The Mag
Please join me in welcoming to the broadcast, Co-Founder and CEO with Property Management, Inc. Mr. Steve Hart. Good afternoon, sir.
Steve Hart
Thank you very much. Thanks for welcoming me to your show.
The Mag
Well, Steve, before we get too far into things, can you tell us a little bit about Property Management Inc? How are you serving folks?
Steve Hart
Yeah, we, we started Property Management Inc. about 12 years ago in late 2008, my business partner and then friend, Christopher Layton, we're in the mode of deciding how we were going to dig out of a tough recession, my background was in real estate sales and construction and development and, and Chris was running a property management business among other businesses and Las Vegas, Nevada and, and we were looking or I was looking for next steps, my businesses had basically been crushed by the economy and things that were pretty much out of my control.
And I was looking for a consistent solid industry that I can transition to and didn't want something that could be destroyed again, by you know, mortgage or banking or down real estate markets or poor economies. And this friend of mine, Chris said, Steve, you got to look into property management. And I, I really cringed at his suggestion. Because at the time, my understanding of property managers was blue-collar and, you know, tough to make money. And I didn't know too many property managers making good money. And so, I took a look at what he was doing in Las Vegas and was blown away at the amount of income potential that he was bringing in. And even more exciting to me than that was the property management was what he called recession-proof.
And when he demonstrated that, to me, it really caught my eye after again, having businesses that were just operated and destroyed by the economy. And, and so long story short, looked at his business and realized, man, this is, this is the most fragmented industry I've ever seen. What I mean by fragmented is, there is no national brands, in property management. I mean, in real estate, you could, you could name 10, 20 different national brands are franchises that were out there, you know, cleaning, you know, companies, you could do the same, but with property management 90% of the property managers in the United States, were mom and pop, meaning one, two-man shows, and I couldn't believe that when I was looking at this industry, wondering why is it like that, and, and the systems and, and training that were available for property managers were limited as well.
And the two of us got together, and we thought, Man, this is an opportunity for us to do is more than just do property management. Maybe we open up a franchise, and that's what spawned Property Management Inc. in late 2008. We opened our first franchise in 2009 and started growing the business from there. Here we are 12 years later, that 270 franchisees independently owned and operated franchises throughout the country offering Property Management Services.
The Mag
Well, I'm, I'm a layperson in this world. So, you're gonna have to define some terms for me. When you say property management, what is a property? Is that a home that somebody is renting out? Is it an apartment complex? Is it a duplex? Like what is the word property mean in your world?
Steve Hart
Yeah, that's a wide question there because as you indicated, there's a lot of different kinds of property management. There's what we call long-term residential. That's your typical housing. You know, people that live in single-family homes or maybe an apartment complex, we refer to that anyone that lives in a property we call that residential property management or long term because typically a tenant is signing a one-year lease.
Then there's also short term or what your listeners might be more familiar with is the Vacation Rental Property Management that's the Airbnb kind of stuff that's super hot right now, short term property management are these guys who just want to kind of rent a home or Villa or whatever it is for a weekend or a week. Maybe it's a property around the medical unit, instead of staying in a hotel nowadays, a lot of people just want to rent something a little more personal and rent a home while they know they're going to be in a hospital for a month, and that we refer to as our short term or vacation rental property management.
Then there's the bigger commercial property management, that's your business complexes, the strip malls, the warehouses, things like that. That's commercial. And then, of course, you've got a really popular sector. Now that's up and coming that we refer to as the homeowner association. sector HOA management, that's where a property manager works with a board that's the elected in a home or housing community that does all their CCNRs and manages the community. And nowadays, in the US, most new communities are being run and governed by HOA management. And there's not very many HOA management companies out there.
And so, we've taken these four sectors we call, we refer to them as the four pillars of property management. And we're the only franchise offering that offers all four pillars of property management to our franchisees. So, our franchisees come in, and they can pick a sector or a pillar that they want to specialize in and offer that type of management. And as they grow in the business, they can bolt on the additional pillars. So ultimately, they could their office or franchise could offer just one or two, or all four of these pillars.
The Mag
So now is your potential franchisee somebody who is one of those moms and pops that just wants a better system? Or is this somebody that's new to the industry altogether?
Steve Hart
Yes, and yes. You know, in our early days, we didn't have the reputation. No one knew who we were. And so, to get someone that was a mom and pop to do what we call convert their property management business into a PMI was kind of a long shot. But now, these mom and pops are seeing that, what our new franchisees have, from day one at their fingertips, for example, the system, that's the software's and all the different vendor technologies that are available for property managers nowadays are just it's amazing what's available.
