On The Property Management Show, we’re starting a new series called How I Did It, which focuses on property management success stories.
The goal is to empower property management business owners with success stories from those who have done it. We all have challenges when it comes to running our businesses, and in this series, my guests will share how they overcame those struggles. We’re going to be honest and open, and we hope it will help you build your property management company.
The first guest in this series is Stephanie Gordon. Stephanie is a longtime customer of Fourandhalf, a good friend, and one of the most successful property management entrepreneurs I know. Her company, Gordon Property Management, is the leader in the San Francisco market, and she’s owned her business for 31 years.
We asked about the most difficult time she went through and what her biggest challenges were.
Managing People Instead of Properties: Becoming an Employer
Stephanie is open about the fact that her biggest challenge has revolved around employees and being an employer of people. Like many business owners, she started the company out of her house on her own. She did everything. Then, adding people became necessary.
Before too long, you’re no longer managing properties. You’re not managing owners or tenants. You’re managing your employees. That can be a difficult transition.
Stephanie believes she stinks at that. It’s not her personality. She wants everyone to get along and do their jobs and be friends. She avoids confrontation. But, that doesn’t work when you’re the boss of people.
She has a great team now at Gordon Property Management. But, it wasn’t always so cohesive.
The Difficult Maintenance Employee – Let’s Call Him Mark
In 2008 or 2009, Stephanie had two maintenance guys working for her. One was great and the other one, we’ll call him Mark, was difficult. They didn’t get along. But, it was more than that; it was making Stephanie unhappy. It was making her so unhappy that she dreaded going into work every day. She considered doing something else with her master’s degree; maybe teaching real estate and property management.
She acknowledges now that she waited too long to fire Mark. But, maintenance guys are hard to find in San Francisco, so she was reluctant to let him go because her company had maintenance needs to meet. Mark worked primarily on a large account; an owner who had about 50 units.
One day, Stephanie realized she didn’t like Mark. She didn’t like the account he was spending 80 percent of his time on, and something had to change.
So, she fired her client. Then, she fired Mark.
It was the first time she ever fired a client, but after that account and the maintenance problem were gone, the whole dynamic in the office changed. Mark had been a drag on everyone, and the client had been demanding all kinds of different things that the team was struggling to provide.
Firing a client is a measure of success.
When you can fire your clients who aren’t a good fit, you know you have done something pivotal for your business.
Remember when we talked about Robert Locke on this podcast? How becoming a Big-A Agent means your owners trust you to make all decisions for their properties? This is in contrast to a little-a agent, who is always asking for approvals from their owners. Stephanie was transitioning from small-a to Big-A at this point, and losing that one account meant losing nearly 10 percent of her overall income.
But, Stephanie has learned that when she fires a client, her income dip doesn’t last long. New business is quickly brought in. You also have to remember she was so unhappy that she was willing to give up her whole business.
Stephanie’s Story: Becoming a Property Management Entrepreneur
She started managing properties owned by her family.
Her father bought and sold apartment buildings, and she grew up in the industry. She’d paint apartments in the summer and help out in the office before anything was automated. There were no computer systems. Stephanie worked as a sales agent for a while, but she wasn’t great at it and she hated cold calling.
As her mother become tired of managing properties, Stephanie’s parents were looking for someone to take over the business. Her brother wasn’t sure, but Stephanie was ready. She started with two buildings, which had 65 and 38 units.
When she got started, the property management industry was much different than it is now. It tended to be the poor stepchild of a real estate office. There was no business development. But, she began to gather referrals from the real estate agents she knew. She began adding properties and adding clients.
The Next Level: Buying a Management Company
In 2003, Stephanie bought a management company from someone she sat next to at a property management lunch in San Francisco. The lesson here is that when you go to industry functions; sit next to someone you don’t know. There’s no telling where it could lead.
