On this episode, host Bob Preston and guest Jeremy Pound discuss various aspects of business development and new client acquisition in the property management industry. The conversation also delves into the building blocks for creating a successful business development program and the characteristics of a good business development manager.
- Understanding the local market and competition
- Finding the right business development manager
- Motivating business development managers
- CRM Software
- Significant opportunities for growth
00:00 Introduction and Background
05:20 Challenges in Acquiring New Doors
10:20 Understanding the Local Market and Competition
13:45 Building Blocks for Business Development
18:00 Reluctance to Delegate Business Development
30:00 Motivating and Compensating Business Development Managers
37:20 Importance of Customer Relationship Management Software
52:40 Closing Thoughts
Connect with Jeremy Pound: https://rentscale.com/
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Connect with Bob Preston
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Transcript of This Episode
Episode Introduction (00:00)
Property Management Brainstorm introduction to the topic and a bit about us!
Bob Preston (01:34)
Hello, brainstormers. This is Bob Preston, your host broadcasting from our Property Management Brainstorm Studio in Del Mar, California. If you're new here, please subscribe for ongoing access to our great episodes. And if you like what you hear, please pay it forward with a positive review. Before we start today, I'd like to give a quick shout-out to our amazing sponsors for helping support the show. Upkeep Media, SureVestor, VPM Solutions, RentScale, Second Nature, Showdigs, Blanket, Latchel, APM Help, and today's feature sponsor, ZInspector, who you will be hearing more about in a brief mid-roll about halfway through this episode.
I hope all my listeners are working on kicking off the new year for their property management business. If you missed it, my final episode in 2023 was about the productive ways to kick off 2024. You may want to listen to that for some great ideas for starting your company in the new year. If you still need to do so, one way to kick off the new year is to prepare a year-round growth forecast. The number of doors in your portfolio and your revenue per unit are the basic building blocks that drive your entire budget for the year. It's an essential forecasting process that every property management company should undertake.
I've been through this forecasting and budgeting process many, many times with my own property management company, North County Property Group, and I have further facilitated the process with many of my property management consulting clients. The business development plan for adding doors throughout the coming year is an essential topic when considering door growth. It's critical to have a plan for this because some amount of property management attrition is expected to be normal in any given year. In fact, according to the NARPAM benchmark study, the industry average for most property managers is about 20% yearly door loss. Wow.
That's pretty extensive. This means that at least 20% of new doors are needed yearly to stay even at your current door level. Recent customer acquisition comes down to profitably generating leads, nurturing them through a business development process, and then converting them by closing and signing a new property management agreement. With me on the show today is Jeremy Pound, CEO at RentScale. He's an expert in the business development process and in training top-performing salespeople toward door growth. We will discuss why so many PM companies are still winging it when it comes to their customer acquisition strategy, and we'll unpack what you can do about it in 2024 to scale your business.
Bob Preston (03:58)
Jeremy, welcome to Property Management Brainstorm.
Jeremy Pound (03:41)
Good to be here with you, Bob. Thanks for having me.
Bob Preston (04:02.)
Absolutely. I always start the show by learning more about my guests. I know you pretty well, but let's roll with that. Okay. So our listeners can learn about you. Can you introduce yourself and tell us a bit about RentScale?
Jeremy Pound (04:12)
Yes. So, Bob, we worked together at RentScale years ago and love what we're doing now. I'm Jeremy Pound. I am a co-founder and the current owner of RentScale. I started with Jordan Muela from Lead Simple, which many of you might know. Also, the publisher of Strategic PM just happened to have one on my desk right here. It's a magazine for property management, entrepreneurs, and executives. And through that endeavor, I also host every other week's live show.
And the irony is not lost on me that the show is called This Week in PM. We only do it every other week because it takes a lot of time to get it all done and out there. But yeah, I am spending my career investing in residential property managers. And I love what our company has done to help the industry elevate the customer acquisition side on lead gen and sales. So, we've hired over 200 business development managers for the industry and worked with over 500 clients. So it's an excellent opportunity for us. We love it; it's a privilege, and we love being a part of this industry.
Bob Preston (05:41)
Perfect, that will be the primary topic of today, bringing on new doors and new client acquisition. So, if you're cool, we'll dive into that. Interest rates are high. Probably at an all-time high, at least in many years, and property sales listings are at an all-time inventory low, at least in my neck of the woods. And so, from tracking the property management industry, it's probably one of the best periods historically for property managers, right? And in the industry, given the right market conditions, why are so many property management companies struggling to open new doors?
Jeremy Pound (05:45)
Well, some are, and some aren't right. I think you and I both know that the industry, I think overall, is growing like crazy. When we think about the number of doors under professional management, it's only an upper trend as far as I can see in every metric I've looked at. Some of that's anecdotal. Some of that's actual, you know, complex data. It is also, a little; it makes me chuck a little bit about that question, Bob, because just like two years ago, every NARPM event I spoke to was about how to get your investors not to sell their properties. It was just a blink of an eye ago that everything was like, everybody's selling, nobody would ever keep their property as a rental. And I remember my message was always like, why is everyone selling their properties? Because property values will only go up, especially on the residential side. I get there are all these multifamily complexes, but when it comes to four walls and a backyard, that's still a unique asset, and there needs to be more. We need to be more built. We all know that.
