Most everyone would agree that 2020 was a challenging year for running a business, regardless of industry. For many property managers, it’s great to still be standing after all of the challenges presented from the COVID-19 pandemic. As we enter 2021, maybe in the midst of planning and goal setting for the year, there is no better time to be pondering the business opportunities available in the property management industry.
On this episode of Property Management Brainstorm, Bob discusses the topic of opportunities in property management with Brad Larsen, Broker/Owner at RentWerx in San Antonio, TX. Brad is very plugged into the industry so it's a lively discussion about some great opportunities in the industry that are ripe for the taking.
A time-stamped transcript of this episode is below.
[2:25] Brad introduces himself and company, RentWerx San Antonio as well as his upcoming conference PMMCON. He also shares his experience from the recent Texas freeze weather event.
[5:45] A common theme in the industry - many plans and goals got tabled in 2020 during the peak of the COVID-19 pandemic. How many property management companies are regrouping in 2021 and things we learned in 2020.
[8:30] Setting the context for discussing "opportunity" in property management.
[11:50] Bob takes Brad through a "lightening round" to get his reaction and description on some new industry buzzwords: Virtual Showings, Remote Team Members, Process Automation, Artificial Intelligence, Zero Touch Leasing.
[23:25] Overcoming resistance to change from your property management staff.
[26:30] Why home sales as a realtor is huge opportunity for most property management companies.
[29:35] Opening new property management territories - opportunity or huge challenge?
[31:45] HOA management as an opportunity in property management.
[33:40] Bob and Brad discuss in-house maintenance as a property management opportunity.
[37:15] Brad shares a personal story about the importance of accounting standards and monitoring the company books.
[41:10] Property shares the Property Management Mastermind Conference details (PMMCON) coming up May 20-22, 2021.
Connect to RentWerx San Antonio
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Learn more about PMMCON, May 20 – May 22, 2021:
Connect with Bob Preston
Property Manager in San Diego
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Bob Preston: 01:10 2020 was quite a year in the property management industry. I don't think anyone would dispute that. And for many property managers, it's great still to be standing after all the challenges presented from the COVID-19 pandemic. Well, here we are. And Q1 of 2021, maybe you're in the midst of your planning for your business for the year, whether that's as a property management company or a do it yourself, landlord who's planning for their property assets. It's also conference season. We have the Cal NARPM conference coming up later this month, broker owners coming up in April and the property management mastermind conference, all coming up, no better time to be pondering the business opportunities available in the property management industry as we move forward through 2021. On the show today I have with me a guest Brad Larsen, Broker/Owner at RentWerx in San Antonio, Texas. Brad will be on the expert panel at the Cal NARPM conference coming up March 11th through 12th, and he's hosting his own PMM con May 20th through 21st. He's a guy who's very plugged into the industry. So, we're going to be talking today about some of those great opportunities in the industry that are there for the taking. Hey, Brad, welcome to the brainstorm.
Brad Larsen: 02:15 Thanks for having me, Bob. I appreciate you taking the time to go work this out and get our schedules together and make this happen.
Bob Preston: 02:21 Absolutely. You're a well-known guy in the industry, but it's always great to get our guests to kick the show off by introducing themselves. So, I'm hoping you'll do that to tell us about you, your PM business and maybe a tad about your conference coming up in May.
Brad Larsen: 02:34 Sure. So, uh, as I say, I have a perfect face for radio, so I'm glad we're doing a podcast on this thing. Uh, it's, uh, putting with a bald head. I have to, uh, you know, I don't want to blind your audience. That's really on the video side, but yeah, I got a lot going on here in the San Antonio region. I'm a real estate broker property manager, property management company owner here in San Antonio. We've been doing it for, you know, eight, nine years and we built it up to a 900 block, single family home. It's just residential focus only got a really good business working at the run itself. You have good leadership in place. And so that's allowed me to go out and do other cool ventures, uh, such as creating a property manager mastermind conference. And that's been one of my main focus in here recently.
Brad Larsen: 03:17 And of course, you know, we're all keeping a very close watch on what went on in the Hogan world, invoicing the conference world. Like no, and everyone's just kind of chomping at the bit to kind of get back to normal. So that's a little bit about us here. Oh, and by the way, they're going to tell you that story. You were talking pre-fill so we had a giant storm here in South, Texas and giant for us is we had three, four inches of snow and we had some freezing temperature and for four or five days and power was rolling. We had rolling blackouts. You know, we were like pioneer folks there and we were chopping wood and carrying water. Like we were like 18 hundreds.
Bob Preston: 03:56 Okay. So, you came through and the states kind of back online. You guys have power, you have one.
Brad Larsen: 04:01 Yeah. We're all coming through it, but I can tell you the pool guys and the plumbers, they're all running around like change right now because they're such in high demand to make these repairs to get this full pig, to get that by fixing the house. I took a lot of internet stuff going on too, though. You know, it's not back to normal, but you know, it will be, and it could have been worse. I mean, it wasn't like a tornado or hurricane where people, you know, really got hit hard, but it was just a bad to Duane and all together. But when it's recovery it'd be go.
