DGS 149: 13 Common Mistakes To Avoid When Starting A Property Management Business

starting a property management business podcast artwork

Most property management businesses suck because they have miserable business owners, but it’s not because of the industry. There are unhappy business owners in any business, in any industry, or in any business category. What would you do differently now that you run a property management business?

Property management growth expert and founder/CEO of DoorGrow, Jason Hull talks about 13 common mistakes made and tips on how to avoid them when starting a property management business. These are things that you should know or wish you had known. Some are really practical and some are a bit more high-level recommendations.

You’ll Learn…

[02:23] Out of Alignment: You’re in the wrong role, doing wrong things in the business.

[04:00] Mistake #1: Not using or choosing cheapest property management software.

[05:49] Mistake #2: Don’t give out your real direct cell phone number to tenants, owners.

[07:03] Mistake #3: Learn how to win the online reviews game before starting to play it.

[08:17] Mistake #4: Do not be the cheapest in your market. Price yourself at the top.

[09:51] Mistake #5: Your business name should always end with property management.

[10:50] Mistake #6: Save time and money – grow a business without paid advertising.

[12:39] Mistake #7: Cycle of Suck – don’t take on shady clients or properties.

[13:57] Mistake #8: Do not hire until you’re clear on what matters – culture, values.

[16:36] Mistake #9: Everybody has a fantasy when starting a business. Kill the fantasy.

[19:20] Mistake #10: Make property management the focus, especially in startup stage.

[21:24] Mistake #11: Protect your time; offload emergency/after-hours calls, eventually.

[22:27] Mistake #12: Distraction of Opportunity – reduce variations and focus on niche.

[24:48] Mistake #13: Don’t be a know-it-all; collapse time by getting a coach, mentor.

Tweetables

“Choose property management software that you can live with forever.”

“You need to insulate, protect yourself, and not be reachable all the time by cell phone.”

“It’s better to be the most expensive than the cheapest, in my opinion.”

“There’s one thing that without it you don’t have a business—clients.”

“When you start to value yourself and value your time, other people will start to value you and value your time.”

Resources

DoorGrow and Scale Mastermind

DoorGrow Academy

DoorGrow on YouTube

DoorGrowClub

DoorGrowLive

Rent Manager

Talkroute

Burner

Abodia

Latchel

EZ Repair Hotline

Property Meld

OpenPotion

The Myers and Briggs Foundation

Telegram Messenger

National Association of Residential Property Managers (NARPM)

Transcript

All right, we are live. Welcome, DoorGrow hackers, to the DoorGrowShow. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, 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.

DoorGrow hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it. You think they’re crazy for not because you realize that property management is the ultimate high trust gateway to real estate deals, relationships, and residual income.

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

Okay. Today, what we are going to be talking about—this was prompted by a question that I saw posted on Facebook. Somebody asked a question like, what do you wish you could do differently now that you run a property management business? If you could go back in time, what would you do differently? There were lots of jokes, hahaha, from people saying I would start a pizza company or pizza place, or I’d do something else like I wouldn’t do it.

It is a common joke. There’s pain underneath those statements because there are a lot of property management businesses that a) suck, and that b) because they have miserable business owners. They’re not happy. I just want to point out that I don’t believe it’s because of the industry. There are miserable business owners in any business, in any industry, or in any business category.

I think the challenge is that the business owners that are not happy out there, which there’s a lot in a lot of industries, there’s a lot in the property management industry. But the ones that are not happy are the ones that are not in alignment with the four reasons, which I talked about in an earlier episode. Go back and check that out. If you’re out of alignment with that, the real issue is that you are doing the wrong things in the business. You are in the wrong role. So that’s the challenge.

I want to talk about 13 tips that you should know if you’re a startup property manager. These are probably 13 things you wish you had known or should know if you’re starting a property management business. Some of these are really practical and some of these are a little bit more high level, mindset, or whatever.

