There is no denying that Property Management can be an all-consuming profession. Once a Property Management business is established, however, it can be a fun and fruitful enterprise. For those who are considering starting a property management company, will 2022 be a good year and is the timing right?.
On this episode of Property Management Brainstorm, host Bob Preston is joined by Kathleen Richards who will share her thoughts on starting her own company and coaching others how to do the same. Kathleen is Founder of The Property Management Coach. She is also a nationally recognized coach, speaker, instructor, author, and thought leader for the last 30 years focusing on business, leadership, and specifically the field of property management.
A time-stamped transcript is below.
[2:30] Kathleen introduces herself and tells a bit about her coaching company, The Property Management Coach.
[4:15] With all the changes in the real estate market and landlord/tenant laws, is this a good time to start a Property Management company?
[10:10] Before starting a Property Management company, should that person to do an initial gut check to make sure they are cut out for it?
[17:50] Success factors and the profile of a person who is well suited to start a Property Management company.
[24:15] Buying an existing Property Management company vs. starting your own company ... which is the best approach?
[28:15] Bob and Kathleen discuss buying a franchise to start a Property Management company.
[31:15] Kathleen speaks about her approach and her "Three Step Approach" to running a successful Property Management company.
[40:10] Kathleen shares her story about how and why she got her start in Property Management.
[33:10] Kathleen shares her closing thoughts and to can reach her to learn more about her Property Management coaching and training.
Connect with Kathleen Richards
Kathleen's online course and training
Connect with Bob
Property Management Company in San Diego
This episode is always available for listening, sharing, or download at Property Management Brainstorm. Subscribe to Property Management Brainstorm on Apple Podcasts, Amazon Music, Google Podcasts, Stitcher, Spotify, TunedIn.
Bob Preston: 01:07 Hello, brainstormers this is Bob Preston, your host and happy new year. I can't believe we're already into 2022. Man, just seemed like 2021 just flew by. We have a great episode today and we're broadcasting from our studio in Del Mar, California at North County Property Group. If you're new here, please subscribe so you get ongoing access to all of our great episodes. And if you like what you hear, please pay it forward with a positive review. For those of us in property management, I think we can all attest that it can be an all-consuming profession when done correctly and once established. However, it can also be hugely rewarding, whether you're starting a property management company or have been doing it for a while. It's important to have a strong foundation in place for success and always continue to evaluate your company. If there are areas for improvement today, we're going to have a really great dialogue and speak with Kathleen Richards to hear her thoughts on running a sound property management company. And we'll learn from her experiences not only in starting her own company, but also coaching others how to do the same. Kathleen is a certified professional coach and founder of The Property Management Coach. Kathleen is also a nationally recognized speaker instructor, author, and thought leader for the last 30 years, focusing on business leadership and specifically the field of property management. Kathleen, thanks for being here today. Welcome to the show.
Kathleen Richards: 02:27 Thank you for having me on.
Bob Preston: 02:28 Absolutely. I always like to start our show by having our guests introduce themselves and perhaps tell us a bit about your company. And so why don't you kick us off with that, Kathleen?
Kathleen Richards: 02:39 Okay. So, um, many people within the NA world know me. Um, I've been a member since 2005 and owned my own brokerage, um, for over 13 years and sold that in 2017. Um, and prior to selling it, I became a certified business coach, and my niche is property management. It's what I know, it's what I love. And I just saw a huge space there that really there was nobody filling it. Nobody really supporting us small business owners in how to be, you know, the best business owners we can be and all of that. So that's why I started the property management coach and I've been coaching ever since then. And then I was fortunate enough. Um, many people also may know gene storm. She started landlord source and then she retired in 2017. And so, I purchased the company from her and rebranded it to PM made D Z. And, um, those are the documents and things that help support an office. And so, it ties nicely with my coaching practice because my niche within the niche is helping people start and or streamline if they've kind of started a property management business. Um, and they haven't really put anything in place. So, my niche within the niche is helping people start property management companies and grow them.
Bob Preston: 03:55 Got it. Yeah. Not an easy task, right. I think, especially in this environ, it's been kind of a strange couple years, right? Lots of changes. Yes. In our economy, the way society functions today during the pandemic politically of course, you know, the environment has changed dramatically, and you know, lots of changes in landlord tend laws and also the real estate and rental markets. So, I guess, you know, a fundamental question is, wow, what's the landscape out there are for property managers. And is this a good time if you're thinking about starting a property management company, is this really a good time to try to do that?
