What are four pillars that successfully build and grow a business? Transparency, value propositions, stellar customer service, and aggressive pricing.
Today, I am talking with Scott Brady. Despite being told by everyone to not become involved with the “Toilets, Tenants, and Troubles” of property management, Scott started Progressive Property Management in 2012. In a short period of time, he has grown his business phenomenally by rebuilding his website, marketing, and company to target self-managing investment property owners.
[05:38] Seekers are just starting out in property management; they get stuck by doing everything on their own instead of using marketing dollars effectively to hire others.
[07:23] Scott built his company of the four pillars to make the floodgates open for generating leads; set up virtual offices and branches to help handle workload.
[09:05] Real estate used to be a structured business, so the challenge was knowing how to get doors; SEO and ads are used to get doors for realtors to buy.
[11:11] Scott is willing to pivot quickly when things are not working; focusing on resolving problems by adding doors, agents, and investors has helped him deal with changes.
[14:35] Conducting product research and talking to clients is important to know what they want and need; serve as resource with connections to help them with pain points.
[17:55] Embrace mutual affection marketing; clients need to know, like, and trust you before they will hire you – build and maintain those relationships.
[19:20] Legislation is a constraint that drives innovation and need for property management; turns you into being more relevant to property owners and landlords.
[20:37] Property management is a complicated business, position yourself as an expert.
[21:56] Spend money on what works for you – whether it’s seminars, direct mail, etc.
[25:13] To get your first 100 doors, test different marketing channels to find out which gives you the best return and connect with experts, such as Scott, for pearls of wisdom.
[28:50] Property management offers multiple streams of revenue: Management, real estate, maintenance, etc.
[29:25] Create market share to help people recognize problems and how to handle them.
[36:08] Growth is not the problem – it’s covering marketing area geographically, and finding the right agents and training them properly.
[36:45] In-and-Out Model: Hire the ding-and-dented to sell them on a path of opportunity – going from front desk to branch manager; no fear of losing employees.
[40:30] Create marketing messages and lead magnets that pivot to: Do you….
[46:13] Constantly try to improve your marketing, sales, processes, and operations; embrace the suck by trying something new and different.
Scott Brady Email
DoorGrowClub Facebook Group
Jason: All right. Welcome, DoorGrowHackers to the DoorGrowShow. If you are a property management entrepreneur that wants to add doors, and expand your rent roll, and you are interested in growing your business and life, and you are open to doing thing a bit differently, then you are a DoorGrowHacker.
At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property managers win. If you enjoy this episode, do me a favor, open up iTunes, find the DoorGrowShow, one word, subscribe, and then give us a real review. Thank you for helping us with that vision.
I’m your host, property management growth hacker and expert, Jason Hull, the founder of OpenPotion, GatherKudos, ThunderLocal, and of course, DoorGrow. Now, let’s get into the show.
Today, I have a special guest that has grown his business phenomenally in a relatively short period of time, Scott Brady. Scott Brady, welcome to the DoorGrowShow.
Scott: Welcome and amen to your opening. Everything you said resonates with me.
Jason: It resonates with the right people, for sure. Those are the people that we want to serve and help. I’m excited to have you here.
I touched base with you just briefly when we saw you at CALNARPM. My father just started property management business a couple of years ago. I think he’s about 200 doors or something. He caught entrepreneurial bug after being a hospital administrator for 30 plus years. He just decided to now start a business. He saw my brother’s success and thought, “I can probably do that.”
That’s been interesting to watch. He sat in on your session and said, “You should go talk to this guy. He’s pretty interesting. He’s got some cool stuff.” And I was like, “What stuff?” He’s like, “I don’t know. Go talk to him.” Then I came over and here we are.
Scott, tell us a little bit about you, your background, how you got into property management. Why don’t we start there?
Scott: You got it. I’ve got my broker’s license in 1997, ‘98. I wanted to be the biggest realtor in my city. I accomplished that by about 2002 or 2003, selling 60 or 70 homes a year. I’m in Southern California and then I decided I want to be the biggest broker in the land. I became a franchise and probably got up to 60 or 70 realtors. Then, a little thing called the Great Recession hit about 2007, and by 2009, more or less decimated. I rebuilt and survived that recession, kept on my property and my investments.
But by 2010 or 2011, I decided if I another recession occured and I wasn’t prepared for it then shame on me. That now was my second recession. Probably by the end of 2011 or 2012, after being told “no” by everybody, “Don’t do this,” the property managements, the toilets, the tenants, and troubles, just go sell more homes—I said, “You know, I’m going to do it regardless.”
In 2012, I started progressive property management and I got on my relationship with my franchise at that time and became an independent real estate company as well.
Jason: Okay, great. You started your property management company in 2012. Jumping into that, were you familiar with managing rentals then already? Was this a new thing you were jumping into?
Scott: I had managed some of my own properties, but I was completely ignorant. I didn’t know anything about NARPM. I didn’t know anything about consultants. I just said, “You know what? I’m in the top realtor, I can figure this out. How hard is property management, right?”
Fast forward, two years later and probably $200,000 in seating at 50 doors, I said, “Gee, this isn’t working out as well I thought it should.” That’s when I finally realized, I was told that 75% of all properties were self-managed, it just didn’t add up to me, it didn’t make sense. That when I finally started using my education, and I started sending out surveys to hundreds of investment property owners. I simply said, “If you’re self-managing, why? What would it take for you to stop doing this?” and they responded.
That was my first pivot, it was 2014, rebuilt my website, rebuilt my marketing, rebuilt everything about the company to really target self-managing investment property owners.
Jason: Okay. You said you were at 200 doors after three to five years?
Scott: After two years, I was maybe at 50 or 60 doors. I built my real estate business on Direct Mail. I was using Direct Mail, targeting the estate owners. In Southern California, you’re talking a million and a half rental properties. Orange County, 300,000 of which half are out of area. I was at least doing that. I was doing okay. At that time, we’re still on the backend of the recession. We got a lot of owners who had evicted a tenant, they just didn’t want to do it. I was able to grow slowly that way.