You know, property management today isn't anything like it was 10 years ago, it's like there was this technology tsunami that came in and all these tech companies are now wanting a piece of this massive industry called property management. It's one of the most stable industries out there, you know, 1/3 of Americans rent housing. And that's just the residential pillar I referred to earlier, that's not even talking about how big the commercial management industry and now this hot vacation and HOA management sectors are. And so, it's a massive, stable industry, and all these guys, all these tech companies want a piece of that. And so, it's just overwhelming for a lot of these moms and pops.
They don't know these, a lot of them aren't tech people. They're their property managers. And what we've done with our system has gone out there and selected the very best software's and technologies and land National Partnerships and great national discount pricing for our franchisees and we roll out what we call a system for our franchisees to follow. We provide all the training support for these franchisees Just to follow on that's all the marketing so they can get prop more properties to manage. It's all of the how-to-use we call it the PMI way of how to do it preferred and more profitably.
The Mag
Now when a mom when you were starting out, and the mom and pop said, well, Steve, you know, that all sounds great, but I'm not seeing really, I'm already doing this, like how do you tell them? You know, like the compelling reason to switch when they say I already know all this, I'm in that business already. Why should I switch to yet?
Steve Hart
It's a tough thing to do, you know, no one wants to be told, hey, you're doing it wrong, or there's a better way for that. And in fact, we don't. We don't tell them that we have what we call a portfolio growth assessment, where it's a free analysis that really takes up property managers business, and we dive into how they're doing with their marketing, how they're doing with their technology, and what are their revenue streams. And we go through all these things, it's really just that property manager reporting to us what they're providing and what they're offering.
And we analyze that based on what we see as a good what we call a strategic property manager that doing things really well. We compare that model or that mom and pops offering to a strategic level property manager, and we just showcase to them, hey, look, this is, this is where you're at, this is how your business is performing. And they can see it themselves that they're falling short, typically, you know, in a lot of those categories. And then we say, look, you know, this is what we could do, where you to consider converting your business to a PMI offering, here's how we feel, we could offer better systems, better profitability, better technologies, and so it's really kind of a self-discovery for these moms and pops, for them, and again, that's a free analysis that we offer, you know, no commitment, no strings attached to that, that we offer for these moms and pops.
The Mag
And that's a great way for them to kind of self-select into your system and process.
Steve Hart
Absolutely, yeah. And again, it's, it's not as telling them they're doing wrong, and a lot of them are actually doing things pretty good. But, you know, typically, we see just massive opportunity for them to improve their business with, with some of the things that PMI offers. Some of us just, you know, hey, they might be really good at long term residential management, but maybe they want to expand their business, and they want to consider bolting on a vacation rental business, to their already, you know, doing pretty well, you know, residential business and a lot of these property managers don't consider that because they consider vacation rental being so different, you know, vacation rental, that's a hospitality business, you know, they're working with guests, and the contracts aren't one-year leases, they're their three days, you know, you know, bookings, and they're getting a cleaning team in and out of there, within three or five days before the next guest arrives.
And, and hospitality business is very different than property management, which is that long-term stuff. And so, we can introduce, you know, opportunities like that, for these, even the mom and pops that are doing things well, they can just expand their business. And we have so many programs, and National Partnerships, where we get these massive discounts in, in the rates. And so just alone, just being part of our franchise, family alone, a property manager, or a mom and pop can save a ton of money on the software that they may already be using. And some of this text that I referred to,
The Mag
Now, when a franchisee says, Okay, I'm in, and now you're giving them all these systems and you're telling them all this opportunity? How are they going about getting business? Like how does the business development and because I would imagine this is a very hyper-local, you got to kind of know some folks in your community in order to really make this go.
Steve Hart
Yeah, it's so key to have a successful it is just a really good marketing program to build a better property management business. And that's one of the downfalls we see in our industry, you know, again, it's dominated by lots of mom and pops. And these guys, you know, maybe they'll go out and they'll get a website, you know, maybe they'll be running some social media or AdWords or whatever, and with the hopes of maybe getting some leads here and there, but it's not a real defined proven marketing campaign. And that's exactly what our franchise is used to receive is, they don't just get a website, they get what we refer to as an entire digital marketing program that has all the components of social media posting, and blogging.
And with this program, we do the majority of it for our franchisees where franchisees aren't required to write their own blogs and, you know, post their own social media. These guys are busy as property managers, they're, they're not social media experts, but we have a team of social media professionals that do this for our franchisees and so we're driving more leads to our franchisees we're making sure their websites, get the keywords and get the response.
