Avenues to Property Management Growth: Q & A with Alex Osenenko | Fourandhalf - Internet Marketing for Property Management Companies

The Property Management Show has been on the air for about two years, and each episode inspires a lot of feedback from listeners. There have been some questions along the way as well, so on this episode, host Alex Osenenko is answering some of the specific questions that listeners have submitted. Alex will use his experience and expertise to answer these questions, and you’ll notice they apply to nearly all property managers and small business owners.   

Background: Alex Osenenko

What makes Alex uniquely positioned to answer these questions?

He has spent the last 10 years in the property management industry, and the last six of those years as an entrepreneur and business owner. He has scaled Fourandhalf from being a garage business with 0 employees to a thriving company that currently employs 27 people and continues to grow. In addition to this experience, Alex has talked to thousands of property managers at different stages of their careers. He has spoken to successful business owners, business owners that have failed, and a whole section of professionals in the middle of the spectrum of success.

Alex sees the purpose of his professional life clearly: it’s to help small businesses grow. This is his passion, and the podcast serves that purpose. Here are the Questions and Answers he’s chosen for this episode.  

Question 1: Struggling with Business Structure  

Sam from Longmont, Colorado started his company about four and a half years ago with a few properties he took over from another management company. He got into the business because he was looking for something more stable than just selling real estate. Now, he’s managing 85 properties – most of which are high quality single family homes. As Sam has grown at about 30 percent for the last two years (way to go, Sam!), he’s wondering how to structure his company. When he first began, he was doing everything himself. That included maintenance, accounting, inspections, and showings. Most of you can probably relate to that.

Once he got to 40 properties, Sam knew he had to make a change. He hired two people; one to help with maintenance and one to help with showing available rentals. As he continues to grow, Sam wants to know how to adjust to increased business. His question is whether to bring in some extra showing agents or switch to a portfolio structure and bring in an administrative person.

Alex has another idea.

Answer 1: The Squad Structure

According to Alex, Sam is in the perfect position to continue scaling with a squad structure. For Sam, that means having a Property Manager Executive on top, who is responsible for speaking to clients. All client interactions should go through the Property Manager Executive. Below that, there is someone handling maintenance support, rentals and leasing support, and maybe accounting. So as a squad, that structure operates efficiently because there’s a single point of contact for your clients. According to expert Adam Hooley, you should be able to handle between 150 and 300 properties with a properly organized squad.

So, Sam’s path is pretty clear. Take the time to spend a day or even half a day reviewing and listening to the Framework of the High Performance Property Management Team with Adam Hooley. Check out that interview, listen to the podcast, and pay attention to the book that he mentions and allows you to download for free. Put the structure together and fill it in with properties. Then, when you’re ready to build that second squad – you already have the framework.  

Question 2: Turning Leads Into Business

Monty from Florida has owned stock and commodity investment firms for the last 25 years, so he’s comfortable using the phone and cold calling. It’s his favorite tool to generate leads at a low cost per acquisition. Property management is a good fit because he’s been helping investors get better returns for 25 years, and this is not much different. Recently, Monty hired one of his former commodity brokers to do cold calling for his property management business. There’s been some initial success, but so far most of the leads they have closed have been only for tenant placement accounts. Monty hopes to convert the placement-only accounts into management accounts in future.

He knows he is one of the best salesmen and closers; and he’s good at hiring and training his procedures with similar results. Monty and his team close as much as 30 percent of their inbound leads and average a minimum of 15 to 20 percent closing rate. His struggle is in getting more leads. Monty says he sees companies like Empire in Houston, that claims to have built 0 to 700 doors in four to five years, or Larsen Property Management (now RentWorks), claiming to add a door a day. He knows those are impressive numbers, and he wonders why he has a hard time generating 40 to 50 leads a month, let alone 30 doors.

Monty recently spent $15,000 on radio and internet marketing to only generate 60 leads in a month. He wants to know what the marketing budget is for companies like Empire and RentWorks, and what they spend to get those results.

Answer 2: Internal and External Ways of Increasing Growth

The companies Monty mentioned are important. Steve Rozenburg and his partner Pete are at the helm of Empire, and Brad Larsen runs Larsen Properties, which is now RentWorks. The numbers mentioned by Monty are real and true; their growth is staggering. And his question is – how can a company get the same growth rate as Empire and RentWorks?

There’s an internal and external path.

Internal Pillars for Growth: Purpose, Numbers, and Experimentation  

First, you have to establish your purpose. The purpose of an organization is not to enrich its founder. That’s the outcome, not the purpose. The purpose of a company has to be higher than that, and something people can connect to and belong to. Brad and Steve have a loud and clear purpose. Everyone knows who they are and what they’re doing. They want to lead the industry, and their teams are aligned behind that purpose. They have values, and they talk about those values all the time.