Once I pivoted toward the new marketing message with Direct Mail, then I really started adding a lot of doors. Probably in my third year I added 50 doors. By my fourth year had added another 100 doors. I was really now starting to grow quite quickly.
Jason: I think there’s a name for the people that are just starting out and they’re called kind of seekers. They get about 50-60 doors and they’ll sit there in pain. Typically, the worst I see is maybe about three or five years. They’ll get stuck and then they either move through that or something weird happens. Some people stay stuck there and they’re not too many, but some people stay stuck there and the once they stay stuck there, they have this mindset that they need to do everything on their own. They try to read books, watch YouTube videos. They believe they’re the smartest tool in the shed and they can handle it all. They were like, “Why would I pay someone else to do this when I can figure it out myself?”
There’s a mindset disruption that they think they can do everything and then they become the biggest bottleneck in their business. They’re the reason they can’t grow beyond 50 or 60 units. They can’t afford to hire anybody.
Scott: Yeah. My definition of hell is 100 doors. You’re one staff member away from doing everything yourself. You don’t have the resources to do effective marketing, grow the business. You have to believe in your marketing message that resonates, and be willing to spend the money to grow the business to 200 doors because at least the 200 doors now you’ve got a few staff members, it can be profitable.
I interviewed property managers for companies at that time before I started and I’m 55 now. I was 50 when I started the business. The average person would say, “Well, I’ve been doing this 20 years and I’m at 200 doors.” I’m like, “Oh my god! I’ll be dead by then.” No offense, I haven’t got that kind of that time on my hands. I’ve not lived a good life up to now. I just didn’t have the patience if you will and I kind of saw the opportunity. That’s when I started really spending marketing dollars effectively, and I’ve built the company on the four pillars which is transparency, value proposition, stellar customer service, and probably the most important one, for me, was aggressive pricing. I priced at 200 doors as if I was at the 1000. I knew that it would be thinner margins, but I knew that was a better tactic for me to take.
The floodgates opened at that point and that’s what caused pivot number two which was two years later, I started getting leads. Southern California, as you know, as a bird flies, it may be 30 miles, but in a car that could be two hours. I was getting leads that were an hour away. I didn’t want to say no to anybody and I started realizing I was going to have to say no. I was having staff driving three or four hours to go to one appointment. At that time, I still had residual agents here. I still had about 10-20 agents which still kind of followed me from the franchise to the new company.
I said, “Well, if I can do it and if they can do it, I think somebody’s realtors can do it too.” I had two agents that were kind of out of area and that was the first experiment on virtual offices. Setting up virtual branches and at this point I’m in North Orange County, we set and went up to South Orange County, we set one up in North Riverside and that was four years ago.
Jason: I run a virtual company too. I’m sitting here right inside my house, and I’ve got team members all over the place. The advantage that I have is I can hire rockstars. There’s a competitive advantage I feel in hiring because people do enjoy working from home and having that freedom or being able to work from anywhere. It’s really freeing.
Scott: Yeah. The thing about real estate is it used to be a very structured business. If you sold 5 or 10 homes a year, Monday you had office days, Tuesday was caravan day, Wednesday was preview day, Thursday—I’m telling you, real estate now, first of all, half the realtors in California won’t close the deal this year. The number of realtors that set close five deals or fewer is something like 90% of the realtors out there. Mind you, there’s 200,000 of them.
I knew there was an opportunity for these people. They had the time, they had the ability, they know how to get from point A to point B, and they also didn’t know how to get the doors. That was the big challenge is, “I can make you a branch manager, but how are you going to get the doors?” That’s when we get very aggressive on marketing using both SEO, Google Ads, Direct Mail, seminars, and if I could produce a door, they were happy to buy it.
We just had an agent three months ago in South Riverside and now she’s at 10 doors already. She bought those doors. We generated the doors into contracts and she’s happy to take those over and pays us for them. Once, I realized that could work, then why not have 17 branches? That’s where we are now. We have branches from the High Desert which is Victorville down to North San Diego. We pretty much cover over a million and a half rentals in Southern California.
Jason: How many doors does progressive cover in the single family residential sort of space?
Scott: Pretty much of the 800, I would say, between townhomes and a single family because that’s what we’re targeting in our marketing. Probably the 800 or 750, maybe a little less. We have a few multi, and a buildings, a few commercial that we just kind of stumbled into, didn’t really target. We’ve got 200 […] in the Pike. We picked up 20 today from a brand new branch manager. I’m looking at 100 to buy, we’ve got another 50. We’ve got about 200 in the Pike and then the goal would be 1000 by the year end. Next year, I think the goal is to add 500 doors. We’re at a 35% annual growth rate.
Jason: Nice. Scott, it seems to me that one of the areas that you’re genius at which is I think, typical of a lot of entrepreneurial people is your willingness to pivot quickly when you’re seeing things not working. I’m sure there’s times when you’re like, “Man, I wished I pivoted a little bit faster than I did.” but there’s always change. There’s always change in business. In property management, real estate, it’s always fluctuating. Things are changing, the market’s good, people are selling off. It’s always influx. What do you feel like helped you whether through all of these where other realtors and other property managers tend to get stuck and struggle?
Scott: We laser focus on the problem. People we’re self-managing didn’t know they had a problem and we really now have embraced video. Last weekend we did our first company video. What we talked about is how we give our clients back our most important asset of all, and that’s their time. They’ve got better things to do with their time than worry about the three T’s. Once we really lasered on the problem that the buyer on the market had and we could offer solution, it seem to really take care of itself at that point.
I would say my job here is to add doors because that solves a lot of problems. Add good agents who get our system and get our business model. Also, add investors because as we walk into the next recession, as we walk into a kind of California rent estate, there’s going to be all kinds of opportunities to make money there as well.