I just made a list of the 13 most common mistakes that I see people make starting property management companies. I’ve made a pretty decent living in helping property managers either start up their businesses or most of the time, helping clean up the mistakes they made during the startup process. It’s a lot of what I do at DoorGrow.

So I’ve talked to thousands of property managers. I’ve gotten to see inside a lot of businesses. I get to hear what actually goes on behind the scenes—the pain, the sorrow, the sadness, and the joy when we get things figured out and dialed in. So let’s get into these. These are in no particular order or priority. These are just how they came into my head.

One of the biggest mistakes that I see, number one, is choosing property management software based on what’s cheapest. That’s a mistake. A lot of times, property managers either don’t use the software in the beginning or choose something cheap or less expensive. My recommendation is to choose property management software that you can live with forever.

The reason being, if you can choose software that you can live with forever, that software is going to save you a lot more money in the long run. You’re going to end up spending a lot of money on staffing costs instead. So if you go cheap on software in the beginning because you’re like, hey, this is a lower price, those costs get translated and pushed on to staff.

Don’t pick it based on what’s cheapest and the same, get the most expensive software but get the software that can do the most, that’s going to give you the most leverage. I typically like to recommend Rent Manager simply because I hear the most positive feedback on it. It’s not an investor-backed company where their primary goal, if they’re honest, is to please their financial backers. That’s not their goal, some software out there.

It’s not owned by some bigger conglomerate or company, as far as I know. They have one of the best property management conferences I’ve heard in the industry. But clients seem to just really love Rent Manager. They love that software.

I’ve seen it used by really large enterprises that have thousands of doors in multiple markets. I’ve seen it used by startups. It seems to work for a variety of different types of management. It has an open API. It connects and integrates with everything is what that means, generally. So that would be my recommendation. Don’t push the cost on the staff because staff are far more expensive.

All right. Number two, don’t give out your direct real cell phone number to tenants and owners. It’s so easy to do early on. Real estate agents are absolute horrors with their cell phone numbers, that happens all the time. Every guy or gal in real estate just gives it out to everybody, puts it on park benches, puts it up on yard signs.

For property management, that’s a whole different game. You need to insulate, protect yourself, and not be reachable all the time by cell phone. So you need to get some other service or you might get something like Talkroute, which works great with cell phones, low latency, voice over IP system that allows you to use your cell phones. It works really well and it’s low cost. You can build out a phone tree, protect yourself, and route it to different services that you bring on later.

You can even go and just get some sort of phone app in the App store to get a second phone number that can allow you to do text messaging, phone calls. I’ve heard of some people using an app called Burner and some of these. Have a different phone number than your real cell phone number and just save that for those that you really want to be able to reach you—family, friends, not clients and customers.

Number three, learn how to win the online reviews game before you start to play it and are losing, which is the default. If you’re a restaurant in the restaurant industry, this is critical. You start up a business, you’re hoping that it’s going to make money, you put on some investment into it, you start getting some bad reviews initially because you make some mistakes, and suddenly, it just compounds, piles on, you just get more and more bad reviews, and you’re not getting good reviews. The business could die.

Now in property management, the default also is that you’re going to get bad reviews from tenants and owners. They’re going to be frustrated, tenants especially, if they don’t get their deposit back or whatever. You need to know how to play this game.

In DoorGrow Academy, we have a training called Reputation Secrets and then teach clients how to win at this game, but you need to have a strategy for this before the reviews just start to happen. Because the default is you will lose and that is a significant impact.

A lot of people mistakenly assume they’ll just get good reviews if they just do good service, and that is not the case. That’s not how the review game works. So before you start to play that game, you need to know how to win that game, and it’s not a hard game to win.

Number four, one of the biggest mistakes I see, my really big tip here is do not price yourself as the cheapest. Do not be the cheapest in your market. Do not price yourself at the low end of the market or at the bottom. There’s already a race to the bottom.

