Our next big topic on The Property Management Show is the importance of standardized systems when you’re starting, growing, or even preparing an exit strategy for your property management company.
This is such an essential topic that we’re breaking it into two parts.
Today is Part I, and we’ve asked Dave Gorham to join us because he’s a systems and standardization success story.
Introducing Dave Gorham of Realty Solutions
Dave Gorham is the broker-of-record and owner of Realty Solutions, a New Jersey-based real estate management company. Realty Solutions is more than a property management company; they look at the full lifecycle of an investor and an investment property. In addition to managing properties, the company does community association management and operates a law firm. They’ve been in business for more than 20 years.
With over 30 years of real estate experience himself, Dave can also approach his work from a place of personal experience because he’s an investor, too. He’s also a Mind-Set Coach for Frame of Mind Coaching, and loves building leaders.
Defining a Standardized System in Property Management: What it Is and What it Isn’t
Anything that makes what you do repeatable and easy to track is a standardized system. It could be a calendar. It could be a history of events. It could be a list you keep with a paper and a pen. The idea is to track what you do and measure results.
It’s that simple.
When you really start to build your standardized systems, you’ll start thinking about property management software and accounting software.
A standardized system is not a rigid set of rules. It’s a consistent plan to leave people more space and energy to be creative and work their own way.
This is an important distinction. The systems provide enough guidance so that when things happen, there are warning signs to show you what might be coming or what area of your business might be affected.
The successful standardized system will have rigid processes but will give the user freedom to do their job better.
In a property management company, your standardized systems might cover how internal communication is tracked or what happens when someone signs up for your services or where you start when one of your clients wants to sell a property.
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How to Manage the Fear of Standardized Systems
People get nervous about standardized systems because people fear they won’t be nimble enough in their job.
It creates fear in an organization sometimes, especially when people believe that they should do things according to their own best judgment. You have to demonstrate the benefits of a standardized system against the risks of doing everything on a case by cases basis.
Fears are usually dissipated as soon as people start using the system. With the right standardized and consistent process in place, you don’t have to figure out what you’re going to do next. You know what the next step is, and you’re prepared to take it. But now you can use your critical thinking and your creativity to do a better job with those steps.
A property manager can do a better job working with a vendor who has been a challenge when she is working within a standardized system. Everything is tracked, so that property manager is not only working better – her work can be repeated and measured because she’s documented what she’s done.
Sometimes You Need a Better System
Everyone uses some sort of system. The question you need to ask is – how do you know if your system isn’t working?
Consider your sales process. You may have a process and you know how to go through the motions. But, is it repeatable? Can anyone follow that process and have the same successful results? If it’s not scalable and another team member cannot follow the system, then you need a better system.
As you grow your property management company, you’re going to continue hiring people and bringing on new team members. If the standardized systems you’re using don’t make sense to new people or can’t be used by someone else, they’re not working for you.
Why You Need a System: An Example (or Two)
Dave is working with a business owner who is re-starting his brokerage company. It’s a small business and the owner has always had a lot of freedom with how it’s run.
The business is five years old, but it’s also brand new, as if he’s starting over. Why?
It’s a new business now because he decided he wanted to grow and move the business forward. So, he needed what he didn’t have yesterday, which was a set of systems that include software. Now, he can track what he’s doing and see where his greatest successes and challenges are. He has a small team that’s going to grow as he scales.
A second example is a new client Dave just began working with, who he has known for years. Five years ago, this client was self-managing 20 rental properties. That required systems, and the owner had some in place that worked for his 20-unit business.
Then, he found himself managing 50 homes and then 90. Essentially, this owner was running his own property management business because he owned so much real estate and he wasn’t using an outside company.
The problem is this: the business changed, but the systems didn’t.
At 150 properties, this client was feeling like he was in some hot water. He needed better systems, but he didn’t know what those were, and his entire portfolio was in jeopardy. It wasn’t being mismanaged out of malice or because there was some lack of understanding about how the real estate and property management industries work. He was still making money, but he didn’t have the systems in place to track the moving parts. How could he know he was profitable?
Let Your Systems Breathe
It is very easy to feel like a system isn’t working on day one.
But, you have to trust the system and let it breathe a little bit. Think of it like opening a bottle of wine. The system needs some air. It needs to settle.