Next comes numbers. You have to understand everything about your business and its numbers. For example, Steve and Pete with Empire obsess about Key Performance Indicators (KPIs). This is what drives the decisions about which direction the company should take. Know your numbers on pre-sale and post-sale terms. Pre-sale is what happens before you bring a customer in, and post-sale is after you sign the customer. Be obsessed with KPIs.

The last piece is experimentation. Both of these companies are exceptional at experimenting. Steve and Alex have spent hours interrogating each other about marketing, growth, what can be done to grow smarter, and why things aren’t coming together as fast as they would like. Those intense conversations required deep thinking about every single aspect of growth, marketing, and scaling your company. Brad is the same way. He runs his own podcast where he interviews property managers who have ideas about better ways to do things. He thinks.

Experimentation culture starts with the owner and trickles down into the organization.

You need resources to fund experiments. Renter’s Warehouse spent 25 percent of revenue on marketing to scale up the business. They don’t spend that much anymore. But initially, they spent that to bring the business up to the level they wanted. You don’t necessarily have to spend 25 percent of your revenue. But, you have to invest into business growth. Put the money you earn back into your growth. If you are looking to grow, have a consistent and strategic budget allocated to marketing and growth. That should be around 10 percent of revenue, depending on your operations structure and how much you want to grow.

Ongoing Investments vs. One-Time Investments

So, Monty invested $15,000 on marketing and radio in November. That’s great. But what if he put $15,000 into marketing and radio every month? Generating 60 leads in one month is not so bad, especially when your close ratio is 20 percent. That means Monty earned 12 contracts in that month. Imagine that your Annual Customer Value is $2,300 or $2,400 on management fees alone. Multiply that by four years, which is the average number of years a customer will stay with you, and you’ve got a lifetime value of $115,000. If you can produce $115,000 over the lifetime of those leads after spending just $15,000 – you’re doing pretty well.

So, it makes sense to keep investing that $15,000 every month – not just one month. That’s how successful businesses operate. Look at unit economics and acquisition costs. If you can pay back your acquisition costs in six or seven months, your investment makes financial sense.

Know the math, and keep experimenting.

Yes, it’s going to be expensive and it may reduce your cash flow for a while. But, that revenue will catch up.

Continue to experiment.

Don’t expect immediate gratification.

You have to look at success from the perspective of annual and lifetime customer value. If you want a great, profitable business, you need to understand that spending $1,000 or $2,000 to acquire an account is cheap.

External Pillars of Growth: Content, Reputation, and Conversion

When you need more leads, you need more content to attract those leads. Both companies that Monty mentioned have well over 150 or 200 or 300 blogs that are basically explainer videos. Those blogs are talking to prospects about managing a property. They are a platform for sharing expertise. That content brings thousands of visitors to their websites.

Next, reputation is critical. Steve and Brad are obsessed with reputation. They check their reviews and they figured out a way to get positive reviews. Find a way for your happy clients to speak on your behalf. You need to commit to a culture of positive reputation. That includes rewarding employees and asking your customers for reviews.

Finally, your external source for more leads is conversion, which happens through your website. Brad and Steve don’t have cookie cutter websites. You need a site that converts visitors into clients. Design a site that can effectively communicate your value propositions and then resonate with visitors.

The companies Monty mentioned are on top of their respective searches because of their internal and external foundation.

Question 3: True or False – SEO Won’t Save You

Matthew from Raleigh asks – when someone says SEO won’t save you, to what extent is that true, and in what way is it missing an opportunity?

Answer 3: No, SEO Won’t Save You. But it Will Help You (If You Do Some Other Things Too)

The last answer focused on internal and external frameworks. Those things are necessary to answer this question too, and it’s worth repeating.

You have to have the framework internally. And externally, you need content and conversion. SEO is plugging keywords and restructuring your website so it responds to the right keyword searches. It’s a back-end website structure that engineers a way for Google to understand what your website is all about. Then, your site is found for particular search terms.

For that purpose, SEO is an enabler. But – if you don’t have a company that’s aligned, and you don’t know your numbers or track your KPIs, SEO won’t matter. If you don’t understand what it costs to acquire a customer and you don’t know where your leads are coming from or what it’s costing you, and you refuse to experiment – then it is true: SEO won’t save you. Your customers will come in and out through a revolving door that never stops swinging.

You need your purpose and a team that cares. Then, you need content, reputation, and conversion. If you are authentically answering questions, and you have a great reputation with a website that converts, then SEO will enable your strategy.