This is a fast track to building a business. It’s not sustainable, that’s painful, that’s uncomfortable. It helps you attract more and more of the bottom of the barrel, the worst clients, and residents. That’s not the type of business that you want to get caught up in. Price yourself at the top of the market.

It’s better to be the most expensive than the cheapest, in my opinion. There’s a lot more nuance to that and pricing psychology and strategy that we get into in our Mastermind program that I love to coach clients on because I have not yet had a property manager come to me that had really effective pricing. It’s always something we can optimize, improve, and then they can close more deals at a higher price point more easily.

That price sensitivity, that sense of scarcity that they’re getting pushed back on, that price sensitivity and pain that they’re dealing with with owners, there are lots of ways to mitigate that, remove it, or capture better prospects that are not like that, like the cheapos of the world. That’s the default. That’s what most property managers do. They try to be the cheapest or they try to charge what everybody else is charging in their market. They’re all making similar mistakes.

Number five, make sure your business name ends with property management. It’s one of the most common mistakes. Almost every startup seems to have real estate or realty in the name, or they choose something generic so they can do it from multiple industries like properties. They might even put rentals, which is weird.

So real simple, when it comes to branding, we’ve helped rebrand hundreds of companies—redoing their names, redoing their logos, hundreds. We are the world’s leading property management branding and design agency. Nobody’s done more rebrands than us in the property management space.

The most common mistake that we see is just not ending your name with property management. Just end your name with property management and be a property management company. Be a master of one trade instead of a jack of all trades and a master of none.

All right, number six. Learn to create a business without paid advertising and you’ll never struggle with growth, and you will save a […] ton of time and money. Cold lead advertising takes a lot of money. It wastes a lot of time because you have to nurture these leads. There are far better strategies for growth.

What do I mean by cold leads? I’m talking about SEO, pay-per-click like Google ads, content marketing, social media marketing, and pay-per-lead services. You do not have to do these things in order to grow your business. In fact, there are faster and better ways. I’m not saying don’t do those.

All of those can be effective if you do the right things, but they can be costly, and that’s not where you should start spending your time and energy. The number one way that almost every business owner I’ve talked to ever in property management, I asked, where have you gotten the majority of the doors you have now? It’s always word of mouth. So figure out how to play that game, figure out a way to create it. to intentionally make it, and to be outbound about it instead of just inbound, which means waiting for stuff to just come to you.

So we have an outbound partner prospecting program that we teach in DoorGrow Academy and in Referral Secrets in our Mastermind program. This has helped some of our clients to have hundreds of doors in a year’s time without spending any money on advertising. It just takes time, but it takes less time than it would be if they were just being spoon-fed a bunch of cold leads. It takes less time and they get more doors. It’s a no-brainer.

The next item, number seven, don’t take on shady clients or properties. I’ve talked over and over again about what I call the cycle of suck. Take on a shitty owner, you have a shitty property, you have a shitty tenant, you’re going to get a shitty reputation in the marketplace. This is the cycle of suck.

Escape the cycle of suck, filter at each stage, and the most important is be careful about the types of owners that you take on. This is the most important thing because this starts the entire cycle. Be careful about the properties that you take on. Of course, screen the tenants—you all do that, and have a strategy in place.

We’ve already talked about reviews. Have a strategy in place to get more good reviews and to mitigate, filter, or prevent negative reviews. If you are able to do this, you will have significantly lower operational costs than most property management companies, which means you’ll be more profitable and you’ll be able to invest more into growth, into your team, and into scaling your operations. So don’t take on shitty clients and properties. Really simple.

In the beginning, a lot of people think they need to take on everybody. This is one of the most common mistakes and they do it at too low of a price point. They’re needy, needy is creepy, and it prevents you from getting on a better business.

