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Establishing great relationships with the right owners will elevate your property management business to a more successful, more profitable level. Identifying and understanding who those owners are can help you be more selective in the business you bring in, and will give you an opportunity to control the customer journey and the professional relationship you have with those clients. Marc Cunningham, a successful property management entrepreneur, has developed specific criteria for who he works with and how he works with them.
Marc Cunningham: Property Manager, Consultant, Educator
Marc was raised on property management. His father started Grace Property Management in 1978, and he spent summers working in the office and learning the business of real estate and property management. Marc studied finance and real estate at Colorado State University, and after working for other property management companies, he returned to Denver and Grace Property Management.
Twenty years ago, there were three people in the office. Today, there are 18 team members managing nearly 700 doors. Mark believes in following the opportunity, which means the company does both sales and management for residential and commercial properties. Ancillary businesses, he says, provide a full customer experience and increase revenue. He thinks property management can be a base on which to build a better business.
Qualifying the Right Clients and Working with the Right Owners
To build a better business, you need to build relationships with the right clients. You don’t work with every tenant who applies for a property you manage; you qualify them first, and maybe half of them are turned away. You need to qualify your owners, too. In fact, your standards for owners probably need to be even higher than they are for tenants. If a tenant goes crazy, you don’t have to renew the lease and the problem goes away. With an owner, however, an issue can get messy and even become litigious. For the success and the sanity of your business, create a system that helps you determine whether an owner will be a good fit for your company.
This isn’t about liking someone or not liking someone. If your business model is geared towards hands-off owners because you want to be left alone to do your job, you need to be selective in the clients you accept. You won’t have a successful relationship or work well with an owner who wants to be involved in everything or provide approval for every move you make. If you decide the hands-off owner is right for your company, you limit your business to people who want you to do what you do and only call them if their property is burning to the ground.
This isn’t as easy as saying yes or no to each potential client you meet. The challenge grows as your property management business grows. When you do more marketing, you attract a wider range of individuals. You’ll need to tighten your filters and ask interview questions that will tell you if prospective owners are going to fit your business model.
Interviewing Potential Clients: The Process
Listening is more important than selling when it comes to the owner interview.
When an owner calls to start the conversation, don’t rush into your sales pitch. Be skeptical. Take your time determining whether this owner will be a good fit. An internal questionnaire can help you. Marc has his property managers trained to answer four key questions after an owner interview:
- Is the owner financially stable? Working with a client who is desperate to rent out a property within two weeks in order to make the mortgage payment is not going to work.
- Is the owner emotional? Emotionally unstable clients will take a lot of time and energy, and they can be difficult to work with.
- Does the owner have reasonable expectations? This is a big one. They have to understand what you can provide.
- Can this owner and this transaction be controlled? If you cannot answer yes to that, you need to decline that business. You need a situation you can control.
Those are the assessment questions at the end of an interview. To start the process, you need to listen. Ask them to describe their property and what they need. It’s amazing what you’ll glean from staying quiet and letting them speak. You’ll be able to gather a lot of information, and you’ll provide an opportunity for the owner to sell themselves to you. That’s the best way to start.
After the owners talk for a while, it’s a good idea to ask some questions so you can be sure your goals are aligned. Talk about long and short term goals. If they want to sell in six months and you have a sales division as well as a property management division, this is a good client for you. If they want to acquire 10 more properties in the next 3 years, it’s probably someone you want to work with. Talk about the goals for the property you’ll manage and the portfolio each owner has.
If the first question an owner asks is about your fees, you probably don’t want to work with them. You should be proud of the fact that you’re not the cheapest property management company in town. The owners you want to work with will appreciate that you’re a premium company providing services that don’t come cheap. This is an industry in which you get what you pay for.
Transitioning from Taking ALL Clients to Selecting GOOD Clients
When you’re on top and your lead flow is robust, you are in the privileged position of picking the owners with whom you want to work. Not all property managers are there yet. When you’re just starting your company and struggling to grow your business, your goal is to get doors. You need to have income and build momentum. At that stage, you will have to take questionable owners. You cannot start your business by turning away half the owners you talk to.