Part of it is, I’m glad I didn’t discover NARPM until I already kind of built my business model because you’re just going to go after the bright shiny light. You’re going to chase whoever, “Oh, I heard this guy is doing this. I’ll do that.” I was able to walk in the NARPM with my business model and then pick it and choose from there at this conferences what will work for me, and then add more profitability. For example, we just got the insurance because of CALNARPM. We just added a fee. It’s helped my business model, but I’m not changing my business model because somebody in San Antonio does it a little bit differently.
Jason: I think that’s a really an interesting point to bring out. Even DoorGrow, we really hadn’t attended any NARPM event until I saw you in the CALNARPM. That was our first legit event. I spoke once at the Long Beach NARPM Chapter just barely before that. I believe that property managers should be educated. I believe that NARPM is a great resource to get educated. The challenge though is you see a lot of groupthink inside of groups. There is a lot of good resources and a lot of great ideas, but it’s hard to know when you’re that young and fresh whether or not you should implement or fall prey to every marketing vendor or do everything that everybody else’s doing. You just looked at the problem and solved it.
Businesses only exists to solve a problem. That’s why we have a business. Our job in a business is to solve a problem and we get paid to fix and solve problems. That’s why businesses are in existence. When we get disconnected from that, it’s easy to do because we start focusing on, “I’ve got to make processes, and to-do lists and implement software, and automation. I’ve got all that marketing stuff to do.” If we get distracted from our clients and we’re no longer client-centric, we get distracted from why business fundamentally exist and it’s to solve their problem.
I love that you actually did research reaching out to your target audience. How important do you think it is to do—and we do this in our own business—how important do you think it is to do product research and talk to your clients and customers?
Scott: We all can have different target markets. It can be investors, multi units, out of state self-managing. If you don’t know your clients, if you don’t know what they want and it could be different in Washington than it is in California.
I have two clients. I have people who we want the manage our property. I’ve got realtors who are struggling in the real estate business. They want to thrive in any real estate market. I have those two clients, and that’s my job everyday is to find the realtors that are making a good fit for this business model and find the by-owner who’s finally decided they’re just not adept at managing their own property.
Your marketing has to be laser focused on the issue at hand. In California, we have a beautiful opportunity here because of so much rent control and local laws and ordinances that are making it very very difficult to manage their own property even if it is next door. I’m trying to position us now. I’ve spent the last six months rebuilding the foundation. New website, lot more video, redid the Direct Mail piece—just to really focused on that issue on hand. Are you prepared to manage your property in a California rent estate? I doubt you are, by the way.
Putting ourselves out there first and having that message. We all know that if you can […] nice database—a lot of people get freaked out—but I’ll send out 15,000 direct mail pieces a month. Our goal is to say not just, “Are you looking for property management, but are you looking for a resource as a by-owner?”
For example, we started an inspection company that we’re going to let the by-owners use. If somebody’s in Nebraska and they got a property in Costa Mesa, we’re going to fly out to do a move out or move in. Let them use our maintenance company. We will do rent ups for them. We’re trying to position ourselves just not, “Are you looking for a property management, but are you looking for a resource to manage your own property?” Beyond and all, for anybody who’s an investment property owner selling in California, get them in our database. If I mail 15,000 and 2000 go to our website and 40 higher […] doors, that’s 180,060 people I could put in our database.
Eventually, they’re going to have a pain point. Eventually, they’re going to have a tenant who doesn’t behave. Eventually, they’re going to have an issue that arises. Eventually, they’re going to move out of the state. No offense, we’re all going to die too. We want to be there for them before they have the need.
The beautiful thing about this business, I’ve heard you say this and I say it as well is, there’s a million and a half rentals on the market area. Over a million being managed by owner. I’m not taking business away from anybody else, any of the property management companies in Southern California. I’m going after the Blue Ocean. I’m going after people that aren’t using any property management companies. I compete with no one in my marketplace. I’m competing with people who think they can do better than me. You and I know they can’t. That means I have to have stellar customer service. I try to build a frictionless website now. If somebody wants to go in my website, find out about my company, choose to use us, fill out a contract online, we just got an email saying, “Okay, I’ve hired you.” That’s the ultimate goal, a frictionless website.
More and more, I encourage other property management companies is you’ve got to embrace mutual affection marketing. You’ve got to have your clients like you before they trust you, before they hire you. The best way to do that—because we’re not realtors that go to the local Chamber of Commerce, the BNI meeting, or go out for drinks with our friends, we have to do it virtually—and the best way to do that is video. There’s no doubt about it. By using video so they’d like you, and then they go through your website, then they trust you, then they hire you. You just got to do a great job in taking care of them. Do what you said you’re going to do, how you said you’re going to do it.
My branch, we manage about 350 properties in my main branch. I will submit to you that Young Hutchinson who is my branch manager in South Orange County who’s managing 70 doors provides a high level service than we do in my branch. I’ve got three property managers who—they like their job but do they love the owner? Well, our branch managers love their owners because they see a listing one day out every single out of those doors.
You’ve got to use all the tools in the tool box and here’s the good news, we’ve got lots of tools. One of your job is to help people use the right tools and discover those tools.
Jason: Yeah. Those agents have an incentive to build and keep that relationship naturally, so that makes sense.
Jason: Yes. A big proponent of going after the Blue Ocean because I believe in this industry, that’s how we can grow this industry and expand it. We also touched on legislation and I believe legislation is a constraint that has driven innovation. It drives the need for property management. I think a lot of property managers whine, they complain, and they gripe about legislation. But every piece of legislation you’ve turned into an advantage for you. It turns you into being more relevant to the landlord instead of them doing it themselves.
Scott: We have owners calling me all day long. In California, we have a proposition coming up in November, proposition 10 which is the Repeal of Costa Hawkins which means that any local jurisdiction that an active rent control could have rent control in any type of property, not just multiunit, older buildings.
