What should you do when starting a property management business and trying to grow your number of doors?
Today, I am talking with Benton Cotter of RentVest. There’s no question that he knows how to grow a property management business.
[01:33] Benton’s background and how he got into property management.
[03:55] Going nationwide and growing from 79 to 4,000 doors in a few years.
[04:33] Steps to take when starting from scratch: Identify kind of company to create to determine clientele and marketing strategy Set fee structure: Do organic marketing, PPC, and SEO.
[05:13] Rework Philosophy: Start small, work hard, and start/pay marketing.
[06:14] Constant interruptions and constraints; it doesn’t have to be crazy at work.
[08:37] Benton built big growth and expanded his network; opportunities are available.
[12:16] Being an owner and involved in all of it – from computers to marketing.
[13:46] Define your avatar, and narrow your niche.
[20:57] Don’t get distracted; focus equals power.
[24:20] Identify strengths and weaknesses, but don’t give up ownership too soon.
[28:18] Everyone makes mistakes; businesses are built on thousands of failures.
[31:07] Put profits back into the business, it will pay off later.
[37:35] How to get unstuck in sand trap of 50 units as a solopreneur.
[40:07] Entrepreneurs are resilient and adapt easily, but should self-reflect on skill set.
[42:30] RentVest’s future goals regarding growth and getting great talent.
[44:20] #1 Growth Limiter: People’s ability to offload and bring on new team members.
[47:50] Hiring Process: How to filter and find the right fit; ownership is a critical quality.
TweetablesStart small, work hard, and start/pay marketing. Click To Tweet It doesn’t have to be crazy at work; create a calm culture. Click To Tweet Simple secret for growth: Focus equals power. Click To Tweet Put profits back into the business, it will pay off later. Click To Tweet
Benton: Once you get big enough, focus on other skill set, hire the people that can do the skill set better than you, things that you’re just not great at and really self reflecting is key on that I guess.
Jason: Welcome, DoorGrow Hackers, 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 things a bit differently, then you are a DoorGrow Hacker.
At DoorGrow, we are on a mission to grow property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, 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, subscribe, and then give us a real review. Thank you for helping us with that vision. I’m your host, property management growth hacker Jason Hull, the founder of OpenPotion, GatherKudos, ThunderLocal and of course DoorGrow. Now, let’s get into the show.
Today’s guest, everybody, is Benton Cotter. He is with a property management firm called RentVest. Ben, welcome to The DoorGrowShow.
Benton: I appreciate you having me on, Jason.
Jason: Ben, I’m excited to have you here on the show. You’ve had a decent amount of growth, correct?
Benton: Yeah, I think it’s pretty decent.
Jason: Let’s give everybody a little bit of background on you and how you decided to get into this crazy business of property management.
Benton: It’s just typical to be honest. I kind of not stumbled into it… Actually, I was going to school and my degree is in computer science and computer programming. I had a friend that was trying the property management business and said, “Hey, why don’t you come just help me out while you’re going to school and do a few things here. Help us with some technology and maybe help with accounting a little bit,” I’m like, “Yeah,” whatever sounds good, I really wasn’t doing anything.
I said okay, I like him a lot. He was a good entrepreneur. That was good. I came onboard. I consulted a little bit for him and then about a year into the business, I came onboard to help him out. I just took over the accounting duties. I just really didn’t know anything about accounting but you kind of learn, and then the technology and marketing, and then we grew that from 79 doors, we grew that to about 1,300. Then we kind of peaked there a little bit. Partnered with him and felt like he didn’t want to expand. He didn’t really want to expand, he wanted to stay local. That’s when I joined up with Jacob Ash and created RentVest to kind of go national.
Jason: Cool. What made you decide to partner up with Jacob?
Benton: Jacob kind of comes from the distressed wholesale property industry. He buys and sells a lot of properties for and behalf of investors from the auctions and the wholesale list. He had a lot of networking. He had a lot of things going for him. I thought about it and we kind of figured out he can kind of expand with the networking and he can help to set those relationships and continue to expand that way through his networking. I know the operations. I’ve been running this company. I know how to run the operations of property management.
He already had established about 450 doors with his investors. We kind of went forward to be honest. We didn’t have a real game plan of roles even, we just kind of knew, “Hey, we like each other. Our wives knew each other. We respect each other in each of our businesses,” and so we’re going to start from there and then blossom. We knew we wanted to go nationwide and be big and then it just started falling in place and moved from there.
Jason: So this previous company that you were with, going from 79 doors to you said 1,300?
Benton: Yeah, in four years.
Jason: In four years. Then you started out with Jacob starting out with basically 450 doors?
Benton: Yeah, that’s correct.
Jason: Where are you guys at now?
Benton: About 4000, it’s been about three years, we’re going on three years. We’re at 4000 doors, single family homes.
Jason: There’s no question that you know how to grow a property management business. You’ve done this with two companies basically. You’ve had phenomenal growth in a short time period. If you were to start over from scratch with zero doors, something happened, and you’re on a new planet or whatever and you’re starting from scratch, what would be the initial first things that you would do in order to start getting this going as quick as possible?
Benton: First, identify what kind of company you want to be, because that really determines your clientele, and your marketing strategy. Once you figure out what kind of client and company you want to have, set your fee structure accordingly and start doing organic marketing and SEO. Start from the very beginning doing all that stuff. Just hard work, man. I love this book called Rework, it’s from the guys that created Basecamp. It’s like, “SEO does everything,” if you need to do the accounting, you need to be the customer service agent, do that. Keep it small, keep it contained, then you build the company how you want it to be, then it’s easier to set expectations.