Bob Preston: 04:32 We were chatting before we started here in California. Of course we've got heat and wildfires. Hey, I don't know if you remember the first time we met, but I do. It was at the PM grow summit here in San Diego. And we ended up coincidentally, just sitting next to each other at lunch one day and we started, you know, kind of exchanging pleasantries and I listened to some of your podcasts. So I know who I knew who you were. You didn't know who I was. And I mentioned, Oh yeah, I just started my podcast. And you were like, Oh, you know, focused, dry did like so interested in hearing the details of the podcast, you know, forget about your business, forget, you know, like you want to hear about the podcast and I'll never forget that. And so it was kind of cool here we are. I think three years later, I think, I believe that was in 2018. Got you on my show. So, Hey, thanks for coming on.
Brad Larsen: 05:13 No, I think anything that's going to go on in the industry to put information out there to put lessons learned out there is fantastic. And I was obviously trying to help you out. I think at least that was my mindset at the time. Well, let me see if I can give him some tips to where he can make it a really good show and it helps the entire industry, but I, that was my Mo my motivation. I thought it was breakfast by the way, but you know, it could have been, I can't remember. I do remember that because if you're wearing a really fancy jacket and I'm like, Oh, this guy's still fancy for California warranted jacket.
Bob Preston: 05:42 I don't remember that. But, uh, anyway, it was kind of fun. Hey, so last year, uh, 2020 was pretty much a time or very strange year. I know at my business, we had tons of plans, growth plans. We wanted to start some new initiatives and had lots of goals. Many of which had to be tabled for a period of time, right, because of the COVID crisis. So here we are 2021 we're chomping at the bit to get going, right. We want to see what we can do. What opportunities are out there that we can work on. You talked a lot of people in, in the industry. Is that a common theme you're hearing out there?
Brad Larsen: 06:13 Oh, absolutely. A lot of us have had to regroup and kind of start over because if you get going into that mid-March, April timeframe, and all of a sudden, bam hit you in the face. So all those nitpick initiatives that you had put together for 2020, all got flipped put to the back burner and then it all became about PPP money and making sure you can survive and okay, there's an eviction moratorium going on and I can't charge late fees and I can't evict people. And all these government dictates were coming down to include you having to work from home and all these different things that, that really kind of hit some of us, uh, square the jaw in a big surprise. Now a lot of it came out probably better than they went in. And so, if you want to think about that side, I mean, I know it's bad. We have a half million deaths. It's never a good thing. Of course I can't understate that we didn't assess really bad, but the other side of this is as a positive person. Now we've got to look for the positive thing in it. And, you know, we were able to take and use good use of that PPP money and reorganize the visits and compensate our employees to keep everybody on. But we also all in the industry sort of, kind of learn how to work from home, how to work remotely, how to do things without having to be there in person. So all of a sudden, everybody wanted to do online applications and all of a sudden all want to do online payments. And, you know, they had all these different things that all of a sudden wanted to do, like zero touch leasing as another one. They want to do it that to where, you know, a year prior, they're like, no, I'll do my way. And that's it. I'm good with that. But when for two, it really did start to change the industry. And it made a lot of people step into a different era of doing business. So we're seeing that as a whole to where, uh, it's, it's elevating the industry as a conglomerate to make it look better and act better and just a better trip into place. And that's kind of anything that came out of that whole deal. If you have to look for at least one positive.
Bob Preston: 08:08 Yeah, no question. We're going to get into talking about some of these individual opportunities here in a minute. But one of the things that we had been working on for quite some time was the self-showings. And we had some owners who were reluctant to go there at first. Well, you know what, during, COVID no choice we're doing it right. And we've learned that you can get owners to go along with it. And so we're never going back. I'd like to talk about opportunities today. So we start 20, 21. What are the opportunities out there that are for the taking and the property management industry? And I think it would be a good place to start to kind of put that into context. What do we mean by opportunity? How do you define it?
Brad Larsen: 08:42 There's all kinds of things going on. And you know, one of the things that we were talking about this this morning, this morning, I will tell you that with the breakfast, with Todd work guide and he's, uh, I hear the word opportunity. I think of him because he put this revenue generation program and I'm not trying to promote what he's doing. I think I backed what he's doing, I believe in it. But the point is, you know, that's an opportunity for us to look at our bid and that's a fail. Okay. How can you monetize self-showings? Just like what you mentioned a minute ago? Well, the way you monetize that as an opportunity is you don't have to pay out leasing fees. You don't have to pay out for leasing agents. If you can figure out a system to do self-showing you that it's not like you have to recreate the wheel, you just turn to any market in the us and say, well, what do you guys know for talk, showing, implement what they're doing and watch how it worked for you in your market? The mindset is what people, when people allow to get in their way is the mindset of, I can't do that in our market. Our servers don't want that. How many of your owners don't want that? Right? It's the 80 20 rule. And even if you boil that down, it might be closer to 95, five rule that a certain owner doesn't want to do. [inaudible] but then you get into the conversation with that owner. If they will look, we have to do it this way. This is how I worked with I worked with and how you're backed up and just how you're protected. That's an opportunity to do, to streamline and better your business model. Not to mention all the other cool stuff that we've implemented, uh, just in the last couple of years. And the big one is always going to be remote team members. You know, we treat that as a very, very hot topic now. And one of the things that COVID forced us to do, what get leaner and youth more remote team members. And so that's been a hugely positive thing for us that rent work in San Antonio, the business that I own, we were able to redesign how we did business. We worked great portfolio commission-based type of a model to where we had one person doing a lot of different things. And then we went to a pain base system and that turned out really well because one person leaves the team. You can quickly replace that person and never really lived to be. And that, and that was huge for us also when the, I don't want to swear to show, but when the crap hit the fan and San Antonio, and it was a, it was a rough deal with it where it's warm everybody that was working remotely for us, either in the region and or outside of the country, all did their jobs to perfection. And more, a lot of them stepped up further because imagine the maintenance calls that we had during a crisis like that. So in what I'm trying to tell you is I think there's that point of the huge opportunity that's going on right now is there is a lot of bugs going on with remote team members. I think that's part of the COVID situation.
