Why the Property Manager is Vital for Property Investments
Property managers are often overlooked in the property investment industry, but they are vital to your success. They are the missing link between you and your tenant, as well as keeping you on track with your monthly rental income. This episode will introduce how managers can help you achieve consistent cash flow.
Why the Property Manager is Vital for Property Investments
There is so much inconsistency across different firms, and sometimes, it's not even the firm. It might be the individual regional manager or the onsite manager, or it might just be not a good fit for that manager and that asset. It becomes a source of competitive advantage when an institutional investor has relationships with property managers. Even lenders want to see who the property managers are because the property manager is the most important person executing the business plan. Often, investors treat property managers as vendors. They want to squeeze them. They want discounts. It's good to hear the human perspective of property managers. Do you have anything to add to that?
Yes. This is where technology comes in. There's nothing worse than putting so much work on your staff that they're dissatisfied because the number one thing that they can do is show up and give good customer service. People buy us. If they're like, “I’ve got to do this task and now I've got to do that task,” and they're so busy that they're not able to even meet the investor goals in leasing because they've got so much admin stuff, it’s not good. It's not a win for the property management company, the property, the tenants, and the investor. You need to be forward-thinking and progressive and help your team buy into these things that we've all been taught.
They’re simple. Twenty percent of your effort produces 80% of your results. For a lot of people, it was hard to usher in the embracing of technology. That's why it took something like a pandemic to make it happen. I understand because we were ahead of it, but so many people were resistant because they're like, “What I'm doing is working, so why do I need to evolve?”
You can sit down with your property management team and the property managers that are there, the feet on the ground every day that are getting their butts handed to them because somebody's screaming at them or some emergencies happen. My manager texts me a tsunami if there is a big issue. If you can get them to understand your objectives as an investor and where you need it to be, then you can help them understand that you don't have to take rents in the office anymore. When you're taking that time to enter in $90,000 worth of rent, you're missing the opportunity to lease an apartment. Why don't you embrace the use of the online tenant portals and start having conversations with your residents to not give them another option? They don't get to come in and pay rent in the office anymore.
What does that do for you, Mr. or Mrs. Manager? Now that you don't have to spend that hour every day entering rents, what can you do with that hour? When they start to get free from the administrative paperwork and they can start to operate in what their strengths zones are, everything opens up. Productivity increases. Their level of satisfaction, tenant satisfaction, and tenant retention increase as well. The by-product of that one little shift is enormous.
A valuable insight, especially as we have a lot of investors and founders tuning in to this show, when you're selling your product and pitching it and positioning it to property managers, emphasizing the cost and savings is only one angle. At the end of the day, you want to save time and make their lives easier. All too often, the very logical engineering, sometimes the inner-driven founder, is going to miss that pitch. The pitch has to be or a big part of the pitch has to connect on an emotional level with the property management firm and explain how this will motivate their staff. This is going to give them more leverage. They can spend time on higher-value activities. It's not simply a matter of saving costs.
I bet you get pitched that a lot. Let's move on to that. Property managers are flooded with startups wanting to work with them constantly. How do you decide who to work with? What advice do you have to founders who want to get early customers in the property management space if they’re selling a single tool or a whole solution?
I'm going to break this down in two. You've got your customers, which are the tenants, and then you've got your employees. I'm going to start in the employee space because I'm nothing without the people that I work with and alongside. I have had all sorts of philosophies thrown at me over the years. I came back to who I am at the core, and that is that I don't necessarily care about the degree that you hold or the educational accolades. I'm looking for people who are hungry. Are you humble? Are you smart? Are you willing to show up every day and play in the arena with me? If I have those qualities in an employee, then I feel like I can do anything with them.
Embrace the use of the online tenant portals and start having conversations with your residents.
Angela Duckworth wrote a book called Grit. She talked about talent versus effort. Effort counts twice. At the end of the day, talent is great, but I want somebody who is going to put in the effort because that's going to be a part of my success as well. That's on the employee side. I am looking for hungry, humble, and smart people. In terms of clients, I keep going back to this. Who are you authentically and who do you want to be aligned with? Life is so much bigger than what is in the bank account. We all want to have an abundant life. I don't want to operate out of scarcity. I want opportunities in abundance, yet, I don't want to align myself with individuals who are going to, for lack of a better term, suck the life out of me. It's not going to be a good relationship.
