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The topic today is how building a culture of innovation can grow your property management business. Our guest is Chris Hermanski, someone I’ve known for six years. Chris, can you tell us about yourself and how you came to be a property manager?

A: I’m the owner of Mainlander Property Management, in Oswego, Oregon. Our emphasis is managing individually owned single family homes and condominiums. We have a portfolio of about 1,300 to 1,400 properties and we work with 1,000 to 1,100 clients. My degree is in business management and I’ve been doing this for 35 years. I kind of fell into the property management business. I was selling real estate for a few years, but that was when interest rates were high, so it was hard to make a lot of money. Then I started managing houses for builders and we built the property management company from there. I have been involved with NARPM since 1997. I’ve served on the Board of Directors for eight years, I’m a past national president and I founded the Broker Owner event. That’s really our platform for connecting with owners of property management companies and dealing with what’s new and coming.

Q: It’s an honor to have you on our show because I know you’re busy so catching you for a few minutes is important. Let’s dive right in. I don’t think there is any more product innovation left. To really build something new you have to innovate the factory, not the product. I say this because one of the people I look up to the most is Daymond John, who said on Shark Tank that there’s nothing new that’s been introduced for the last 500 years. We are interpreting the old in a new way. Even Twitter is essentially a pigeon mail. It’s a note on a bird that gets scaled up dramatically with digital channels. You have been innovative with your company. In my early Appfolio days, you were already an established client. How do you come to be in the forefront of technology and how do you pick the good innovations?

A: We are always looking for the next way to improve and enhance our business. I believe in technology and how it can enhance what we’re doing. I like learning how to apply it. I don’t look to the property management world; instead I look to other experiences I have as a consumer. Sometimes the property management field lags behind other industries. So I look to banking, the real estate community, and little things come up. I always thought it was cool when I had a dentist appointment and I got a text as soon as I made an appointment, then a reminder text a few weeks later, and then a text before my appointment. It might have been annoying, but I never missed an appointment. So I thought that would be cool if we could use the same technology for showings. We have come up with some technology that we think is ground floor right now, and we’re working to implement that. You have to keep your antennae up and see what’s going on and how it might apply to what you’re doing.

With Appfolio, we were using a software product before that for accounting that was archaic and not doing well. We came across someone doing a fact-finding exercise for a property management solution, which became Appfolio. We were able to tell them what would make a perfect property management program. They created a dream cloud of what we needed. That was exciting. There are other innovations that are also exciting and speaking to what we need. Remote lockboxes and using standard business technologies like scanning our answering services or voicemail systems. We are always aware of how we can incorporate things from the property management industry and even outside of the industry.

Q: Tell us about your decision making process. A company like Appfolio approaches you, and you know that switching software would be significant. How many properties did you have then?

A: 1000 plus, I believe.

Q: So there were a lot of properties to switch, which comes with some risk. I know that LeadSimple also came to you around the same time, but you weren’t interested in trying that technology just yet. So I’m curious: you made the move with Appfolio, but you weren’t ready for LeadSimple at the time. I know you’re using it now, but you didn’t then. How do you decide what’s good for right now and what you need to wait and see before you adopt it?

A: A little of it is gut instinct and the rest is knowing what your current needs are. With LeadSimple, I felt like I was a fish swimming up hill to get it started. Our staff wasn’t quite ready to make that switch. But everyone was frustrated with accounting, so we were eager to try Appfolio. We used that system right next to our current system. That made it an easy transition. We were simply replacing the backbone of our operations.

LeadSimple was more of capturing and managing and in the old days, we could be more casual about that. Today, it’s a more competitive field, so the technology we get from LeadSimple will become the backbone of our business now. Tracking new clients and having a CRM type mentality when we’re tracking and marketing is a new priority that we didn’t have when the company first approached us. The leads we get may be insignificant compared to other leads, but we still can’t afford to ignore them. We can’t always pinpoint where every lead comes from. Sometimes it’s from your reputation and things you’ve been a part of. Someone might see a vehicle with your name on it or someone might call us and we kept track of them and when they are ready, we are there. You don’t know when it’s going to be.

Some of the technology is great that’s coming out, but not necessity for our company right now. If it’s not a significant part of what we’re doing right now, it doesn’t matter as much. When you find the technology that can really change things right now, you do your due diligence and you test drive it. I try to engage key staff members so employees can embrace it and see the learning curve as being mild. We want everyone to be fluent in it.

Q: The property management business is, I think, growing significantly. It has a lot more room to grow especially when you think about the housing market. People can’t afford housing as much or they don’t care about owning a home. Millennials want to keep moving. So the market is growing and property managers are doing well. But the competition is there as well and the more efficient you are, the better. So keeping that antennae up and looking out for technology is your job as a business owner. Whether you’re checking into a La Quinta or the Ritz Carlton – there’s something to gain from that experience. But for implementing that technology is really about addressing an existing pain point and not doing something just because it’s cool. Appfolio addressed your pain point, so you went with it.