That a property manager needs to get people seeing them in their community. You know, they might be in a huge city like Atlanta where there's some big boys and big strategic property managers in there and these little moms and pops now, they, they don't stand a chance of getting noticed on the web or on social media with all these big guys with massive Google AdWords budgets. And so, we can help them get noticed and see that as a national brand, we have a lot of power and, and our URLs and websites and other marketing programs really get even the smaller guys notice and get them leads.
And so, as a smaller mom and pop or as a new startup franchise one of the biggest focuses PMI has, with these property management franchises that we have is getting a set marketing program and helping them get the properties and build them a portfolio. We help them grow their portfolio, they're going to be happy, we help them make that portfolio more profitable with all of our, we have 50 plus revenue streams that we teach you an average property manager only is doing three to five. So just the added revenue streams that we offer a loan to a property manager is going to help them really accelerate the profitability of their business.
The Mag
Now, what does an ideal market look like? How large of a community does a community have to be in order to be a good PMI kind of suspect at least.
Steve Hart
Yeah, when you think of our industry, where 1/3 of the housing market in America is rentals, regardless of its if you're in a small town with only 50,000 homes in it, you know, even 50,000 homes a third of that’s a massive opportunity, you know, a property manager that manages a couple 100 properties. This is I'm referring to the long-term management sector here. You know, a property manager with a couple of 100 doors under management considered doing well. A property manager with 1000 doors under management is top 1%.
And so, you don't have to have 1000s of properties to make a lot of money in our industry. And so again, back to your question, if you're in a town with you know, 30,000 or 20,000 rental properties in it, you can make a massive business, you can build a massive portfolio with a lot of income in a very small market. And then there again, then there's these, the vacation rental pillar.
You know, we have franchisees throughout most of the major resort areas like ski towns in Colorado, Utah, these are small little ski towns, and vacation rental manager with 50 what we refer to as a key which is just basically a short-term rental property of vacation rental franchise, he with 50 keys is doing really well. So again, you don't need to be in a big, you know, Metro city or area to build a successful property management business.
The Mag
Now is the franchisee typically an owner-operator is this something that can be run, absentee?
Steve Hart
Both, you know, right now we're seeing the majority of our franchisees are owner-operators, and a lot of them especially if they're a startup, this is non-conversions. A lot of the startup guys, you know, we allow them to even start this thing out of their home of this if they want. It's not preferred, we'd prefer if they got to office space, or at least an executive suite or something, but we even allow them during the first initial startup phase while they're going out and building their portfolio to even start from the home office. So, we keep their startup costs super low. And make it really, really easy for them to come out of the gates keeping their costs low and build profitability fast.
The Mag
Now when you were just when this was the beginning, and before you had, you know 201 150 10 you had to have one talk to listeners about getting that first one and then you know and then that kind of leap of faith that person had and then how you felt as that person became successful.
Steve Hart
Yeah, that's not answering that question is not going to help us. You know, sell franchises because that first franchise you know, we used my business partner’s model off to Vegas. I guess is kind of our, our mothership and model office, but his office, you know, we didn't, he didn't have all the systems and things dial like what we have available for our franchisees today. So, you know, if you talk to any of our early franchisees, you know, we only opened seven franchises that the first year in 2009. And those guys van they had limited systems, but we don't we didn't have four pillars back then, you know, we really started out only really offering long term residential and commercial.
And so, it was a much more simple offering, the systems, and technology, you know, 11 years ago in 2009, was also nothing compared to what it was today. But it was hard, you know, we thought we would come out of the gates and sell or not sell, but open, you know, 20 to 30 offices our first year, and we'll open seven, and it was barely enough for us to even keep our doors open. You know, I didn't have a job remember, I lost everything in 2008. And so, I was hurting financially and my business partner, he just kind of put the money in and was saying, you know, here you make it happen he was busy with his other businesses. And so, it was really tough not just the first year but the first few years.
The Mag
How'd you got the line? How'd you get the escape velocity? What was kind of the tipping point?
Steve Hart
Yeah, you know, it, it was just kind of keeping our head down and improving things and making a better and helping these early franchisees succeed. And, you know, we had a few guys that didn't succeed, we had a few guys that weren't willing to follow our program and do the work and, and, you know, that doesn't help you build a franchise when you have a couple of guys that don't succeed. And, and so we just kept our head down and kept doing what we knew worked. And remember, it wasn't like we had a lot of competition out there.