If you become the salesman, then become the salesman. Figure it out and then hand it over and hopefully the next person you hand it over can take it to the next level. I really believe in that philosophy. Start small but put a lot of hard work into it and then you got to start marketing. Me and Jacob don’t take a lot, we just put it back in the business, you just got to pay your marketing first.
Jason: I like that idea, pay marketing first. It’s funny because sometimes you’ll see companies cut their marketing expenditure when times get tough or things get tough. I’ve heard feedback from several people that they wish they had never done that. That was probably the worst idea, because eventually that creates a sales slump and some other difficulties. I think it’s cool that you mentioned Jason Fried over at Basecamp. I actually got to hang out with him on a Skype call for about 90 minutes a few years ago.
He cut my staffing costs in half. He knows a lot and in a short period of time, he showed me how he ran his company, how he does things, and I was comparing notes with my agency, and how I do things. He helped me realize how we had so many interruptions and so many things are causing constraints that I just see at that time because it was what everybody was doing. Everybody was using Slack. We were interrupted all day long by everybody constantly. He actually just came out with a new book. Have you read this one?
Benton: Yeah man, it’s awesome. It’s crazy to think what they do. There are tidbits there and there man. We started promoting at the private office. You schedule your time so some people can see you. There’s just some cool things in there that can really—I’m just amazed that they can do 40 hours and 32 hours in the summer and they’re still killing it. It’s like awesome idea, that’s what we want. We want every employee to be like, “That’s perfect,” I think I want a company like that, that would be awesome. You go out the door and be like, “I want to be the biggest company.” Now we make sure we’re a great company providing good service and also good life for our employees. They got it down, it’s an awesome book.
Jason: For those that aren’t watching this that are listening right now, the book is It Doesn’t Have to Be Crazy at Work. It Doesn’t Have to Be Crazy at Work is a phenomenal book. It’s more of a manifesto for the future. There’s a few little things in there that I think I would probably differ on. You talked about no goals. Well if you do have goals, they should look like this a little bit, but other than that, I really love some of the ideas in that book. We’ve been referring to it internally.
All those ideas were things that he had shared with me on that call that I’ve had with him. I’m glad it finally came out with this book, because we’ve created—but I feel like it’s a fairly calm company and it’s fairly quiet. My whole team is virtual.
Jason: Yeah. I’m glad he came out with that. I’ve been telling people about it. It’s a really good book for those listening. How are you creating all this growth? Because I think a lot of people look at you and they say, “He must be a unicorn. There’s something magical. it’s not something I can do,” and my perspective is that there’s so much available potential market share in property management here in the US that there aren’t even enough management companies to handle the amount of growth that’s available to them right now. I’m guessing you don’t feel like you’re in a place of scarcity like most property management companies feel when it comes to competition.
Benton: Yeah, that’s the key. I think you hit it totally. There’s tons of opportunity, tons of way to grow that’s crazy. I think there’s stages, 0-400, 0-500 doors is one stage. Plus that 1500-2000 stage. When we reach that level, we just open up the gates and take whatever we can get from marketing, but if you’re at 0-500, you can never win on one marketing strategy and make it really work for you. If it’s return clientele, a lot of people I think when they’re young, they try to just open the gate and try to get everything, and they’re traversing their way down, and it costs them a lot of money. Why don’t you just slow it down, find the perfect client that you want, build your little avatar, and try to market to that person that you want, or that you kind of reflect I think is good.
Find the person that fits your personality and then go, your conversion rate is still huge. You get 89% conversion rates if you just kind of niche in. Once you past niche, then you open it up as you go down the ride. For us, our initial strategy is […] we do PPC in the company SEO and some thorough things. We have a few things going for us that are new. When we initially started here we were like, “Okay, we know we’re going to acquisitions,” we had acquisitions just kind of fall in our laps, 300 doors, 350 doors like, “Okay, I guess we’re going to do the acquisitions, let’s see how it goes.”
We didn’t know what we’re doing and made tons of mistakes, but we had 350 doors right out of the gate basically and then we had to go beyond this. It’s Arizona, a lot of people are selling. We still need to market plus we’re going to have attritions in the acquisitions. We want to stay afloat. We just stuck with PPC because we knew that was direct, and we knew we can expand in other markets. We knew exactly how we can test it. We can predict how much leads we’re going to get and then keep with the aggressive fee structures. PPC was our number one thing and then acquisitions for about a year and a half, two years actually I guess. This year, we’re finally seeing more of our SEO and added some more content marketing and other stuff coming out.
Basically, PPC was our bread and butter, but it’s expensive. We think we can double our leads with SEO and our budget is going to be nothing compared to what our PPC is. I think that’s the key, it’s just finding who you are. It’s crazy that people think, I don’t know, they just kind of think that they’re going to find these clients when they didn’t offer good value to those type of clients. We don’t offer good value to those people going multifamily, or C-class properties, we just don’t offer good value to them.
We tell them, “You don’t fit in our profile, that’s great. Do you have a thousand doors you want to bring on to us? We have no idea how to manage you, we’re not the processor for those kind of notices,” and showing the property, we’re just not set out for that. We have to be honest and say, “Hey, we’re going to stick with our niche. Those are the processes around it,” we make sure that niche serves those processes, provide a great service to the clientele we want. Then you have to be okay with saying no or people going to other places.
