Marc Cunningham

3 Tips for Running a Profitable Property Management Practice

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Change Your Behavior to Transform Your Business
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 are 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. Five years later, she is still one of our top agents!

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 can adopt to get your property management business on the road to success.

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 even consider hiring someone after one interview? Here are two tips for hiring:

  1. Schedule multiple interviews. You need to stop talking and make them sell themselves on why they would be the best person for the position.
  2. 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.

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.

The other side of the hiring coin is that successful companies also fire quickly. If you have an employee who is performing poorly, 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. My motto is, “Hire slow, fire fast.”

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 here are three of the most important:

  1. They stop the revolving door. When your team members have those re-occurring questions they should first reference their systems manual before they interrupt you.
  2. They reduce liability. If the unimaginable happened and you were hit with a fair housing (or similar) lawsuit, you can show that you have a process in place. That will give you some amount of legal protection.
  3. They 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 auto-pilot due to utilizing a systems manual.

Successful Companies Have Multiple Profit Centers

The property management industry is full of ways to provide multiple services to your tenants and owners, and to charge accordingly.  It is not about being greedy or trying to squeeze the last penny from your clients; rather, it’s about fulfilling needs.

  1. 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 pull 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.
  2. 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?

These are just three behaviors necessary to succeed in the property management business, but even these few steps will have a dramatic impact on the success of your business if you focus on them.

Marc Cunningham3 Tips for Running a Profitable Property Management Practice
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The Best Kept Secret for Finding Off-Market Deals

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Local property managers can help connect you with great rental investments!

Over the past several years, the real estate sales market has strengthened and prices have risen. While this is positive for the economy and owners of real estate, it has created a challenge for those of us looking to find and purchase “good deals” on rental investments.

Would you believe me if I told you there is a secret supply of off-market, tenant-occupied, financially-performing rental homes in your community?

And that you can access this supply without have to spend any marketing money? As a matter of fact, with a simple phone call you can have access to this pool of rental properties. All you have to do is call your local property management company.I run a property management firm in Denver, and we manage hundreds of rental properties. Most of them are owned by small investors who own one-to-three properties. At any given time, we have dozens of investor clients who would be interested in selling their tenant-occupied property, if only they could find a buyer. But they believe they CAN’T sell because it is tenant-occupied, has outstanding repairs that need to be made, and they don’t have the money to fix everything. They just want out. If only they could find a buyer….Get the picture?

If you are looking to buy a rental property, I suggest you Google the phone number of every property management company in the area. Start by calling those property management companies that do not sell real estate (which should be around 50% of the firms in the area). Your conversation should sound something like this.

You: “Hi, my name is Marc Cunningham and I am a local real estate investor. I’m looking to buy a rental property and have it managed. Can you tell me a little bit about your property management services?”

Them: They tell you all about their services, what they do, why you should hire them…

You: “That sounds very interesting. The biggest challenge I have right now is finding the right home to buy. Does your company help investors like me buy rental properties?

Them: If they do: “Yes. We can help you do that.” If they don’t: “No, but we can refer you to a local real estate agent.”

You: “What I would really like to do is to buy a property that is already tenant-occupied. You said that you manage X rental homes. Do you think any of your current clients would be interested in selling their rental property to me?

Them: Awkward pause while they connect the dots and consider the fact that they could facilitate a sale for a current client, make some money in the process and hopefully retain management of the property with you as the new owner.

You: “I would even consider properties that may have some deferred maintenance if I could get a good deal on it.”

Them: No response as they think through their current client list and recall recent conversations from owners who said something like “I can’t wait to sell this rental property!” or “don’t renew the tenant lease agreement this year because I want to sell.”

You: “May I leave you my contact information and have you call me if you come across a deal for me?”

This is truly a win-win-win.

  • The seller wins because they have a tenant-occupied property they just want to unload.
  • The property management company wins because they are helping the owner sell the property, maybe make a commission from the sale, and hopefully retain the management of the property with YOU as the new owner.
  • You win because you are able to purchase an off-market deal, at a good price, with property management already in place.

If you make this call to five local property management companies, you will have at least a few potential deals to consider, and have property management contacts in place for future deals.

Marc CunninghamThe Best Kept Secret for Finding Off-Market Deals
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Leading My Employees Should NOT be this Difficult!

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“Why can’t I find employees who are self-motivated and get their satisfaction from just coming to work every day!”

This was the question posed to me by a frustrated real estate business owner as we were discussing the idea of how to lead your employees.

After I picked myself up off the floor from laughing, we talked about the fact that if our employees were as self-motivated as we think they SHOULD be, and if they did not rely on us for some level of energy, motivation, clarity, and happiness – then maybe they would not need us at all, and simply leave us to go work for themselves. That is NOT the outcome my friend wanted!

Leading our employees (or team members as we call them) is simple to understand, but very hard to do well.

As a leader, you need to bring three things to your team every day. These three things are as necessary and important as bringing your cell phone or your wallet or your purse with you. If you realized that you had left your cell phone in your car as you walked into your office, you would turn around and go and get it, knowing that without it you can’t perform effectively.

In the same way, if you don’t bring these three things into the office with you every day as a leader, you can’t lead your team effectively.

#1 – Energy. A primary goal as a leader is to motivate the people around you. You must motivate them to perform at their highest level. You need to inspire them and energize them. We all look to people who can ‘bring us up’ when we fall down. People will follow and remain loyal to any individual who cares enough about them to want to see them energized.  Energy is more than high-fives, it is about knowing your team on a personal level. Once people are excited and energized about what they do, the next thing they need is clarity in order to channel that energy into results.

#2 – Clarity. Your employees want and need clarity. An energized team member without clarity will move fast but get little to nothing important accomplished. They need clarity of WHY their duties matter, HOW they contribute to the overall success of the team, and WHAT success looks like for their role. One way this can be accomplished is through documented systems outlining the job functions for each employee.

#3 – Accountability. By accountability, I do NOT mean micro-management. Healthy accountability is when team members buy into what they are working to accomplish, understand and agree to the clear expectations of what winning looks like, and regularly measure their performance against those clearly stated and measurable goals.

When you bring energy, clarity, and accountability to the office with you every day, the people around you will take notice. You will grow in your leadership and the people around you will become more successful – what a cool concept!

Marc CunninghamLeading My Employees Should NOT be this Difficult!
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