So it was just really interesting. Two years ago, it was always like, oh, it was a terrible time to be in property management. Let's get into the brokerage side. And now we blink our eyes, Bob and all the brokers are like, let's get in the property management side. Right? I mean, we're seeing nonstop. So, I wanted to stop and pause on that. It's very chuckle-worthy how fast the pendulum swings in any industry. And then you know, my best clients, my entrepreneurial friends, the people that I see doing the best, what I try to remind myself of, and it's hard, is the best strategy is usually a three to five-year plan. It's looking ahead. So we all know Wayne Gretzky: I don't skate where the puck is. I skate where the puck is going. And that's what I was trying to share with the industry. It wasn't just me. I had this figured out differently. All the most intelligent people I knew in real estate were thinking, hey, the rents will only go up.
These assets are going to be crazy. People have these 3% mortgages. So it's just really interesting that. So take that for what it's worth. Only make decisions on a three-month or six-month period if that's right for you. You should think a little bit further ahead. But to answer your question, which is right on the point, some people are okay. And it's mainly because they have this legacy momentum. They've been around for 20 years, and they're number one on Google, and every agent in town knows them, and they're building, they're, they're just, you know, basically, um, taking advantage of their brand recognition. But if the industry is growing, new people have a lot of opportunities. Right. And so what I love about property management is there's a lot of innovation and room for doing things in new ways. We know technology has played a considerable part. So I also see new people coming in, and they're doing it differently.
Jeremy Pound (08:30)
And so now everybody has to have a different strategy. The industry has matured. And so the most straightforward analogy that I like to share with my clients is, you think that generating leads is like walking on a 60-degree day on a flat road, right? So I know you're in Southern California. I'm here in South Florida. It's a great time of year in the winter. It's like 65 degrees outside. People will go for a walk all day long. That's what you think lead gen is like. But today, with the competitive landscape, the biases that investors have, and the concerns that accidental landlords have, promising lead gen is much more like going up a 40-degree angle with a hundred-pound backpack on and wind in your face. Like, so a couple of years ago, I hiked Mount Washington. It was a great example. They call it the deadliest small mountain on earth because so many people die. It's just wild. The weather changes, and it is straight up, and there are rocks, no tree cover, and the wind comes like crazy. And the effort you have to exert to get to the top of that is so much more than the energy you exert just going on a walk around the block here in South Florida on a December day. So, people don't understand how hard it is to generate leads in this environment. So I know that was a long answer, Bob, but that's what I'm saying. The people that are really
Bob Preston (09:51)
You know, so many companies struggling is an overstatement. Still, I talk to working companies in my new business, property management consulting, right? And they're still winging it, you know, they don't, they've got the rest of their company nailed down, they've got all these extraordinary processes and great systems in place. However, they're still winging it to lead follow-up or generate leads. You know, and this is very, very surprising. That's what I'm trying to say.
Jeremy Pound (10:15)
You have to work a lot more than you think you do, but it's worth it because it's a recurring revenue business, which is fantastic.
Bob Preston (10:20)
Yeah, absolutely. Absolutely. You mentioned that there weren't that many competitors when you started. Well, there were. I'm in the San Diego metro area, and my business was in the northern part of the county. It's a big county. I found understanding the local competition and where they were focusing was critical because the San Diego proper market was saturated with established property management companies.
I don't know if you know San Diego very well, but in North County, as it's called, like coastal, kind of the surf spot zones where there were a lot of vacation, a lot of high-end property value rentals, there wasn't anybody who had tagged that as their specialty. So, my company, North County Property Group, right? So how important in your mind is it to understand that local market and the competition and just craft door growth and a business development strategy?
Jeremy Pound (11:06)
From a client acquisition side and business development side, Bob, you hit the head on the nail. Would you like me to know more about your market so I can operate a business? Can I come in and could I have bought your company? I would have needed to learn the market, but I would have relied on the systems you had, the people you had, and the technology you had.
But when it comes to attracting clients and standing out, this is where local information matters so much. So the answer to your question is it matters a lot, specifically on the business development side. So even if you're an owner and you're thinking, I don't need to know how much, I don't believe how much local Intel helps me run my business, I can assure you that,
I can share a hundred strategies for using local intel to close more doors and win that business because to the investor side, you know, and anyone watching this might think about this. Now, if you're super experienced and you've been owning properties for years, you may not remember this, but as newer investors, we do care. Our property is unique. We bought in a specific neighborhood for a reason. We want to know what's happening in the Northern California market and why that's different, better, or worse than the rest of San Diego County, right? Like, you know, we do want to know that. And so I know there is a huge trend and for good reasons for this industry to bring on more global talent. And maybe our maintenance coordinators and assistants don't need to be in our market, but I can tell you head-to-head
if you give me two companies. You let me have somebody local who knows the market, who's willing to be an influence in the local market, go to local events, do things, know everything about the market, know how to discuss, use the local Intel and vocabulary that the locals use, versus somebody who's just going to do it, you know, from anywhere and call it like a just a vanilla type of property management. Local BDM or owners will crush it if they celebrate the area. It's just such a local business. So, you hit the head on the nail there.
Bob Preston (13:20)
If nothing else, I mean to give your elevator pitch where you can describe your differentiation. I mean, you've got to be able to do that. You've got to be able to stand out. Otherwise, you're one of these interchangeable parts of hundreds of property management companies that might be in your area. So yeah, you mentioned that I could come in by your company, and you have systems in place. But the business, I might use some things interchangeably today, right? Business development, customer acquisition, door growth. We're all talking about the same thing here. When we use those terms, we want to be precise. Yeah. Okay. So, in that regard, what are the basic building blocks for creating a good business development program or customer acquisition strategy?