People are going to charge $50 a month, we’re not going to come down to that price. This is our price, you know how much we can afford and pay for and so we let them go. It’s hard but I think that’s the way to go. Then just incrementally expand your network.
Jason: If you are a computer science guy, you understand this stuff. You directly probably were managing or probably still manage the digital marketing side of things that you’re doing I would imagine.
Benton: Yeah. That’s kind of laid up a little bit, the technology background. It’s a little easier for me to learn it. My brother has always been in marketing. You learn some things from him. At the beginning, yeah. Other company, me and the owner previous learn all the technical stuff, then you kind of help with content and vision. Then we kind of worked together all the way. When I started here, it was two years that’s when I run it with PPC. Now we have my brother’s marketing firm running our PPC and other marketing stuff to help out. Yeah, I’m still involved every day.
We just had a full testing this morning about our new website, SEO website. I’m pretty involved. I just don’t think I’m learnable for people. I think that you get it, or join up with people like you guys or somebody else that knows it, and then you still have to be involved though. It’s really most effective if the owner or someone really critical to the business that really wants to see it thrive, needs to be involved in the marketing and the sell side, but marketing especially because you build your content as you go.
Jason: Yeah. You certainly need to understand that, because if you’re doing marketing related stuff that you don’t understand, it’s not a really great strategy for growing your business. There are a lot of marketing agencies. They’re happy to just get paid if there isn’t a real definable ROI. You mentioned that one of the first things is kind of defining your avatar. Explain to us who your avatar, how you perceive your avatar.
Benton: It’s going to expand because we’re kind of opening the gates. We’re doing less conversion. But really what we go after is, we’re going after that person that’s not the new accidental landlord, we let the bigger company take care of that. We want them when they’re on their second, third round of properties. We want 2-10 doors single family homes. We go after single family homes; three bedroom, two bath and above. Really, that’s where we niche in.
We don’t care about—we’re not going to go man or woman, or three years or anything like that. We take the property they have and then make sure that they value the tenant. Value that it’s a good experience for the tenant and that’s key for us. We really rely and we really believe in that. It’s hard for us to work with people that, “I don’t care that that door knob’s not working. They can still use a screwdriver or something,” things like that. No, it’s really experience.
We go a little bit farther, I think than most companies on that. We’re losing business because of it, but we’re kind of okay with that. We’re really 3 bedroom, 2 baths, single family, and age does play a factor. To be honest, most of our people are about 35. You kind of go after that 35 and above type of mentality. You see some of our content stuff, it’s not going to be this new tech type of cool content kinds of stuff. We go after the more established.
People are using this as an investment, not as accidental but actually, they’re methodical about it. They want to grow, they want to buy one every three years or whatever, they want to buy another one and then we kind of form up with them. We […] with another company that helps them buy and find the right windows, and stuff like that. Plus our staff on the ground helps.
Jason: Now, this is another thing you’ll see a lot of companies do. They try to run multiple businesses. They’re trying to do real estate, they’re doing property management, and then in property management they’re doing single family like you had mentioned, but then they’re multifamily, commercial, HOA, trailers, mobile home parks, storage units. How do you feel like having such a clear niche? How do you feel like that has helped you to grow and do you feel like it could have worked any other way?
Benton: I really believe in that. I really believe in staying in your lane, because your heart’s in it, but also all your focus is on that. We do have some multifamily just because require doors to have it. A lot of people that we acquire actually, they render that problem. They’re killing themselves because they have 15 different processes because they have 15 different types of businesses.
It’s hard not just to manage a single family home and then throw another process between shared staff for multifamily which is very similar but still different. We do have like a storage unit. We don’t know what the impact of storage unit is. There’s different processes for that. It just gets kind of convoluted and your processes don’t get more refined, they just get broader. If you can find your… single family homes, we kill it man. We do a great job and we test it. I think your processes are ever evolving. In a single family home we figure out, “Hey, we do inspections here,” if you start to change that inspections, you have these 15 businesses abroad that you have to kind of test with I guess, you’re testing different operations for processes. It’s really hard to really narrow that down and really see the results of it.
It’s just like your marketing, if you have 50 ads, it’s hard to test them. If you have three ads, it’s easier to test them, and raid against each other. Same thing with business processes. Plus our marketing, you’re bringing out something emotional to these people, and if they have different mentalities and different things they’re working on, and you say multifamily, HOA, single family, commercial on your website, they’re going to go the person that, “I want someone who is just dedicated that knows property management with single families. I don’t want someone that knows commercial too. I really want the expert.”
We’re trying to build ourselves as the expert in single family and it just makes the messaging and content a lot easier. It’s crazy. I’m telling you, we bought 11 companies now and about 4 or 5 of them had like this diversified portfolio. We’ve kind of just got rid of them. We got rid of their storage unit, we stuck some of the multifamily because it’s less than 50 units it’s not like on site, and we have one great property manager doing it. Other than that, we’re getting rid of that, we’re getting rid of commercial, we have a couple HOAs. We don’t know what we’re doing, so we’re really trying to narrow into that single family. Even when you acquire and you realize, “When we acquire this, we’re probably going to lose that HOA or multifamily account. We’re not going for it.”