I am personally opposed to rent control. It’s a violation of Private Property rights, but it could be a boon for property management because it makes it that much more difficult to manage our property. You want to be ahead of that in California or whatever is in your state, whatever is going on. California happens to be rent control and Costa Hawkins and position yourself as the expert. People gravitate to the expert in their industry whether that’s Tom Ferry or that’s Jason Hull or that’s Scott Brady in property management in Southern California, and that’s how you want to position yourself out there.
This is a complicated business. Real estate is a complicated job. Your job’s going to get more listings. Your job’s to close deal. This is a complicated business. There are a lot of moving parts to property management. Unfortunately, most property management companies are managing 20 or 50 or 100 doors, they’re only good at a few of those aspects of that business. When you get to 500 or 1000 doors, you’ve got the staff, the revenue to take care of all the moving parts. My job is to make sure that’s happening but we can be the clarion call for people who are managing by-owner and collectively be the expert in this industry.
Jason: I think what the Iceberg Report suggested that there was maybe 30% of single family residential roughly that are actually managed professionally. It’s a huge opportunity. If you look at Australia, the numbers I’ve heard tossed around for single family are about 80% are professionally managed. I don’t know if we’ll ever get quite to that point, but it certainly shows that we have a lot of room to progress and move here in the United States. I think there’s a huge opportunity right now. I think property management really has only gotten started and there’s a massive amount of potential.
Let’s touch into some of the things that, specifically some of the channels, that you tackled. You mentioned, you threw out a couple of them like working on your website and pay-per-click. For property managers that are stuck in that cycle suck as I call, they’re in hell, or that solopreneur 50-60 units. What tactical sort of things would you encourage them to do so that they’re not out damaging the reputation of property management which actually makes it harder for you to grow your business, perception wise?
Scott: There’s low-cost, high-return, high-cost, low-return, whatever works for you I say spend money on it. For me, low-cost, high-return seminars, we do local landlord seminars at our different branches where we invite local investment property owners for a three hour presentation at no cost to them, throw in a free lunch. It’s an opportunity to really disabuse them with a notion that this is an easy business. If you own an investment property, you’re a property manager. Whether you hire a property manager or not, you’re on the same industry I’m in. You need to know the same laws, the same rise of tenants. We bring them in, give them a quiz which they always fail about basic laws that they need to be aware of. Bring in an insurance guy, a mortgage guy, then talk about rent control—what’s going on, the local laws, what’s affecting them.
If we send out 2000 pieces, we’ll put 40 people in a room and our vendors offset pretty much all the cost. We’ll pick up, well, a, we’re going to have 40 people on the database. But I’ll guarantee you in the next 10 years when they need a property management company they’re calling us because we’re the ones that were the property manager before they needed it. We still give up to four to six doors out of that. But it is a low-cost way to not just add doors but become the expert in your community.
Direct Mail cost me roughly 50 cents a piece. If you’re messaging that Direct Mail piece if that’s compelling and if it drives into a website that’s frictionless and makes them like your company, we find Direct Mail very effective. We do it eight piece Direct Mail, high-end professional looking piece, but I print obviously a lot of them.
Google Ads, we happen to use The Geek Voice. I don’t have to but I do. You sent out ads in your market areas saying, “We guarantee to find a tenant 21 days or waive our management fee,” and you’re going to get leads. Then, what we find, what we got leads from Google Ads, it forces you to be a follow up machine. Of course, you’ll respond quickly. Of course, you have a very compelling message for that person. We use of course the Google Ads.
SEO’s a long-term, slow growth—it’s a long march, but we try to optimize every single one of our branches. We’re not a franchise but it looks a lot like we’re a franchise. Each of these branches kind of operates independently. They’re on a split with us of course, and they’re happy as can be because they do none of the back office. They only deal with the fun stuff. Tenants, owners, and lease-ups and we deal with all the back office—all the compliance, all the insurance, all the department real estate stuff, and the stuff they’re not going to be good at. Then, we do the sales and marketing as well.
Jason: If you have to start over from scratch, just hypothetical, somebody had wiped out your business, wiped out your bank account, wiped out your team, and you’re starting from scratch and you’re like, “I’m going to get this property management business going.” What would you do to get your first 100 doors here in 2018, do you think?
Scott: I definitely would’ve not listen to Yelp. I remember Yelp calling me and saying, “We’re going to give you 20,000 impressions a month for the low cost for $4000.” I went like, “Oh my god, that’s easy money.” I signed a one year contract. There was $50,000 flushed down on the toilet.
Jason: You got those impressions right?
Scott: I would definitely have tested different marketing channels and then find out which one gives me the best return. I would definitely done seminars day one. The beautiful thing about property management, people want to work with the biggest realtor. I want to deal with a guy that sells 100 homes a year. I want to deal with the biggest real estate company because there’s credibility there. Nobody wants to work with the biggest property management company. That’s not a driver for an investment property owners. They want to deal with someone who has a few doors, but it just have great reviews, great customer service, fair pricing, like I would say, the four pillars; transparency, value propositions.
That’s a big advantage for this industry. If you position yourself as a local leader, as the expert, that’s a big thing. I definitely have a website that embraces video. I only started on that recently. I made every mistake on the book. Honestly, every mistake in the book. If you go to NARPM, I think there’s pearls of wisdom there. You can find them and pick them out. I would seek out experts. You don’t know at all, I didn’t know at all.
There’s no book by the way. Hopefully, that changes next year but there’s no book on how to build a profitable property management business from A-Z. How to corporate, first things first, operations, marketing, sales, all the rest. Unfortunately, it’s like handed down like Beowulf. It’s this oral tradition. It’s changing. I think people like you are changing it and there are some other places out there that are really not afraid to share. I’m happy to share it because once again, I’m not competing with anybody out there.
If we all collectively go out to people managing by-owner, nobody tries to sell their home by-owner. They think it would be madness to try to do so because we made it so complicated. So many people told people that you can’t do it. It’s impossible to do it. You’re going to screw it up. If we did the same thing on property management, we made it so complicated to manage ur own property. We do that legislatively. Then, we also convince people it’s madness to manage our own property and that’s done through marketing. I believe we all benefit from that. You’re right, 70% drops to 50%. Well, 20% in Orange County, that’s 3 million people, 300,000 rentals, that’s 60,000 different doors to be managed.