She got a great deal. The seller lent her the money to make the purchase, and she paid it back over time. The bulk of the purchase was three buildings at the edge of San Francisco’s Tenderloin district. It’s not a great section of town, and she did wonder if she had made the right decision.
The next step was to hire her first employee, who was a part time person who did data entry and bookkeeping.
High-Level Details of Stephanie’s Purchase:
- She paid one year’s annual gross in 2003 for each unit.
- The claw back clause allowed her to reduce the purchase price for the clients who went away after 12 months.
Megan was the company’s second employee, and she is still with Gordon Property Management today.
The first employee, however, was another relationship that ended badly. She felt very entitled and she became difficult. Stephanie likes to hire people and start them low, but raise them quickly if they’re good. So, that first employee had been getting big raises for a couple of years. Then, she longer seemed worthy of that big 10 percent annual raise. When she didn’t get it, things got a little crazy.
Finding Contractors is Hard: Why Stephanie Didn’t Hire the Best One She Knows
Stephanie’s husband is a licensed contractor. Could they have paired up and started a construction department at Gordon Property Management?
Stephanie says no, for two reasons:
- She did use her husband Richard to do some early jobs, and the clients didn’t love it. They thought he was overcharging, or they expected the work for free.
- Richard hated it. He’s a perfectionist who likes to work with a big budget and build beautiful things. The apartments in San Francisco managed by Gordon Property Management are older and rent controlled. Not exactly part of her husband’s creative vision.
There are plenty of times that he gives her advice or tells her what kind of work needs to be done at a property. But, early on, they decided it was best not to work together.
The Next Step: Internet Marketing and Educational Content
Stephanie attended a CALNARPM conference in San Jose in 2011, and it was all about technology. She admits not being a tech person, and had always resisted it. But, she left that conference feeling energized and excited about technology.
She wanted a Facebook page.
As one of Fourandhalf’s first customers, she began doing some marketing. She recorded videos and blogs and went all in with the content creation. Here’s some valuable information that can help you measure results:
- In the first year that she did content marketing, she saw an uptick in business, but not huge growth.
- In the second year that she did content marketing, people were finding her on the internet.
- In the third year that she did content marketing, things really took off. The phone started ringing and it hasn’t stopped.
Intentional Dinosaurs: It’s Time to Innovate
Even though she didn’t love technology, Stephanie didn’t want to be outdated. She didn’t want to be the property manager who was still advertising rentals in the newspaper. Once she got started with Appfolio and automated all of her systems, things got a lot easier. It was painful for a little while, but well worth the effort.
NARPM helped her with innovation, too. She went to classes and attended trade shows. She met vendors who were coming up with new technology for the property management industry.
If you look at the most successful property management companies currently in operation, you’ll find that all of them do videos and blogs. They are putting out a lot of educational content. In addition to blogs and videos, they’re doing long form content like podcasts. They create books. Look at Stephanie. Look at Andrew Dougill in Tampa.
Stephanie also invests in reputation management, and she thinks it’s important to look at the responses from customers. It’s a valuable service; the good reviews are published publicly and the bad reviews are immediately addressed so customer satisfaction can improve. People don’t see the tremendous advantage to this service yet, but Stephanie has already seen the value.
She points out that as property managers, you aren’t selling shoes. You’re working with people’s homes. If you treat your tenants right and value them as customers, in the long run, it will benefit you as a landlord. Happy tenants are important because you’ll need them to be on your side one day, and there’s a big difference in managing a cooperative tenant and one who is holding a grudge for some need you didn’t meet earlier in your relationship.
PM Grow Summit is Coming…
It’s time to start preparing for next year’s PM Grow Summit. You’ll have the opportunity to meet Stephanie and people like her. The 2019 summit will be in Austin, Texas from April 17 to April 19.
We want our guests to help us pick our speakers, so contact Alex with your suggestions. He has enjoyed receiving your notes and feedback, and he’d love to hear more from you.
If you have any questions about PM Grow or this new series on the podcast, contact us at Fourandhalf.