Jeremy Pound (13:56)
So, building blocks, Bob, we talked about this before; it's been a couple of years. Could you know your customer, right? You should know your ideal customer. Do you know who your bill serves, right? Doesn't that make us, doesn't that make our business development decisions easier? Where to market, where not to sell? And doesn't that even make our business decisions easier? What to offer, what not to offer, how to price the product? So immense clarity and confidence in who your customer is is always the foundation, even before the building blocks, if I would use that analogy. And then from there,
You know, there is a finite number of people who today own properties, and their property portfolio or their property makeup is an ideal fit, and the owner is a perfect fit, and you want to know all those people. So we talk about this all the time. List building is the number one strategy in local property management. If you wait until people are ready to switch property managers or they're prepared to hire, you're only talking to 3%, maybe 5% of the market. We know how to find investors. We know how to create content. We know how to give value. I want to have conversations and influence with as many people in my market who fit my ideal prototype as possible, even if they're not ready to buy from me for years. So, the mentality around list building is also a huge building block.
From there, we also need to find the people who are just popping up and are ready to buy today, right? We do need to be found on Google. We need to have other real estate agents and influencers in our local community down to things that people never think about, like divorce attorneys, probate attorneys, or anyone with anything to do with financing. I think, you know, the best clients I have; I think even the mayor knows who they are, right? And so if anybody needs in town, they will know who they are. That network and being found when people are ready to buy is the duality I see work. Suppose you try to over-index on only being found when people are prepared to accept. In that case, you're missing out on so many people, and your acquisition cost will go through the roof because that's the competitive red ocean that everybody's fighting over. But if you also build a list, getting some wins and enough ad bats will take a long time. And so I want you to be focusing on both sides.
Bob Preston (16:15)
Yeah, it's a parallel strategy, right? I mean, you have to be doing both. If you're banking on pay-per-click and waiting for the phone to ring, those people are; they may be ready to sign now, but they're also talking to five or six other companies, probably versus if you're out networking, you're going to be talking to people who might be considering you in the future, but you have more time to tell them your differentiation and get them aware of you. Then perhaps when they come back, they're ready to go. They don't even talk to anybody else.
Jeremy Pound (16:43)
Yeah, in 2024, it is tough to build a profitable business where you are not in it for the long term. Right? What I mean by that is if you're in it for the long term, why would you want to be conversing with all of your ideal clients years before they hire you? So, everybody comes in and says, hey, I read this business book, and I can spend $1 to make $2. And if that works, I'll do it over and over again. And I agree that there is a lot of fundamental expertise and knowledge in that statement. But you can throw money on the fire if you think you'll open on a Wednesday and by Monday next week. It turns into customers; there are just a lot of people with a better reputation, more awareness, more money, more expertise, and more experience. They are just going to eat your lunch. So it is a long-term play for sure.
Bob Preston (17:35)
Yeah, for sure. We talked about this a little bit before we started recording. When I had my property management business, North County Property Group, as the company grew, and you even referred to this earlier, there were systems in place and processes. Well, you know why? Because I delegated things to other staff members along the way, and instead of doing them myself, I helped them create the systems and the processes for doing that. Accounting, maintenance, and leasing, right?
The business development function was one of the last holdouts for me, which we had joked about before. Because it's like, all right, this is my baby, you know, and I felt nobody could tell the story like me, right? So how am I going to give that up to somebody? And it was tough for me to trust in that. And I was afraid to let it go. But the reality was, I was only doing it with, you know, 10, 20% of my time, and sure, I could respond to people when the phone rang, but I wasn't doing that other, kind of that other side you mentioned, out there in the network, out there in the community, out there meeting people and talking the company up. Do you hear from other broker-owners and PM companies that this is tough for them to give up?
Jeremy Pound (18:37)
I do. I completely do. And I mean, that was the personal journey that I was on. I remember, you know, before RentScale, I had a lead generation agency. I used to do, you know, marketing for other service companies, like property managers, or what we do at RentScale. And you know, we were a relatively successful local company, and I had had eight to 10 employees. And I remember I was still doing all the sales. And to me personally, it was like, I didn't know this until I later replaced myself. And then I looked back and thought, I realized that was my identity, Bob. Like I was the guy who could close all the business. And I started thinking, why would all these people work for me if someone else is the one that can complete all the business? That was the journey that I was on. I started to realize, I'm like, well, what is my job here if I need to close all the deals? Yeah, that's a super naive statement. Fast forward ten years later, that is the most ridiculous statement. But I say that because I've talked to other people that feel that way. Some people don't want to give it up. They feel like that's the value that they add to the business. And other people love it.
And like you said, Bob, you can relate to this because of our conversations. When thinking of business development, we remember the highs of the highs, remembering the three calls a week or a month to get where people are ready to buy. And all we do is tell them what we do. And then they sign up. And we're like, I'm so good at sales, right? Then we give you a look into a natural business development environment where somebody's working 40-plus hours a week. And they're building these relationships, and they're nurturing a list. And you look back and think about how many people in your pipeline weren't ready to close within a week or two and completely forgot about them. But they were prepared to buy in six months or maybe a year or even 90 days from now. But with the proper follow-up, that person would have closed. We have this foggy sense of what we do as owners and sales and are still deciding whether to do the work. I have a few diehard salespeople clients; they'll live and breathe it, which they want to do. And they're willing to take it seriously. And for those people, for a season of their business life, it's great for them to do business development. But that's rarer than most of us, which remembers the three calls that were basically like the layups, right? And we're like, Wow, I'm still good at the sales side of this whole thing. That's all.