Jason: There’s a bigger room there for growth.
Scott: Yeah. There are not enough property management companies in Orange County to absorb 60,000 doors. I truly believe that is the future that’s why we built this model. You asked about distribution channels, we also now do wholesale. I’m going to find those property management companies that want to grow, but don’t know how to get from A to B. They’re kind of stuck at 50 doors or 75 doors. Look, I’ll do the backend for you, you can even keep the name of your company for all I care. We’ll help you get there.
I think there’s an opportunity for people to do wholesale as well and start marketing places. There are realtors in our marketplace who don’t tell their broker they’re managing 50 doors or the brokers managing 50 doors and it’s not profitable to them. We can relieve them of that back office and that unprofitability, if you will.
There’s so many ways to skin the cat in this industry. That’s what makes us. in my opinion, exciting because when I was a real estate agent, I sold real estate. I made real estate income. That was it. Then, I became a broker. I made some money of my agents maybe had escrow. Property management, there’s management income, there’s insurance income, there’s real estate income, there’s maintenance income. My job, in my opinion, is to create multiple revenue streams and push the money where the best returns are in those streams.
Jason: I love this ideas. One of the things you’ve mentioned where I think there’s a lot of opportunity to create market share and to go into the Blue Ocean is to help people see a problem they can’t see. You’ve mentioned that one of these by-owner people that are managing their own property, they can’t see the potential threats. They can’t see the problems that they’re dealing with. Sometimes they’re too close to the fire to really recognize the frustration that they already are experiencing with the tenant, and the anxiety that they feel when they see it show up in their phone, and they just don’t even realize there’s another way that’s better.
We’ve seen this at DoorGrow. It’s the same thing. We see property managers that are running their business in a way that to me, looks so painful and uncomfortable, but they can’t see the problem. They might have a brand new website and they can’t see that to me, having studied a conversion rate optimization and tested with hundreds and hundreds of clients that we did websites for, they can’t see the leaks that we can see.
One of our biggest lead magnets was simply to create a website quiz. If anybody tried it recently, it was having a text message problem until I fixed it this morning.
Scott: I tried that yesterday, I tried to get it on.
Jason: Oh, yeah. I took care of it. It’s connected to Zapier and it sends a text message and they keep trying to block the text messaging so we use Twilio. Anyway, that’s nerdy stuff. I show people the problem and they can see the problem, their behavior changes immediately. Their perception changes immediately and they see the need. Whereas what most people are doing in my space that we say that we compete with is, instead of helping people see the real problem that exists, they just wait until people come to them and say, “Can you do this for me?” and sell them what they think they made.
Our challenge at DoorGrow is we’re selling something that people don’t recognize they need. It’s our job to educate them or to help them see these various leaks in their business. The website’s like a one minor thing, but it’s significant, it’s in the pipeline. If we take all the leaks throughout that pipeline and our sort of consulting package that we take them through like you’re talking about, includes several methods for establishing yourself as an authority in your market, and figuring out how to go after that blue water, and how to create real relationships.
I’ve just read this really great book I recommend to everybody. For those not watching this, listening, it’s called Bluefishing by Steve Sims. The reason I love this book is he’s very contrary to this idea of hyper automation and hyper technology, and trying to just systemize sales and relationships. He’s very much about going deeper with clients and creating deeper connections because it’s much more powerful. That’s what you’re doing when you go do these investor seminars. You’re reachable, you’re a person, they can create a relationship with you. They feel like they can trust you. They learn to like you and that creates referrals, that creates more leads, it creates advocates for your business to send you business.
I think there’s definitely something he said about, let’s get out there into the marketplace. There’s a market share waiting to be created and nobody’s going after it. We have all these opportunity to build the business as big as possibly you can handle. I doubt you feel like you’re in any form of scarcity but most people in this industry feel like they’re starving. The number one challenge on all of my feedback quizzes and questionnaires that we send out, when we ask, “What is the number one challenge in your business right now?” They say, “Getting leads and growing our business.” It’s always that same thing. You don’t feel that. What’s your perception on that?
Scott: If you build a better mousetrap, people will run to the mouse trap. Hiring staff for example, that used to be a problem. It’s no problem anymore because we become kind of in-and-out property management, In-N-Out burger. People start at the front desk, they move over to assistant property manager, property manager, branch manager. I will tell you, the dream job at this company is a branch manager.
I’ve got a guy. He manages 100 doors. After our split, he walks with $6000 a month plus sells five or six homes a year, plus leases out 30-35 a year. Do the math. He’s making not just six figures. He’s making almost $150,000-$200,000 a year, and he’s independent. He makes his own hours, does his own thing. He’s our prototype and if you build a better mouse trap for me for realtors, or a better mousetrap for the by-owner, on our marketing piece, we drive them into a quiz—self-managing investment property owner quiz, and they fail it everytime. I realized, I don’t know what I don’t know. Then we can send them into a California rent estate website. Where it says, “Here’s why we’re becoming a rent estate and what can you do about it.” It’s the old market share. They ask you answer. If you give them everything possible they should know about this industry, they’re going to think, “Boy, there’s going to be more than that. I don’t even know these stuff. I might as well hire this company.”
For what we do in this industry, for the money we make, for the risk we take, for the drama, without crazy they won’t need us, but thank god there’s a lot of crazy out there, and that’s job security. When the phone rings here, I tell my staff, “That’s job security.” When the phone rings, we’re saving our owner the time to deal with that phone call from the tenant or vendor. I don’t know what real estate will look like in 10 years, I’m very pessimistic about the future of organized real estate. I do a lot of seminars and I’ll ask a crowd of 100 people, “How many of you think that real estate will look the same way in 10 years?” Not one hand goes up.