Bob Preston: 11:30 What you're saying, because when people talk of opportunities, they sometimes automatically think, okay, what ways can I make more money? Or what can I do to, to make my company more profitable, generate more revenue, but it's not always about that. It can also be about efficiency gains within your business and making it run more smoothly. So you don't miss a beat, however, right. I'd like to try something here, do this. I'm going to call it a lightning round, but you don't to answer the questions early briefly, right? Because I want to dive into this. The industry has all these new buzzwords, you've already laid a couple out. Right? Right. And so what I'd like to do in this lightning round, if that's what you want to call it, I'll throw out a buzzword and we'll get you to react to it. We've already heard one. You, you mentioned it, virtual showings.
Brad Larsen: 12:11 So the virtual is going to kind of put that into a definition is you're allowing prospective tenants, prospective applicants do felt, show the home. And so what you end up doing is they, they can either call in or email in and, or fill out a form online and you're giving them a code to let them access the property themselves, your lock box. And so some fun stuff on nest, right? Um, we were using a, uh, there there's lots of services out there that you can do that self-showing stuff with, and I'm not going to promote or mention any of them. But what was going on is we were using an electronic satellite connected lockbox. And those ended up starting with failing. They started to fail for us wide a bit. And so, we got to the point of, okay, this is, this is getting embarrassing. Uh, we had joining agent that were bringing their own batteries to the field. Uh, we had showing agents that wouldn't show properties for rent work because we used those lock boxes that were literally working one third of the time. Yeah. I mean, it was, it was really bad. Okay. They were failing a third of the time. So we ended up going back to mechanical, dumb lockboxes, like the kind you can bother the master blocks or whatever. Yeah. Yeah. It had been around for a hundred years. And again, going back to the mindset, people were like, Oh no, you can't use those. You know, what if somebody breaks in and I'm like, well, if they're going to break, they're going to kick in the back door and break in. It's not going to be because of a lock box that I put on the front door handle. If they want it, they're going to get in. So don't be afraid of virtual showings. Don't let your owners be afraid of vertical showing the date world. You can build the processes around screening that potential virtual showing purpose. You'll let them into property. You know, at a certain window, you can call them to follow up. And if they make sure they turn off the lights and they closed the door, they lock it. You can do all that within a timeframe where it process, you know, you're not giving somebody a code. Yeah. Go over there and, and do whatever you want whenever you want. Now there's always going to be safe card to that. So don't get me wrong. I'm not trying to make it like selling super easy, but don't be afraid of it because 99.9% of the time, it's going to work very effectively. It's going to allow you to lease your home faster. And if you or I were leasing a home, you would want to conduct a virtual showing. That's the bottom line. Do you want to wait for some agents to drive across town to the current, a key for you just to take a look at a rental property? Well, I can tell you the answer for me is no, I don't want to do that. And it was really irritating if you had to do that, because this is today's world. Now you think of the other side of that. When you go rent an Airbnb or a VRVO, what happens? They give you the code, you to the property on your own leave when you're done. Everything's fine. Yeah. So, it's, it's a, it's a thing now.
Bob Preston: 14:57 Yeah. And Oh, by the way, it's safe from a COVID perspective. No need for social distancing, with an agent and all that kind of stuff, because there isn't one there. All right. Uh, you touched on this one too. You've mentioned remote team members. They're sometimes known as virtual assistants, right. Are we talking about the same thing? Tell us about that. What is it and why is that an option?