Kathleen Richards: 04:27 I love this question because when I first became a professional property manager, that was in 2005. Okay. And then we all know what happened in 2008 and 2009. And it was a very scary time. My business was initially under the umbrella of a real estate office and the real estate office. I'm in a small little market, Santa Cruz, California. Um, they were very well known, and they filed for bankruptcy. Yikes. So that's when I went out on my own and I was completely panicked. I was going to lose all my clients and all of that. what I can tell people is that fear is a very powerful motivator. right. And so, what I discovered was that property management is one of those industries or businesses that excels, um, times economy has challenged, or people have a lot of fear. And as you said, the past couple years, you and I are both in California, you know, the moratoriums and rent control and all these different things is becoming more and more difficult for an individual person to manage their real estate.
Kathleen Richards: 05:34 Very true and, and not get sued and just all the things is changing all the time. Right. Um, and so I covered that in challenging times, my business boomed. And then when times are good, my business did very well because now people had the discretionary income to pay for property management. But my business grew leaps and bounds in the 2008, 2009, 10 timeframe, which was surprising to me because I, I was kind of panicked about what was going to happen to my business. Um, so again, you know, when you've been around long enough, you've seen cycles come through. I think this is a fantastic time. If you were thinking about expanding and going out on your own or really, you know, scaling your business to the next level or starting a company now is a great time because you know, a lot, you may know way more than what you think, you know, you're in it every day, you're dealing with it, but for the average person and out there, they're becoming really scared because of the constant changes.
Kathleen Richards: 06:42 And, you know, I know within the industry in general property managers, because we qualify people to make sure they can pay the rent. And we reach out to our tenants when issues come up, most property management companies, very, very few tenants that weren't paying their rent during the moratoriums. Right. It, I think it's really fallen on those individual landlords, and they just didn't know how to navigate it. They didn't know what the laws was were on their side. Things were changing constantly. So yeah. Now is absolutely beautiful time to get into property management. It seems very counter intuitive, but I think it's a great time for you to really be able to serve clients, bring value to the table, um, and to really help those people that need help.
Bob Preston: 07:30 I tend to agree. Uh, my take on it is a little bit different though. Uh, first of all, you're absolutely spot on the fear that we all had, I guess, year and a half of, of people not paying rent and all that. I mean, there was a little bit of that due to the pandemic and loss of jobs and things like that, but it wasn't to the degree that we all had feared. There was, there was a lot of fear in the beginning to your point of, oh my gosh, you know, is my company going to survive or people going to pay their rent. And for the most part, that was not a huge problem for most people, right? In property management company. Now I can see that that might have been for individual landlords who didn't know how to navigate that. The thing that I've noticed though, over the last year and a half is that perhaps, you know, those entry table stakes have changed a little bit, right?
Bob Preston: 08:10 Because during the pandemic we've had to pivot and we've had to do things differently. And there are a lot of technologies that have now come into play for most of us, us to become more efficient, maybe be a little bit touchless in mm-hmm during the pandemic that now, you know, nobody's going back, right. So, this is kind of the way things are done. So, it's kind of an interesting time, but I agree with you that it's a great time, because if you come in, all these things are already in place and available to new potential property
Kathleen Richards: 08:37 Managers, and you may not have the same overhead that you might have had before. True. Because of all the technologies, right? Yeah. So, I know quite a few of my coaching clients actually let their leases go on space that they were paying. And so that's money. They can reinvest back into their company because they don't have a brick-and-mortar office space anymore. Yeah. That's true. Tenants pay rent online. Mm-hmm, they're able to do keyless showings, like you said, more and more is becoming remote. And although our industry's been trending that way, I think people on the other end were very resistant to it. Property owners yes. Were resistant to that. Um, maybe even old tenants were resistant to it, but they've been forced into that's right. Doing a bunch of things that is new for all of us and feels uncomfortable. And then once they kind of do it, they're like, oh, I can see the benefit of this.
Kathleen Richards: 09:27 Oh, I can see how prospective tenants really like being able to go see the property at different times with the keyless showing system. Oh, I, you know, I mean, so the change was forced upon all of us and some of us dove into it, you know, more readily than others, others went kicking and screaming. Um, but the reality is I think there will be more of a, like a hybrid model. I mean, some people may still have an office, but if their staff wants to work remotely or they're using virtual, you know, office, people support VAs, all of that. I think now people are becoming a little bit more comfortable with doing business in a different way. I agree
Bob Preston: 10:05 Completely now you and I have something in common in that we've both started property management companies. Right. And I don't know about you, but for me in the early days, man, you know, there were moments where it was absolutely gut wrenching. I wasn't sure if I was going to be able to make payroll, you know, all these kind of things in the very early days I'm talking about, you know, there, there were days I had lots of self-doubt. Other people were wondering, you know, what the heck, what is I doing? Why are you, why are you getting into that? I guess what I'm getting at, is it for a person to do this? There needs to be kind of this initial inspiration, this initial gut check, if you will. And I suppose that's true of starting any company regardless of, of industry. Uh, but property management's no exception. Do you agree? Oh,
Kathleen Richards: 10:47 Absolutely. Um, the one thing I see in my coaching is you have kind of two different types of personalities that go into property management. You get those that just jump in with both feet and, and say, I'll figure it out on the fly mm-hmm and then you get those that are, um, fearful and doubtful and they want to know how to do everything the right way up front before they even like take one client. Right. Um, I, I think no matter what business you start, you need to go in with eyes wide open. And one thing I did in its little piece of advice, I give to other people that are thinking about getting into property management, especially if they've just been doing it for themselves, or they're transitioning from one career into something else or people that have always done sales and they've never done property management and they think, oh, it's easy.