All right, the next item. The next tip for startup or starting a property management business is do not hire until you are clear on your culture, which means your values, what matters to you, and you’ve created that in a tangible way, which means it’s written, it’s documented, and you are clear on what you should be doing in the business. Meaning, you are clear on the things that bring you those four reasons. You know what gives you more fulfillment, more freedom, and more contribution so that you can get more support.

You need to understand yourself. Because if you don’t understand yourself, you’re going to do the wrong things as a business owner. You’re going to wear every hat in the beginning. The hats you need to get rid of are the ones that are minus signs for you. They are not energetic plus signs. They do not give you life and energy.

You need to strategically focus on that. I talked about time studies and things like that in our program, ways of figuring out which things energize you versus draining you. I talked about the five currencies of time, energy, effort, focus, and cash. Figuring out what is going to give me the most fulfillment and freedom. What’s going to bring me more joy? You need to understand what that role is that you’re going to be moving towards.

You don’t have to do anything in the business in the long run. You could offload everything, but there are certain things that are going to bring you joy and fulfillment and that’s why we have businesses. That’s one of the main reasons. So you need to figure out what is that for you so that you can build the right team around the right person.

If you’re showing up as the wrong person, you start to build a team, and you don’t have the culture, and you only have yourself clear, you’re going to build the wrong team. You’re going to be frustrated with them, and you’re going to be like most of the 200–400 door companies that the business owner is in a state of constant burnout and frustration. Just frustrated that they cannot get their team members to think and make decisions because they’ve set up their business the wrong way, they are annoyed, and they are micromanaging everybody even though they don’t want to admit it.

So make sure you get clear on that. That’s something that we help clients with. Clients give me feedback. They dial this stuff in that that was the most important training and material they went through in our Mastermind program, which is what I call Purpose Secrets and getting that clarity. It helps them build their dream team so they can have their dream business. If you don’t have the business of your dreams, as one of my coaches and mentors would say, then you are not yet the person that can run it yet. That means you just don’t have clarity on yourself.

All right, the next thing is number nine. Tip, starting a business. When we start a business, we all have a fantasy. It is so sexy, it is so seductive that we’re willing to take a risk against the advice sometimes of family and friends, and we start a business. We spend money, we spend massive amounts of time and energy to do this, to go towards this fantasy. Everybody has a fantasy when they start up a business.

You have to be willing to kill the fantasy. So this tip is to kill the fantasy early. You know that you’re delaying this death of the fantasy. What I mean by killing the fantasy is if you want a reality, if you want a real business that actually pays you, because fantasies are sexy, nice, and they make you feel good, but they don’t pay you. They don’t actually give you a real-life result.

The fantasy just makes your brain feel good and gives you some chemicals. But if you want to have a real business, you have to get a reality business, you have to kill the fantasy if you want that. You have to let it die. So kill it early. What I mean by this is some business owners delay this. They mentally masturbate as one of my mentors or coaches would say.

They don’t take the right action and they spend a lot of time doing all the action that’s safe. I’m going to work on my branding, my business card, my logo, or my website for 100 hours. They’re doing all this stuff, and they’re not getting clients and they’re not getting paid. You don’t need any of that stuff.

The only thing that you need in order to have a property management business. There’s one thing that without it you don’t have a business—clients. That’s the one thing and you can just get clients. I’ve seen people have hundreds of doors without a website, without a good brand name, without a logo.

Certainly, these things can help improve things and make things go faster. But you don’t need t-shirts printed, you don’t need a cool brick and mortar building. You just need some tenacity, some work ethic, and to take the right action.

That’s the first thing I start clients on if they’re in a startup stage or they want to grow their business, we start them down to what I call the Grow Program First. It lets you add doors. Then we can clean up branding, website, and your sales pipeline, and then it’ll go faster. But there’s no point having something that’s going to help you go faster if you’re not even moving yet. Let’s get you moving and making some money first.

Kill the fantasy early, do the uncomfortable hard stuff first. If it’s uncomfortable, if you’re avoiding it, if you don’t want to do it, it’s probably a sign that that’s where you should go. Lean into the pain early in the business and the business will be less painful forever.