We, as this industry, knows that the industry is done. It’s cooked. We all know in 20 years, it’ll definitely not look anything like this. But property management is a pretty safe bet for at least 10-20 years. As a matter of fact, technology only makes us more efficient. You can manage more doors with fewer staff and do it more efficiently.
If you focus your company on solving the problem of your target audience, which happens to be the self-management investment property owner, and get up everyday and think, “How can I solve their problem?” Make them aware of the problem because if you’re waiting for them to pinpoint, that may not happen for 20 years if my only dad dies and his kids inherit the home and they hire a property manager. You’ve got to move that time frame up to today. Not when they finally get a pinpoint when the next recession hits. But if the next recession hits, God bless! We’ll all do better. If rent control passes, we’ll do better. But rather than waiting for that, put that to the forefront of your target clients’ mind and you become the top of line. When they hire property manager of course they’re going to call you.
Growth isn’t our problem. Our problem is mostly covering our market area geographically. My challenge is finding the right agents who get our message. My challenge is make sure we train them properly, they’re not doing anything stupid out there. I’ve had other challenges, but there’s no reason why we can’t be California’s first property management company from NorCal, SoCal. The reason why we don’t have 100 branches managing 50,000 doors, it’s just a matter of scale at this point, and having the right marketing message.
Jason: I think you dropped an interesting bomb that you breezed to really quickly, but it sounds really interesting. You’ve mentioned that In-N-Out model, it sounds like testing out and that you’re taking people through process to groom them from frontdesk sort of role all the way up to higher level role. Could you just walk through that briefly again real quick?
Scott: I’ve never hired a property manager. The term I use which my wife hates is that I kind of hire the ding and dented.
Jason: Let me explain this because most property management entrepreneurs are whining constantly about their property manager that they just left them. They can’t onboard right, they can’t find one. You’ve never hired a property manager?
Scott: We sell people this opportunity. We show them a path that they may start at the frontdesk but in two or three years, they can be managing 60 doors and having a lifestyle of multiple income streams. Today, I had somebody else write me a resume […] who wants to join me, I have no idea who they are.
In-N-Out, if you don’t know what In-N-Out is in California, it’s a burger chain. You start at the potato machine, cutting the potatoes, move to the frying machine, move to the hamburger machine, move to the frontdesk. The bottomline is you can start from $15 an hour and a regional manager in In-N-Out makes $200,000–a lot of money.
In property management, if you don’t show them a place to move up somehow, this is a tough job. We deal with a lot of drama in daily basis. We can hire people, train them the way we want to train them, teach them about customer service, we help them get their license, we move them to a system. They kind of use my office. My office is the Hub where they learn property management. I had a gal, start at the frontdesk, became assistant property manager, became my BDM, she’s now on 20-30 doors. I already know in a year from now, I’ll get another BDM. By the way, that happens to be the gal who’s my assistant operations manager who wants to get into the same thing.
Jason: Because […] a couple of paths that they could go down?
Scott: They all gravitate toward branch manager and property management for the most part. But there is also the maintenance company, there’s operations, there’s leasing specialist, and some other stuff. I remember when I was at 100 doors or 200 doors and kind of traditional model. I was always afraid of if I’ll have one staff person, I was host. I was in fear. Somebody walked out the front door and I just don’t have that fear anymore.
One of my pet peeves about real estate is that we’re independent contractors. If somebody opens a real estate company across the street and had a better latte machine, I could be host. Everybody could get up and walk across the street and I lost my entire real estate company.
In property management, I’ve not lost one realtor and I’ve been doing this model for four years. I get the doors back if they leave. That’s in the contract. I’m not afraid of them starting a property management company because what are they going to do? They’re going to do all the stuff that we do in the backend? If they did, then I’m not doing my job. We have a model now that not only do we bring staff through, the In-N-Out, but now, we have realtors that are not ever going to go anywhere. Why would they?
Jason: Right. Because they’re constantly fed real estate deals.
Jason: Because they’re doing property management.
Scott: It’s correct. It’s like the old model. When I got into real estate, you had a horrible split with a big company but they feed you listings, they fed you buyers, and you’re okay getting that terrible split because you’ve got revenue. 50% of something is better than 100% of nothing. Basically, we’re just doing that model again. I get 65% of something rather than 100% of nothing. It works. It’s not every realtor’s built for this. We specifically target now through our marketing, agents to do 3-5 deals a year, that had been in the business at least 10 years, who have seen the recession. Now our problem is picking the right ones. We see more realtors interested in joining the system.
Jason: Also, I wanted to mention, I love the idea of doing the quiz. That’s very similar to some of the stuff we’ve done. I love this idea. We created a lead magnet. Before DoorGrow existed, when we were OpenPotion, we created a lead magnet for our property management client in Florida. That was really sticky. It was like Nine Reasons You Might Not Need a Property Manager. The entire PDF had nine reasons, but the reasons were like, “You have tons of time available. You love having anther part time job,” there were these kind of things.
Scott: We have the same seven video. Ours is Seven Reasons Why You Should Manage By-Owner. Of course, you’ve got nothing but time. You don’t have enough money, you can’t afford $100 a month for a property management company. You know the laws of California inside and out. You like going to court. After they get done with the seven, they’re like, “Yeah. Can we call you?”
Jason: You’re an expert in the landlord tenant law.
Scott: Yeah. The same old stuff. We did create a website that we drive people to this by-owner website where they can get all the tools and stuff they need to manage by-owner if that’s what they choose to do.
My biggest mistake I made the last few years was I was sending out my marketing buzz, “If you’re looking for property management, we’re the right company.” I think we all do that for the most part.
Jason: And no one’s looking for it. Even if […] volume on Google really hasn’t increased much since 2004, if at all. In fact, more recent years it’s gone down. If you look at Google Trends, you can see this in US.
Scott: Yes, if you pivot your marketing to, “Do you need help managing your own property? I want to give you tools to manage your property better.” Well, that’s everybody. That’s obviously, 70% of the market. By kind of change in my marketing message both on our website now, it says “owners” but it’s a whole section for by-owners. “If you’re a by-owner, here are some tools you can use.” It’s just not trying to ram all the people looking for—because what percentage of people right now are looking for property management? 1%? 2% of the investment property owners?
