When it comes to property management, the unfortunate truth is that there is no correlation between being good at property management and being good at running a property management company – zip, zero, nada.
You can be really good at collecting rents, adept at handling maintenance calls, and even excel at dealing with difficult tenants, but if you’re not engaging in the behaviors necessary to run a successful company, then your business is doomed to fail.
In the past several years, my firm has purchased three different property management companies. Each company’s owners were very good at the day-to-day tasks of property management, but they lacked skills and knowledge when it came to running the business itself. In fact, one seller was so good at property management, that we actually hired her as a property manager after we purchased her company. Six years later, she is still one of our top team members!
The good news is that operating your business successfully is all about behaviors. It can be as simple as looking at what successful companies are doing and copying their behavior. However, simple does not necessarily mean easy. Below are three behaviors that you must adopt to get your property management business on the road to success.
1. Successful Companies Hire Well
The most important duty you have as a business owner is hiring employees. Those of us that have ever made a bad hire understand this all too well. Whether you have one employee or twenty employees, how much better would your business be if they were all A+ players? In sports, the team with the best players usually wins – the same is true in business. So the next time you are ready to make a new hire, slow down your interviewing process. Think of it like a marriage. You would never commit to marrying someone on a first date, so why would you consider hiring someone after one interview? Here are my biggest tips for hiring:
- Schedule multiple interviews. You need to stop talking and make them sell themselves on why they would be the best person for the position. Don’t be afraid to ask difficult interview questions.
- You are not looking for a reason to say “yes” to the candidate, rather you are looking for a reason to say “no.” Once you have found the candidate to whom you can’t say no, you have your new hire.
- Don’t over focus on technical skills. Too often we overemphasis experience and skill for the task at hand. Look first for “soft skills;” things like the ability to communicate effectively, likeability, energy. “Hire for personality, train for skill.”
Put your candidate through four filters:
- Character: Can you trust them with your clients?
- Chemistry: Do you like them?
- Culture: Do they buy into the unique way your company does business?
- Competency: Can they do the job for which they are hired?
Yes, this process will take more time on the front end, but it will save you frustration, lots of money, and headaches, by taking your time and getting that top performer. For more, check out my videos on interviewing prospective employees and how to stop hiring and start recruiting.
The other side of the hiring coin is that successful companies also fire quickly. If you have an employee who is performing poorly or is just a bad fit, you need to get up the courage to do what is necessary – that is what leaders do. It will not be easy, and you will have a terrible night of sleep the day before, but your life and business will be better every day after that. You are hurting yourself, your business, your other team members, and even that bad employee by keeping them around.
If you still can’t decide if you should fire that person or not, ask yourself this: “Knowing now what I know about this person, if I could go back in time, would I hire them again?” If the answer is no, then you know what you should do.
My motto is, “Hire slow, fire fast.”
2. Successful Companies Rely on Systems
What makes so many cheap fast food restaurants successful even with sub-par food? People keep coming back because of consistency (even if it is consistently crummy food). There are more reasons to use systems manuals than I have room to write, but the four most important to note are that they:
- Stop the revolving door to your office. Do your team members keep coming to you with questions you think they should know? When your team members have those re-occurring questions, they should first reference their systems manual before they interrupt you. The time saved from interruptions will surprise you.
- Reduce liability. If the unimaginable happened and you were hit with a fair housing (or similar) lawsuit, you can show that you have a training process in place, and even though your team member may have violated it, it was there, and they were trained on it. While that will not completely release you from liability, it will give you some amount of added legal protection.
- Increase the net worth of the company. Utilizing systems manuals is the easiest way for you to increase the value of your business. Otherwise, the worth of your business lies only in your property management accounts, and those will come and go. However, a systematized business has much more market value and can be sold for a higher price. A buyer will pay a premium for a business that can replicate itself and run on autopilot due to utilizing system manuals.
- Create accountability for your team members. Your team members want, and need, to know exactly what is expected of them and how to do it. A properly structured system manual will have key result areas, which will define what success looks like for your team. They provide a way for you to get a quick overview of how your team members are performing. Download a sample of one of our system manuals at www.RentGrace.com/systems
For more, check out my video on the importance of system manuals for property managers.
3. Successful Companies Have Multiple Profit Centers
I realize some people get uptight anytime “profit” is mentioned. However, it is not about being greedy or trying to squeeze the last penny from your clients. You have a duty to ensure your business is profitable. Profits allow you to hire the best employees, pay them well, pay for your mistakes, improve your customer service to your owners and tenants, save some money so you can take advantage of buying opportunities when they arise, and probably most importantly … healthy profits will help you sleep better at night. The property management industry is full of ways to offer multiple services to your tenants and owners and to charge accordingly.
- Define the scope of your services with owners. If you don’t tell your property owners where your services stop, they will keep asking until you find yourself doing things like making special trips to the property to pick up their mail and take their trash cans into the garage. Next time they ask for a “favor,” respond with, “Sure, I am happy to have someone do that for you, but they will bill for their time.” See if that helps to stop the requests.
- Consider the apartment industry. The apartment industry runs their properties like businesses – because they are. Most apartment complexes charge for things like application fees, lease administration fees, non-refundable pet fees, roommate addition fees, and inspection fees. Why don’t you? Take a field trip to the local apartment community in town and see how they do things – it will probably give you some new ideas.
- Stop Overlooking Opportunities. What opportunities have you always thought about doing, but have never had the time or courage to start. Are you actively buying real estate (at a discount) from those owners who want to sell? Are you profiting from the maintenance and repair service you are administering? Are you considering managing that small commercial property you were asked to do? Before you “no,” pause and ask yourself “why not?” Missed opportunities are a hallmark of a failing business so start looking out for new opportunities for your business.
These are just three behaviors necessary to succeed in the property management business, but even engaging in just these three behaviors will have a dramatic impact on the success of your business.
One last consideration: “Don’t let perfection be the enemy of action.” If you are waiting to implement that new idea until you can perfect it, STOP! Successful companies implement a new idea as fast as possible, then go back and make adjustments as needed. Every new idea we have implemented has come with bumps in the road, but moving forward with those opportunities, even when we have been scared to do so, has helped us become who we are today.
This post was provided by Marc Cunningham, president at Grace Property Management & Real Estate. Grace Property Management has been using Appfolio software to improve his company’s operations and facilitate tenant payments. To learn how Marc can help you be a better property manager visit http://www.propertymanagementsystem.org. You can contact Marc at firstname.lastname@example.org.