Kathleen Richards: 11:38 I just collect a rent check and put a tenant in there. And that's kind of all I have to do. They don't really understand that you're running a full-blown company. Right. Um, is I tell people to try it on for size first, before you commit to it. So, I had been managing my own rentals for years and my husbands and so forth. And then, um, I'd worked in Silicon Valley when I got transitioned out of that as often happens when you're in high tech. I um, and, and my husband retired, he was a fireman and we moved back to the full time. I didn't want to do the commute to Silicon Valley anymore. Um, everybody kept encouraging me to get into property management and I was like, you know, doing it for myself is one thing I get to call the shots. It's my property.
Kathleen Richards: 12:28 I don't know if I'd like doing it for someone else where I'm not the owner property. I'm the facilitator. I have to be a good educator, negotiator, persuading the owner, why they need to spend money here and you know, just all those things. Right. So, I went and tried it on for size. I worked for a local property management company that a very good reputation in our area. And I worked for them for six months. And by then I already had my real estate license and everything. And, um, within a month I felt like I had found my tribe. I loved every single thing about it, so that when I decided to go have my own company, it was a leap of faith, but it was an educated leap of faith. It's not, I, I wasn't fearful about, did I make the wrong choice because I already knew I loved it. Yeah. It becomes
Bob Preston: 13:20 More like, what, what can I make this be rather than do I really want to do this? And do I have what it takes?
Kathleen Richards: 13:25 Right. And I think the most important thing for anybody starting a company, um, or starting anything, you have to be really connected and tuned into why, why you want to do this? Mm-hmm because you're going to be doing it yourself. Typically, people don't have money to hire a big old staff. And you know, I mean, it's you, and there's days where there were days where I definitely would've given my two weeks’ notice. I been working for a company, but you can't, when it's your own, you got to figure out a way to solve it. You've got to motivate yourself. You have to be persistent. You have to be a good problem solver. If something's not working, how do I make it work? Right. You have to be industrious. Um, and so there's not, you know, I, I think there's at least where I'm living and, and, and where you're at too.
Kathleen Richards: 14:19 There's a lot of startups and there's this whole romanticism around becoming an entrepreneur. Okay. I think it's great for people that want to start a business and do that, but there's nothing wrong. Absolutely. Nothing wrong with being an employee for somebody else. If you don't have kind of the stomach to be an entrepreneur, the ups, the downs, the, you know, whatever, that's okay. You know, we need everybody to make a company run efficiently. Right. But if you are going to go out and do it yourself, you need to really kind of do some research and go out there with your eyes wide open so that you don't make tragic mistakes. That could cause you to lose your real estate license, get sued or something like that. Right. Right. Um, and that your, your sick successful, I mean, nobody wants to start a venture and then a year into it, go I'm out.
Kathleen Richards: 15:15 I just, I can't do this. Right. So, um, that's a painful lesson to learn. So just going with your eyes wide open, but you have to really, really be connected to your why, like, why you want to do it because that's, what's going to get you over the hump and kind of the self-doubt and real quick on the self-doubt. I used to say voicemail messages from my owners that would call me up. And I had a, a couple owners that were just fabulous and I'm a very direct person. And so, they were very direct, which is why we worked out well together, but I would get voicemail messages. And this was back in the day before smartphones and all that sort of stuff or little notes. And I'd have clients saying, Kathleen, you're the best property manager I ever had. Or I just want to let you know, you are doing a great job.
Kathleen Richards: 16:03 I never worry about my property. And I would save those so that when I had a really bad day or I had the owner that raped me over the Kohls, I would hit and replay my voicemails and go, you know what? I really do know what I'm doing because we tend to absorb that one negative piece of information. And we hold onto that. And we don't, we tend to let all the, the affirmations go, and it should be the reverse, but as human beings, we do that. Right. Absolutely. So, I used to save all my voicemails. I had little letters and postcards from my little old ladies, and I would tape 'em up just to remind myself that I really do know what I'm doing.
