Andrea Hardaway from First Property Management is blazing a path of success as she has published her book, Property Management Freedom, and recently gave an inspiring talk on the topic of market consolidation at PM Grow Summit 2022.
Despite hefty acquisition offers by larger management companies coming in their direction, Andrea and company remain determined to move forward with independent operations – something we wanted to explore more about!
Let’s take a deeper look at what makes them so successful.
Property Management Offers versus Property Management Conversations
Andrea and her two partners started First Property Management seven years ago in a Panera Bread. With no prior experience in property management, but a passionate drive to succeed, they steadily built up their portfolio – now managing nearly 1,000 doors! Team members are loyal and talented and they have an ever-growing list of clients and residents who trust them to keep things running smoothly.
With such a successful business, the leadership at First Property Management could probably make a lot of money by accepting one of the many offers they have to sell the business. So, why do they keep turning them down?
Andrea is clear that she’s not turning down conversations. It’s smart to have conversations because there’s always something to learn.
But, selling her property management company is not something she and her partners are ready to do.
There’s a lot that’s happened in the last few years, and a lot that’s still to come.
Here’s why Andrea and her partners aren’t ready to sell:
- They have a great business environment which allows them to be free from the day-to-day operations of the business.
- The portfolio at First Property Management is growing. They’re managing almost a thousand doors and preparing to expand from Chattanooga throughout Tennessee and into Alabama and Georgia.
- A lot of business operations are being streamlined and automated.
There’s more going on that can’t be shared yet. All of those things are increasing the value of their company. They’re also increasing and the value of what they bring to the property management industry.
Andrea and her partners want to see where those things go.
Beyond Customer Retention to Brand Ambassadors
That means something to Andrea’s company.
First Property Management has achieved incredible success without relying on traditional marketing and advertising. Instead, their growth relies entirely on organic relationships.
When your growth and your success is based on relationships, you need a lot of trust, and that trust has to be protected. Their clients refer other clients to them. Several owners on the west coast talk to their colleagues and when those colleagues are ready to invest in Andrea’s market, a referral is made. By building strong bonds with both customers and employees, FPM has managed seven years worth of sustained development – proving how important it is to invest energy into creating meaningful connections when striving for success!
Here’s how Andrea and her team turn owners, residents, and employees into brand ambassadors.
Keeping Property Owners and Investor Clients Happy
The client base is grown from relationships.
Andrea and her partners Brian and Randy also invest in properties themselves. This means they’re not a fee-heavy property management company. They have fees, of course. How else would they stay in business? However, there are certain things they’ll never charge their clients for.
One example is maintenance. A lot of property management companies use maintenance as a profit center. Andrea says she understands this; it’s a great way to make money and sustain a business.
At First Property Management, however, there is never an upcharge for maintenance. The vendor’s invoice is passed on directly to the owners so they can see that they’re paying exactly what the vendor charged.
Their clients trust them and value their commitment to transparency. They’ve built a reputation for effectively managing properties and helping owners and investors build wealth and grow toward greater financial success. As a result, not only do clients stick with them, they’ll even refer others to First Property Management.
Residents, not Tenants
At First Property Management, they understand that a home is more than just four walls and a roof – it’s an essential part of living. That’s why Andrea and the rest refer to their tenants not as renters but rather residents.
This messaging is important in communicating with residents. When a property manager sees a house as a home, there’s a different sort of relationship in place. When property managers understand that a home is just one part of a broader life, the relationship deepens. Property managers at First Property Management believe in moving work orders along and meeting the needs of residents because a home is a foundational part of a person’s life.
When FPM first launched their resident benefit package, there were some mixed reactions from tenants. However, when it was presented as a way to improve their day-to-day living in their home, the majority of them embraced it.
Keeping a Property Management Team Happy and Intact
Andrea wants her employees to be so happy about arriving to work that they skip to the front door, but she understands the work isn’t always easy.
Property management is a difficult industry to be in. It’s not super complicated, necessarily, but there’s so much involved in it, and that action never stops. Andrea wants to create an atmosphere where team members are joyful.
To this end, Andrea works closely with the Director of Operations, who oversees the day-to-day business. She is realistic with her expectations. She tells her team when she’s unhappy about something, but she also tells them when she’s excited about something.
There are a few things Andrea believes help her retain her best team members.
First, she offers one on one meetings with each employee. This is their time to talk about whatever they want – things they are happy with, things that they think could be done better, whatever. Any conversation topic stays between her and them unless it’s critical and needs to be shared. In that case, Andrea checks with the employee and makes sure that they are comfortable.
