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Talk Overview:
Andrew Dougill came to Tampa, FL in the 1980s. After asking the admin for a rubber (i.e. eraser) on his first day on the job, he realized words definitely have different meanings to different people. When applying this to the word “grow”, that can mean growing the number of doors, growing the size of your company or growing to dominate the market.
However, when you add doors, you have to add employees and that comes with training, HR, etc. It also means you increase your overhead plus you have to maintain systems to deliver a quality service/product to customers.
Andrew’s session explains how you can you grow your property management company without adding doors.
Talk Notes:
When you add doors you have to add employees and that comes with training and HR, etc. It means you increase your overhead plus you have to maintain systems to deliver a quality service/product to customers.
In 2010, Hoffman Realty was invited to a meeting with a fund manager. At first the prospect of adding doors to their company was very exciting until they found out the budget.
Upon running the numbers, the most interesting thing they learned was about the profitability of their current portfolio:
- 25% of doors were responsible for more than 50% of their profit.
So it was decided, what if they took on 1000 new doors, they spent their time learning what made the 25% so profitable. Then they could apply the across the rest of the portfolio.
1) Where does the money go:
The biggest expense is labor related costs.
Labor should go into places where it adds value (core tasks)
- Acquiring new accounts, onboarding new accounts, background checks, maintaining accounts, collecting rents, customer service tasks, etc.
Labor shouldn’t be going to non-core tasks:
- Landlords that want to manage the manger, Landlords that don’t have money, high maintenance properties, etc.
Decided to upgrade through acquisition. This means. every time they brought on a well performing account, they got rid of a poor performing account.
2) How to upgrade
Find your target owner,
- Low involvement landlords
Have money to maintain their properties and recognize the value of their tenant
- Treat you with respect
- Allow you to be their advisor
Find your target property
- Tight service area
- Middle of the market rents
There is a sweet spot with cost of rents (too high or too low = more expenses on your end).
- Popular Locations
Close to transport, shopping, schools
- Well maintained properties or capable of being well maintained
How do you recognize a target owner?
- They don’t believe property services are a commodity
- They care about the quality of the management services
- They understand the value/price trade off.
- They also usually always have pain (an emotional need that your service can satisfy)
In order to find quality owners/properties:
- Prospect, prospect, prospect
- You must generate a lot of new leads
This allows you to focus on your target customer
- You’ve got to spend money to make money
So you’ve decided to fire an owner:
- Do not make decisions when you’re mad, glad or sad.
- Let them down carefully
Tip: Send them a fee increase letter (either you get the fee increase or they hire a new company).
Conclusion:
You can grow your business without adding doors. The key to this is:
- Understand where your labor goes
- Focus on upgrading by defining a target owner/property
- You have to prospect, prospect, prospect.
About Andrew Dougill:
Andrew Dougill has been a real estate investor and residential landlord for more than 30-years. He is a Realtor, professional Property Manager and is the co-owner and Broker of Hoffman Realty LLC in Tampa, Florida with his wife MaryAnn Hoffman. Hoffman Realty has managed residential properties in the Tampa Bay area since 1988. Prior to joining Hoffman Realty, Andrew spent the first 2-decades of his working career as an engineer, designing computer hardware, software and firmware for use in industrial, aerospace, military, public safety, business and residential computer systems.