A: Correct. At first, LeadSimple seemed more of a sales mentality than we were using at the time. This required detailed information and we were casual about our sales process. Now we are embracing it so we can ask more key questions and gather key information. We’re using a system rather than writing phone logs in spiral notebooks. We capture it so we can follow up.

Q: Formalizing the sales process has become a huge pain point opportunity.

A: Yes. To get the business, we have to formalize the process.

Q: How do people find you? Why do technology companies come to you to show you their new stuff?

A: I’m sure it’s simply because we are in the business. It’s not always them finding us. We go looking for them too. We ask questions all the time. We go to NARPM conventions and trade shows and we have also participated in our local market. There’s an apartment association that has a significant convention and we attend that. Different tech companies exhibit there. We pay attention to what we experience in everyday life. We research and we call people to think about how we apply certain things to our industry. It’s how we’ve latched on to remote lock boxes. There were so many hoops to jump through initially, but finally it has showed up. When I saw it at a trade show, I was ready for it and I bought it immediately. The company provider was able to elaborate on things that I had not even thought of. We have refined the process so we know how to use it and the technology has been a time saver.

Q: Has that led to successful implementation?

A: It has given us a lot of flexibility. We can give a person a code that only works for a short window of time so people can see the property. You have to have the stage set. Clients have to know we’re using it. We cannot always do blind showings, but it’s a tool. It’s one more tool to make us efficient. If we can do things with more efficiency, our people can work smarter. In this type of business, our big expense is salary and payroll. So if we can keep that down, it puts us ahead and we can add more capacity. Technology allows us to do a lot with the staff we have now.

Q: Has there been anything that wasn’t successful? Or anything you regretted? What did you try to solve that didn’t get solved?

A: We are still struggling with inspection programs. We have tried a couple and they’re good but they have their pitfalls. Most of our staff prefer using pictures and written correspondence. We’ve tried video and other technologies that other property managers swear by, but I haven’t found a perfect program yet. We are working through it this year and looking closely at how we can help ourselves. We do three inspections; the move in, the move out and periodic inspections. The software works great for those periodic inspections, but for the move in and move out inspections, we prefer low tech right now.

Q: The current application inhibits rather than improves efficiency?

A: Exactly. It’s more cumbersome and we need the right equipment like tablets with connectivity to save things. So we are still dealing with that pain point.

Q: What has been your most successful tech implementation?

A: Appfolio has been the easiest. We found something cloud based that we were skeptical about at first, but it was implemented right away. With digital photography and using pictures we have had easy implementation. The lock box program is successful. Those are what come to mind at first. We went to cloud based email versus a server based email and that was a different learning curve, but everyone embraced it. It was awkward at first, but once we got through it, it worked well. We’re also successfully using online storage for word processing and spreadsheets. Dropbox and the Google Drive have been easy to implement.

Q: Is there a specific methodology for a rollout? Maybe you don’t put it on paper, but how does it happen? You have an idea and what happens next?

A: I roll the idea by a couple of people. My son-in-law is new to the industry and I run it by him to get an idea of if it has value. He looks at it and flips things back to me. We talk about it and decide together. My general manager is a seasoned veteran and she’s a good balance. I’m a quick start and I like to get things going but I don’t always have the wiring to finish the job. She helps me do that. So we have an honest evaluation process. When we were looking at online scheduling, she liked the idea and we figured out how to embrace it. She sat in on the demos and it appeared that we had some traction and again it was filling a void we had and a frustration that we knew we had to eliminate. Then we got to a detailed level of looking at pricing and implementation. We do a test drive. Some things we test drive don’t work out, so we let them go. People who are selling these things are happy to have the feedback.

Q: So, to summarize your golden nuggets: First, you gather a sounding board. It doesn’t need to be an industry expert. It can be, but maybe it’s a couple of broker friends, or a tech savvy person. You run it by them even if they are not in the industry. Then, you go to your VP GM and have them do the initial vetting and validation. Their opinion is heard, then you do the demo, review it and then get your hands dirty and test the product. So you roll your sleeves up, do it and make your decision.

A: Spot on; that’s our process.

Q: If you have only one piece of advice to give to a newer property manager – what would that be?

A: Surround yourself with other people who do what you do. Go to NARPM events. Participate. Have a mentor you can brainstorm with. Ideally, that will be someone not in your market so there’s no apprehension and you can play off each other and work together. Learn from that. Keep your eyes and ears open in and outside the property management industry for tech advances and see how you can apply them to your business.

Thanks for your time, Chris. We’ll see you at the broker owner event in a few weeks. And for our listeners, thank you for joining us. And if you need help with marketing for property management companies, please contact us at Fourandhalf. We’ll see you next time.