Bob Preston: 16:42 I still do that. I still go back to our Google, my business page. And I read their reviews that are still there from a few years ago that are positive affirmations of the good job we're doing for a lot of clients. And sometimes you need that piece of inspiration. Right? I also like you know your, why I'm a big fan of Simon Sinek. I, I bet you've watched it the golden circle, right. If you've not, you should. Um, I look at that video, it's a Ted talk where they talk about, okay, the why will really drive sort of your instincts on what you should do in business. And everybody knows what, okay. What you do, you're in property management, maybe how you do it. Well, I use property management software, but why, why, what gets you up outta bed every morning? What drives you to succeed at this?
Bob Preston: 17:22 For me? Like you I'm, I'm also a former Silicon and valley, uh, executive. We should talk about that sometime, but I found property management to be collaborative problem solving, helping people, all these attributes that I did in my normal Silicon Valley life. And so, for me, that was what I was looking for in my next phase of recreating my career. So that's why I, I took it on. Correct. That's really interesting. Well, good stuff from your perspective. I mean, you probably talk to a lot of people, and you know what they're all about. I mean, is there a profile that's best suited to start a property management company? I mean, I think there are a number of tangible requirements that somebody has to have, right. They certain have to have obviously a license. They probably have to have some level of experience and legal knowledge, maybe an amount of finances to fall back on. Right. Maybe some savings in the bank. What does that look like? Predictors, if you will, or the success factors that you've seen before taking that leap?
Kathleen Richards: 18:17 I would say those, um, yeah, the one thing I've noticed in the past year, there were a lot of realtors that were saying, oh, I want the consistent cash flow and kind of getting into mm-hmm property. And, um, the one thing I've really noticed, and, and I tell people that straight up, what are you kind of that? Why like you, do you love sales, or do you love and other things, right? And if they say they really love sales ask, 'em why. And based upon the descriptors that they're, you, I will know if they're going to be a good candidate for property management or not. Mm-hmm. And so, what I have found is the really highly, highly successful sales agents, their personality characteristics are kind of 180 from the highly, highly successful personality, characteristics of a property manager. Yeah.
Bob Preston: 19:09 They can be kind of gun linkers. Right.
Kathleen Richards: 19:12 Yeah. And, and, and they're out there and they do it. And usually, the top performers have assistance and transaction coordinators and all sorts of things. They're, they're superb salespeople. They may not know how to put together an actual contract, but they have somebody that does that for them because they produce so much when you're in property management, the people that are typically attracted to property management are very operational people. They're people that like routines, what I hear from people that come to me all the time for coaching is, you know, I do sales, but my clients are knocking on the door. They want me to manage this. They want me, but I want to do it. Right. I don't, you know, so they're smart enough to say, I don't want to just take it on and figure it out on the fly. Right. So those sorts of people I know will be more successful because they're deliberate, they're intentional, they're detailed, you're putting together leases and management agreements.
Kathleen Richards: 20:06 These are legal contracts, people right. Um, just how you, you need to know fair housing. I mean, I can't tell you, um, I, a VA I use for some project management, she's in Florida and she's had a heck of a time finding a new place to move to. And so, she just found a place and she was sharing with me, her experience. And it was mind blowing of what was happening to her in Florida with realtors that were like trying to show her properties and lease things up. And some of the stuff she was telling me was outright illegal, like outright illegal to do against fair housing, all sorts of stuff. So, I think personality wise, um, the people that I've seen most successful in property management are, are people that do like to look at things from an operational perspective. They like to have a plan in place.
Kathleen Richards: 20:59 They like to kind of work that plan for those that aren't like that it doesn't mean you can't have a property management business. You do just need to know at the get go, you're probably going to have to have an operational person working with you, setting up the office, getting all the forms and things that you need in place and what your processes are going to be, because that's just not you. Right? Right. Yeah. So just being cognizant of that alone, um, cause that's why I see people struggle. Those agents that do manage a handful of properties and they're just always shooting from the hip, always shooting from the hip because they don't think operationally, it's just not who they are.
Bob Preston: 21:38 If you had to pick one thing that somebody should have to enter a property management business or start a property management business, what do you think I'm going to give you one what would that be? Um, it's tough. Huh?
