pete?” And Pete’s pulling people out of flood and doing this and that, then nothing would have gotten done here. At some point, someone has to be the leader and I think the way that we run our business is through leverage and through team. That’s just the way our structure and our culture is.
Jason: Both of you have all that leverage, you have the bandwidth to shift your focus to this rather than okay, we need to keep our business afloat. You have a support system and a structure in place that enables you to already do that.
Steve: What’s funny is, I’m sure a lot of people are saying, “Yes, that’s easy for them to say because they have all the staff and they have all things.” From day one, when we hired our first employee, we didn’t have the money too hire our first employee, but we know we couldn’t afford not to do it. We just kept on going that business model of saying, “You know what, how can I take a couple more minutes of my day? It’s a matter of leverage, hiring, systems, policies and procedures.” We have a business coach that we go to every week. We’re accountable for it.
I remember Pete one day, he said, “Man, our payroll is almost $60,000 a month.” The business coach said, “I hope pretty soon it’s over $200,000 a month because I think you guys are that much bigger.” It’s a different way to look at it than say, “Man, I don’t know how to do this.” We’re spending $20,000 a month in marketing. He said, “Soon you’ll be spending $50,000 a month.That just means you’re gonna be having 5,000 doors.”
It’s just the number. It’s just a different way to look at things. This disaster was a true test that the reason that we got out of this in front of everyone else is because we were looking at it from a leveraged standpoint, not a juror. The other property management people we know that we’re doing, they were in the middle of it and they were like, “I’m gonna have time to do this or do that or think of creating a landing page.” Pete and I did a PSA, Public Service Announcement and a TV commercial last week. It’s gonna get blasted all over the TV stations. If we were in the heat of battle, pulling people out of floods, we wouldn’t be able to think of these strategic ways to be better.
Pete: Our office never shut down, Jason. Even Monday, when the flood was going on, we had our phone systems stayed up it’s VOIP. We have assistance that answer the phone whether it’s a leasing call or just a regular property management call. They are in Mexico and in the Philippines. When you called our number on Monday, when Hurricane Harvey was touching down or the rain was coming down, our office was open. We physically shut the office, but we had our phone systems going up and running the whole time.
Steve: We know a couple of our people in Houston that did not have the VOIP type of phone system. They were dead in the water. They couldn’t get to their office. they couldn’t get into their phone lines at all. That was another lesson we’ve learned.
Pete: We have like a 4-day head start on.
Jason: Yeah, makes sense. I love the idea of leverage with it and I think a mistake people make in hiring an estate builder company, they think, “Oh! I need to build out some big organizational structure. I need to fill these roles.” The way I look at it is, who’s the most important person in the business? The most important person in the business is the entrepreneur. That’s the person that drives it, that’s the person that does it, and so if that person takes a viewpoint of, how can I create leverage? What do I need to get off my plate? What am I not good at? What don’t I enjoy doing? They hire base on that.
They’re constantly getting stuff off their plate so that they can then support their team. There’s a sort of build a whole business, totally different fashion to that. It doesn’t matter how many doors they have, they might still build it so that the whole universe rides on their shoulders.
Steve: A lot of people do is they try to offload it and maybe they don’t do it correctly, or they don’t task it correctly, they don’t train the person correctly. That person screws up, they get the heroitis and they go, “You know what? You can’t do it as good as me, get out of the way, I’m gonna do it because you just can’t do it.”
Pete: The bigger they get, they become the hub and everything has to go through them and then they get burnt out.
Steve: They’re at the bottom there. They are the reason the company can’t grow because they’re constantly going, “You know what? They just can’t sell as good as me. They just don’t know how to do it.” The reality is it goes back on the person saying, “You didn’t train them correctly.” It’s really a bad leader.
Pete: Or hire the right person.
