Thank you for joining us for another episode of The Property Management Show. Today, we’re talking to Doug Brien, who is the co-founder and CEO of Mynd.co, a property management startup. Before we talk about his innovative new property management platform, there are a few other things you need to know about Doug.
First, he’s a former NFL kicker who went to the Super Bowl with the San Francisco 49ers.
He also co-founded and led Waypoint Homes, a company managing 17,000 single-family homes in 13 different markets around the U.S. He personally has investment properties, and his entry into the property management business began with his inability to find effective and exceptional management for his own rental investments.
Today, we’re talking about Mynd.co and how he’s using the lessons he learned at Waypoint Homes to make the property management industry better.
A Property Management Startup Raised $35.6 Million
Mynd.co is a venture-backed property management company that raised $35.6 million and has 2,500 units under management.
This is significant.
There’s a lot of momentum behind Mynd. With more private equity and VC-backed money in the property management industry, acquisitions and consolidations are moving rapidly, changing the landscape of this business.
Technology and systems can scale the potential of property management businesses. This is what’s behind Mynd, and it’s not new to Doug and his team. This is what they began at Waypoint.
The goal is to create a property management company that can perform at a level high enough to attract institutional capital. There’s a tremendous opportunity to build a 21st century property management platform by using technology to systematize and measure tasks and outcomes. You can’t improve something if you don’t measure it.
Data is the new oil – have you heard this saying yet?
People are beginning to realize that data is the most important resource in the real estate business, and especially in property management. The companies that know how to collect it and harness its power can create simpler and more profitable investments for people who want to own rental properties.
Property Management Performance Gaps: Lessons Learned
One of the major performance gaps in the property management industry is the visibility and use of data, metrics, and reporting. The things that an individual investor wants in a financial package are much different than the things an institutional investor wants. End-of-the month statements are great if you’re looking back at your performance. But, your new investor clients may want real time data. When you can create real time visibility, you can use what’s happening right now to make adjustments and corrections. You can focus on the right things.
Vacancy is a problem for investors of every size. Data has shown that self-showings can make a big difference in lowering your vacancy rate. With smart locks that generate codes for limited periods of time, prospective tenants can see a property immediately. There’s no time to waste with scheduling and coordination. One of the biggest conversion fails is scheduling appointments with agents. With self showing technology, people can be pre-screened and given a code to let themselves into the property.
Things move faster this way. The philosophy of Mynd is to meet people where they are and create a seamless experience. A mobile-enabled experience allows people to find an ad, see the property, apply for the home, pay a deposit, and sign a lease. It’s seamless and it’s faster. You rent the property quicker and to a better quality of tenant.
These are tenants who are willing to self-serve. That shows you something about a potential resident.
This is not forced. Mynd offers both self-showings and appointment settings with an agent. A competitor of theirs, Progress Residential, completed a helpful study that showed 90 percent of their prospects chose self-showings over personal showings, and those showings have a higher close rate.
That data is hard to ignore.
The Depth of Opportunity for Professional Property Managers
More data that’s hard to ignore is what the Iceberg Report has published.
The report focused on single family properties and multi-family units up to fourplexes. The findings showed that there are about 22 million rentals in the U.S. Only 30 percent are professionally managed versus the 70 percent that are self-managed. In Australia, it’s the other way around.
Why are U.S. real estate investors self-managing? Who would want to do that?
This is the trend that Mynd is trying to reverse, and Doug has two suspicions on why landlords and investors are managing their own properties.
First, finding good property management is difficult. That doesn’t mean good companies aren’t out there. They are. But, there are also a lot of mediocre companies, and there are some that just aren’t good. If an investor has one bad experience with a property manager, trust is lost. That investor concludes that the asset is too important, and will manage it all alone.
Second, there’s been a culture of DIY in America. That’s changing because it’s generational. Real estate has never been a market that was focused on customer experience. When service providers can do better and help people to feel comfortable trusting their most prized asset to a company that can provide value, those statistics may change.
Another thing to consider is that Australia is more tenant-friendly. There are rules and laws that are far more complex and prohibitive than the regulations we have in the U.S. So, it’s difficult for an individual owner to navigate those successfully. They need the help of a professional.
Ideas to Improve the Property Management Industry
Mynd wants to make it easier to invest in small residential rentals of 50 units or less. That covers 84 percent of all rentals. This is a financial investment. If you invest in stocks or bonds, you can get real data on your phone, and you can find high caliber professionals who will manage those investments for you.
Why can’t that be possible for the property management industry, too?
Mynd is trying to make it feasible and simple. They want to create a more compelling investment platform. A majority of real estate investors own rental homes within a 60 mile radius of their own residence. But, the chances that these are the best places to invest are pretty low. If you live in Oakland or Hayward, you might be better off investing in Kansas City or Dallas or somewhere in Florida.
With innovative management technologies and their own software, Mynd can gather operating results and financial results in any market. They know where things are happening and where they’re not. That’s going to help them put together a portfolio of different properties in different markets.
Investors should be in the markets that make sense. They should have the choices to move assets around. Doug sees a point when fractional ownership is possible, and investors can sell half of a building in order to do something else.