Brad Larsen: 15:16 So the role I call remote team members because virtual assistance is it doesn't explain enough what they do. They really are part of your team because to me, a virtual assistants, like somebody you can use for one hour a week for them to balance your QuickBooks or write a check or pick up your dry cleaning or whatever. Now, remote team members, they really are part of your team. And so we embrace them, we adopt them, we put them on our website and include them in on the meetings. Uh, and they do a lot for us. And ours are quite frankly, they're all in Mexico. And we've had a lot of good luck with that. Uh, we've got some of those remote team members going on plus years with us. And I know it's been a w basically a lifesaving event for the business to create autism different feature, to where they can be done remotely. And that remotely could be done here in San Antonio, working from home and or anywhere in part of the world. And it's really amazing nowadays, because you know, you've been in your area in part of that California stuff. You know, people are moving out of the city and this is all kind of California. It's all over the country. They're moving to the suburbs and or the country. And, you know, what's driving that is internet. Internet is driving that because if you Bob can do your role or your job at your word, anywhere in the world, why would you want to go live someplace that's potentially dangerous for you and your family live somewhere that you potentially want to live and still work? That's been amazing to see it in the broadband is going to be continuing to expand that remote team effort, because, you know, for example, uh, you know, a big company called RealPage there, they do property where some of the other systems that, that work out for, uh, the property management industry, most of their teleport is working from home now how the world is turning. So I use him as an example just because I see them quite a bit. And I understand that they're all working from home, or they're all doing the same thing or better than what they were doing before in person enter the new world. And it's kind of an exciting time.
Bob Preston: 17:17 Yeah, absolutely. Hey, let's get into something that's a little more nebulous, artificial intelligence. We're hearing that a little bit in our industry. Yeah.
Brad Larsen: 17:23 I think you're going to see a little bit more of that come up. And it's mostly for lead gen and, or the basic questions that need to be answered. I don't know if you're ever going to really see it do much more than that. And what do you think? Well,
Bob Preston: 17:37 It's tough to see where it fits in. I think it's related to the next buzzword. So let's get them both out on the table, uh, process automation, right? I think there's a little bit of an overlap there. Do you agree?
Brad Larsen: 17:46 I do. And, um, the Holy grail of our is workflow automation, and that's what everybody wants. They want, they want to, where somebody applies that go to person, a person, a doctor that they do it they're close to data. Then it goes to the person be in that order, it's workflow automation. So somebody comes in on a Monday morning, we have 25 paths and knockout that are all on a dashboard. And that's sort of what artificial intelligence did, but it's not necessarily intelligent because there's somebody behind it punching where the diagrams are going. And all of these, these bots are going to be happening now, you know, it's ever changing. So I don't really necessarily know too much about it to where how's it going to affect the property management industry? Because we are service-based industry. I don't know how much it's going to really change what we do other than potentially from Catholic third stuff and, or just lead generation type of things. I mean, are you thinking different than I'm missing them?
Bob Preston: 18:44 Really? I mean, I, it's interesting and people ask me, well, what about process automation? What about, uh, artificial intelligence? I go, well, we use it every day. I mean, the most basic example is our auto-attendant when somebody calls the office, push one and this happens right. And then call gets routed. And if that person's not available, maybe that goes to another person. Eventually the phone gets answered and directed the right person. I mean, that's a really simple example. Chatbots are another one, right? A lot of people are putting chatbots on their websites and that's all a form of artificial intelligence and process automation, my point. And I think you brought it up is, Hey, this is still a relationship business.
Brad Larsen: 19:20 I think it's going to be next to impossible. And I also think that because of the fragmentation of this industry, if you rate the level of installation that is going to keep it safe for the entire duration, however long you want to say, because it boiled down to its service and a third is dependent on the local market and the local market varies every single market that you're selling. So it's never going to be something that any, any entities, no matter what, uh, we can't just slap a label on and say, this is how you do it.
Bob Preston: 19:50 Yeah, absolutely. Hey, this one could be multi-faceted too, but zero touch leasing. Another buzzword.
Brad Larsen: 19:55 The zero touch leasing became a word with the COVID. And we've been doing this for three, five years, at least. And the concept is the pendant we're applicant. The applicant never has to come to the office. Nobody ever has to meet the applicant. And the applicant never has to really interact with the office in person. So let me walk you through this and you'll get it. And you already know that it's fun with kind of walking through the audience. They apply online, they pay you a security deposit via a wire and or comfort of electronic payments. They sign a lease agreement electronically, all that's done through electrons, they communicate with you via phone and or text message. When it's time to move in, they go straight to the home via a box access to home via lockbox, and then move in. There you go, okay. The same can be in the exit. They can do a lockbox move out and exit without ever having to come to the office to give you keys, uh, all the stuff in between there, they can do an inventory condition form. And so for a walkthrough, uh, they can do repairs. I mean, all that general type leasing that that walked through in those first few steps is not that difficult to do. And now in the COVID world, it makes a lot of sense. And another thing I always tell people is on the leasing side, if you, you know, there are some old school thinking way to thinking to say, they want to meet with these applicant. They want to meet with each tenant and then want to see the tenant face, face. They want to work with them at the kitchen table and have them sign a lease agreement in person, you know, a couple of challenges there. One you need to bring into the fair housing stuff. Okay. And you could be accused of favoring, one person or another person and favor to them is discrimination, right? That's the fair housing. Monica. The other side of that is you're acting like Jim house attorney. If you're sitting across from somebody trying to explain to them what an actual termination closets or an Apple, because one of you explained that wrong. Okay. I've never been a big fan of trying to sit there and explain a lease agreement through pin it, because it's going to be, there's going to be disclaimer all over it. That says, take the plea agreement, who your attorney is, a legal document, have them review it and explain it to you. I don't want to be their attorney trying to explain a document to them. All that's done through electronics lease agreement now where they can have all the time in the world, they need to review that lease agreement in detail. There's no prep to have a face-to-face meeting. You know, they can review that lease agreement at 30 leisure, within a certain timeframe for you to read it, read it carefully and then sign when they're ready. So there's benefits to both sides of that. If you are not bothered, renting a home, I don't read anything. You know, you're probably bad as needed. Sometimes it's usually signed by the time bump, boom. When can I move in? Where do I, you know, how much down, how much am I right at the whole, my apartment? And that's what you're going to find. And leafing, neurotech leading people. You're giving them what they want. You know, if you look at it like that, it's a service aspect. Give them what they want and make it happen for them.