Steve: Or just hire the right person, write this profiler, any of those things. It showed that by us having this disaster happened, by us being able to step in an get the team, it was really very interesting, it was awesome to see how the team, everybody had fed off of everybody else because there was no chaos. We’re being proactive not reactive so that when things were getting done and everybody was stepping right in play getting stuff done with no problems, and no challenges, could’ve been an exactly the way Pete and I would’ve wanted it done or the way we think we would have done it, probably not but, the reality was we were able to 10X what we did by having massive amount of people out there doing stuff as opposed to just keep an eye, they know the phones on,and they would still be on the phone.
Jason: Yeah. I think a lot of business owners look at themselves like atlas holding the entire world on their shoulders and really, if you build a really good team and a good support system in your business it’s the situation in which they’re holding you up and you feel, as an entrepreneur, supported. We feel like the pressure and noise gets lower for you as you scale and you feel like your life is getting tactically easier. If your life is getting tactically harder, you’re doing it wrong. You’re doing something wrong as you scale and grow.
Steve: The definition of a business is a profitable enterprise that runs without you. When I do speaking events and stuff, when I talk to property managers and stuff I’ll tell them, who can lead your company for 1 month? 2 months? 3 months? With no phone, no email, no contact, and come back, and your business is bigger than when you left it. There’s probably really about one person still standing when you ask that question and normally those are people with a lot of staff because the people that are doing it themselves they go, “Well, I don’t have enough money.” They always have a reason why it won’t work. They never give me a reason why it will work.
In a disaster like this, when something like this happens, they’ll gonna learn that they will run themselves into the ground. Business owners and entrepreneurs don’t fail because there’s not enough hours in the day. If they need to work 25 hours in a day, they would. They fail because they have no plan and they have no strategy and they fail because they don’t understand the power of leverage.
Pete: I’d also add that if this happens to us about 2 years ago, I don’t know if we would’ve made it. It takes time to build that team and you have to break a lot of eggs to make that omelette sometimes. There was a lot of learnings that both Steve and I learned on the initiation process, the hiring process, personality process and we’re still learning but, every new hire or every time we replace somebody, we just get better at it.
I will put my team up against anybody else in the country right now because I’ve seen them in action now. And I was teaching somebody, and somebody just ask me, “Oh men, you must be so busy right now with this flood.” I was laughing and I’m like, “Honestly, I’m actually not that busy, my team doesn’t want me around, they wanna handle it and everytime I get involved, I just messed something up right now”
Jason: Yeah. I love it. We’ve talk about dividing and conquering, and taking things into bite sized chunks. Having somebody at home that’s able to dedicate their time and attention to resources to come and able to strategy, you need a general if you can have an army.
I love that you were able to do that, that was probably one of the most critical pieces from my outside perspective as to what made all of this work. You being able to figure that out and do that because people need direction. You can have boots on the ground and everybody is willing to donate time and and people are willing to give you resources and even give you properties. But if nobody organizes this stuff, it’s just chaos.
Steve: That spreadsheet that he created with the tabs, we were living inside that spreadsheet because a property would go from unable to contact, to all of a sudden that property would go into contacted damage, and then it would go from vacancy to no longer vacant. That spreadsheet, a simple Google spreadsheet is all you need. Everybody was in those tabs constantly. If you sat back and watched that Google spreadsheet, there must’ve been 15 people in there moving stuff around constantly but it was a lot of current document. As crude as it was, it saved us. I don’t think we could’ve created something on our own with six months of preparation to work as well as that document did to keep us with some strategy. Sometimes, simpler is better and this definitely was the case.
Pete: Jason, the other thing that I wanna add is there can’t be two captains at the same time. Sometimes, especially for those of you watching that, whether it’s a husband and wife team, or they have partners like Steve and I, business partners, there are times when Steve is the better captain and I just go ahead and I sit, I become the first officer.
I have strengths, and Steve has strengths. My strength is being able to see a whole bunch of stuff and being able to basically, in detail, iron it out, give it to people, and disseminate it. Steve, to his credit, put his ego on the side, and allowed me to be that captain while he rode the first officer chair. If you have two people that are running or trying to run it, and they have a different vision, he may not not have felt that was the right way to go about it but he had a trust in me and he had to understand that that’s my strength and he let me do it.