When you are clear on who you are as a company and what your value proposition is, it becomes easier to attract the kind of clients that you want. It’s about knowing your value proposition, knowing who you are, and being unapologetic about it. A mentor of mine once said, “You do understand that you can say no to business.” I was like, “That's a noble idea. I can say no to business?” We're so accustomed to being, “Yes. I can do it,” and being a yes person doesn't always serve everybody's best interests.
The customers for me are the tenants. I had a hard time coming from being a property manager at a multifamily Class A property and then becoming a fiduciary. This is a really tricky situation because when you're a property manager, you're not thinking about your own or when you're sitting in that chair. You're thinking about your tenants or residents. When you get into the fiduciary mindset, you realize they're your customer and not your clients.
You have to be able to understand where your fiduciary responsibilities lie while still serving your customer base at a very high level. That can be tricky for a lot of property managers. It’s our job as a management company to teach them what being a fiduciary is about. It's not about just putting butts in beds. It's about vetting the most qualified tenants. It's about when that person comes in and they've fallen on hard times, and they're three months behind, you can't give them one more month because the fiduciary is to the client.
Regardless of what class of property we're managing, everybody deserves quality housing. Everybody has a right to have a quality roof over their heads. They deserve to be treated with dignity and respect, and at the same time, expectation setting is not just with you and the clients or your team. It's with you and the customer or the resident as well, so setting expectations on the front end is vital.
Startups want to get clients. It's hard to reach property management firms and get a pilot running because property managers are very busy. They're under-resourced. What advice do you have as someone who has integrated technology and believes in technology? How can they meet you where you are and what advice do you have for them to get a successful pilot running?
It goes back to research and then it's getting into action. If we're talking about the integration of technology, I'm so passionate about this. You as a company or as a team need to sit down and go, “Where are the opportunities for improvement?” You could be doing everything great, but you still need to be looking at ways that you could get ahead. I read Leadership by John Maxwell.
One of the things he said was, “We used to be able to goal set for 1, 3, or 5 years. Those days are gone. We need to be goal-setting for six months because things are changing so rapidly.” You need to sit down and take a good look at where you can improve your level of service with your employees. If employee satisfaction is low, that’s bad. You’ve got to have your employees happy.
You’re nothing without your people, so you have to make sure that your employees are doing fine.
Where can we improve our level of satisfaction with our clients and where can we improve it with our tenants? When you identify these areas, then you start to go research solutions to these problems. I'm going to give you an example. We knew we had a phone problem when we got to a certain size with the company that I served as CEO. We had two phone lines with calls waiting. We didn't have any data to back up our instincts, which were that we were failing to answer the phones and we didn't have enough manpower. We knew that once we found a solution to that problem, we were going to uncover more problems.
The first thing we did is we found a solution. We ended up getting RingCentral, which at that time was probably the only voice override system available. Now, you've got lots of others like Grasshopper, etc. Once we got RingCentral, we said, “We need to figure out why people are calling. Where is the volume coming from?” We were able to identify that most of the people are calling for information on our properties, and to your point, it's not cookie-cutter when it's single-family. It's a bunch of different nuances to each home.
RingCentral was telling us what the data was that we didn't know before, so we said, “There are only 480 working minutes in a day. If the average talk time is two minutes and we're getting 1,000 calls a day, even if we threw two people at this problem, we’re still not going to be able to solve the problems,” so then we started researching technological solutions to the problem. We found a solution to the initial problem. We then uncovered more problems, and then we did a deeper dive and found another technological solution, which for us was with our property management software company. They had artificial intelligence created. Her name was Lisa. We could point all of our calls to Lisa. Lisa could answer prospective tenant questions and then there was a leverage piece.
It’s understanding that your biggest area of opportunity to have a solution in place from the jump is who’s going to answer your phones and how you are going to show your units, especially if you're in the single-family space. Make sure that you have solutions to those things in advance because we know that these are problems that you're going to have.
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About Zain Jaffer:
Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780m.
His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as “Forbes 30 Under 30”, “Inc. Magazine’s 35 Under 35,” and the “SF Business Times Tech & Innovation Award.” He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.
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