But, on its own without those core principles employed in any business, you have a leaky bucket that SEO cannot fix.  SEO makes an impact when everything else is working for you.

Question 4: Relationship Between Marketing and Business Growth

John from Minnesota asks – why should I spend money on marketing if I’m not growing?

Answer 4: Investing in Growth is NOT Optional

If you’re not growing, it’s probably because you’re not marketing. Or, it’s because your team is not aligned or because you don’t have a purpose that’s clear and communicated. If you’re not growing, you’re probably not looking at your numbers every six months.

Growth happens to companies that are programmatically going after their purpose. It happens to companies that are structured correctly internally and externally, and are well-positioned. So if you’re not growing, find a way to put budget towards acquisitions rather than whatever activities you are currently investing in. Your money’s going somewhere. Are you spending it all on payroll or software? You pay yourself a salary, and then where does the rest go? Which part of your revenue is dedicated to growth? If you say none – then there will be no growth.

Running a business is difficult, painful, and lonely. You have no one to complain to, and you have to make decisions and solve problems. You have to be unpopular sometimes to save the organization and the company and the critical customers. It’s a lot easier to do things the way they’ve always been done. That’s the definition of an easy life as an entrepreneur. If things worked one way 20 years ago, you think they should still work that way now. But, that’s not true in most cases.

Everyone wants to grow, and the urgency to grow requires an investment. Whoever you hire to help you, you need to put in the resources and the work.

Find a partner and invest time in this. It’s important to understand that anything growth-related requires an effort. It requires experimentation and investment. Successful property management companies figured that out, and they’re not stopping. They aren’t just setting it and forgetting it or leaving their system to run on autopilot. They experiment continuously.

Listen to Brad Larsen’s podcast if you get the chance – it’s called The Property Management Mastermind. You’ll gain some exceptional knowledge out of that.

Today’s Takeaways:

  • Understand your purpose and align the team behind it.
  • Know your numbers.
  • Be a culture of experimentation.
  • Make tons of content.
  • Be obsessed about reputation.
  • Create a website that converts. Make it unique and explosive.

That’s the winning formula.

Contact us at Fourandhalf if you have any questions about property management growth, and we’ll start planning another Q&A show in the near future. So, send us your questions, and thanks for listening.

Alex Osenenko

About Alex Osenenko

Alex’s professional mission in life is to help small businesses grow and thrive. Alex is the President and CEO of Fourandhalf.com and a Co-Founder of the PM Grow, Inc. His business philosophy is simple: Happy Customers are created by Happy Employees, which results in Happy Shareholders. Alex's deep commitment to entrepreneurship and improving the lives of small business owners everywhere empower him to host “The Property Management Show” bi-weekly Podcast and speak internationally on the subjects of Growth, Marketing, Sales, and Entrepreneurship.

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How we got these numbers

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• Customer Lifetime Value (4 multiplied by ACV)
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• Estimated Lifetime Profit (at 20% of LCV)
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Alex Osenenko
President and CEO

Alex’s professional mission in life is to help small businesses grow and thrive. He is the President and CEO of Fourandhalf.com and is serving his 5th year on the Board of Directors for CALNARPM.

After spending 9 years in the trenches with his property management clients, Alex draws on his experience to host “The Property Management Show” Podcast and co-authors a weekly Property Management Blog on Fourandhalf.com. Alex has extensive experience speaking for various NARPM events at the local, state, regional and national level.

Alex is a graduate of San Francisco State University with an Electronic Commerce Systems Degree. His business philosophy is simple: Happy Customers are created by Happy Employees, which results in Happy Shareholders. Alex serves on the Board of Directors of CALNARPM (California Chapter of National Association of Residential Property Managers) and hosts a Podcast “The Property Management Show“, available on iTunes.

 

John Bykowski
Chief Operating Officer

After graduating from the University of Michigan with a film degree, John proceeded to do everything but. During his career, John has specialized in operations and has developed processes for small companies in diverse industries, such as bleeding-edge marketing technology, social networking, trade shows and exhibitions, and cloud software. John and Alex had worked together previously, and when he needed someone to help take Fourandhalf to the next level and beyond, Alex brought in John as his first employee, and later, business partner.

In addition, now that he’s using his film school know-how to help property managers look their best in their blogs, his mom no longer feels his degree was a complete waste of time.

Danny Morris
Director of Account Management

Born in Australia and growing up in Israel, Danny has spent a lot of time traveling the world between those two places. After completing his military service in Israel, Danny began following his biggest passion, writing, which he discovered while backpacking South America and publishing his first book.