Bob Preston: 22:57 He'll help me get there from point a to point B faster, right? And to your point, the whole process can be automated. The application, the screening piece, the lease itself, the move in inspection. We didn't touch on that. Right? There are automated versions of that, where the agent can go ahead of time, like do the inspection, right? These three 60 degree cameras send it electronically to the tenant for signature. Boom. Okay. Here's your lockbox code. If you have any comments, once you move in, let us know. You've got three days to give us your comments on the, on the inspection, good stuff. There's so many different little things that can improve a business. Do you ever hear feedback from property management companies? God, that's a great idea, but my employees will never go for that. Now my staff doesn't want to change
Brad Larsen: 23:35 All the time and it could be about, it could be about one little thing. Um, and so part of this is you have to do things kind of by committee. What I'd say that is like, Hey gang, I have a great idea to do that. One thing in a business. Let's take a look at this. Let's brainstorm on that together. And let's find a way to implement something like that into what we want to do. So for example, I'm going to, I'm going to give you a detailed analysis on deployment because we implemented something called the maintenance service package. And so this is mandatory for all of our incoming owners that they are opted in. There's really no opt out, but we charge them X dollars per month. And we give them all these goodies and return all the maintenance service package. Now it's on our website. It's not anything I'm trying to hide. We fully disclose it to our owner. We now have had a couple of months, but in our took them by going backward a little bit, backing up and talking about it is I came up with this idea. It's like the reverse of a resident benefit package for the owner, but an owner maintenance service package. And what we did is we brainstormed it. Like literally we went into the office in the conference room. I have two big whiteboard behind me. I started writing down, this is what we want to do, but then what we want to provide the owner. This is the value that they're going to get in the annual inspection, annual HVC inspection, different all the goodies that were thrown in there. And for that is a therapy. We charged this X and after we went back and forth with the staff, everybody got to add in their 2 cents. And what I did was I got buy-in from the team because everybody got to contribute. And so I think that's something you want to consider. If you're looking at implementing any sort of new idea, any to our new business process, it would get the team involved in that decision-making process and let them influence in what direction to go. You sometimes you also tend to just have to make the division, the gang we're doing, right? The inmates run. The asylum is you sometimes have to just say, Nope, I get what you're saying. I get your concern, but work we'll deal with that. Yet. We're going to upset one or two or three owners we'll deal with them as they come up with the other 97, 98% of the owners are going to be defined with something like this. So, I think that we have to do kind of go forward and get the mindset that we can't be afraid of these new things that can improve our business.
Bob Preston: 25:56 I think that's it. I think that's the mindset. And sometimes I could be accused of this. I come up with these ideas kind of like you're talking about these aha moments from the networking I do in the industry. And so I go off and I brainstorm it and I talked to my buddies around the industry and I start to piece it together. And I come up with what I think is some structure, but I've been spending some time on it. And then when I introduce it to the team, sometimes they look at me like, are you nuts? You know, they, they, they don't get it right. Cause I'm sort of springing it on them. And so I like your approach. Bring them in, you know, Hey, I've got this crazy idea. I think it can work, help me formulate it. And then you've got the buy-in because they've helped create
Brad Larsen: 26:31 Yeah. Another good example of we had to recreate the, uh, the sales process. So when I, when I say that is we looked at how many, one of the points you and I were going to talk about is real fast. Well, you know, well, we ended up having to do this year is we had to revamp the failed practice because we looked at what we've been doing the last couple of years with the inventory home. And I'm talking about homes that we manage. And when that owner slash seller decides that they want to sell, but we've only been captured, just a small fraction of that visit. We did, we didn't, we're not doing enough prospecting. So, one of the things we did, we created a three-page plan, and we brainstorm with the team that the power we're going to do this, uh, I've got involvement from the business development team, from the operations team, from the accounting team. And we're also going to be taking the Mike Connelly approach. Now, Mike and I did a podcast while back when he, the property manager up in the San Francisco area and the genius move they were doing was doing who fails comparative market analysis every year for every owner, see where every owner, every year, when you're thinking, why would you do that? Why? Because top of mind, you know, do you want them to sell? No, you don't want him to sell out of inventory, but if they're going to sell, maybe they'll sell with you. And then maybe you can sell that home to another investor with the home, never leaves your inventory.
Bob Preston: 27:52 We've had, we've had homeowners say to us, Hey, I've got a real estate agent. I want to put my house on the market and we're can I, well, why don't, why don't you assess? And there'll be like, well, we didn't know you did that, right?