Kathleen Richards: 21:49 The one thing for, it's tough to get it down to one thing, because you know, initially I want to say they need to be somewhat organized, but again, you could hire an assistant to help organize your life. Um, I would say they need to have a really clear picture about what kind of a business they want to create for themselves. I agree. They need to be, have clarity around what this is going to look like. Like, are they doing multifamily? Are they doing commercial? Are they doing single family? Are they going to pick one neighborhood? Because I get newbies that think, for example, they're going to do all of San Diego County or they're going to do the entire San Francisco Bay area. And I'm like, uh, no, you're not. no, I mean you'll burn out. So, dog quick. No let's, you know, when somebody's new, they think they need to reach everybody. And the opposite's true. You need to go niche, niche, niche, niche, because now you know who to target to now, you know who to say yes to, to, and who to say no to. And it's so much easier to build a business when you're really, really clear about your prices and your services and where you're doing business and who you want to do business with. So, I'd say clarity about what you want your business to
Bob Preston: 23:05 Look, especially in the early days. I oh for sure. My word would've been focus kind of this same thing. I think we're talking about the same thing, right? We cover all of San Diego County now, but you'll notice the name of my company is north county property group. That's because when I entered the market, I could not conceive of trying to cover all of San Diego County. Right. So, um, we focused on north county. So, for me, uh, focus was the primary, everything. I knew that I wanted to focus in a place where there wasn't at least in that particular ditch as much competition then right. Once we had a foothold in the north county, coastal area of San Diego, then we started to expand. Likewise, we focused on the higher end of the market. I learned very quickly that 80% of the property management problems were coming from about 20% of the properties and yep. Uh, that is not what I wanted. You know, I didn't want to burn a lot of time on properties that, uh, not only didn't produce good property management fees, but they were going to bring a lot of headaches. I had a lot of
Kathleen Richards: 24:01 Clarity at the beginning about who you wanted to work for and who you want to work for that's right,
Bob Preston: 24:06 Right, right. And it morphed very, very quickly. So, I think that's the other piece is I keep, keep focusing on the focus. Right. So
Kathleen Richards: 24:12 Yes. So, you don't get distracted for
Bob Preston: 24:14 Sure. Okay. So, I've got another great question for you. This is really fun. Uh, love talking to you fundamentally. I think they're probably two basic approaches to getting into the business and the property management, I suppose one would be, uh, buying a company. Right. One of, uh, that already has portfolio. I considered doing that myself when I first wanted to get in the other would be building your own company kind of brick by brick from scratch. Right. All organic growth. How did you build your company when you started and what do you recommend to someone who you're coaching when they're first starting? Okay.
Kathleen Richards: 24:46 So remember how I said at the beginning that I tried it on for size mm. To see if I even liked it true. Right before I invested all this time, building a company to realize, no, I really don't like this. Right. So once I knew that I loved property management, I loved every aspect about it. Okay. I remember. And I'm in a super tiny little market, lot of vacation companies and things like that.
Bob Preston: 25:09 Very similar to our market here in Delmar.
Kathleen Richards: 25:11 Oh. And generational people like there's certain names in real estate that like have been here for generations. Okay. So, I remember just kind of putting out there, you know, it'd be really, really awesome if I could buy business from somebody retiring because it would take me forever to grow my business organically and I don't have forever okay. My husband had just retired and so I was looking to buy something and then my intent was to make it better and sell it in five years. So, so it was just a weird thing in that Craigslist was new at the time. And I happened to be looking on Craigslist and under professional, there was, um, 20-year-old property management company owner wants to retire. So, I reached out to him and within three weeks I bought the company, and I was confident in buying it because I knew I loved it so much.
Kathleen Richards: 26:10 Right. So, I went in and bought his, but he had over the, he was a good salesperson. I think he was probably an okay property manager, Santa Cruz, county's quite large. And he had properties everywhere and he had a lot of bad properties too. So, I decided early on, I go everything that was way up in the mountains or way down in the agricultural areas. And I focused on prime towns and neighborhoods and so forth. I would cycle through and every year, close out a certain percentage of my portfolio. As I brought on higher end properties, better properties, better owners to deal with. The other thing I did that I think was really key to being profitable, kind of at the get go was in my area again, old school, everybody charged one, one rate. It was a percentage of the rent. Uh, and they said they did everything.
Kathleen Richards: 27:04 Mm-hmm yeah. And right at the get go it's like, I don't do everything for that. I'm sorry. No. So I immediately unbundled, and I said, this is my management fee. And then these are the other things that I can do for you. And I attached a price to that. So, I uncoupled stuff. And the way I market in position was that you pay for the services that you use. But that's what I did was I, I bought a business and then refined it and put in processes and systems and, and all of that for a 13-year period.
Bob Preston: 27:37 So that's really interesting. I took a little bit of a different approach. I did look at buying a company in the early days. And then I was just not quite sure what I was going to get. And I was a little bit worried about getting a leaky bag. Right. And so, I looked at the amount, I mean, obviously to buy a company like you did, you have to have the financial resources or the ability to get a loan to do that. Um, so I kind of looked at it differently. I said, well, if I'm going to put this amount of money and to buying something that I'm not sure are going to get out of it, that makes me a little nervous. I'd rather take it slow. I had time to develop the company, kind of build it in my image and vision and do that over the course of time. Right. It's a different approach. I suppose, a in between in all, this is the concept of a franchise. There are property management franchises that are popping up. Some of them are quite around the country. Yes. PMI is one, uh, real property management. Um, there's several others. What are your thoughts on buying into a franchise to get started?