Jason: Yeah. Even if you have taken on companies in which they do multiple things which is probably why you’re able to buy them anyway, because they’re distracted and focused on too many things. They’re not able to systemize their business, they have too many niches, they’re struggling to grow. That presents an opportunity for you. You’ll bring them on and you’ll just make sure that you keep and retain the piece that you really want that makes sense for your business model.
Benton: Yeah, and it doesn’t disrupt us. We don’t want to keep disrupting and trying to build… Vacation rentals, Airbnb has a lot of response. The only way we will ever do that is separate another division, another sub entity where we’re not running it, someone else is running it, we’re just investors in it. You need to be focusing on what you’re doing. Maintenance, you do third party maintenance. You’re not gonna be an in-house maintenance company because we can’t focus on that.
The people that care, we want our employees to care, but really the owners and our executive staff, we care about our business. The maintenance comes from like we just throw everything at a fee. It gets the crap stuff. Or, it becomes a profit center and then your property management business suffers. You kind of lose focus on the core and so we try to stay in that strategy form. We don’t have maintenance. We’re not doing any insurance company. We’re not doing all these crazy things. we’re just like, “Let’s stay focused on what we can do,” and then you have great partners that can help us and boost us on these things, and maybe if we get big enough, we can invest in one of these partners and create our sales, but not with our current staff. We need someone else running that for us.
Jason: Yeah. I think that’s been one of your greatest secrets to growth. It’s such a simple thing, it is to focus. Focus equals power in just about any sort of situation, and because you’ve had that focus, any marketing related stuff that you’ve experimented with, any acquisition stuff you’ve experimented with, as long as you’ve kept that core focus small, and simple, and narrow, it’s allowed you to make it really potent.
Benton: I agree 100%.
Jason: This is where I think a lot of people fail. A lot of people listening to this are going to go, “Oh my gosh, he mentioned pay per click. I better go do pay per click. He mentioned SEO, maybe I should go try and do SEO with a 4000 door company even though I have 40,” I think what I would love for listeners to take away and make sure they’re paying attention to is this really strong focus that you guys have. I think as entrepreneurs, it’s so tempting for us to get distracted so easily. We see opportunity everywhere that destroys us.
What you’re basically saying is you’ve built this business, the business that you want. You have the clients that you want. You haven’t been building the business that you can build. There’s this business that you can build. A lot of people will, “Well, I can do this and I can do that. Let’s start a maintenance company now, we have 200 doors,” and you haven’t fallen prey to that. How do you stay so focused, because I don’t see that very often. It’s really difficult for people to maintain that focus.
Benton: I think it started how we originated. When you raise a business, usually it’s just you and your wife, or somebody you know, you try to make money. You’re more of a profit center. For us we understood, “Hey, we make profit, but as owners, we’re not going to take anything until we reach a certain level,” and so we focus in on that. We know this is where we want to go, this is where we can be in. Our goal was property management. It’s crazy, we’ve invested in other companies and invested in other type of entities and it helped us along the way with those type of things.
Our goal is we’re not going to get involved. We’ll leave them once a quarter and see how it’s going, and things that we can help or they can help with us. Stay focused and it’s key. It’s really hard. Even marketing was hard for us because PPC is expensive. We’ve spent time and money. We really have our PPC budget.
Jason: If you do that wrong, we used to manage PPC campaigns for clients and we did a good job but some businesses weren’t even ready, they weren’t even answering their phone.
Benton: Yeah, that’s the key. There’s a whole cycle for it. If you’re small …
Jason: There’s a whole mechanism that needs to be in place in order to make that.
Benton: That’s the key. If you can focus on one thing just like we’re talking about focusing on single family homes, but when you’re marketing, focusing on one thing until you master it and then see if you can bring something onwards easier. I’m just maintaining the PPC, now I can really focus my efforts in this. You were talking about it before, we just get distracted. There’s so much things distracting us. If you stay in niche, figure it out and then move on.
We do that in marketing, you can do that in operations, you can do it in technology. I’m like man, I know I have that background, in my other company we did do a lot of it. That’s a lot of time, that’s a lot of effort. It’s expensive. Why don’t we just niche in, have a great partner with our third party CM, let’s just continue with that and then we’ll figure that out later. Just keep niching it and keep perfecting your systems.
It’s hard, there’s cool and exciting things that come out all the time. We’ve made mistakes, we’ve gone for some things here and there. I think if it’s splitting up your time and time is so valuable. Time with your staff that you actually still can accomplish that. That would be great if you can turn it over to a different firm to do the marketing. If you believe in them, they believe in your vision. Maybe it’s not quite as good as you can get it if you really took all the time and effort, but it’s 80% there, that’s pretty dang good.
That’s awesome actually if you can […] and effectiveness, depending on what you […]. It’s really hard to find. You have to let things go and just focus on what’s important. Once you get big enough, focus on another skill set, hire other people that can do the skill set better than you for things that you’re just not great at and really self reflecting is key on that I guess.
Jason: I love the idea of what you said about focus on one thing until you master it. I think that’s the challenge is that I noticed a lot of property management business owners are really kind of like the dog seeing a squirrel. They just are like, “I just went to this NARPM convention. I went to this conference and they mentioned they did this to grow, and they did this,” they’re so distracted and they don’t really focus on that one thing until they master it. They go and just off load it to a marketing agency that’s going to do a bunch of different things for them and they don’t really hold that company accountable to make sure they’re really mastering or the leader in any one of those things.