On that same study I did, which I sent out, I said, “If you’re currently using a property management company…” which was 30%, I said, “…are you happy?” 90% were happy. We do a great job as an industry. Once we get somebody’s property and managing it well, you can’t go after those people, they’re happy. It’s sticky once you find a good property management company. You can do something pretty drastic to lose a client unless you’re a complete nutjob.
My marketing in my website, in our marketing says, “We want to talk to all of you.” Once it comes to the website, hopefully, they see that, “Wow, this is really tough to manage my property. Oh my god, rent control is coming to California. Oh, it does not cost that much to hire professional property manager. Oh, look at the great review.” By doing that, like I said, on our website, we’ve got to mapped out all our properties we manage.
The question we used to get when I was taking those sales calls which was only about a year ago was, “Do you manage properties and fill in the blank.” “Fullerton.” Well, how do you prove that over the phone? Instead, just go to the website. Look at the map. You can see all the properties we’ve managed in the city of Fullerton. You can compare us to other seven companies in your market area. You can see a copy of our contract. I have little videos explaining the contract. I can talk about whole harmless right in the contract, right there.
If we as as industry make it so easy to do business with us, we charge a fair fee, it goes without saying, I’m excited about property management. I’ve been doing it six years. If you’ve had told me 20 years ago this is what I’ll be doing, I think you’re out of your board. But here’s what I find that part about that In-N-Out, nobody wants to come work for property management because they hear all the horror stories, all the crazy stories.
I tell people when they interview here is, “Lose the passion.” Your passion should be the thing you don’t get paid to do. That’s the thing you do on the side. Instead, be really really good at this job because if you’re really good at this job, if you’re a great property manager, the world paves the path to your door. Once the world paves the path to your door, you get control of your life. You start really loving what you do because people tell you you’re great at what you do. Once you kind of flip that on its head, I find people that come here to work love what they do. They know, particularly millennials, people 23-27, they’re really concerned about where our industry is going. Where’s retail going, where’s all this different industries. I can tell them, “You’re safe here. You’ve got a career here.”
As long as I’m growing the business, they trust me. They see the phone ringing, they see us adding doors. But if you’re not growing, they grow concerned, I suspect.
Jason: Yup. The old adage, sales solves all problems.
Scott: New doors solves all problems. People argue with that. Good doors solves all problems but we lose doors just like anybody else. Our attrition rate runs 5%-10% a year. If you don’t grow by 5%-10%, you’re shrinking by a certain percentage. If you add more doors above that, you get rid of the owners that really don’t respect what we do and how we do it. We all have the stories about those people.
That’s the problem of the by-owner market is they have high expectations but don’t want to spend a little bit money. By growing, you could also weed those people out, the pumpkin patch theory.
Jason: We’ve got Mike Michalowicz speaking at the conference which is going to be awesome getting into that. Scott, we’ve come into a lot of different things. I think you gave a lot of value to our listeners. Is there anything else that you’d want to point out to probably property managers that are struggling, trying to grow their business?
Scott: Everyday, my little feet hit the ground and I try to build a better machine. Just the last six months, I’ve learned more than I did six years before that. If you’re constantly trying to improve you’re marketing your sales, your processes, your operations, that’s the beautiful thing about this business. It’s evolving. If you do that and don’t sit on your laurels, and test, and pivot, that’s what you need to do.
The biggest thing I did last year that was hard, by the way, if you can’t tell, I’m a sales marketing guy. I love the lead conversion. I love when the phone rang and they got my marketing message and they fell in love with me and my company, and they want us to manage their property. I realized I was still in the business.
About nine months ago, I don’t know when it was, I decided to get out of the business. I hired a business development manager, and I hired another person, so I could then work on the business and have a higher view looking down, if you will. I understand it, I don’t want to sound egalitarian and that I’m above this. I was there for five years. I was in the business and I had to be. I don’t have the luxury when you’re managing 200 doors, to hire a business development manager.
By and large I disagree, but you’ve got to work on the business and really take a hard look in your marketing, your website, what you’re saying, who you’re saying it to does not resonates, what’s your conversion rate. Embrace video, get it into your website, use it. It’s an incredible tool to tell your story. I’ve mentioned earlier we just finished the video and it wasn’t cheap. But it’s a statement video about our company and the title of the video which will be on the website in a about a week is, Our Million Dollar Mistake. It’s my wife and I saying that we sold a rental property 30 years ago. I wasn’t in real estate year. We got married and bought a house and kept mine as a rental. We’ve got a tenant from hell—the worst thing you could imagine. After a year of that drama, my wife turned to me and said, “We’re selling this house. I can’t do this. Not with a two year old.” And we did. That house was worth $800,000 now. The monthly revenue would be $3000 plus.
I made that mistake. The video is saying, what we said is, “I don’t want my clients make the same mistake.” You try to say this to property management companies. You have a different audience than I do saying, “Don’t make Scott’s mistake, what he did in the first two years.” You don’t have to learn by the school of hard knocks. There are people out there who figured this out.
Here’s the beautiful thing, they’re willing to share with you. You may have to pay them. Sorry. Not everything is free in life. Pay the right people the right amount of money and save yourself the two years of sorrow and waste of cash. That’s what I would say.
Jason: Gosh, I spent years and years being the know-it-all trying to make things work and struggling. When I started realizing it wasn’t working, at some point you have to be honest with yourself. You’re looking in the mirror, your wife’s saying, “Where is the money?” Your struggling to pay your team. You have to be honest and say, “I need to know something else. I need support.” I started reaching out to coaches and started getting coaching and going to programs. I’ve spent probably hundreds and thousands of dollars in working with coaches. I spent probably, on average, maybe $50,000 or $60,000 a year minimum just on coaching. A lot of people think, “That’s like a full time employer too, right?” For me, I’ve never had been able to experience growth as fast as being able to work with somebody.