When it was time to unpack, he returned to Australia to complete his Journalism studies amongst the beaches of sunny Perth. Danny is a huge online fan and after working in a number of related jobs, he finally gets to combine his two favorite things, working with media and people.

Marina Osenenko
Product Manager

Marina draws upon her real estate, business operations and customer service expertise for Fourandhalf. Her favorite part of being with Fourandhalf is the opportunity she has to really get to know our clients, build professional customer relationships and truly be part of a team that assists in their success.

Her time away from work is happily spent watching her children grow up and attempting to keep up with them! Any spare moments beyond nurturing her children are filled with hiking, spending time with friends, exploring the Bay Area and squeezing in a non G-rated movie every now and then.

Marie Liamzon
Product and Marketing Manager

Before joining Fourandhalf, Marie worked for one of the largest banks in the world. She took on different roles, but couldn’t find what she was looking for. She pursued a variety of side projects until she finally decided it was time for a career change.

Marie is very passionate about helping people and learning new things. In her spare time, you might catch her exploring new places and taking far too many pictures.

Kyle McLean
Customer Success

Born in San Diego County, Kyle McLean has since migrated to the Oakland woods. A fan of tall trees and tall tales, he holds a bachelor’s degree from the creative writing program at the University of California, Riverside and is a licensed California Certified Shorthand Reporter.

After a few years as a freelance court reporter, Kyle has joined Fourandhalf for an opportunity in sales and digital marketing. In addition to reading and writing, his hobbies and interests include gardening, hiking, soccer, coffee brewing, and craft beers.

Karen Wyle
Account Management

Originally from the Philadelphia area, Karen moved eight times in seventeen years all over the East Coast and to the Midwest before settling here in Northern California six years ago. She is an alumna of Brandeis University with a BA in American Studies and earned a MBA in Marketing Management from Indiana University in Bloomington. Karen’s business career has been well-rounded, with experience including advertising, direct marketing, corporate retail, product management, new product development, and new customer generation. Beyond an office setting, she has been thrilled to volunteer her time giving back to the community with KPMG’s Family for Literacy, at her daughter’s school, and as a Girl Scout Troop Leader. Karen enjoys music, good food, traveling to new places, completing jigsaw puzzles, meeting people and making connections.

Karen became a part of Fourandhalf’s Account Management team in 2016, relaunching her marketing management career after a pause to raise her family. She is excited to rejoin the business world and to work with such a strong marketing management team.

Paige DeRuyter
Account Management

Paige graduated from Chico State University with a degree in Journalism. Her favorite part of working at Fourandhalf is helping clients create and produce educational blog content to grow their business. She is an avid sushi enthusiast who enjoys riding her bike and watching college football and in her free time.

Nissim Boozaglo
Web Hosting Support

After working as a Radioshack store manager, Nissim decided to change his career path and pursue his passion for music production by getting his B.A.S. from Expression College for the Digital Arts. Nissim has a beautiful 8-year-old girl and loves cooking delicious homemade food and going camping with her! At Fourandhalf, Nissim is responsible for the implementation of the clients’ Landing Pages and Google Adwords campaigns.

Theresa Barnes
Campaign Director

Theresa Barnes was born and raised in the Bay Area and graduated with her Bachelors Degree in Communications Studies at San Francisco State University. She worked in aviation at a private FBO for 3 years, and other industries, before joining the Fourandhalf team. She finds a balance between being a young mother, work, and living a healthy lifestyle outside of work by staying as active as possible. She is dedicated to customer satisfaction and having a great work ethic.

Brittany Stephens
Campaign Director

Brittany recently moved to the Bay area after graduating from California State University Chico with a degree in Business Marketing. She is known for her excellent communication, customer service skills, and shameless nerdyness. Her passions include: music, tabasco, Lord of the Rings, and the Golden State Warriors.

Logan Jones
Business Development

After graduating from CSU Chico with a Degree in Business Marketing, Logan moved back to the East Bay and pursued a career in sales. With an attention to detail and a relentless drive, he strives to improve himself and his passions each day. When not at work Logan enjoys playing guitar and writing songs, and occasionally performing around the Bay Area. He is an avid sports fan keeping up with everything SF Giants, 49ers, Cal Bears, and Golden State Warriors.

Hope Lumbley
Account Management

Hope recently moved to the Bay Area after graduating from Chico State University with a degree in Journalism. She is coffee crazed, dog obsessed and hopes to visit all National Parks. One of the greatest times in her life was when she lived abroad in Costa Rica and hopes to travel more of Central America in the future. She feels blessed to work for a company who supports her love for travel and the need to learn more about what the world has to offer.

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