Kathleen Richards: 28:34 So, this is such a great question. And I coach quite a few people that franchise and the very first time someone came to me, um, part of the reason people buy a franchise, provide a, all the systems for them, right? Like how to make a sandwich. Property management is a little bit different, I think, than how many franchises work. I was shocked when people came to me initially and, and the person that first came to me, they literally had been a manager of a Walgreen store. And then out on a whim, bought a franchise. So, they knew nothing, literally zip, zero, nothing about property management. And I've seen that happen kind of time and time again. And a few people that had franchises that came to me literally after like a couple months, you know, they'd hire me to help them with a training. What do I need to do?
Kathleen Richards: 29:24 I have all these systems, but I don't know what to do. Um, they ended up folding because the franchise fees were just so expensive. They completely drained their bank within three or four months. And they had no clients. Right. I think you just need to kind of like go in with your eyes open. You cannot think that if you know nothing about property management, that buying a franchise is going to do it for you. I, I think that's kind of a mistake. I would tell people to learn about property management. Maybe go work for a property manager for a little bit before you make that big investment. Right. And see if you really like it, see if it's really what you think it's going to be. It's well worth your time to go work for somebody for six months or something. And then when you have a better idea of yes, then maybe make that leap.
Kathleen Richards: 30:13 If you want to do that, me personally, I wouldn't do a franchise, but I'm also the same person that would never own a condo. I don't believe in HOA peeps. Okay. I don't like somebody else telling me this is just me. And I know myself well enough. Right? I don't like somebody else telling me what I can and can't do what color I can paint my condo. What, you know, I mean, I, I don't want to be part of that. I know I would not work well with a franchise because they've got their model that they want me to follow.
Bob Preston: 30:43 I actually did a franchise on our sales division side. We, we affiliated with Weichert Realtors, which is a national brand, and that's been helpful in establishing a brand and some identity for our sales division, for the, for the agents. Right. I didn't do that for our property management side. Um, I know a lot of people are doing it, I suppose it provides some sort of a template, maybe a platform form, which elevates your launching point, perhaps. So maybe you don't need quite as much runway. Um, but I think again, it's an interesting personal choice when you're first starting out. So, let's drill down a little bit on your approach when you're coaching people. And you're talking to someone about starting a property management company. My understanding is you have kind of a three-step approach. Can you tell us about that and what those steps are? Yes.
Kathleen Richards: 31:22 So to simplify things for people, because I think sometimes people overcomplicate what it means and what they need to do to start a business. Right. But for me, I've kind of boiled it down to three things, plan perform, and then profit and I put profit at the end. Planning is so important. I can't tell you how many people I coach that kind of just jumped in or people gave 'em a property to manager and they had no plan. They still have no plan. Right. They're constantly putting out they, they run what I call a reactive business versus an intentional or proactive
Bob Preston: 31:58 Business. And that's just not for people that are starting out, blows my mind. I'm involved in NA too. And I meet 'em. I met a bunch of people in Kansas City in October and oh, we don't have a forecast. I'm all what? You don't have a budget. You don't forecast, you know, blows my mind.
Kathleen Richards: 32:11 No people just kind of go for it. Right. And so, um, planning is really important. You need to have a plan for all the different facets of your business. It doesn't need to be Uber complicated. You know, this isn't a master's degree course in, you know, getting an MBA, but you do need to have a plan. You do need to know what you're going to do next. You need to think kind of through your process because when you do that, that ties into your word of focus. You need to have a plan. Okay. Then the second part of that is once you have your plan, okay? Whether it's your marketing plan, your budgeting, your operations, even planning out who your next hire might be when the dime gums. Right? Um, how many doors you want to have? Like I'm constantly shocked when people say to me know, I want to make X amount of money per month. And I know that that may not be reasonable at the get go. And I go, okay, well with the average rents in your area and what are you expecting to charge? Let's do some basic math. How many doors that does that equate to? Or have you done the math? They go, no, I don't. We sit there and we do the math real quick and they realize that they need 150 doors that kind of income or whatever. And they're like, oh, like all of a sudden reality hits. Oh. And I go, okay, that's a good long-term goal. Let's back it up. And what's a realistic monthly goal to get there. Right. So, you got to have that plan. Then the next thing is you have to put your plan into action. You have to actually do stuff. Things aren't just going to fall in your lap. Yes. You can do social media and you can put the word out there, but you have to work it. And that's the hardest part of being an entrepreneur, right? There are days when you don't feel like do it, but you have to, I mean, that's part of it. You get out there and do it. You've made that promise to yourself that I'm going to do this. So, you're doing it day in, day out. Whether you feel like it or not, some days you don't see, you know, the reward, you don't feel like it's happening, but it's like the farmer you plant the seeds and months later, things start spread. Does it sprout overnight? Not necessarily. Right? So, it takes time and perseverance. And then profit is the final thing that I say that if you're