Bob Preston (21:04)
It was the right recipe for me, and we were joking about this, too, because I was lucky. I had my son Brett come in, and he took over business development. I could trust him; he picked up on things quickly; he could probably do the pitch better than I could. But you know, when he was on vacation, I still got a little taste of it, right? I used to come back in and, oh, this is great, you know, I'm going to close all these properties while he's away, I'm going to show him, you know, who can do this. So, it was always fun to plug back into it when I wanted to.
Jeremy Pound (21:28)
Listen, I still deal with sales now and then when I have to Bob in my own business. But I'll tell you, you know, we have a team of three salespeople. Yeah, we're growing faster than ever. You know what I mean? Like, I've got no ego. Like, I'd rather I'd rather have the company grow. And by the way, the other thing is the owner and maybe Bob; you can relate to this. I was guilty. I always try to tell my owner clients. Remember, you're selling with all the authority and autonomy, right? You can change the rules, you can discount things, you can be like, yeah, we'll make an exception on that, right? Yeah, all those things. And you're like, why can't this other guy do it as well as I can? I can tell you that when you get another person to do it, they're going to follow the rules better than you will; they're going to follow your rules better than you do. And it's fantastic. So, I love it when my clients say, yeah, I could have closed that deal, but they wanted to change all these policies. And I just let them go. And I'm like, oh, I remember myself, right? My imperfect person would have been like, I would have just made the deal work. But then my operations team would have been mad at me. Who knows if that client was a good fit? We may have had bad reviews. So, like all the reasons we tell ourselves why, especially in property management, we have systems and standards, right? And we have rules. Just imagine all that rigidity being enforced on business development because that happens when you have somebody good at it.
Bob Preston (22:50)
Very true. Okay, so if I'm a broker-owner of a business and I'm reluctant to give this up, and you're trying to tell me, hey, it's time to give it up, right? What should I be looking for? What are the key characteristics of a successful BD manager, BDM, or whatever you want to call it if I'm hiring? What should I be looking for within a property management company?
Jeremy Pound (23:08)
So when I'm talking to somebody brand new, again, this is super high level and simple, I'm looking for two dimensions, Bob. I want somebody with high leadership ability who can follow a process. And as you probably know, Bob, those things don't always fit the same way. Can you see my graphic? So this is what we look for. So when I'm on a call, I'm looking for somebody to politely and naturally take control of the conversation when I'm interviewing somebody. I want somebody who has no problem with conflict. They have no problem with leading to it. They have a purpose when they talk to me. They are looking to do everything. And then I also want them to realize there's no point in reinventing the wheel and just starting from scratch and saying, well, I'm just going to wing it as you said, which I know we always talk about. So, on the left, you've got a wing in it. On the right, you've got a sales process. On the bottom, you've got low leadership, which I call an order taker. On the high end, you've got high leadership. I call that the rainmaker. So that's the graph I wanted to show you. So, this is the rainmaker. This is what we are as the business owner. And if we could get somebody with our leadership ability to follow a process, we could inch them over to the right, and they could be scalable top performers. This is what we're looking for.
Now, many other things matter, but I have to tell you, this is the winning formula we've repeatedly seen. And so, you know, you can see the labels I've created here; if I'm going to wing it and have little leadership, then I'm an account manager. If I've got little leadership but want to follow the process, I'm an order taker and will follow the process. But what we want is somebody in that time.
Bob Preston (24:37)
One of the reasons I was reluctant is that in the very early days of the company, um, I had an agent with me who was good. She was charming. She could talk to anyone, but she never met a stranger, right? Could go out, uh, close almost anybody. The problem was, uh, she was bringing on crappy properties, right? And so that arrow to the right, that you showed the systems and processes you are forcing people to follow, wasn't easy to enforce with her. Sometimes, Jeremy, we wouldn't find out until a month or two later, like, oh great, a new property. And then we realized, oh my God, this is an awful property. It's a horrible tenant. That is the thing that I was always afraid of. Do you find that sometimes keeping people staying in their lanes? You want a leader; you want somebody who can go out there and do it and be a rainmaker. But on the other hand, there's also, you've got to confine them a little bit because they got to stay in their lanes.
Jeremy Pound (25:15)
Yeah, and I get it; they're going to be frustrated. And that's not a bad thing. They will want to say, hey, I could go close to these people. But I've done it for many years, if not decades. And there are people out there who get it and build relationships with those who support those clients and know how to go back to them, ask for referrals, and convince them to expand their property. And they don't want to be that person who is letting them down. So that person is out there.
And that's why I love that graphic because once people believe that person's out there, they raise their standards. But so many of us hiring our first salesperson ever are just like; we're just convincing ourselves that salespeople are salespeople and they're going to be the way they're going to be. But it's only sometimes the case.
zInspector Midroll Commercial (25.54)
zInspector is the most powerful and affordable property inspection solution in the market. A great in-app camera experience, fully customizable templates, tenant-led inspections, 360-camera integration & virtual tours, and two-way PM software integrations make it the most collaborative field-to-office property inspection solution available. Embrace the future of property inspections with zInspector. (https://www.zinspector.com/)
Bob Preston (27:00)
So you're a proponent. When you helped us hire somebody, I can't remember the exact tool or process you used to survey, but it might've been DISC or something like that, putting them through some assessment, right? Before hiring.