All right. What is next? Number 10, make property management the focus. At least during the startup stage. I’ve seen so many that have it as a side hustle. It’s a side hustle for years where they sometimes come into my program, it’s a side hustle, and they don’t even choose to focus on it. Then after about three or four months, they realize they finally get honest and connect to reality, they’re not going to do the work.

Because they don’t really want to invest in that business or focus on it, and then they just give up, quit, stop the business, or just leave it where it is, and they don’t make it a focus or priority. So if you want just to succeed and go fast, give it a real chance of success. If you have a baby that’s born, you need to take really good care of that baby, at least for the first little while, first few years. Because otherwise, that baby is not going to be able to feed itself, change itself, take care of itself.

That’s your business. Your business is this baby. You need to take care of it in the beginning. Eventually, you can build a team, you can build systems, you can offload things, you can focus on other passions or other businesses if you want to, but it needs to be a focus if you want this to work.

One of the biggest challenges I see is they don’t make it a focus and they artificially keep feeding into this business from the resources, revenue, and staff in their existing healthy business. So then you end up with this cancerous tumor on the side of a healthy real estate company, for example, that’s a property management business, and it’s not profitable.

I had one client that had 600 doors when he first came to me and was making $0 in his business. That’s painful. Too many expenses, too much staff, too many resources, and a cycle of suck. All these things were going on, lack of technology, et cetera because a healthy company would have had to make significant changes at about 100 doors or so or earlier just to break the 100 door barrier.

They were able to artificially skip past that in terms of door count because they had another business they could siphon resources from. Make sure your business can stand on its own two feet and make it the focus.

Number 11, protect your time and offload as early as possible emergency or after-hours maintenance calls. You need to value yourself and protect yourself. You could get a service like Abodia, Latchel, or EZ Repair Hotline I’ve heard good things about. You could sign up, eventually, once you get maybe 50–100 doors.

It might make sense to get a service like Property Meld and they work really nicely, I guess with EZ Repair Hotline under their full-service plan. I’ve heard great things about Property Meld service over and over again from clients. But as soon as possible, offload emergency or after our mains maintenance calls. You’re the business owner and protect yourself, protect your time, and protect your time with your family.

When you start to value yourself and value your time, other people will start to value you and value your time. That means they’ll want to pay you, they’ll want to give you money because you’re valuable. You have something to offer them. Don’t be low value.

All right, so the next thing is the number 12 tip when starting a property management business. One of the biggest problems I see with entrepreneurs is this distraction of opportunity. We see opportunities everywhere as entrepreneurs. So my big tip is to reduce variations as soon as possible. Variation, what do I mean by that?

I mean shift your focus towards simplicity and doing as little as possible, like one thing, one main business. You will go faster. Reducing variation means having less types of management that you offer. Don’t try to do commercial, residential, multifamily, trailer parks, and storage units. Pick a niche and really focus on it, reduce variation.

Don’t have custom contracts that you’re trying to negotiate every time. Get a lawyer, get your contract tight, determine this is what it’s going to be, and improve it over time. Don’t fold on it. They’re looking for an expert that they can trust. Be that expert that they can trust. Don’t fold. Don’t cave in.

Reduce variation in the business. The more variation you have, the more side hustles you have, the more random things that you’re trying to do, the more service you think might be a good idea that you’re trying to incorporate, if you do those at the wrong time, it just creates speed bumps. It slows you down, so try to reduce variation.

My business, we basically have one product, one service, one sales pipeline. Our growth has skyrocketed as a result. In the beginning, I had this company called OpenPotion. It was OpenPotion Website Design and Business Solutions.

I was like, I’m going to set up computer networks, set up businesses’ phones. I could do their websites, I can help with logos. I was going to do everything because I thought I could do all this stuff. Overtime, we’ve done less and less and less and made ourselves more and more focused.