I think if you’re watching this, you need to know what your strengths are, and what your business strengths are, what your partner’s business strengths are, and allow each other to basically take over the role of a leader at that point in time.
Steve: Yeah. It’s very important. It wouldn’t be good if Pete and I are both the owners of the company and each of us have our own.
Pete: 50-50 partners, no less.
Steve: If all of a sudden Pete and I were on the phone and I called and he said, “Hey look, this is what I want you to do.” That might be a lot of chaos. We know from knowing a lot of property management companies, people that have called us and asked us for help over the years, or come into our office to see how we operate. We’ll talk to them and there’s no true leader.
It’s not that that one person has to be the leader all the time, but for certain circumstances like when it comes to sales and marketing, and vision, that’s my role. When it comes to operations, that’s Pete’s role. I don’t step on his toes, and he doesn’t steps on my toes. We’re very clear, especially in front of the team, to make sure that there is a clear line between what we’re doing. Because again, don’t get me wrong, we were not always this way. At first, we were like keystone cops running around. I’m calling the maintenance guy and the maintenance guy says, “Oh, Pete already called for this property.” We were running around and we finally said okay, we need to have some roles, what are you good at, and what do you suck at, and what are you good at, and what do you suck at.
Pete: We think differently. When I call the maintenance guy and Steve calls the maintenance guy, we tell him to tackle a problem, with two different ways, and it was chaos. You already take Hurricane Harvey that created a chaos and we were both trying to run the ship it would’ve doubled, it would’ve exponentially increased chaos.
Steve: For people out there that partnership hasn’t been wise whatever it is, you have to designate the captain incharge for that situation. Pete was clearly can be the captain of the situation. I reported to him while I was on the phone call. I had to report what I did. Offline, Pete and I will have another conversations but right there, for my role I had to do something, I did what he said, “Okay, I want you to do this, this, this.” he would send me updates, I repost them. You wanna make sure with your team, However big or small it is, is that you clearly define that because the last thing that you guys wanna do is the arguing over who should be sending an email or who’s more up on thing during the heat of an emergency.
Jason: Yeah, absolutely. That makes a lot of sense. I’ve seen a lot of business partnerships that were not equally yoked or not effectively match made. I’ve seen some dissolved, it’s pretty common in business. It’s like a divorce, it’s a painful process. I’ve seen some that worked really, really well together. In fact, when there’s a good partnership it tends to work better than being alone because you’re challenging each other.
Steve: Yeah. it’s like Pete’s and I, we joked and he was incharge of everything, we got five properties this one’s perfectly and nobody would ever call or talked to him. If I was in charge, we’ve got 5000 doors and it’d be chaos. No systems, no policies, it would just be freedom, we would be stabbing each other in the office. Pete realized that the one thing of our partnership, that Pete and I are very good is this we don’t have any hidden agenda. We both put the company first all the time. Whatever’s best for the company, we last, the leadership last. We make sure everyone’s paid, we make sure everyone’s taken care of, that’s just how we operate and that’s how we operate our business, and it’s been proven to be very successful for us.
When it comes to helping people, property managers, we reached out at NARPM and we got a lot of people when we first started to help us so we always pay it forward to other people, and we always help people, and people call us, and ask us. We’re a small group, property managers, there’s not a lot of us out there. Even in Australia the good friends I have down there, I share ideas with them when I go speak down there and stuff.
It’s nice that everybody has the greater good of what you’re doing in your company always first and foremost in mind. Especially in a disaster, when it’s hitting the fan and you guys have to start delegating, you can’t have an ego of saying, “Whoa, I don’t like the way you talk to me. I’m in charge too.” You gotta put that aside.