Jeremy Pound (27:14)
We are, well, we use Business DNA. It's not necessarily better than anything out there. What matters is that you know what you're looking for on the assessment, and you may have heard us say this. We want to use it to disqualify somebody who doesn't; we think he will want to be in something other than that role, right? It's a huge investment to hire and train; the way we work, we guarantee that person or we'll rehire them. So we don't want to bring somebody who will be fantastic for 40 days. I'm like, I want to do something else. But it's not just a pass-or-fail assessment. If you've got the right tool and know how to use it, how will this person sell? So, I got to meet your son, Brett, who is excellent. The way he sells might be different than me. And we might both be successful if we came in and were BDM A and BDM B in your company.
We may do things differently. And so, the assessment can help us understand it. Are they going to be, you know, a real relationship driver? Are they going to be, you know, really outgoing and want to do high volume? There are many different ways and different people can be successful at sales. So I'm also not a believer, which I think too many talk about, whereas some perfect tests will just predict with 100% accuracy who will be a killer salesperson and who will not. If that's out there, please let me know. But I keep trying everything somebody sends me. Sales is a highly human-dependent thing. And sometimes it works, and sometimes it doesn't. You have to get it.
Bob Preston (28:51)
I think it also depends, I think it also depends upon what the owner of the company, the broker-owner, wants in terms of their growth rate, you know, because we kicked off the session I did with the intro talking about the forecasting process and how it's essential when you're doing your forecasting and your budgeting for 2024 that you understand what kind of door growth you need. The building blocks for the budget are required to drive that budget.
If you want that to be a slow and steady pace, right? Some business owners like that. Others like, oh my God, go out there and sign as many properties as possible. We'll figure the rest out later, right? So, there are different styles that I find when I'm talking to my clients. So those personality assessments, whatever they are and whatever you end up using, really help you understand that. Is this person going to be that organized, like steady Eddy, or is this going to be the person who can go out and, you know, totally kill it and bring back a bunch of new properties every single day?
Jeremy Pound (29:40)
Yeah, 100%. And that's a cultural fit, right? What is the appetite for growth from the company? It is essential to have a BDM or anybody, even in your marketing role, anybody on the customer acquisition side; you can be a culture fit based on this idea of how fast is too fast and how low is unacceptable. And everybody's got to get aligned around that.
Bob Preston (30:00)
Mm-hmm. Yeah. So a sidebar on this would be, how do you motivate these people? Well, it depends upon the person to some degree, but that's one of the common questions I get. If I hire somebody, how should I incentivize them? What should the comp plan be? Do you have preferred models that you introduced to your clients?
Jeremy Pound (30:17)
We do have compensation models, for sure. We have multiple models that work, depending on how the portfolio skews from a completely single family to a more petite multi. So we typically don't work with clients that are above small multi. And our definition is you don't need on-site management, right? So it doesn't matter; I don't care about the door count. Every state has its own rules. You're in California; it's probably a little lower than elsewhere.
Some of our clients have, you know, 34-door complexes and, you know, Georgia, and they don't need on-site management, Right? So that's what we call small multi for us. So, if they're bringing on tons of portfolios, it may change slightly if they're bringing on a single family. So I know you're in North County in San Diego; we've got another client in Ventura. And it's like their average rents might be six, $7,000, and like yours, maybe six doors reliably or 50 to 100 doors a year is like killing their business goals in terms of what they want to do.
Bob Preston (31:19)
Yeah, that's like ours. Yeah.
Jeremy Pound (31:21)
Then you think about, you know, somebody like in Memphis or rural, you know, Tennessee, and maybe their average rents are six, $700, proper. And so, the door count can get out of whack. So what matters is, like you're saying, what we believe in is for compensation is a mix of base and then, you know, goal incentives per the deal. We like to create what we call target earnings for you. You guys may be familiar with that. So, if you're hitting your goals, you'll make this. That doesn't mean you're guaranteed that. And many owners who only have a property manager on staff and a maintenance coordinator are not used to these numbers. And so I say, hey, if I bring in somebody, and they're going to close 120 doors for you, they might make $120,000. And they're like, nobody at this company makes 120,000. They think that's fine. But we're going to base it on local data. So we love talent.com. There's a great tool, Bob, on talent.com. It shows you a bell curve. So you can put it in business development, you can put it in sales, and you can do Chattanooga, Tennessee, Boca Raton, Florida. You can do Ventura, California. You can do whatever you want. And you're looking at comps. So, when you rent a property, what do you do? It's a three-bedroom. It's in this part of town. It's a two-story. What do the comps look like for that?
Why would marketing a sales position be any different? So the most challenging thing for people to get their heads wrapped around is we look at the comps and then reverse engineer what it would take for your company to make that much money. And then, if you're working with us, we'll challenge you on it. We'll make sure you're not just, you know, you're not smoking anything, and it's not a pipe dream. You're different from, oh yeah, somebody will come in here. As an owner, I've only closed up to four doors a month, but if I hire someone, they will complete at least 45 a month.
And if they do that, then I'll pay them, you know, half a million dollars. So we checked it, but it is a reverse engineer. It's very much like pricing a property. And there's a great saying in real estate that I love when it comes to pricing properties: if it's not selling, it's not compelling. We do the same thing in marketing roles, right? If you put it out there and you don't get any good candidates, if it's not selling, it's not compelling. We need to rethink it. So that's what we like to see in terms of compensation is a, is a base. Why a base? Because, in this kind of sales, it takes time to build a book of business and a network. That doesn't matter if you're getting 150 leads a month because you have a lead and a marketing machine that changes the mindset. Most people don't have that, right? But most of us are saying, hey, you go out there, take the leads I've got, and develop your own. It makes people feel like they're part of the team, not a hired gun. If you're like, I need you to come in and work the front desk on Tuesday because somebody's sick.