If I wanted to really learn how to do what Steve Sims does, I would probably just reach out to Steve Sims and say, “What would it take to do something with you?” Or I would reach out to Mike Michalowicz, “What would it take to learn and something with you?” That allows me to invest back into my clients. When we’re willing to be the idiot, willing to ask questions, we’re willing to look down, we’re willing to learn and grow, we’re willing to pivot, and we’re willing to make mistakes, that allows us to invest in ourselves, to collapse time significantly, and buy our freedom. I feel like every dollar I put towards something that is helping me move my business forward is buying me more and more freedom. Whether it’s my team members that I’m off loading things to that I used to do, my executive team.
Like you, in my business, I used to do every single thing. I was the one guy. I used to think that I can find one person to replace me. That was it. I have like an army. They used to do different little things. I think one of the biggest challenge we have as entrepreneurs is that we’re highly adaptable. You’re obviously highly adaptable. You probably could do every station in your In-N-Out. You probably could. I’m sure several of your team members probably could too.
There’s only one that makes the most sense for you right now and that is your area of genius. It’s where your best and highest good is in the business where you can help drive all the other outcomes or you can motivate and inspire your team. I would love to see every property management entrepreneur get out of being the solopreneur, the struggling person, the person banging their head against the wall asking, “Why can’t my team just do what I say?” To being the person that’s like, “I have the team that I’ve dreamed and love. We’re growing, we’re healthy. We feel momentum. We have a client-centric vision and mission to benefit our customers. We’re solving real problems and we’re making a difference in the community.”
Scott: As Goethe said, a little German for you, that there’s boldness in action. I went to a seminar and I listened to Marcus Sheridan about embracing a video. There were 60 people in the room, 100 people in the room, as far as I know, nobody took that action. Sometimes you take action, it doesn’t work, you adapt, you take different action, and yeah, don’t get in a rut and try again. If you don’t try, you’ll never work in that end. Because if you take action now, I think you’re going to reap the reward that’s coming, and definitely in our market, down the pike in the next two years.
Jason: I like to say, “Embrace the suck,” because the thing to realize—our kids are great at this. Our kids just do this, generally. We all start at suck. That’s the level everyone starts out. “Yeah, you haven’t done videos.” “I feel uncomfortable.” Yes, because you haven’t done it.” Or, “I’m not good at it or I’m awkward. I say, “‘Uhmm’ and ‘And’, these things too many times.” Yes, you do.
You should see my first videos. They were absolutely awful. I remember my first video I made were I was trying to sell something and I had to edit out probably 30 “uhmms.” It was ridiculous. I was cringing. But you make those videos, you watch them, and you listen to yourself. You’re going to fix those problems really fast. It doesn’t take a lot of time. You just do it. You just take action and do it.
Scott: The lowest part of my opinion is a seminar. You get in front of 40 people and tell them about the business and become the expert in front of 40 people. I remember the first time I had to go to CALNARPM, I had to speak in front of 100 property managers. I was scared out of my mind. I was sweating profusely but it forced me to know my stuff. I knew speaking in front of people manage more doors than I did at that time. I had to put my stake in the ground.
The same thing is true, you start small if you have to or start big if you can, but start. Try something new and different.
Jason: Genius in action. Scott, I really appreciate you coming in the show. How can people get ahold of you? What else would you like people to know? What do you have available to the listeners?
Scott: I have the local landlord seminar in a box which is on the Property Mastermind website which is ran by Brad Larsen. If they want to look at that, it’s $495 and it’s everything from the direct mail piece, to the video how I did it, to the powerpoint presentation.
If people want to email me, happy to have the email. I love sharing. I have somebody call me today from Washington. She was shocked I picked up the phone. I go, Why wouldn’t I pick up the phone?” I love talking to people and getting new ideas. My website’s my name email@example.com. It sounded like a good idea 20 years ago. Now, it makes me look really, really old.
I’ll be at the NARPM event in San Diego speaking on, how to add a door day at $191 a door. Reach out at the Broker Owner, I’ll definitely be there as well. I try to be affable and easy to reach. I’m really honest and forthcoming about what I do and how I do it. Doesn’t work for everybody, but it will work for somebody else out there.
Jason: Great. I appreciate you coming on the show. I appreciate you contributing to the industry and sharing value. Scott is also inside the DoorGrow Club Facebook Group. If you’re a property management entrepreneur and you’re not in that group yet, make sure you get in there. We reject two-thirds of the people that apply because they’re not true property management entrepreneurs and business owners.
If you are one, go to doorgrowclub.com, it’ll redirect right to the Facebook group and get in there. You can hang out with Scott and myself and others that are contributing and making a difference. Check out Scott and connect with him if you’d like to learn more about what he’s up to. Scott, I appreciate you coming in the show.
Scott: Jason, thank you. Thank you for the show and thank you for everything you do to make this a better industry.
Jason: Appreciate it.
Really great to have Scott come on. Lots of great takeaways. I’m going to go back through and watch this again, listen to it, and take notes. There’s a lot of little things he threw out there.
If you are a property management entrepreneur that is struggling to grow and you have been sitting at that point of not knowing why things aren’t working. You feel like there’s got to be an easier way. You feel like it shouldn’t be this hard to grow the business. You know that there’s tons of available rental properties out there that could be managed, then reach out to my team. We want to help you. We’re looking for the best property management entrepreneurs that we can help win.
We’re definitely not the cheapest guys in town or the budget guys. But we’re not looking for the cheapos that think they can just do everything themselves and goodbye. We want them to help you grow and help you grow quickly. We want to make a difference in this industry so connect with DoorGrow, connect with my team.
I think you’ll be really excited to hear what we can do for your business and how we can help you grow without having to do all the costly marketing in the red water that everybody is doing in the same way. That’s a sure fire away to stay in the cycle of struggle, and pain, and discomfort. Reach out to DoorGrow. You can check us at doorgrow.com. I’m Jason Hull and we are out. Bye everybody.
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