Even focusing on a niche in becoming DoorGrow so that we can become more effective and reduce the amount of variation in the business. It allows us to go deeper, help our clients even more, and reduces the complexity so that we can service more clients more quickly and provide better service.

Number 13, do not be a know-it-all and collapse time by getting a coach. Now I know you’re like Jason, you’re a coach, come on. This is biased. Transparency time here. I was that guy. I tried to do everything myself in the beginning.

I tried to watch the YouTube videos and read every book. I thought, I’m so smart, I can figure anything out. I am smart enough to probably eventually figure everything out, but it takes a decade to go that route when you could collapse time in a year if you worked with somebody that already has invested a decade into this.

I started this business in 2008. I’ve been helping property managers since then. It’s over a decade. I’ve also been able to incorporate knowledge, wisdom, and ideas from hundreds of clients, thousands of property managers that I’ve talked to, and being able to pull in the best ideas. I’m really good at piecing together various pieces, ideas, and creating new things. It’s just kind of my area of genius.

As an ENTP, if you’re familiar with Myers Briggs, I’m always looking for truth and looking for what works. That’s kind of my skill set, but the trap in that is I always thought I could figure it out. But when I got coaches, I started actually go fast. Nothing helps you collapse more time than getting mentors or coaches that know what they’re doing. They can help you move forward a lot faster.

When I started getting coaches and mentors, and I’m very careful about who I choose as mentors or coaches nowadays because I’m at a level to where a bad coach or a bad mentor could do a lot of damage. One of the things I look at is, do I want to be more like that person? Do they have a lifestyle that I would like to have more of in my life? Do I feel like they’re a good person? Do they have values? That’s important to me.

Do they have knowledge that they can share? Are they sharp? Get a coach, get resources around you, get mentors. It’s going to help you collapse time far faster. This takes humility. It’s hard for us as business owners, especially early on because we think we know a lot.

Over the years, a lot of pain, failures, and mistakes helps us learn we really have no clue. We’re all just winging it. There’s a lot of people that are far beyond where I’m at that I could learn from. Don’t be a know-it-all. Get a coach and collapse time.

If you feel like I might be able to be that coach and might be able to help you grow and scale your business, we have over 80 businesses in our Mastermind, which means over a hundred people in our Mastermind program that we are coaching, mentoring, and helping move their business forward. You’ll get access to me with one-on-ones. You’ll get access to me through video, voice, text message through Telegram messenger.

We do two weekly calls each week, and we have a repository of training material I built out in doorgrowacademy.com that you get access to as well. Then you get the support and help from my team. We included a website in the program and branding. All this is just part of this mastermind experience.

My goal is to keep clients forever so that I’m adding value. It’s very easy for me to help a client offset the cost of this program by double, so that this program feels like it’s now paying you. Very easy, no brainer. So if you’re interested in the DoorGrow and Scale Mastermind, reach out to us, reach out to us, reach out to my team, check us out at doorgrow.com. Join our Facebook group at doorgrowclub.com.

We would love to talk with you and see if you might be a good fit for our culture, for our program, and for the types of clients we want to help and service. There’s nothing I enjoy more really in my business than helping coach the clients. It’s super fun.

It’s Wednesday. I got to do one of those calls today. It’s super rewarding being able to hear all the wins, people adding doors, hear the questions, and be able to support these people in growing their businesses. I’d be honored to be able to support you. It’s my passion. It’s what I love doing.

With that, those are the 13 tips for those that aren’t in the startup stage. If I were to add a bonus one here, I would say, get around other people doing what you want to be doing. Join NARPM, get around other property managers, get to know your local competition. It’s a friendly space. Create some relationships and be connected.

Don’t be an island in your business. Our mastermind can be a support or channel for that as well, but make sure you’re connected to people. I’ll leave it at that and until next time, to our mutual growth. Bye, everyone.