Sometimes, those companies are just doing it for 10 companies in the same market. I think you’re putting your hands into this McDonald meal deal sort of situation that may not be a fit for your business and you want something healthy to be put in your business. I think the challenge there is when business owners give up ownership of something they should be focused on too soon. Like, “Let’s just advocate this to a marketing agency and just trust them to do this. Let’s just hope we can throw money at a marketer and they can in exchange give us deals,” which doesn’t typically happen. You don’t just hand all these to a marketer and they give you deals.
Usually, the best they can give you is a cold lead that you need to nurture and create a relationship with and create a process in the system to close that deal. If you’re scattered like you talked about with various different types of management and your avatar isn’t really pinned down, and you’re pulling accidental investors, small multi, and single family, and everything’s like random, then your marketing is infinitely less effective. It’s so easy that a single marketing channel can be instantly divided in half by having a little bit of dilution and focus. A lot of companies have multiple segments or dilution and focus. It’s not even half as effective, it’s like a fraction of a small percentage as effective as it could be. Then they say, “Well, that doesn’t work.”
Jason: “I tried this in the worst way possible and it doesn’t work.” I think that’s a challenge too. Any marketing channel to be clear to listeners, I’m pretty opinionated a lot of time. I talk about how the industry does not need to be all fighting over the cold or worst leads by doing SEO, and pay per click, content marketing, social media marketing. They can go out and create new market share and capture people long before they’re searching on Google. Search volume on Google has been on a decline for property management since 2011 according to Google trends.
It really hasn’t grown since 2004. More companies are competing there though. It’s gotten Uber competitive in SEO, and in pay per click, and search engine marketing. If you’re going to play that game which you’ve done successfully, if you’re going to play that game, you really need to know your shit. You need to know your stuff and be able to focus on it. You need to have a certain understanding that if you’re going to hand it off to another company one, you trust them that they’re going to focus on you, in your market, in your niche more than anybody else, any of their other clients. That you can trust them to do it the way you would do it and you would want to do it.
You need to understand what they’re doing. I think the scariest thing is when you give something to a marketing agency. I made some big mistakes. I made a mistake of one company showing out $20,000 in marketing in a 3-month period and not getting single deal out of it. We learn from these mistakes. I think the other thing you’ve mentioned made mistakes too. I think our businesses are built on thousands of failures that we learn from.
Benton: You made a mistake, and so you’re involved in it, so you understood it. I think that’s the key, always be involved. Especially if you’re under 500 doors, you don’t have someone else in your marketing. Unless you’re really involved and you did the technical stuff. Just be involved in it. Plus you learn what sells. When you actually are on a phone call, you understand, “I remember putting out this content, and this ad didn’t really work, so I’m not going to bring that up. Now, I’m going to bring up this that everybody engaged with.”
It’s a whole cycle. As we get bigger, it’s harder because we have 13 locations. We have tons of sales agents. It’s hard to get that message around, because we’re testing and it’s a bigger cycle, so we’re less effective. If you’re a local and you know your marketing, and you understand what’s working, you’re way more effective than anybody else bigger. Especially those bigger companies of PPC and referral base. I’ll go back to the beginning.
When you’re starting out, and you like crossfit, pick up the cross fit people that you like. It’s the common thing that you have and you kind of have the same, not same personality, but we have the same interest, it’s easier to target those people and just go after it. You’re the salesperson, and if you have the same interest with the person you’re talking to, it’s easier to sell. Then you work from there like, “That was pretty close, I’m just going to go up to all the gym people,” and then you just keep building and building. It’s more of referral, and organic growth, or just do some Facebook live, do anything. Get your name out there.
It’s really effective. We can’t do it as bigger company. I try to be the authority figure on these podcasts, or educational web series, and stuff like that. I’m not the one calling these sales people. “Brian, Brandon, and Felix calling,” like, “Who’s Brandon?” I’m less effective than the small business owner could be.
Jason: Yeah. I love what you mentioned, you said if you’re under 500 doors basically, don’t off load your marketing, advocate it, have somebody else to do it. You need to have really clear transparency there, clear ownership, and you need to understand what you’re doing. I’ve heard this from Grant Cardone, I’ve heard this from lots of people, “If you don’t understand something, don’t invest in something.”
That goes with your business, or with marketing, or anything. Don’t invest time, energy, money, attention, staff resources, into something that you don’t understand as a business owner. Take the time to understand it like you’ve talked about you’ve done, or don’t. You mentioned something earlier that I think we breezed over that I think is significant. In the beginning with your business, you said you didn’t take money out of the business as owners.
Benton: Yeah. It sucks. That was a great partner. That’s paying marketing first. When we were on a growth expenditures, we needed to grow. Also, we want to hire good staff, we want to choose our staff well. We’re not looking for as much profit as we can get. We’re looking for growth to be reach a certain mass, but also growth to reach certain goals, and critical mass for marketing, but also to take care of our employees. We got to pay employees, that’s the key. We can have the best marketing, best operations, best fee structure, everything’s great, but if you don’t have good employees, you’re going to kill yourself, or you’re just going to be that one owner doing everything and you convert like crazy, you’re never going to get past 300-400 doors because your staff can’t handle it.