Jason: One of the secret ingredients that you guys have that enabled you to be able to deal with this disaster, take a leadership role, get lots of free publicity which obviously probably wasn’t intentional at the beginning. But I’m sure you got that, there’s some upsides to all of this for you guys. Both of you have somebody that can question you, that can say no to you, that can call you on your BS. A lot of business owners don’t have that, they’re on their own. Their spouse might, but sometimes they don’t have that. Everybody needs somebody that is not amazed by that.
Pete: For those that don’t have somebody to bounce ideas off of, that’s where the business coach, or any kind of coach, or a mentor comes to play. We have a business coach, I have a personality coach, we have a marketing coach, and then we also have mentors. The National Association of Property Managers have been really kind to us. I have about five or six really close people that I call and I’ll ask, “We’re not doing this, is this correct, is this right? How would you do it?” Those are the people, especially if you don’t have a partnership, those people become invaluable.
Steve: And not only that, some of those close friends of ours, they’re local competitors here in Houston. We’ll actually call them and say, “We’re thinking of doing this, what are your thoughts? Give me some feedback.” They’ll tell us, we’re not in competition with other people.
For people often that are small, that maybe they say they can’t afford a mentor or a coach, you can have a mastermind group of your own in your own regional area, or across the country, of people making life size properties. Okay, one to two years old, what are the common challenges? Because one thing that Pete and I learned is the problems and challenges you have at 200 doors, you don’t even know what’s gonna exist at 300 and 400 doors, let alone 1000, or 2000 doors. You don’t even know what’s coming around the table that’s coming down the fan for you, you don’t even know what’s gonna happen. If you don’t have anyone to bounce ideas or coaches, our business coach, we wouldn’t be in business today if it wasn’t for our business coach.
It’s because there’s things like employee challenges, here we attest his workforce commission, if you fire someone what’s the legal obligation to that. I never thought of those things. Those are the things that I would say you know, talking to you, Jason, all the knowledge and information you know, that’s valuable. What does it cost people not to have you? That’s my question. People say that, “Oh, that cost is too much high.” What does it cost you if you go on a business? It’s all worth nothing. People always look at the worst case scenario of what’s gonna cost you?
Pete: Just using the word cost versus what we say, we use invest. We invested on business coach, we invested self training, we invested personality coaches. Just them using that language shows that they’re not ready to invest in themselves. Tony Robbins, he coined that term modeling. If you wanna be somebody, you have to get to know somebody. If you’re on a 100 doors and you wanna get to 200 doors, go find someone who’s running 200 doors and start modeling yourself. This way you don’t have to rebuilt the will.
Steve: When we first started, we talked to a guy that have 1200 doors and we said, “Hey, do you mind if we come out for a couple of days and check on your operation?” He said, “Absolutely.” We went out to his operation we sat around and he basically taught us everything that we needed to do. Maybe he thought this guy would do what we don’t do, but we’ve left with a plan.
Pete: But how many mistakes do you overcome by doing that, by learning from somebody else’s mistakes?
Steve: Yeah, that was huge. People from your community, Jason, I’ve talked to several guys, I’ve actually talked to on the phone that they ask me questions. If I got time, then I can chat with them, I’ll give them my thoughts. Right, wrong, or different, at least it’s giving them food for thought and that hopefully they walk away saying okay, a different way to look at it, maybe I agree, maybe I don’t but at least it’s another perspective. I’ve got no skin of the game whether they are success or not. I want them to be successful but it’s not like I have a hidden agenda.
Pete: You’ll be surprised how many people give you time for free, a mentorship, and also if you’re again smaller, you have vendors, those vendors are probably businessman themselves, great way into a mastermind group. You take three or four vendors, you create a mastermind group, you hold each other accountable, and you meet every two weeks, or once a month, or whatever. Cheap ways to really bounce ideas off of each other, like minded people.
Steve: Vendors can offer business for you as well.