Brad Larsen: 28:01 That's the biggest kick in the teeth you get in this industry. We got to get that a lot. And it's one of the things where we're fighting an uphill battle. But part of the process, if you put those TMH every year in front of the seller, in front of the donor, constantly barraged them with, Hey, we fell homes. We sell homes, we sell homes. And so we went through and fit them. And from design on hiring a couple of key agents that are going to help do this, building a commitment, split, building their program, building out their profits. And it's an intercourse with mentor, even hiring more remote team members to assist them overall with the intentions of one, capturing more tail. That's the number one thing. And two, when we do capture those sales, sell those homes to another investor to lift the home, never leave the inventory, right? Katherine, more business. Don't let them put to ever leave the inventory. That's all we really wanted with our sales system to revamp. And so we're now on month two or three of doing it this year, here we are at the 1st of March. And so, we're only going to really know if these KPIs have improved after another six months or a year, but again, the half market, you know, we need to start talking about the real estate market yet. It's stupid hard right now. What's going on there?
Bob Preston: 29:10 Yeah, no, it's really hot. And in California too, and it's an opportunity. This is a big one for there, for the taking, but you know, it's not for everybody, right? Not all property management companies want to do this. It sounds like you're working on this too. I think we need to get better at it and understand how to do it and how to kind of manage a house account. That's kind of what you're talking about. The ones who you already have in your portfolio to decide to sell versus opportunities that may be come in from the outside or other people, you know, and how do those differ and get sold within the business? Hey, how about opening new territories? I think you did that, right?
Brad Larsen: 29:38 So I was, uh, yeah, I'm, I'm a failed, uh, Greenfield, or if you would call it a term, so, okay.
Bob Preston: 29:45 Well this is cool conversation then. Cause you know, I mean it's an opportunity that there, but it's a, again, it, it can be, it can be challenging.
Brad Larsen: 29:52 It can't be. And so three years ago I decided to do what we call Greenfield. Austin. Austin is only 90 minutes depending on you. I decided, okay, I'm going to open up its own little faction up there. Uh, open up, you know, try to get a property manager hired. Some staff do some keywords websites, lead generation business development. Try to build that from absolute scratch. And we only ended up building it up to like 15 or so units. And one of them were the problems, child, local property owners that were just like we're fed up with. So the end of the day, we ended up shutting it all down. We, we turn over the other property management account. We fired one owner. And so we only managed a couple of homes up there, but we no longer advertise. And so, what we discovered with opt-in is a very niche market. I mean, you have to kind of be there in there from there to really crack into it and not saying anybody else can make this work. You can really make it work in any of the market. From our experience. It was a real challenge. Uh, just because of all the dynamics in a new market. Now, San Antonio is completely 180 degrees, different it's military tinny. It's got a turnover. The churn turnover rate is different. Uh, it's the mindset, the numbers are different. The number of the price of home and often to the rent for 1500 bucks a month, it's going to be 400,000 versus a few hundred thousand in San Antonio. So it took the different market all together. And so, what we ended up doing was it like, okay, throw up your hands and say, you know what, uh, I think this is not going to work. We're going to, we're going to advance to the rear as I say and make a retreat. And we backed out of the ops and altogether that's our, that's our, you know, failing story in a nutshell.
Bob Preston: 31:30 I mean, you also have to set your priorities. You can't do everything. You have to pick which, which initiatives you're going to push on. And what are the opportunities you want to chase? And maybe it's this year pushed on sales, maybe next year. It's something else. Cause I know there are so many different opportunities out there and it's you can't, you can't be all things to all people. What about HOA? Have you, have you dabbled in HOA?
Brad Larsen: 31:50 I did. And I'm another failed story on that one because, um, you know, five years ago I opened up an HOA faction of management. We got two accounts and mandate for a little while and quickly discovered that it's challenging and then to grow is super challenging. The reason is in our market and I know people love HOA management at a certain level of property that they love it. There's another doctor that, uh, have been successful at it for us. What was going on is a lot of work in the beginning, very little return, you're dealing with nothing but of a group of Karen's that all we want to do is nitpick about who's parking the car where, uh, what happened with us. And that's what we discovered. We couldn't build a business as well as we wanted to because the HOA community, they have their HOA board and they have been working with a property management company, HOA management company from day one assigned to them from the builder. So, they walk into it with already the assigned management company. And unless there's something really egregious or awful, why were they want to switch? There is no motivation for them to switch because we're not saving that particular board member money. Right. They get the board money funds. They have they're working for free as volunteers or whatever. They're not actually making anything or saving anything by changing management companies other than giving themselves a whole lot of extra work. So it was so daunting for us now we ended up defending. Okay, good. We tried that, uh, tried to Greenfield method in a different market. I'm just going to focus on residential homes here in San Antonio and be very, very, very good death.