Lessons Learned. How is Mynd Different from Castle?
Doug and his team are successful raising capital and meeting expectations. He is aware, however, that nothing is ever guaranteed.
It’s difficult not to think of Castle Property Management in Detroit, Michigan, which was also VC-backed and focused on technology and systems. Doug is working with Scott Lowe, who was part of the Castle team. There’s a lot to learn from the Castle experiment, and Doug said he had a lot of respect for what they did in Detroit, and how strongly they believed in what they were doing.
What they got wrong, Doug believes, is that they didn’t bring in enough subject matter experts who know the property management industry. They lacked the experience in growing a company. There are always going to be mistakes. The difference that Mynd is making is that they are constantly measuring the levels of customer satisfaction. It’s their focus.
Growth Through Acquisitions: How to Buy and How to Sell
Mynd is growing through acquisitions, but they don’t think of it as buying companies. They think of it as partnering with companies. The strategy is called Land and Expand.
They land by finding the right entrepreneur with a portfolio that’s a good fit. They pay for the value that has been created, and they partner together to move forward. The owner or the team members might stay with the company, and they become a part of Mynd. These are local market experts who know the area and the properties. They are invited to share their goals and to build the portfolio. That’s the land piece.
The expand piece is the large digital footprint that Mynd leaves. It’s the online presence combined with the offline channels that create indirect and direct growth.
If you’re thinking you might want to sell your company in the next 12 months to a platform like Mynd, you should begin to identify its value right now.
- Everyone has a different way to value companies. One thing that’s consistent, however, is that a potential buyer will want to see your revenue. Your recurring revenue from leasing and management fees will matter. So, if you want to grow the value of your company, you need to grow your revenue.
- Next, consider what your contracts are worth. Management agreements that are a month or two old will not be as valuable as that contract that’s been in place for two or five years.
- Be careful about exceptions. If you’ve got side deals with some of your owners that are outside of your normal operating procedures, it’s going to be difficult for the company that’s acquiring you to meet those existing obligations.
- Audit all of your leases and property management agreements. Clean up your accounting.
It’s a good idea to hire a consultant to help you through this process. It will make your business clear, and you’ll find it’s a positive ROI experience for you. Buyers like Mynd will want to see clean, consistent, transparent businesses.
Get your consultant on board three to six months before you want to sell.
Look for a person who is involved with institutional property management. For example, maybe you can reach out to someone who works in the business and would be willing to give you 10 or 15 hours of their personal time. You could pay them around $75 per hour, and at the end of the project, you have properly audited your business, and you spent very little money.
You can also send some sample contracts to a potential buyer. They won’t go through every lease, but they might tell you what kinds of trends they see, and what might be a problem for you.
Pricing your Property Management Services
Pricing always depends on the market. Mynd is creating software that makes pricing part of task management. Property management is a series of tasks created by owners, tenants, and the property itself. Your job is to resolve those tasks. To properly price your services, you need to know what things actually cost. What does it cost to lease a unit? What does it cost to collect rent? To manage residents?
In the future, Doug expects to be able to price in a way that offers investors more flexibility and more ease. Data, again, will lead to a meaningful strategy.
Mynd is excited to do things differently. They’re starting a model for short term rentals. In the Bay area, you can earn twice as much revenue with short term rentals. Because they’re more operationally complex, new software is needed to handle the shift in services that are provided. Property managers can change 15 or 20 percent, and the investor will be on board.
Marketing and Technology for Property Management Entrepreneurs
Maybe you’re the owner of a management company, and you’re in high growth mode and you’re managing between 600 and 800 homes. Mynd cannot take all the business that’s out there, so what is your biggest opportunity?
Doug thinks that opportunity lays in word of mouth from customers who have received excellent service from you.
Property management is a trust and credibility business. If someone finds a good property manager, they are willing to tell everyone. Your sales cycle on one referral is fast and easy when you do a great job.
There’s also a technological revolution happening right now that can help you. Property management companies who can ride that wave and leverage the opportunities it provides can earn more money. Figure out how to use the technology to drive customer service and earn referrals. You’ll thrive in the next five to 10 years.
Be obsessed with customer experience.
Property managers are always finding themselves between owners and tenants, so you’ll get negative comments from someone. When that happens, get to the bottom of the situation, resolve it, and make it right. Admit when you’re wrong, and respond online proactively.
Invest in the systems and the technologies that allow you to monitor your reputation and your ability to provide great customer experiences.
Marketing and brand management brings more lifetime value out of a new customer. Every referral is valuable, and it’s how a growth-minded property management company can strive and survive.
Property Management (and the NFL) Requires a Thick Skin
Property management is not unlike being a professional athlete. No matter how many good things you do in your career – it’s the thing you missed that will always be remembered.
Maybe you saved someone tons of money on repairs or leased a property for the highest possible rent. The only thing that person might remember is the eviction you screwed up.
Have a thick skin, and focus on what you can control.
PM Grow summit is coming! It’s going to be April 17 to April 19 this year, and Alex wants to know who you want to hear from at this summit. Send him an email at firstname.lastname@example.org.
Thanks for joining us.