Bottlenecks to Property Management Profitability: Focusing on the Wrong Activities
The latest series on The Property Management Show podcast is going to focus on the bottlenecks that keep property managers from becoming profitable, growing and increasing their productivity. To kick off this series, we have invited Kasey McDonald to talk to us about the activities a business owner needs to focus on to start or grow a property management business.
Kasey is the director of the Property Management Training Academy, and she’s been in the real estate industry for 20 years, focused on property management. She began her own property management company where she organically grew the business to 227 doors in three years. Now, she’s doing what she really loves – focusing on the education and knowledge side of the industry. Her job is to help businesses be better businesses, especially if they don’t understand property management as well as they should.
The discussion of the day?
Removing the bottlenecks that inhibit your growth.
Why Are There so Many Bottlenecks to Property Management Profitability?
It’s easy to focus on the wrong activity for your market. It’s easy to misunderstand the activities that are involved in generating leads and building a sales pipeline.
Before you can grow, you have to understand where you are and what’s happening in your market. There are probably 50 things you can do to grow your business in your particular market. To be effective, narrow that down to the five best things, and focus on those.
It’s important to commit to a growth activity and to be consistent. A common bottleneck to property management profitability is giving something a try for a short period of time and then stopping if you don’t get immediate results. Some activities in prospecting and sales will take a lot longer. Be consistent for a long period of time. If it feels like something isn’t working, keep going. All of a sudden, the flood gates will open up and you’ll wonder why. The “why” is that you stuck with it, and you didn’t give up a month earlier.
Focusing on the wrong things while you plan and build your business is common. If you know how to avoid this mistake, you’ll have a more productive time growing.
Look at Your Foundation: What Works and What Doesn’t?
Your foundation is your systems and your processes. Here are some good questions to ask about your foundation:
- What have you been doing to grow?
- What results have you had?
- What do you need to do to get the results you want?
Maybe you’re making calls to prospects in your database, but you’re only making those calls once a week. To achieve what you want, you might need to increase the amount of time that you spend on that activity. You can’t do the calls once a week and then push the activity to the side when you decide it’s not working. Break it down and decide how frequently you should make these calls, how many calls you should make, and who those calls should reach. When you invest in the activity, you will get the results you want. Those results may not be immediate, however. Property management profitability takes time and consistency.
In Kasey’s practice, she helps owners identify what’s not working. Usually, the problem is lack of effort.
Formula for Growth: Consistency
Be consistent with your time and your activities. Block out the time you need in your calendar to complete your tasks, and always leave room for growth activities. You don’t want to be multi-tasking while you try to grow. You don’t want your attention pulled towards several things at once.
Any property manager who says “I’m too busy” to focus on growth is simply making bad choices about how their time is spent. You can find an hour in every day to work on generating leads. If you can’t, your day needs some restructuring.
It’s easy to get distracted and stuck in the day-to-day, even when you begin bringing on team members. Delegating is hard. But, if you devote one hour every day consistently to a couple of growth activities, you’ll see the results coming in and you’ll understand the process.
There is a lot of noise in your office, and if you start the day not knowing what needs to be done, you’ll be reacting all day long. So, understand your key tasks. Put everything that needs to be done into your calendar until it becomes a to-do list. Then, find the hour you can dedicate to growth activities.
Property Management Profitability: Five Growth Activities Every Owner Can Try
The growth activities that work best depend on your market and your goals. But, these five can help you with property management profitability, no matter who you are or where you operate.
- Organize your database of clientele. This should include past, present, and potential clients. Make phone calls and send emails. Keep your brand awareness in front of the people in this database. Kasey recommends a minimum of 10 calls per day.
- Distribute door hangers. The door hangers in your community can tell people who you are and what you do. Showcase recently rented homes in the neighborhood on your hanger, and invite people to contact you if they’d like to know how much rent their home could earn.
- Spend time on network referrals. Connect on Facebook and visit community forums where you can answer questions and establish yourself as an authority. Be an expert. Talk to people. Find out what they need. Showcase yourself as the resource that can help them.
- Build Business to Business relationships. LinkedIn is great, but face to face relationship-building is even better. You have business to discuss with tax accountants, attorneys, real estate agents, brokers, and even your vendors. A lot of property managers don’t invest the time here because they don’t get anything from it right away. But, the trust and relationships you build will ultimately end up with more business.
- Think about your vendor relationships. It can be easy to think about your carpet vendor as the guy who cleans your carpets. But, he’s surely talking to homeowners, landlords and tenants that aren’t yours, but might be thinking about buying a home. Kasey started inviting her vendors to a picnic every three months. It became a big event and she began offering referral bonuses to vendors who brought her new business. This is an area of growth that’s right in front of you. Your vendors can do more for you than clean the carpets and fix the toilets.