When your team trusts the system, it will work. The implementation process will take a lot longer if the team fights it or struggles against it. When the team adapts, there’s an “a-ha” moment and immediate buy-in. But, sometimes you have to break a lot of bad habits to get there.
To effectively get your team on board with a standardized system, you have to accept feedback about positive and negative experiences. The system itself is not good or bad, and it doesn’t care what people are saying about it.
How Communication Helps System Implementation
Communication helps you and your team adapt to new systems faster and more completely.
Dave’s company is big on communication. They talk about things and they trust one another. Recently, a new system went into place where nine agreements were proposed and everyone had to agree to them. One such agreement was that cell phones and computers would no longer be allowed in update meetings.
That was frustrating for some people who never want to be without their phones. So, they talked about it. These conversations include everyone from the leadership team to the individuals at the secretary level. Everyone agreeing to the new systems has changed the culture at Realty Solutions dramatically. The secretaries in the office have the same weight as the founders when it comes to making changes.
Communication fosters accountability. You all agree to this standardized system, so you are accountable to yourself for following it.
Another one of the agreements Dave’s team came to was that three people had to be in a room in order for something to be changed. Whether it’s a system or something involving a client or a vendor or a tenant, the two people discussing the change has to bring in one more person from the leadership team. At that point, with those three people in the room, it can be adopted and then brought up to the full group. This isn’t a debate that everyone will be involved in; it’s the unveiling of a new system that was agreed upon by at least three people.
Standardized systems provide integrity within your property management company. It’s integral and closed and whole. You have the opportunity to put it all together.
Impact: How Standardized Systems Help Businesses
The client who finally asked for help with his 150 doors to manage is a success story. Things were working before, but they were working badly. Now, he can track things. He can show his profits with some reliable documentation, and his banks are happy. He may not be bringing in the money he wanted to, but his business is stable and next year he’ll earn more. That’s a big deal.
Realty Solutions has grown dramatically as well, thanks to its set of standardized systems. They currently have 600 doors they’re managing, plus a number of law clients, plus a number of sales transactions, plus 20 community management contracts, all totaling about 3,000 doors.
Five years ago, this would have been hard to imagine. But, a business can grow from 150 to 300 to 500 to 1,000 units with the right systems in place. When everything is standardized, you’re prepared. You can react quickly to anything that isn’t working, and you can fix what is broken.
At the end of 2019, Realty Solutions bought a huge batch of contracts and a community management company. Integrating those staff members and those clients would not have gone well if strong systems were not in place already.
What to Do When Your Employees Are Uncomfortable With Change
Fear and ego are the two things that get in the way when people are joining your team from the outside and integrating into your way of doing things. Those new people at the table had their own systems, and they might be protective of them.
Transparency helps. If you can be open and transparent, and the new people you’re working with can be open and transparent, you’ll have a win/win situation. This should be your intention.
Dave admits that one of his favorite sayings is “I told you so.” He even loves saying it out loud.
This is because the consequences are pretty high. He cannot have everybody doing things in different ways when he’s running a successful company.
While he might enjoy the “I told you so” moments, things rarely get to that point because he’s good at educating people and talking about the business and how it operates. He and Rob consider what they have a democratic dictatorship. What they say as the company owners will be the way things are done at the end of the day. But, the team is encouraged to talk about it and figure out how those standardized systems can work for them.
Most property managers are in this business to serve and make money. So, if you’re going to fail – fail forward. That means you have to correct your mistakes. The transparency you have with your systems requires faith and trust.
Faith is blind. If Dave can provide his team with faith, he’s a good leader. Trust requires evidence. People will trust your systems because they’ll see the evidence that they work.
Takeaways from Part 1: The Power of Standardized Systems in Property Management
Everything can be standardized. If you think of systems as rails that you should stay within, you’ll find that you’re better protected against risk. Going outside those rails elevates your risk. Establish those boundaries and stick to them.
In Part Two of this podcast, we’ll talk about how you do this – how you can implement your standardized systems, and what you should look for when you’re putting them together. Make sure you join us for the continuation of our discussion on this important topic.
Standardization is not what you think it is. We hope you’ve learned that and a lot of other things today. Please contact us at Fourandhalf or Dave at Realty Solutions if you have any questions about how standardized systems in property management can help you grow your business.
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