Steve: Absolutely, because at the end of the day they’re business owners, you are a business owner. We’re good friends with people here in Houston, and people go, “I can’t believe you’re friends with those guys.” We literally are direct competitors, and my sales people are right at the house behind them but at the end of the day it’s like Chevy and Ford, it’s just business, it’s not a personal thing. They have things that they probably wanna know about us and we wanna know about them, as long as you’re not sharing trade secrets of what you’re doing, you just talk about overall business, it really is helpful. You’d be surprised at how many people will share their information.
Pete: I will say that it will find your mentor in a different market, they will share a lot more. People you share and used them but, you have to keep some of the stuff for the best.
Steve: Jason, what you do that’s a whole other world when it comes to marketing. We’re big believers in marketing, we invest a lot, we have a whole marketing team and a sales team, we have the resources that we invest in. A lot of people don’t think about that.
The marketing society of what we do by us having that footprint that we had, we got called by CBS Radio and CBS TV, we’re gonna go on Realty411 magazine now and all this things because of how we handled this. But, if we didn’t have that marketing footprint prior to leading this, Pete would not know who he worked. We didn’t have the Facebook friends and everything that we’re doing to reach. We wouldn’t be able to, probably, be on this podcast with you, because nobody would know who we are or share what we are.
Pete: At least we invest money in marketing.
Steve: Absolutely, we invest a lot of money and the first thing that we do is that we invest in marketing.
Jason: It’s funny, I’ve talk to in several calls today with property managers that are losing more doors than they are getting right now], and what’s funny is they talk about spending this money on marketing and I say, “If you’re spending your money effectively, it’s an investment, it always pays you back, it always pays you more, otherwise it’s not real marketing, it’s failing.
The same thing with the coach, people go out and we’re expecting people to invest in our business like, give us their properties, give us money, pay us, and if you’re not willing to at least invest something in yourself, if everything goes into the business, everything goes to your team, and you don’t invest into the business, you don’t invest into yourself, it’s really difficult to have the confidence and tell others that they should be investing in you as well.
Steve: That’s a great example. I don’t know if you’re familiar with the Grant Cardone but my sales people, we have them in Grant Cardone University, and they’re required to do those modules everyday and that’s non-negotiable. We’re investing money in them to give them a skill but at the end of the day, they’re gonna be that much more successful for the company.
We believe that much in self development that we say, “Look, not only are we paying for it, this is part of our core values of who we are as people. You’re either going to do that or you don’t belong in this company because you are not believing in what we’re doing. I totally agree with what you’re saying, we invest in this and we want you to invest in our company by giving us your property but we don’t really invest in ourselves, you’re just being a hypocrite in my opinion.
Pete: I’d like to add, if you are on a smaller side, the best investment that you could make is investment in yourself because let’s say you manage 150 doors, you don’t have the skills yet to manage 5000 doors, maybe not even 500 doors. I can tell you the skills that I had or that I needed when Steve and I started we’re managing 60 doors and the skill set then that I have to day it’s 700 doors we’re different. The company would have outgrown and in times, it has outgrown I have to catch up but, it’s a self investment that allows you to continue grow, your company is only gonna grow to the amount that you grow yourself.
Steve: Just case in point,we’re doing a big expansion. We’re opening offices here in Houston and we’re gonna be doing some licensing in other stage and stuff like that and one thing our business coach told us is he said, “You guys have to realize that when you guys get over $10 million dollars in revenue, everything that you’ve created up until this point will break. Nothing will work. You have to redo your whole company for systems, and operations, and everything, it’s gonna be a whole new company, hosting $10 million in revenues.”
We stood there thinking like, isn’t it just supposed to keep adding and expanding and now, he’s telling that everything, we’re just basically walking into this huge storm that we know we’re gonna walk into and just because you’re making that much revenue, that doesn’t mean that it’s necessarily gonna be a good thing in the sense of having to basically restructure your whole company, and they said every system that you have will fail when you get to that size, and that’s something that you don’t think about.
Jason: We’re looking forward to breaking our systems.
Steve: Yeah, we are all looking forward to breaking our systems. But it’s not something that we would ever think on the radar if we didn’t have a business coach or a mentor, we would never be opening up operations in Dallas, and we would never be looking at June licensing of our company, we wouldn’t have the doors that we have, we wouldn’t have anything.