Example: How Personal Videos Can Work
Respond to the desire for a personal touch. People want something personal, so send a message on social media or provide a picture or a video. Educational content is valuable, but a funny video or a personal message counts, too. It leads to a better relationship.
Kasey was working with a property management client who was struggling with ways to show that inspections were actually being completed. These inspection reports are often sent electronically, and owners rarely had any way to know that the property manager was at the house, doing the work.
So, Kasey’s client began making brief 25-second videos while at the property that could immediately be texted to clients. When one such message was sent to an owner who happened to be in California, Kasey’s client earned five new clients because that initial client happened to be with five friends who had investment properties of their own.
Property managers don’t always think like this. Open your mind and try new things. Show people what you do. Send a video text message after showing a property and let your owner know how it went.
You will struggle to get to this place if you don’t have the mind space. Another good reason not to get stuck in the day to day.
Setting Goals and Managing Expectations
Goal setting and result tracking will depend largely on your market. You need to first understand your potential opportunities for property management profitability. How many doors are out there for you to grab?
Look at what you can do and look at the activities you can implement. Then, break it down.
For example, if you made 10 calls and spoke to 10 people, you might get half of those people willing to continue talking to you. Then, maybe 50 percent of those people will sign up for some sort of service with you. So, getting two new relationships out of 10 phone calls is a pretty good success rate. Out of those two relationships, if one of them gets into your pipeline, you’ve really done well.
Maybe you’ll set a goal for 30 new leads a month. Break down what that means. Out of those 30 leads, if five of them sign up for an appraisal, how are you doing? If you engage in a face-to-face discussion with 10 people every day, you could end up with 10-15 new doors in a three-month period. Is this achievable for you?
Once you’re meeting the initial goal you’ve set and it’s consistent success, you can raise the expectations.
Find out what works and be consistent. If you’re not able to meet the goals you have set, it’s either a marketplace issue or the activity isn’t being done correctly. Sometimes, the owner can be a bottleneck if the goal that’s being set is too high. Don’t de-motivate your people.
Bottlenecks in Results: What Blocks Success?
Sometimes, the wrong individual is performing the wrong job. Make sure you have the right person doing your business development or your sales. If the activities are faithfully being performed and you’re focused on those top five growth activities but there are no results, it could be a person problem.
Either you have the wrong person doing the job or as an owner, you have set the target too high or you’re not providing the tools and resources to support the position. Make sure you’re spending money on marketing. Make sure you’re committed to the growth practices. Make sure you’re not micromanaging.
A huge bottleneck to growth is the owner who has to approve everything. Kasey worked for a business where she had to get the owner’s sign-off before she made a social media post or sent out a newsletter. It led to missed deadlines and late messages.
Create a guideline and empower your people. Then, get out of the way.
Make sure you understand the strengths and weaknesses in your own business. If your weakness is sales, employ someone who has the right skill set and empower them to do their job. Don’t break their hands, and don’t say no all the time. Let them flourish in the job and your business will grow.
This can plague established property management companies as well as new companies. Young companies can sometimes grow faster because they’re starting out with the latest technology and the newest tools. More established companies often have to be convinced to embrace those things.
What to Do Once Property Management Profitability Bottlenecks Are Identified
As bottlenecks are identified, the best thing you can do is to work through them. Sit down with your whiteboard or your notepad or whatever works. Dive into your business and revisit what is working well and what isn’t working at all. Make some allowances for changes in the marketplace. Ask questions and identify priorities. Be open.
Flow charts and work flows are a great way to see what you could be doing more efficiently. Writing it all down forces you to look at things objectively. If you can do things more efficiently, you’ll notice where and how when you have it written out in a flow chart.
It’s also easy to turn negatives into positives when you’re writing everything out. If you don’t close a lead, put the process into a work flow and see where things broke down. Maybe you need a 24-hour contact period instead of a 48-contact period. Maybe a personal note in the mailbox as you’re leaving the home after visiting a prospect will help.
Not having a work flow in place is a bottleneck.
Myths can also be bottlenecks. Have you heard that a great sales person can sell anything?
It’s a myth. Your sales person needs to know what he or she is selling. Make sure our people have the training they need before they make even one call.
Here’s what you should take away from this conversation with Kasey:
If you are an existing property management company and you starting to see bottlenecks in your growth, sit back and analyze what you have been doing. Work through it. Are you still on plan or do you need to revisit and make some modifications? The, map it out.
If you’re a start-up property management company, do the same thing. You aren’t revisiting a plan, but you are writing and implementing one.
Today’s podcast listeners can get a free 30-minute consultation with Kasey, so contact her at The Property Management Training Academy. Contact us at Fourandhalf if you have any questions, and make sure you stay tuned for more episodes in our Bottlenecks to Profitability series.