If you're paying them all commission, they will look at you and ask, why would I do that, right? But if they're a team, they have the base; they're part of your team. Then, we want to starve out the underperformers, and we wish to golden handcuff the top performers. So if I'm closing one door a month, I'm not making enough money to live and want you to want to leave. Especially in California, from employment laws, I want you to want to go. Instead of me having to fire you. Whereas if you close 20 doors a month, your compensation will get a staircase. So, the person who closes 20 doors isn't made 20 times the person who closes one door in terms of commission. They may make like 30 or 40 times. Cause it's going to escalate for them. That's the person we want. So that's the compensation model we use. You did ask the question, Bob; I wish to say this. You wondered how you motivate them. I was; I have a mentor, Jack Daly. He's not too far from you. And he's, you know, built two different billion-dollar companies. He's a great sales leader. And I asked him on my podcast, I said, how do you motivate salespeople? And he says you don't. You hire them that way, and you don't mess it up. And so when it comes to motivation, you must hire a motivated person and take your time with it. And the comp model is a big part of that.
Bob Preston (35:41)
Yeah. I give them a comp plan and, uh, let them roll, you know, don't get in their way, don't make them come into the office, all those kinds of things, right? As long as they're producing. Yeah.
Jeremy Pound (35:48)
Support them like they're out there working hard for you. Make them celebrate their wins. Give them, if they need to make a $10 concession to close a deal, be the person that helps them do that. You know what I mean? And again, I mean, don't change your policies and things like that, but make it easy for them to win. That's what a good salesperson wants.
Bob Preston (36:06)
Yeah. I like that stair-step model you talked about because you might be able to have, like, okay, in our forecast, I need you to close at least; I don't know; let's pick a number five, six, ten properties per month. And that's that sweet range where you identify, hey, you've got your base, and then you can make this much per property. If you stair-step it up and go from five to ten and now you're at 15 or 20, the commission bumps slightly.
This is where it's essential, though. I want to caution people because I made this mistake. If you will have your BDM doing multifamily doors, okay. You have to have a little sidebar that says, okay, multifamily is comp comped differently. Because it's your point, if somebody goes out and secures a 30-door unit or apartment complex that can't, that will break your model. So you, that's one caution, right?
Jeremy Pound (36:51)
That's a great point, Bob; thank you. And I will say we've done this for years. Anybody watching this, whether you know or any of your clients, Bob, whether you're a RentScale client or not, we will walk you through our comp models. We will tell you everything we've seen work and let you know the pros and cons. We will always take that phone call. So, if anybody wants to go through what we've seen work and how to create that caveat, send them our way, Bob. We'll be happy to walk them through that.
Bob Preston (37:14)
Perfect. Hey, so let's switch over to a different, slightly different topic, whether you have a BDM or not. And that's the importance of customer relationship management software for tracking purposes. And I'm blown away, Jeremy. I talked to a lot of companies. Now, some of the companies that I speak with are, you know, still fledgling; maybe they're in that zero to 100 door category, or they're trying to get to 200, whatever it is.
And I'm amazed at how they don't have any way to track the leads that come in, right? The phone rings and a property manager answers it, whoever that might be. It's a potluck that day. And they're expected to take it through the course, but there needs to be a way for management to track what's going on. This astonishes me. Because I know that there are some best practices out there. I got religion one day when I started my company; we still passed sticky notes around. And, you know, taking, uh, bringing messages from the receptionist. And one of my clients said, "Hey, uh, I'm not too happy with how my property's getting rented, you know, it's taking too long. Can I call some of the leads that came in and, like CRMs, can also work for the tenants of that name? So it's for more than just new property, um, new owners. And I was like, I didn't know what to tell them. Right. So, I got religion on the CRM right away. And we brought on Lead Simple there pretty quickly after. What are those best practices that you're seeing out there? Text messages, videos, emails, phone calls. It has to be timely, right? You have to get that quickly.
Jeremy Pound (38:32)
Yes. Well, I'm passionate about building a business at scale. And when you do things at scale, you have to do them differently than at a craft level. Right. So if you're a woodworker and you're making one product at a time, you can have all you can have of the standards you want, and you can poo anything that's like creating efficiency.
But then I also realized, like you said, Bob, like I was speaking for so long, I'm like, hey, I'm here to help somebody who wants to do this at scale. And if you're getting dozens of leads a week, you need help keeping track of them. I also realized you're getting three leads a week; you probably can't keep track of them unless you have a system. It goes back to that self-awareness thing we started with at the beginning of the call. You're just, you know, forgetting that you need to follow up with people.
You're just expecting to take a phone call and either close them or not close them. And that is not sales. There is no, I mean, unless you have a marketing juggernaut, and for whatever reason, they've made it illegal. To be a property manager in your county, you have one exclusive license; there is no way to take phone calls and expect to close them. It's a complicated thing. People have questions; they need to think about it. They're shopping. So, yes, organization, I say all the time, Bob. If I think about it and get any advantage, the one advantage to selling more is having more volume. So if I talk to 10 people a week and I'm a master salesperson, but you talk to 100, and you're an okay salesperson, you're going to win, right? So volume is, like, hands down. If you can fix volume, fix it. The second most important thing, this is coming from a sales consultant, is just organization. And like, you know, when I think about, we looked last year, Bob, at our average close rate from when somebody talked to us to when they closed. This wasn't a roundup. It wasn't a round down. The CRM told us that our average sales cycle was 365 days to the number, which was amazing to see, right? You know, and we're a sales organization. We're working hard on this thing. And part of that is because of the volume. Again, going back to number one, like we're talking to more people, all those people will be ready to buy.