We knew from the very beginning that we have to have great staff. That means probably we’re paying for what they are. Right now, we opened up new markets in new areas and we’re paying these people with zero doors. It just sucks, but you have the capital to do that. We have no investment groups or something, nothing like that behind us. Whatever growth we can get from our revenue is where we’re at. It took a little bit. I took a little salary, but my partner Jacob Ash still gets paid less than anybody in the business right now which is crazy. We have a lot of revenue and he still gets paid less than an our receptionist which is pretty awesome. You don’t find that very often.
Jason: Maybe you guys should take better care of him.
Benton: No, don’t tell him.
Jason: At DoorGrow, we’re at about $1 million run rate annually in revenue and this is one of the things that I painfully had to learn. If you take too much out of the business too quickly, it really inhibits your ability to invest back into the business and to grow. That’s significant. The other thing that we’ve implemented in the business is we follow the profit first system from Mike Michalowicz. Making sure that we’ve set aside the ability to make sure that we’ve got some padding in the business as well.
I think it’s very easy as entrepreneurs to put all the money just towards new stuff, and towards growth, and towards people which can be also really dangerous and not have any sort of padding. It can be really dangerous to take too much out of the company. I think growth is directly impacted by the ability to make sure that there’s some financial safety and intelligence behind how this is going. The financial side to be clear is not my strength as an entrepreneur. Some entrepreneurs, that’s their jam. They’re practically accountants. Me, I’m more on content creation, visionary, coming up with ideas, putting things together.
I think another key thing is getting those team members that kind of help counter your weaknesses. Having a strong operator, having people that understand the financials really well that can help me understand everything, having a good accountant, I have a profit first coach. These are all things I’ve had to bring in to make that work for me. It sounds like you guys run really lean as business owners in order to facilitate more growth. It sounds like that’s very different than other companies and I think that’s something unique worth pointing out.
Benton: Just the compound interest. We put in, it’s going to multiply. We proved that. You put $1 in, and you get $4 back. We put as much as we can until that gets lower. It’s a critical mass, but it’s hard. I think growing out I remember my other company, we started it was just me and my other partner. We were living in our parents, our in-law’s houses. I remember we were across the street actually. I was in the basement, he was in the upstairs. We were making $20,000 a year. It was so hard when we were starting out.
It’s hard. It was really hard, but I learned that principle from him to be honest. In the beginning, you just got to put back in the business and it will pay off later. For three years, we were living pretty lean. My family and wife hated me for three years. Now at RentVest, it’s the same thing, we are a little bit on that side. It’s still hard. You see your employees are making more than we are. It’s a hard mentality to have. We had one goal, growth. If you’re not growing, that’s great. You always got to be growing because you’re losing doors.
There’s going to be a selloff time. It’s going to happen, so you got to be prepared for the next day, but also making sure you’re finding that balance. It’s rough, but if you can do it, it just compounds if you’re doing it right. Marketing stuff just compounds, it will get bigger and bigger, and eventually it will pay off hopefully.
Jason: I love this idea. I’ve got a friend named Brad [Gibb]. Really intelligent guy when it comes to finances and business. One thing he shared with me as an idea is he said to me that there’s almost no investment that could be more profitable for you to put your money into than a healthy business than your own business. People could go buy real estate, they could go play the stock market. They can go do a lot of different types of investments, but nothing gives as big of a return as a healthy business that is growing and investing the money back into that business.
I think that’s a mindset shift that a lot of people need to keep in mind. A lot of financial advisors, a lot of financial people will tell you, “You should put your money here, and you should invest money here, you should take out the disbursements here, and you should do all this kind of stuff,” but really, you’ve done this. You’ve put money back into the business and reinvested the money back into the business. You view this as an investment that is growing. I think that’s a key mindset thing for people to take away from this interview.
I love all these things you’re telling us about. You had mentioned that if you’re under 500 doors, don’t advocate your marketing and this sort of thing. What would you recommend? I think we have a lot of listeners that either get stuck in the sand trap of about 50 units as a solopreneur, or they get into the space of 200-400 doors.
I recently presented at the Los Angeles NARPM chapter. I went around and asked how many doors they had. Anybody focused on single family residential or the amount of doors they have in single family residential, they were all in the 200-400 door category for the most part, like almost everybody there. This is a common other area where they get stuck and they’re dealing with operations, hiring, and trying to build a team. What helped you to kind of break past that 500 door barrier? What are some of the initial things that you felt like were critical?
Benton: I think critical is I understanding your skill set and you need to hire somebody that can take over some of those things that you’re doing. If you have that 500 doors, you got to get more specialized. Am I going to be the salesman for another 500 doors, or am I going to be the operator, or am I going to be the marketer. Not necessarily narrowing just to one of those, but I feel like you have to invest in somebody else to take over some of your duties that maybe you’re not so quite good at that you can really hone in.
If you hone in on marketing, it’s obviously going to get better then. You’re just spending more time in it and you’re learning the business, and it’s going to get better. If you’re honing your sales craft, that’s going to get better, or get your referral network. I think it’s hard though, because usually at that door, you’re making $200,000 or whatever you’re making. When you hire a salesman and you make $60,000-$100,000 straight to your profits, you have to realize that in a year, you’re going to get that back and get even more.
I think that’s good. I talked to a lot of people and they never ever do that. They all still run the business, they’re trying to do everything, and they’re even working 80 hours. Tell you what, those 80 hours are not effective than you working 40 and my other guy working 40. You can do 120 hours and still both of us can be more effective, just because you’re overworked, and you’re tired. That plays a role. Just focusing on that and then you really put money in the market. It’s a standard principle.