doing all those other things up front, you will be profitable. But when I work with people I talk about at the beginning, we need to be really clear. What services are you going to offer? And what's your pricing going to be? So perfect example. I had a fellow come to me, um, had worked in, I think like commercial real estate wanted to transition into residential. And he was going into mill valley, which is very high end. Right? Very high-end homes, probably rent $10,000 a month for people in other parts of the country that have no idea what California's like. Um, and so when I asked him what he was thinking of his pricing and so forth, he, he wanted to go in with some absolute ridiculously low, low, low, low management fee. And I'm like, well, why are you, why do you mm-hmm want to do that? He goes, well, cause I'm new. And you know, I don't have a ton of experience and I go, okay, so you're going after the lowest price, who are you attracting? Right. And I said, also the other thing is you're not going to get the kind of business you want because, and this is the example I gained. If you saw an ad, for example, on Craigslist for a Ferrari listed for $10,000, what would your first thought be? He goes, oh, that there's something wrong with it. So, you need to know your market. You need to know what you're doing. Also, if you're going to price yourself at that, how many doors do you need to have to actually make a living? If you go in as the cheapest person in town, who are you attracting? You are attracting people that want to pay the cheapest amount of money for their property. And they're going to be demanding all kinds of stuff from you. And I find it very interesting in the property management industry, maybe it's changing, but I know for a very, very long time, um, I used to get beaten up, you know, I'd go to conferences and I would tell people these different things that I'd put in place in my business, profit centers or revenue streams or whatever. And they, they would kind of beat me up over it. And there's this mindset around making money is a small business owner. And so, I do a lot of coaching with people around. If you're going to be in business, it's your duty. to be profitable. It's wonderful to be profitable. It's no fun to pay the taxes when you have a profitable business, but on the flip side, it's wonderful. And then I feel valued for what I'm doing. So, then it kind of reinforces what I love doing versus being beaten up every day, you're doing all this stuff for your owners and you're not earning anything. And so, you feel really devalued. Absolutely. So that's a big part of my coaching with people is that mindset around profitability and what that means for you. But that's my three-step process plan, perform and profits.
Bob Preston: 37:22 Interesting to hear your, your philosophies on profits. I call it my moral obligations. It's my moral obligation to be profitable.
Kathleen Richards: 37:28 Yes. I agree. A hundred percent to.
Bob Preston: 37:30 To my life, to my employees, life, to our clients, to stay in business to my family, all these people, moral obligation to provide a great place to work. I can't do that if I'm not, you know, it's not a money grab here folks. And if you're uncomfortable with our fees, I'd say this to our employees all the time, who struggle with it sometimes like, well, that should be included or so, and so's pushing back and well, then they can go talk to another property manager, who's cutting corners and charging less and they're going to be disappointed. Believe me. Right.
Kathleen Richards: 37:57 Then, so my little line that I used to say to people when I'd meet with clients and they would say X, Y, Z company does it for this price, would you do it for that price? I go, no, because this is what you get with me. Yep. Right. But I'd always do the caveat. I respect if you have a budget and if you can't afford to work with me at this time, that's okay. Maybe we'll have an opportunity in the future.
Bob Preston: 38:19 I like that. I like your model too. The plan perform profit. I'm going to say this based on my experiences that that cycle leads to be wash, rinse, repeat, right. It needs to be, it's not a onetime thing. Right? I mean it, and, and depending upon how quickly you grow, it could be even several times a year. What I found in my business is that we would grow to a certain point based on that plan, perform and profitability to where either something broke and we had to change some processes or change some things, almost like a stair step effect. Okay. Then guess what? If you get to a point where maybe your processes are broken, you may need to reinvest in maybe technology and more people that might hurt your profitability for a while. Right. But guess what? You become more efficient. Then you run a little while, right? So, it's this interesting cycle of continually planning, valuing your performance and striving to be profitability. And that never ends. And my experience right.
Kathleen Richards: 39:14 It's not one and done. And that's the other aspect that I love about being a small business owner, but you're so right. It's, it's never going. And I think sometimes people don't realize that either. You know, when I tell 'em okay, you have your policy and procedure manual, you set it up, but it's a living, breathing document. It's not one and done. I mean, it constantly, as laws change, as things change, you want to go in and
Bob Preston: 39:40 Update that this is not a binary business is another thing I say to all my employees. They say, well, we want to, we want to understand the rule on this, uh, pertaining to security deposit disposition. Oh, well that would be nice if it were a binary thing, it's either this or that. It's not always the case. Lots of times there's interpretation and judgment involved, right? Yes, God, this has been really, really a great conversation so far. Uh, one of the things I always do on this show is I ask my guest to tell a story about themselves. I'm a big storyteller. I like to do it when I meet new clients. Oftentimes I find it helps people connect to me. Right. So, I kind of love doing that. Do you have a story that maybe defines you, uh, shape your life or, or something either personally or professionally that you you'd be willing to share?