Bob Preston: 33:32 No, I think that's good to be razor sharp with your focus or rifle shot. Not try to be too shotgun. Uh, one, one more here and then we'll head towards wrapping up the show
Brad Larsen: 33:42 Maintenance. So the in-house maintenance deal. Uh, I've gone full circle on that as well. And so we used to have in-house maintenance where I had definitions on the payroll in my office at all times they have company vehicles that can go and pick a go around here. They're everywhere. And the end of the day, when it got slow in the where, uh, basically you're just paying them to sit around. So what we ended up doing was we, they naturally kind of went away. Those guys went back to the apartment complexes and then whatever they want on their own way. And we said, you know, we're just going to a third party vendor, everything. So, we just use third-party vendor, and we can cycle through them or without them, you know, because if you start using HPAC contractor and they start talking while you just fire and fire, no. Okay. So that's been working well for us now. We're I think the line in the sand is with, we just had a couple texts. So we were small. We were only really doing everything for now. Uh, we couldn't really go out and service the general public. We couldn't really go out and serve service other property manager. So it did for third thing, the home that we manage what'd I think limited at odds and also kind of precluded us from really turning the corner, making a profit. So we're, I'm going to make a point is super small. I would run maybe two technicians or go through for fig. So it's dozen 15, 50 technicians and 50 trucks think a lot of service. Everybody in the community, you know, general, you know, like a general public contractor services, other property manager, you'll get the home Depot and Lowe's service accounts, you know, and become an actual service maintenance company would maybe have HPAC and maybe have plumbing, all that stuff. So, if you get stuck in a no man's land where we were, it just doesn't work. You know, it just didn't work. I mean, you can make it work. You can work that we're a peg into a round hole, but what you learn to do is just kind of let it flow naturally with business. Again, it's either take small or go big. That's kind of the bottom line because we know property managers, you and I, that have really big maintenance companies, you know, a couple of dozen tax stuff, a dozen trucks and they killed it. They have to kill it. That's it's separate business. I mean, it's tied into management. You know, one of the things I've really, really like, and I want to do in the future is get into some sort of pool maintenance. Now in our market, we have lots of in-ground pools and there's only so many that we managed to have in ground pool, but there's also that we can maintain outside of our management services that I think is a very, very good recurring revenue business. I love the recurring revenue business model, such as, you know, your property manager, right? It's all recurring revenue, pool manager, it's recurring revenue. And if I right into a job.
Bob Preston: 36:24 General contractor and I have a separate business called maintenance sank and their maintenance thing is our primary maintenance vendor, if you will. But, uh, the concept that you've talked about to the point where it's a big operation where you're servicing other PMs, or maybe you're servicing hos or do it yourself, landlords with their own portfolios, I've thought about that a lot. My issue is my core competencies in the property management side, right? Like you, that's kind of where I want my business to grow are managing properties, helping people manage their portfolio, selling their portfolios, buying properties. Then all of a sudden, if you've got this other organization, which is a maintenance company and that's requiring X percent of your attention, it just seems like it could be super challenging.
Brad Larsen: 37:01 Yeah. It's a buildup to where you can have a general manager underneath you, you know, to handle that faction. That's really the end goal, but you got to do, you got to do the legwork, you just got to get in and dig in for six months a year to build it up where it could run itself.
Bob Preston: 37:15 Yeah, absolutely. Hey Brad, I always like to ask my guests to tell a personal story. And so hopefully you're up for this today. I love it because we get to know you a little bit as a person and an individual. So got something for us today.
Brad Larsen: 37:27 Yeah. I mean, the story that kind of touches me on the bids and the flat side is, you know, we suffered a large embezzlement now that we've discovered it, it happened several years ago and it's going on three years now, since you discover it. And we're talking to six-figure and Beverly from a key person in my business. Wow. And you know, when that was discovered, it was pretty devastating because that could be pretty close to, you know, everything, you know, pretty one of the first person that started with my company. And so, he just, we discovered that that person with, you know, basically by putting off ons and I'm not going to get into the details as far as any of that, but that pushed me to look at things in a different manner with the parent side, you know, I really adopted the mindset of Ronald Reagan trust, but verify. And so, we built in, you know, I was, I was one of the key people that started the Narcan accounting standards with Narcan. You know, that was the head of the chair because I had been personally victimized by bad accounts. It was my fault, a hundred percent my fault. I don't want to say I'm not putting blame on that purpose with my fault for not discovering that, you know, month one and doing something about it. So it's all on me and it's not, I'm trying to make sure that people look at this Northern County standards and say, okay, that's of some really good guidelines in there for checks and balances and doing different things. And for teacher to make sure that you think don't happen, forget about the embezzlement, the accidental, pure mistakes, right? The unintended, you know, honest mistakes Steph with something like that, having a backup in your accounting systems will do, and it's going to be for any business, any purpose you have. And through that, your accounting is up to snuff. And if you don't understand what it is or needs to be seek out assistance, that they, how can I make my accounting better right now? My mother-in-law being my accounting. And, you know, for example, people say, well, my mother-in-law is great where my accountant or my brother or my Twitter, my fault. Well then you never make mistakes. Right? Did they forget to carry this year on once in awhile? I mean that point you need overtime. And so we built that into the business and I think that the purple story, because man, it's been, it's been painful, you know, going through a civil battle, going through, you know, the legal battle in the courts. Uh, you got a criminal case pending. I mean, it's, it's been a nightmare. And you know, the day, you know, we had insurance claims and all this stuff, it's been difficult to deal with man. And I hope nobody ever has to go through that because it's been a nightmare.