People say that, “Why are you spending that money on a business coach? I can’t afford a business coach.” and I think is this, “You can’t afford not to have a coach” if you don’t have a coach how much are you losing? You have said about the marketing people that when their losing marketing, my question that I will ask people is, If you do marketing, what is your acquisition cost per lead? What is your acquisition cost per client? And more importantly, what is your acquisition cost per marketing strategy?” The look in their faces, it’s not just here, when I was in Australia speaking, I was asking them the same question and it was just blank faces and these were owners of big companies and nobody can answer that question. I said, “How do you know what’s working and what’s not working? How do you know if it makes sense to continue these marketing program that you’re doing?” I know we’re getting out of subject I would give them an attention.
Pete: You haven’t back for marketing.
Steve: Yeah. You know marketing but, if you don’t have the business coach like the question you ask and I’m sure Jason, you ask a lot of questions that you probably get some blank stares that they don’t know the answers to and maybe sometimes they don’t wanna know the answers to because they don’t wanna face the fact that what they’re doing isn’t working. Bringing this back to the storm thing, if what we were doing wasn’t working, it would’ve come out during the storm. We would’ve basically had at some level of implosion but instead, it went the other way. Like you said, we’ve got publicity, we’ve got the TV, we’ve got some radio, we’ve got a commercial, and all these other things because of the fact that we were strategically set up correctly.
Pete: We’ve picked up like 10 new clients during the storm.
Steve: Yeah, during the storm we’ve picked up people.
Jason: Let’s tie this together. Here’s the thing, a lot of people watching, just might be thinking, “Well, I’m never gonna have a tornado, or an earthquake, ir a hurricane in my area or this might not happen to me.” But in property management and in business, there’s always a catastrophe waiting to happen, you could get audited, you could have a business partner embezzle, there’s always something that could happen and you’re always liable, you can have a lawsuit. You guys really have set up since the beginning is this ability to make quick shifts and to adapt to what’s going on in the business, and rather than stay comfortable.
I’m guessing that both of you are the type of guys that probably have that morning routines. You have programs that you do. You have stuff that your tackling each day. You have objectives. You have targets. If people are listening to this and they’re just coasting, and there’s coasting along, there is an inevitable catastrophe coming because what happened is, if you are not proactive, or if you are not taking a proactive approach to your life then, there’s a fire that’s going to start, there is a catastrophe that’s going to happen. It’s gonna happen either in your business or it’s gonna happen in your marriage if you’re not investing there, it’s gonna happen in your health, if you’re not investing there. There was a day were I couldn’t even like work because my back had gone out, because I wasn’t taking care of myself. I was working too hard, too many hours and it was this wake up call because then business went away. I wasn’t showing up in marriage then. I wasn’t being a dad then, like I wasn’t useful to anybody because I let one of those slip.
You need to make sure you’re taking care of yourself physically everyday, emotionally everyday, connecting to people that matter to you, mentally everyday that you’re investing getting knowledge, and that you’re also spiritually, intuitively, or whatever that looks like creating some power to yourself from connecting through that inner voice that we call deep down inside, that feel like I should do this.
We need to make sure that we’re investing all this energy because if we’re not, we’re just waiting for catastrophe and any one of those can derail you. It will derail the business. It will derail anything that you’re connected to because they’re all tethered nected together. I want people to understand that I don’t just believe in coaching and say that I believe in and offer to help people in their business, I also make sure that I get coached.
I think that it’s a hallmark, if you’re working with a coach that doesn’t believe in coaching and you can know that just by citing what coaches do you have right now? Like I have a Facebook coach, I have a Profit First accountant coach, I have business coach, and I’m spending probably between those and training programs, and whatnot, at least like $50,000 a year. My wife looks at these things sometimes and says, “Why are we spending so much money?” I said, “Because we wouldn’t be making this much money if I weren’t spending so much money.” I view that it’s just as important as having team member, just as important as doing marketing, because you need something objective, something outside of yourself that will challenge you to do things that you wouldn’t do just on your own.