We do a lot, we’re up to 15% as our benchmark. We don’t try to go over 15, we’re lower than that. Sometimes months we spend 15% of our revenue on marketing, because we’re in total growth mode. If you just put in 1% of your revenue and you’re probably losing business. At 5% I bet you barely gain doors from that point, because you’re at a high attrition rate.
Jason: Yeah. I think a lot of business owners, I mean sales is the life blood of a business some people will say. They’ll also say the phrase is out there, sales solves all problems which we can totally […]. There’s a little bit of fact that if sales isn’t working, there’s no money coming in your business.
Benton: That’s true.
Jason: What’s interesting is what you talked about in figuring out your genius and what your real skill set is, I think one challenge I’ve noticed with entrepreneurs that I’ve coached and worked with is that as entrepreneurs, we’re really adaptable. We can do just about anything. We can learn it. We can figure it out. We tend to be really resilient and highly adaptable creatures. The challenges that makes it really difficult to know what we really should be doing, and what really is our strength, and what we really enjoy doing.
I have processes I’ll take entrepreneurs through like doing time studies and other things to really get them clear on what actually energizes them and what trains them, rather than just focusing on productivity. One of the things I’ve noticed is that a lot of business owners are the salesperson in their business. The reality is, like you’ve mentioned, they’re really just a part time salesperson. They have a part time person feeding business into their business that’s maybe spending 5-10 hours a week max. Doing the follow up, trying to close deals, this sort of thing. They’re spending the rest of their week crazily trying to also manage maintenance and coordinate stuff, manage their team, run team meetings maybe, everything else. I think there’s a lot to be said about this.
Again, what you’ve mentioned goes back to focus. That you have a very narrow focus for your role in the business. The other people in your business sounds like their role is very focused and narrow in what they do. You have a narrow focus on your avatar and the types of clients that you attract, the types of management that you do, and all of the focus in buying that you focus on—so much focus in every single area allowed you to have this really rapid growth. I think that may be the biggest takeaway I hope people gather from this interview and this call.
What are your goals for RentVest? You guys have some big numbers that I saw as far as growth.
Benton: In 2020, we want to be at 10,000 doors. I know we’re at 4000. Last year we expanded, we grew 11 locations in a year and a half. We kind of shifted on, “Let’s land and then expand and work on the SEO.” This year at the end of the year, we’ll be around 6000 doors, next year 10,000. That’s more growth than marketing. We also want to change the ministry, change the idea a little bit more. We really believe in the tenant value. We really try to push that hard and really hoping that hopefully understand what you wanted to make money off without throwing fees at them, bringing value to them, and make money on that. We’re trying to prove those things, but really it’s growth.
We have probably four or five more locations we’re going to be opening up in. We’re going to stay around 20, it’s kind of our goal. We want to get to kind of the bigger markets and see where it goes. Our PPC is duplicatable, our SEO is duplicatable, we’re just getting the right people onboard, it’s cheap for us. We’re always searching for good talent. We actually want great talent. We want the unicorns. That’s the hardest piece as you grow, is finding people that really care about the business and really feel ownership of what they’re trying to do, especially when they’re 2000 miles away. I don’t know why but we’ve been really lucky with the type of people we’ve got. We’re pretty confident we’ll keep growing that way. I think that has a lot to do with the network.
Jason: I don’t know, I might disagree with you on what you’ve told so far. Why don’t you touch on just briefly, because I think this is another area where you probably have some strength. I think the number one limiter to growth is people’s ability to offload and bring on new team members. How do you know when it’s time to bring somebody new on? How do you make that decision as a company?
Benton: It’s always hard. For us because we really want to be loyal but yet you don’t want to be loyal to the point that it destroys your business and your clients. We always go back to this thing we call total fiduciary for your clients. In total fiduciary we help them buy the right rental investment, help them manage it properly, help them sell it properly. If you can’t do that and your staff is limited, you just gotta suck it up. That’s been really hard for us.
When we acquire a company and the first company we acquired, no one is left with us. They were just sent their way, and it’s hard. We tried for a year and a half. They’re really good people though. We love these people, but they just wasn’t working. We had to let them go. It was a night and day difference. The people brought on sought our vision. The clients were so happy. A bunch of investors come with our client, a thank you even.
It was hard. The first 10 people that came up—well, I had this one property manager and I hated him, but then he got me this one and I loved it. It was so hard to see. For us it’s kind of we are valuing all of our time. We don’t use some metrics all the time. We have KPIs and stuff, but if you’re below this number, you’re going to get fired. We we trust our managers, we help them understand, help them work with them. If they’re good people, and they’re working, and they’re progressing, let’s get them. Maybe they’re in a different role, we’re going to give you some role, and then when you’re hiring is key.
We just got this new software that helps with predictive hiring. It’s actually helping us, because it’s honing in our strategy and our process of hiring where it’s more systematic, but also it helps personalities where they don’t go and stuff that plays a role, color test, or whatever. That plays a role, but I don’t like defining people like that. Sometimes they might be in that quadrant, but really they can do other stuff and excel. I think it comes down to people caring about people. They just have to care about the people rather than the numbers.
Our managers aren’t focused on the revenue around their people. They get paid accordingly. Like the guys that work at Basecamp, just get good people. If they’re good people, and they see the value of business, and they understand, it’s so easy to tell them, “Hey, we’re going to make this change, because the values. It brings value to our clients. It helps us be better as a company,” and they just get it, when they’re onboard, it’s so easy. You can just identify those people really quickly and then take care of them. It’s hard, but we’ve learned.