Kathleen Richards: 40:19 Yeah, so I'm, I'm the eldest of a single mom that was on welfare. And so, you know, I learned very on to become very self-sufficient and if I wanted something done, you just go for it and you do it right. Mm-hmm and, um, you know, fast forward after for college and all of that, I was working in high tech, um, for Microsoft actually in the bay area in the early years. And I was in marketing, and you know, I was out of college, you're proving yourself. I was working 60-hour work weeks. It was not uncommon to be there till two, three in the morning, go home a couple hours, come back at 6:00 AM. Right. My whole division ended up being downsized. I was a PowerPoint product manager and now PowerPoint was part of office. You only need a one marketing team. And so, it didn't make sense for me to relocate up to Seattle, to stay with the company.
Kathleen Richards: 41:15 Um, so that had a huge effect on me because another value that I've had my whole life is loyalty. You know, I'm super loyal to my friends. That's just really important to me. Right. And here I felt I've been very, very loyal to this company. And then I was just like, go, you know, I, I learned quickly that everybody is disposable does not matter what you do within the company. And that was kind of a harsh lesson for somebody that grew up with the whole notion and really bought into, if you just work hard and you buckle down, you'll do well in achieve and move up the ladder and so forth. Right. the.com thing was happening. Right. That was big. And everybody was trying to get me to interview with all these companies again. And I was like, I, I just didn't want to do it.
Kathleen Richards: 42:01 You know, it left such a bad taste in my mouth of just getting, let go. Right. And your identity's tied to it and your value and worth mm-hmm. I decided that I would never work in a corporate environment. And so, I just decided I'm going to have a business. And if I work 60-hour work week, I get the reward from that. If I don't get the business, then I go out and hustle more. Right. Like there was that direct correlation between if I work hard, I'm going to do well and I'm not going to get laid off. Right. Like I'm my own boss. My clients might fire me. And then that's the signal. If everybody fires me, then obviously I'm doing something wrong. But I like that direct feedback that I got from my clients. You, I mean, I knew immediately they'd call me if something wasn't right. And then we would solve it together or work on it. So, for me having my own business was just, you know, everything I'd learned prior to that prepared me for having my own business, working in the corporate environment. I applied everything I learned there along with, you know, I have a master's in business as well. Everything I learned there, I applied to my little company. I mean, I ran my company. Like it was some big fortune 500 and it was just me in the beginning. Right. But the things that I put in place and how I thought about things in my mind, it was like I was running a big company. So that's a bit of piece of advice I would give for people of don't devalue when you're starting out and saying, oh, I just have a small company who are a future company today. Right? Like what you do today will be the future result of where you're going to be.
Bob Preston: 43:38 That's, that's very interesting. I mean, uh, I love your story about kind of deciding to leave Silicon Valley and, uh, the story about becoming an entrepreneur. Very similar to my, my story as well. I'd like to tell that to my perspective clients, because it's a way for me to communicate to them that, hey, I'm not to some real estate broker who's who jumped into property management. I mean, this is my business. Hey Kathleen, this has been a great conversation today. Lots of good information. Thanks so much for coming in the show. Of course, I'd love to continue, but we need to wrap up. Do you have any last words for our listeners today? And if someone wants to connect, find out more about your coaching, some of the trainings you have coming up for new property managers, how would they go about finding you
Kathleen Richards: 44:16 I'm in the process of, um, creating an online course for those people that want to start a property management company, or they've kind of started one, but they don't know what the steps are to take. Right. And that'll be coming out in February. And I, um, have a free training that I'll be doing in January the end of January on the three steps to generate revenue year-round. So, if people are interested in that they can go to PM done, right.com and there's a low registration there where you can sign up for, um, that free training that'll come out in January. And then if people are looking for individual coaching or, you know, someone to just help them streamline their business, or want to inquire more about one-on-one coaching, they can go to the property management, coach dot and see the programs that I have available there.
Bob Preston: 45:13 Perfect. I'll put links to those, to URLs also in our show notes. So, people can find you and your websites and your trainings and wow. That was wonderful. Thank you so much for coming on the show.
Kathleen Richards: 45:25 You're so welcome. Thank you for having me.
Bob Preston: 45:27 Thank you, Kathleen. As we wrap up today, I'd like to make another quick plug to our listeners to please click on the subscribe button and give us a like, pay it forward with a positive review, because that helps encourage more guests, more great guests like Kathleen to come on our show. And that concludes today's episode of the property management brainstorm. Thank you for joining us today until next time we'll be out in the field, working hard for our clients to attain top pretty value and maintain top tenant relations and we'll catch you next time.