I believe we have what’s called the default future and you know what that is because you know where you were a year ago, and you can look at your business, you can look at other property management, it couldn’t deal with this disaster, and that’s where maybe you would’ve been 2 years ago you said.
You know your default future. The way to escape the default future, because even if you have a business partner you’ll eventually working to kind of a state of equilibrium, a state of good thing, and getting a coach outside of that thing allows you to break free from that. You have the advantage that it takes longer to get to that space than if you’re one person.
You wanna make sure that you avoid getting into this situation in which you’re the emperor with no clothes, you got a team around you that says, “Guys, I think you’re awesome.” You’re on a train that’s headed for a cliff. Everybody listen, make sure you investing on yourself, investing on the things that really matter to you, and that you’re creating a space that you really enjoy and giving up the things that you don’t enjoy. You’re off-handing that.
Steve and Pete, what are the takeaways you feel like, in wrapping this up, you wanna share with people that are in property management companies, maybe they are thinking, “Hey, this might not even be relevant to me.” They are concerned about something coming down the pipe that they can see?
Pete: I’ll talk more on the disaster side of things and I’ll let Steve on the bigger picture side of things. I think number one is look at of VOIP system if you’re not on one, look at having some assistance elsewhere so that you keep your business going and also, just have a communication plan for your residents, your vendors, and your owners before the storm hits, and of course for your teammates. And then, just create a structured approach on how you’re going to eat the elephant, as we say.
Steve: I would say that my biggest way that we got that proved to work was first of all, speed, speed is the key. Velocity. Getting that thing moving as quickly as possible, don’t overthink it, just do it, get it done like our landing page for RV. It’s not pretty but it’s up, it’s functional and people are going to it. Be a leader and get out there as quick as you can and definitely over communicate.
I don’t think in any disaster you should ever under communicate with your clients, meeting your tenants, and your owners. I would also suggest that you gotta remember that both sides, tenants and owners, in a disaster there’s a lot of emotions flying. They may say things that they don’t mean and you may say things that you don’t mean, but you have to remember you’re running a business, they’re not. They should be but they’re not always.
The tenants are just wanting a place to live. You have to make sure that there has to be some empathy involved between the owners and the tenants given the situation and we found the best way to do that is just to have the communication, and talk to the owners, and talk to the tenants, and be solution base. Have a solution Don’t just talk about the problem. Those are the things that I would say.
Jason: Steve, I really appreciate you coming on this show. It’s awesome having you and Pete here sharing with us. How can people can communicate with you and find out more about Empire Industries?
Steve: Yeah. Obviously, go to our Facebook page, facebook.com/empireindustriesllc. We share everything. We don’t hold back. Anything you want, steal it, grab it. Also, go to our website empireindustriesllc.com. We have a Hurricane Harvey page and people in Florida we might wanna create some of those coming up for you guys. But also, go to our blog page. I probably do two to three video blogs every week. They get pushed out on our blog page for owners, tenants, and agents. It’s just great information. Start becoming the trusted individual, is it property manager, marketing? We were huge in that. Get some things in there, steal on, borrow, I don’t really care.
If you want some advice, you can give me a call, you can call our office, 888 866 6727 or just go to our website empireindustriesllc.com and you can get a hold of me there. But, if anybody wants any advice or help from Pete or myself, we’re always willing to help. We do have people that come to our office, kind of see what we do. If you want to, just give us a call, let us know, we’d be glad to help.
Jason: Steve, I appreciate you coming out and I’ll let you get back to your game.
Steve: Yeah, we got a [4:00] PM team leader meeting so I gotta get up there. That’s why Pete pulled out.
Jason: Alright. I appreciate you taking the time to update everybody.
Steve: No problem. Thank, guys. I appreciate it. Thanks, Jason.