Start your property management business by attracting people aggressively and not by turning them away. You may need to come down on your prices. As you grow and establish your business, take some chances and trust your work. If you do a good job and provide high quality management to your owners, it will not be long before you can begin raising your rates and letting the less desirable owners drop away from your company. The owners you want to work with won’t leave you over modest increases in fees. If you’re doing a good job, they won’t go find someone else. Then at the end of each year, identify your bottom 20 percent of owners. They may be on the bottom because they’re difficult to work with or they have dilapidated properties in bad areas. Let those owners go. You can afford to do that because you’re bumping up your fees and because your reputation is attracting new owners who better fit the profile of what you want.
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Remember Your Mission and Your Purpose
Customer service is important, and your philosophy needs to be pretty simple: to do a good job. Marc’s mission at Grace Property Management & Real Estate is to improve the lives of real estate investors and residents through property management. It might not be on signs or posted around the office, but it’s something they talk about every month. They remember that they aren’t in the real estate business. They’re in the business of improving people’s lives.
When a tenant calls without hot water and you can get that fixed in less than a day, you have improved someone’s life. When you collect rent and pass it onto an owner who is retired and counts on that income, you have improved a life. Even mundane things like lease renewals can mean that a child gets to stay in the same school for another year. These things are important, and if serving people in this capacity doesn’t make you happy, you’re probably in the wrong business.
You have an opportunity to be impactful.
Marc’s Philosophy for Property Management Customer Service
Here’s a customer service philosophy that might be counter-intuitive:
Don’t answer your phone on the first ring.
So much of the property management industry is about speed. This is important; you need to get back to people quickly when there’s a problem, and be responsive to the needs of your customers. However, you need to be realistic, and more importantly, you need to train your customers to be realistic.
Property managers are professionals. Property managers need to think of themselves as doctors and lawyers. If you called your attorney right now, would he pick up the phone? No. He’d return your call at the end of the day or maybe even the following day. Your doctor isn’t going to answer her cell phone when you have a non-emergency question. The mentality of property managers is that the only way to create a positive relationship with an owner is by answering the phone on the first ring or responding to questions over weekends. Expectations need to be established, and you don’t want a client to expect that you’ll answer your phone at 6:00 on a Sunday morning. It’s unrealistic. Clients who expect that are not the clients you want to work with.
You can be the best around and still be the one who is in charge of the relationship with your owners. Control the situation, control the work, and control the relationships. This starts with the first conversation. Set yourself up as the alpha from the beginning.
The property management industry has the potential to evolve into something that operates at a higher level professionally. The challenge is that there are so many new people to this business. Many of them have come from real estate, where there’s a completely different mindset. They have been trained to jump on the phone every time it rings. Without establishing the control that’s necessary, burn-out can easily happen.
Using Videos as a Customer Service Tool
Not answering on the first ring doesn’t mean you should be non-responsive. Automated outreach can be valuable. You can’t follow up with every lead, but you can send them an introductory video that explains who you are and how you work. You can begin to create a relationship, and by sharing your process and your philosophy, people will either be turned off or they’ll be ready to talk to you. Videos provide a tremendous competitive advantage because people want to know who they are working with.
Your videos do not have to be perfect. People tend to avoid them because they don’t like how they look or how they sound or they’re insecure about their clothes or their hair. Don’t worry about that. People aren’t looking for a Hollywood production; they want real life. If you stutter a little, that’s okay. Start with something and then keep improving upon it.
The Structure of a Successful Business
Before you put together a portfolio of the right owners, you have to have the right team in place. Marc’s company is composed of 18 people, and it works as a hybrid. Property managers are always the point of contact for owners, and they are responsible for maintenance coordination, turnover, owner leads, and relationships. They do not have to worry about leasing or accounting; there are specific people who fill those roles. There’s also a resident services coordinator who is the first point of contact if there’s a problem with a tenant. There’s a consistency in what team members are responsible for, and everyone knows what they aren’t responsible for doing.
As a business owner, your team needs balance. You may have one property manager who is comfortable with a portfolio of only 40 or 50 properties. That’s fine if you also have a property manager who is in growth mode and feels like the sky’s the limit. Just like with choosing owners, you have to hire people who fit your property management business model.
Marc can provide some insight and coaching on a number of topics relevant to property managers, from systems to pricing to growth. To learn more about him, visit propertymanagementsystem.org. Also, Marc is offering generous discount for our listeners: 10% off any of his products when you use the promo code “Alex.”
If you have any questions about this podcast, or you’d like to talk to Alex and his team about property management marketing, contact Fourandhalf.
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Hi from Australia.
I just watched this and found it brilliant!