Bob Preston: 39:57 Yeah. I think particularly companies that have trust accounts are somewhat susceptible, right? I've heard attorneys get that a lot too. Law groups can suffer embezzlement opportunities from grievous employees who do bad things. I mean, that's pretty much what it is.
Brad Larsen: 40:09 So kind of one of the, one of the capitals of that, Bob neat little thing is a lot of folks are turning into the preferred net program, like a note security deposit option. And so that became a trend along with the zeros, by leasing it, a lot of property managers are getting away from charging security deposits. And so I predict in the next couple, three years that you're going to see a significant reduction in the way people are charging security deposits, if at all, because all of the law did you work date? My date are pennant favored for security deposits, but dependents can, can just get done one little technicality of a snag over a period of time. They can get all they want. And then the attorneys see that. And they're like, Oh, this is a big target, a big property manager. Look what happened. I'm home for a triple this and triple that because they missed one thing on the period box or whatever. And so I think a lot of us are getting to the point of, right, we're not going to charge a security deposit. We're going to charge a monthly. And then we're going to bill you at the end, like a hotel, you destroy the planet. We're going to send you a dollar bill and you're going to pay it or I'm just going to have to get in collections.
Bob Preston: 41:11 Hey Brad, I would love to continue. I've got a hard stop coming up here in a bit and you've been great for coming on the show. I'd love to hear a little bit about PMM con. If you've got a minute to share what's up with it. W when is going to be what's the show going to be like?
Brad Larsen: 41:23 Sure. So the property manager mastermind conference is going to be going on in May, 2021 in the grapevine resort in, uh, excuse me, of the Gaylord resort in grapevine, Texas doubt. Okay. It's always Dallas, Texas May, 2021, but a PNNcon.com to learn more. The biggest thing about the conference really is it's going to be a second iteration. It's a fantastic event. A lot of mining built in that's the part of it, but the property management map to mine. So we've got schedule seven plus hours of a small group interacting. When these groups are going to be anywhere from 30 to 50 folks in a small room after we do the main stage stuff, all the cool speakers and presentations, we have to break down into those small groups. And that's where the facilitator kicks in to create that magic of like, what do you do? And this is what we do. And this is how I learned from you and network really going to be an office conference and a, to our annual work banquet going to be Friday night, the 21st black tie event, going to be an entertainment open bar plated seating, live band. It's going to be a fantastic deal. So visit PMM con.com uh, the trending issue going on right now, isn't going to happen because of COVID. Well, I feel the birth of Mark that tactic we'll go, Matt. Let's, we'll remove that mask mandate sometime in the next 30 to 60 days, but is going to make, uh, have an opportunity to have a map, free ministry situation going on in may for our own conference. And that's going to be fantastic to where people can get at it, like real adults again, right. Math free. So look forward to seeing you there, Rob. I hope I'm hoping you can make it.
Bob Preston: 43:04 Yeah, I got I'd. I'd love to, then I'll check it out and I'll try to get there and it would be wonderful. It could be mass free. Awesome. Well, listen. Any last words or thoughts for our audience about pursuing opportunities and how do you, how do you prioritize? We got to wrap up, but I just want to get some last thoughts.
Brad Larsen: 43:19 We could talk all day about that type of stuff. There's so many opportunities. Yeah. Overall, it's taken into account that this visit the property management is fantastic. You can build it up to where it can run itself. You can build it up to where your employees have a great career with your company. And it's all going to be a very situate. It's a great situation to get into an industry that's insulated from some of the craziest stuff. You know, I would definitely a debate this morning with Todd Workday about talking about, okay, is it if bill are going to come in and crush everybody? Well, you know, his idea is maybe it could, maybe it would, I'm more than on the lines of, well, I don't think it can because of the stuff we talked about, potentially it's earlier in the episode, but I just wanted to kind of give us a positive outlook for going forward in the future that I think we're going to be in a very good situation and it can be under the tail that are coming up and watch the market do it. Cyclical terms here and there. But in the other day, we're going to be around doing what we do has been providing a good service.
Bob Preston: 44:12 If someone wanted to learn more about rent works, where would they go? How would they do that?
Brad Larsen: 44:15 Oh, you can visit us online, rent, work.com T w E R x.com. And I send people there all the time just to copy that stuff we're doing now. I copied everything that we do, you know, but we're full to build your website. So if you haven't reflected about some of the, or benefits packages
Bob Preston: 44:32 Or anything like that, I go there all the time, but you got a lot going on that website, right? I mean, it's like, Whoa, this is a, this is amazing stuff. Hey, awesome, Brad. Hey, thanks again for coming on the episode. Really, really appreciate it. And as we wrap up today, I'd like to make another quick plug to our listeners to please click on subscribe, give us a like also pay it forward with a positive review to help encourage more guests like Brad to come on our show. Brad, I want that thumbs up that review from you to, you got to do it. I'll trade one back. Hey, that concludes today