You know, it's a fragmented industry and a really cool industry that was recession-resistant, you know, whether they even if the economy tanks, people still need rental housing, you got to live somewhere. All right. Yeah. So we were in a sexy industry, no competition, really. And, and we knew we had a model that was really going to work, it just didn't happen very fast. And even the third year, the fourth year, we were starting to build a little momentum, but it sure hadn't hit that takeoff point, until about 2000, probably about 2014 2015, where we really saw, you know, where we were opening 40, 50 offices or franchise offices per year. And that's when it started taking off.
And we are projecting to open 80 new franchise offices in the US just this year, in 2020. We were voted by Entrepreneur Magazine are ranked by Entrepreneur Magazine as one of the top 100 fastest growing franchises. Right now. For six years in a row, they've ranked us in their franchise 500, and for the last four years, we've been number one in our category, which means the very best top-ranked property management franchisors so we've gotten some accolades from, you know, some of the industry professionals out there and given us some awards that, you know, kind of make us feel good about all those early years of, you know, really just sweating it out and, and, and toughen it through some tough times.
The Mag
Now, do you have any advice for somebody franchising a friend, a new emerging franchisor have you know, some do's and don'ts and how to build a brand that's going to last?
Steve Hart
Yeah, my first advice is good luck. My partner and I were reminiscing about the early days just a few weeks ago, and we both were like, man, we would never do that over. So maybe your listeners don't want to hear that, but
The Mag
It's hard. There are no shortcuts. Really?
Steve Hart
Yeah, it's really hard to even when you know, you know, one of your potential franchisor guys to listen to this might have an ideal idea, you know, where they have a, you know, a cookie business is just killing it in their local town and they think, man, I can franchise this and what I can tell you is franchising and running a franchise is nothing like running a successful business.
And that's one of the reasons what was so tough for our first 4, 5, four or five years and in getting our business off the ground is and we were learning what franchising was, and, and there, it's so different and it took us a little bit longer to figure out the franchising side and this is even working with franchise attorneys and you know franchise broker groups that say they're gonna come in and help sell a bunch of your franchise This is working with all that industry stuff already it just took some time you know maybe hindsight maybe if we would have had the money to go out and bring in franchisor you know, kind of seasoned partner in and maybe that would have kind of cut that learning curve down for us but you know, we just had to learn it on our own because we didn't have the money to hire it or bring that in and it was a little harder than we thought it was gonna be.
The Mag
Now, did the point of inflection happen because you stumbled upon some magic way to get new franchisees that are like digital marketing started working or franchise brokers started working or the expos started working like did something kind of monumental happen that all of a sudden now, you're the belle of the ball and people are seeking you out?
Steve Hart
I wish there was a secret sauce you know moment that I could say yeah it was because of this that really turned you know helped us turn the corner you know Luckily for us, we had amazing offering and that really is needed and wanted and we knew that from the get-go and like I said we just kept doing what we knew was needed by the industry and from our side making it better for our franchisees It was about getting the success and it just took the time it takes time as a new property manager to build that that portfolio you know, most people coming into our franchise have got a grill that portfolio Wednesday Tuesday and we help them acquire local competitive businesses we call it our acquisition program where they can buy up existing portfolios.
But most of our new young franchisees are just following our marketing program and building you know a couple of doors a week here or there and it takes you to know, six months nine months 12 months to have a decent enough portfolio to really say hey I'm making money and this is residual money I mean these properties that I'm managing they pay me every month that's a cool really cool hot point with our franchise I didn't you know bring up earlier property managers we have you know, residual income where these properties if you do a good job managing them they're sticking around the property owner is not going to pull that contract from you and that's residual we get paid month after month.
So, as we add more and more properties to our portfolio, it's just you know, a consistent dependent remembers the industry we're talking about is probably one of the most consistent industries that I can think of you doesn't go away people need to rent properties. And so, it's just it's a good stable market.
The Mag
Well, good stuff, and congratulations on all your success if somebody wants to learn more about Property Management Inc. If they're considering to be a franchisee, is there a website for them to go to?
Steve Hart
Yeah, propertymanagementinc.com, you can see all about our offering for someone that has no experience no real estate background, or property management background. No problem. We don't require that we just look for people that are willing to roll up their sleeves and want to own and operate their own business and we've got all the systems all the training to teach anyone experience or no experience how to do that. And also any property managers that think that they're interested in this free assessment, can go to propertymanagementinc.com click on the conversion tabs that talk about you know, existing property managers, and we can get them that assessment and see if there's areas where we can help them out.
The Mag
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