That's a great model to grow a company. I hope everybody that's listening is okay with that. It's a farce to believe I will talk only to the people ready to buy. I have such a great product, but they'll only call me when they're ready to buy. I've yet to see that work. Unless you're selling crypto, Bernie Madoff, or anybody else, I've yet to see that model work. So, and then the third thing, to complete my thought on that, Bob, the third most effective thing to me is how good of a salesperson you are. So I made that point because I am here to help people become better salespeople, but no matter how good of a salesperson you are, you can't trust volume and then organization, right? And so that's what Lead Simple helps us do; that's what CRMs help us do. Just imagine, you know, if you're managing one or two properties, and you're just like, yeah, I'm not going to use an accounting system. I can keep track of all my expenses over the year. And at the end of the year, when it was time to file taxes, I figured it out. I'll pull it up then, right? It's the same analogy. So, organization is critical—as are all other best practices. I mean, I think you were hinting perhaps at speed to lead, just getting back to people faster. I believe that one of the things we talk a lot about today, Bob, is that you could probably relate to this as a consumer. And now, working with your clients, different people want to be communicated with differently. And so we don't force phone, text, or email on anybody. One of our follow-ups is, hey, I'm texting you because you filled out a lead form with your phone number. What's your preferred communication style?
I use this analogy, but it's true, Bob. Some people, you know, say, hey, I'm going to rent out this property finally, or I'm going to hire a manager. Maybe you have dinner, perhaps you have a glass of wine. It's 10 p.m., and you fill out three lead forms online. And then now you need to remember who you filled out from. You have no brand affinity. And then you've got three people reaching out to you. Then, that's where I was.
And they don't call you back. And that's why I was joking, like, maybe they had a couple of glasses of wine, they forgot they did this, you know, it's like, then they, it's like, you filled out my lead floor, why won't you call me back, right? So imagine how much we're going to; it doesn't matter how good your product or services are, Bob; at this point, I'm only going to get back to the people, making it easy for me to get back to them. So, I may have talked to the third-best property manager of the three people I filled out, but they made the sales process that much easier for me. They communicated how I wanted to, were friendly, heard what I wanted, and maybe I'll hire the third best property manager out of the three options at the end of the day, but I will only know that if they made the process easy. So it's super neat, yeah, and it's the way you communicate with people. It matters. That stuff's never been done.
Bob Preston (43:34)
Well, in a good CRM, there's some automation built into it regardless of what it is. I had a guy call. I stepped away from my business and started working with Pure six months ago. But while I was still there, I had a guy call me. This was my record, Jeremy. Ten years ago, he had called me. 10 years, right? And he sat on this condo and lived in it, having it as a second home. Then he rented it to his son and then to a family member, and okay, well, finally, he was in a position where he needed a property manager. That process took ten years. That was the record, but he was still in my CRM. And why did he remember me? Because we had these sorts of drip campaigns that were ongoing. So even though he wasn't communicating with us, maybe once a quarter or twice a year, he was still hearing from us whatever that process was. And he remembered, and he remembered my name. It's incredible.
Jeremy Pound (44:20)
All right, let me lean on that for one second, Bob. I love what you just said. Many of us in this business and property management are investors. And why are we? Why do we love investing? It's because of compound returns. So, I'd like to think about your business model thoroughly. You started a new property management company. Ten years later, you're still closing leads from year one; ten years later, you're only closing new leads. You're spending new money. You've got no compound. I just wanted to let you know that you've got no advantage.
Why would you want to run that business, right? Like the longer I've been in any industry, Bob, the more people fall into my lap. I mean, I can't tell you how many times we wake up on a Tuesday morning, and we got a lead saying, "'Hey, Jeremy, I'm finally ready to write you a $20,000 check.'" Like just out of nowhere. Yeah, so that is compound interest in business. Why would you not want that? So, I love that you shared that story, and that's the best way I've ever conveyed that concept, which is essential in building a business today.
Bob Preston (45:21)
Yeah. And I used to love it. We'd send out these automated drip campaigns depending on how long the lead was and how long ago the lead came in. If you've been with them last year, it's every month or every quarter. But every time we would do that, we would get these people from the past to say, hey, wow, thanks for remembering me. I might be ready to go in another two weeks or be prepared to go in another month. I'm almost finished with my remodel; whatever they didn't share with us, which is the reason for their delay, is now past them, and they're ready to go. And those people you can close quickly once they're ready.
Jeremy Pound (45:55)
Oh yeah. Think about it. I mean, Bob, were you ever in B&I? So what, that famous line in B&I, significant life or business event, right? That's why B&I exists. It's like, I'm the title person, and you're the real estate agent.
I can't go out and knock on doors for you, but I'm here when somebody calls me one day, and they said, hey, I'm getting a divorce, or I just had my fourth child, or my kids all went to college, or you know, I've got a job promotion, and I'm moving to Seattle. Like that's what we're here for. Right? So that's what B & I exists for. And we can recreate that model through marketing and follow-up. So I love it. This is why you were able to exit your business. I
Bob Preston (46:34)
That's right. I'm a consultant in the industry and talk to many different businesses. This topic comes up a lot. And so I wonder if you agree with this. Still, I put the property management businesses in two categories when they start discussing business development. One is they need help finding the right person and getting them plugged in. Everything else is locked down, tight, and in place, right? Their systems, processes, and everything look good. The owner's ready, right? Would you be able to find me a guy, right? And then I hear from other clients whose foundational pieces are still a mess, right? And it feels like those foundational places must be put in place first. Those are essential to successfully bringing on new properties, having them stick, and creating a solid biz dev program. Do you, do you, is that a good description of the people that come to you? Is that a good way of looking at two types of customers when they come your way?