You got to cut ties and bite the bullet as soon as you can. If you know it’s not going to work, bite the bullet. Everybody says it and it’s so hard, but you really got to do it. It’s hard, because you want to be loyal, but it’s judgmental to your other clients and your other staff if you don’t let somebody go.
Jason: Yeah. It really can be a cancer, it can deplete the whole morale. It goes along with if you have bad claims, or you have bad team members, everybody else watches. If you allow your team to be subjected to bad clients or to other bad team members, you lose the faith and the support of the good ones. Players don’t understand those situations.
How do you filter and what’s kind of your interviewing process? How do you know if somebody’s a good fit to you for your team. Something you mentioned is vision. A lot of companies I don’t think have really a vision, or a set of values that are really clear that they relay to the team. I don’t think people can buy into anything. You obviously have something there, but maybe you could touch just a little bit on, because I think this is a big challenge for property managers, scaling, growing, and building out their teams with good people.
Benton: I think that comes back to even your vision, or your business, ethics, and stuff. You build your mission to statement. It all comes back to self reflection of your business. Who are you as a business and where are you really going. Don’t flabbergast that. Don’t be one of those tech companies, “Change the rules. We’re going to bring peace to the world,” no man, we’re property managers, we’re going to help people be successful in investments.
If they’re tied to that one game, you kind of bring everything around with that. First thing I learned is I don’t know how to hire. I hired somebody that came from […] is called Human Capital I guess. He came from a big company and this is what he’s doing for a living, helping other companies hire right. He came onboard, and he had a real estate background, and became our regional manager.
What a life changing event for me is, because all I went off of was just feeling. I meet him in person, or no I call him to the video chat thing, then I met him in person and like, “I like you. Let’s hire you,” I don’t care about the resume. That’s stupid, resumes are so overplayed. Give me a break.
That book we just read …], hey, just go get some scenarios but it’s hard. We’re not a tech company, we can’t give him a computer programming problem. We have to go through scenarios and it’s so hard to do that, but we kind of played some scenarios and we make them do a mock sales call for salespeople. It was so awkward. It’s so hard for these people. I felt so bad I cringe every time.
We just look for little key corners and then we turn to our software and we’re able to kind of systemize that. We’re able to rate those scenarios, and what actions came in, and then their emotional and actions that they have. They took assessments. It all comes together. We’re more systematic about it now.
It can always come back to being really who are we, and then if you can figure that out, you can kind of figure out who you are onboard. Our number one thing, people that take ownership. If they take ownership, normally they’re more inclined to actually […] especially for the property management and portfolio position, each problem solved all day long can communicate.
If you have that ownership, that’s who we look for. That’s number one quality and then we try to break down from there. I still allow the entry process somewhat, I still want to actually have his ownership of his own portfolio, but I’ll be involved, or I’ll give an advice, but it’s still his call. I give them 100% complete […. It comes down to hiring good people and ownership. It always does, it always comes down to ownership. When we fire somebody, it’s always because they don’t take ownership. They know how, they might be good people, they just have no self reflection of how to take ownership. It’s just his personality. You can’t fault them, that’s not a good fit for us, so we’ll move on.
Jason: Yeah. I love it. Ownership is a critical quality. You don’t want somebody that always just got excuses and blames everybody else.
Well, I think this has been super helpful. Ben, I really appreciate you coming on The DoorGrowShow and sharing with us some of what’s helped you to grow over at RentVest. How can people check out your company if they’re interested in working with RentVest, or how can they reach you, and any final words that you’d like to throw out there?
Benton: Our website is rentvestpm.com or you can look me up on LinkedIn, it’s not conventional. I’m pretty open. I really like talking about the business. Facebook message me, I always respond. I love doing that stuff. It actually brings me joy to help people be successful. There’s plenty of room, we don’t need to be—I’m not holding back secrets now. This is what we do and it’s easy stuff. That’s the key—we were the geniuses overhearing that. We just figured out some things and then we would go for it. We kind of learn from mistakes, but I’m always free to do that.
Anybody can grow. If you really want to grow, my one thing is, if you really want to grow then […] sometimes they’re like, “I want to grow,” but they don’t want to put the money or the time into it. If you want to grow, you got to put that effort in as the business owner or key person in the company that needs to help and […]. I appreciate you having me on. I love listening to your podcast and your conference. I really appreciate what you’re doing. It’s helpful stuff man. We just got to collaborate and make the industry better. I really appreciate that. I’m a listener. Even at my stage, we need to improve on things, and you guys bring some tidbits here and there all the time. I appreciate it.
Jason: Thanks for the plug. I appreciate that. Ben, it’s been great having you on the show. I’ll let Ben go. It’s been really great to have you. Those of you that are listening, if you’re listening on iTunes later on, please give us a review, give us some feedback. We would love to hear from you. If you’re checking this out on YouTube, make sure you like and subscribe to our channel. Those of you that are not yet part of our awesome community where Ben and other really savvy property management entrepreneurs are hanging out, that is inside the DoorGrow club. It’s a free community for property management entrepreneurs and you can get to that by going to doorgrowclub.com.
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I appreciate everybody taking the time to listen. Check out today’s show. Until next time. To our mutual growth, bye everyone.
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