Next, she conducts an internal survey every six months. This allows her to get a pulse about whether people support and rally behind the business or whether they’re detracting from it. Specific questions are asked about the company itself and its performance. She wants her team to know that she’s listening to concerns.
Finally, she has team-building days that take place in the field. Not every person who works in property management gets out there. They work in offices or from homes and they don’t always see the properties that are being managed. She does team building events where the office closes and everyone participates in some group activity. Recently, it was a three-hour cooking class one morning. After class and lunch, they went on a van tour of the homes that they manage. They went inside to tour the homes that are vacant or being turned over.
The point of this? So her employees could see these places not just as an address but as a physical space that someone will call home.
If you’re not already doing something like this, you might want to consider it.
Investing in the Community
Part of Andrea’s strategic plan is community engagement, but it’s about more than growing her business. Andrea and her partners truly care about the impact that they can make on their community.
Here are some of the things Andrea is working on individually and with her business.
Real Estate Development and Affordable Housing Nonprofits
Andrea has joined nonprofit boards related to real estate and development and affordable housing. Chattanooga Neighborhood Enterprise and the Community Foundation of Chattanooga are two such organizations. She’s also on the board of the Chattanooga Design Studio, which focuses on urban design and development.
Eviction Protection Initiative
Andrea is on an advisory committee for Eviction Protection Initiative (EPI). This is a surprise to a lot of people since property managers do most of the evicting. But, she takes no joy in evicting people. Inspired by Dan Heath’s book Upstream, she believes that it is better to get to the root of problems early rather than just solve symptoms one-by-one. She understands there are correlations between factors like late payments and utility shut-offs which can lead to eviction down the road; so with EPI, they’re looking upstream – finding indicators before negative outcomes occur and guiding those affected onto more secure paths towards stability.
Collaborating with Affordable Housing Developers
By partnering with private developers, First Property Management is working to address a difficult problem – making affordable housing available in Chattanooga. But it doesn’t stop there – they’re also encouraging their own residents to consider homeownership by providing a robust set of benefits and assistance.
The company is passionate about this, and Andrea wants to see owners and brokers encouraging meaningful action in their local communities too. Why just make real estate deals? Why not make deals that make a difference?
Not only does community involvement benefit those being served, but it also impacts retention. The more they are in the community, the more exposure their company gets.
This community investment shows up in clients and team members, too.
During COVID, many people began having financial issues. They were losing jobs and not getting paid. There was an eviction moratorium and people were getting behind in rent. One of Andrea’s clients paid the rent for some of his residents. He took money out of his pocket and put it towards the rent he would have collected so the property managers and his own company got paid, even if it meant a loss in profit for himself.
He did that because of the way he views people. We are all connected in some way, and that matters to Andrea. These are the clients she and her partners want to attract. If they’re not that type of client now, she hopes they grow into that.
There is an opportunity to do very well financially while doing a whole lot of good in the community. They don’t have to be separate. You can be motivated by money and committed to the community.
Andrea also suspects that one of her employees paid someone’s rent when they fell behind. She’s not supposed to know that (and would never require an employee to do it), but she thinks it’s a beautiful display of care and optimism.
But do not mistake that optimism for naiveté. This is simply the culture Andrea feels responsible for creating.
How to be Profitable in Residential Property Management
Are you wondering how Andrea remains profitable with all of this in place?
She affirms that profitability is important. It allows her company to stay in business and create new opportunities.
Profitability starts with company structure. She and her partners are living the lives that business owners should live. They don’t have to put in 40 hours at the office. They can leave and come back knowing that everything is running smoothly and they won’t miss a beat.
They have a great team and they have KPIs to manage the business. Along with profitability, they look at client retention each month and make adjustments as needed.
There’s a financial reserve in place, too. The company has a capital reserve in place in case the business gets in trouble. Her team gets paid. The partners get paid. Taxes are paid. There’s an operating margin and a budget that they work to. She recommends reading Profit First by Mike Michalowicz, which gave them the framework for their cash management solutions.
First Property Management is always working towards remaining profitable. You don’t have to choose between making money and doing good. But, as a property management business owner, you also need to recognize when it is time to step back and take of yourself so that you don’t burn out. If you and your team are not burned out, then you can be better advocates for your business, your clients, and your community as a whole.
Andrea literally wrote the book on this – Property Management Freedom: Grow Your Property Management Company without Burning Yourself Out.
If you have any questions about this podcast, contact us at Fourandhalf.