Jeremy Pound (47:25)
Oh yeah, it's just, I wouldn't have, I wouldn't have said two types of customers. Where are you on the scalability path? So, we call it the scale path. You can relate every job to this. I only do some jobs because sometimes I need to learn how to do a job. I have to hire somebody. But for the most part, every job that I did in my company that I've been handed over, I did. Then I did it with formula because I'm like, if I'm going to train somebody else, it can't just be Jeremy magic. It can't be the Jeremy show where I show up and am in a good mood. And I'm like, what does it look like when I'm doing this role? How would you like me to get it done? I document it. And then I hit it off, right? And so to me, I just a different way to say what you're saying, Bob is like, is it reproducible? Would you happen to know what you're looking for? Because wait to hire somebody. If you don't see what you're looking for, unless you're going to break like a Bob like it, I will hire you, Bob, because you've done it before, not as an employee, but as a consultant, because you know what it's like. Then, could you please help me ensure I hold people to the correct standards? And we do the same thing on the BDM side. But if I'm not hiring a Bob or a Jeremy, and I'm just going to turn it over, you better believe I'm going to be like, hey, I'm following my serum. I'm following my training guides. And, like, I'm ready to spend money on this. And by the way, sidebar, one of the reasons so many people are scared to spend money on their first BDM is because they can't figure out how they will hold them accountable. After all, they don't know what they're doing. They're just taking calls. Right. So, do you know if that matches with what you were saying?
Bob Preston (48:55)
I think 100%. I mean, you have those people who are like ready to go, they're ready to rock and roll, they know they need it, they've got all those processes, they've got their comp in place, whatever it is, and others are like, wow, I wouldn't even know what to do with the person if they came in, right? And so that's the counterbalance of what I call two types of businesses, but you've described it a little differently. Yeah, perfect. Hey, so.
Man, I am so passionate about this topic. My career has always been in Sales and marketing, even before becoming a property management entrepreneur. You're passionate about it. We can go on talking for hours about this stuff, right? So, let's work towards wrapping up because we've some time constraints. What do you see coming next year for property management and the industry? And what should broker-owners do to take advantage of all those opportunities coming next year?
Jeremy Pound (49:50)
All right. We have two hours left because that's what we'll need. We'll have to do a sequel maybe midway through the year, but a lot. It's a fascinating time. I love such a lot of credit. I want to give a massive shout-out to Jordan, who you know. You know, Jordan Muela, LeadSimple. He discovered that I was running a RentScale-like business that needed more focus on property management. And you know, he had me on his podcast, and we had six clients the following week. You know, as you know, that's not usual, right? As a consultant. But it just showed the hunger for that. And shout out to my OG clients who went through this with me. But it's such an exciting time. So, five years into this, I love how validated the business model is. I'm also excited, Bob, and this may be different from the answer you expect me to say.
More 30-somethings than ever are coming into the housing market, even more significant than the baby boomer generation, right? So, this decade and what I like to call the new roaring 20s, we're in Bob. And I know that's a danger. That's a bold statement. But I've been saying that for about two years; we're in the new roaring 20s. There, there will be more 30-somethings than ever coming into the housing market. And by the way, these 30-somethings were disenfranchised for a decade, not able to buy living in these multifamily properties. And that's great. And you're right, everyone makes this argument that the new multifamily properties, I'm here in Boca Raton, they're everywhere. These things have gyms, they've got bars in them, like they're excellent places, like, feel like we're living in the Jetsons, other than that you don't arrive by flying car. But at some point, they're going to say, hey,
I've got kids now. I don't like the neighbors in the hallways. Maybe the kids down the end of the hallway could be more friendly to my kids. I'm just looking for a little more space. You know, we've got dogs. There will never be more demand for single-family homes than we've seen since maybe right after the baby boomers. And there's never been less of them. So I get, you know, when you say what's coming like I can talk about a lot of things, but when you zoom way out to like first principles,
There will likely be so much demand for single-family residential properties because people will not easily be able to afford them. The mindset shift of the coming families is that it's okay to rent. We might prefer it. It's much more convenient. And as our industry makes it more convenient to rent, I mean, a shout out to my friends at Second Nature and, you know, resident benefits packages and how we're making it so convenient and concierge-like to own a home without owning a home today, Bob. I think it's enormous. So I can talk about what will happen in marketing, but the underwhelming theme is imagine if somebody is like, well, what stock would you pick? But you just felt like the whole stock market would explode in value.
You'll be like, it doesn't matter. Just be in the market. You have to be in the market. It's just, I think right now, if you have, especially if you don't have a flat fee and you have a percentage of rent, okay, I might be wrong about this for the next eight months or maybe the next 18 months, but five years, if you stay in the market, I think you're going to make so much more money. The value's just going to be there. So that's where I would push.
Bob Preston (52:36)
As I mentioned, we could go on for hours on this topic, but we need to wrap it up in the interest of time if that's okay with you. So, what are your closing thoughts that you'd be able to share with our listeners? I mean, particularly when it comes to new property acquisition, business development, door growth, and forecasting for the new year; I mean, on this theme, what are