Calendar icon March 21, 2023

Four Keys to Successfully Scaling A Property Management Company

Today we're looking at the best ways to successfully scale a property management company. And we're going to an industry expert with our questions: Patrick Freeze.

Patrick Freeze was once a professional poker player. Now he is the CEO of Bay Property Management, a Baltimore-based firm that has scaled to nearly 6,000 doors and is one of the largest PMCs on the east coast.

While his personal origin story is one of the most interesting in the PM industry, his company’s growth story and the tactics used to go from nothing to a heavily-scaled PMC are equally interesting.

Through a marketing-focused approach that was complimented by intentional and detailed process optimization, Freeze achieved an impressive amount of growth at Bay, and he joined us to explain exactly how he got there.

Four Keys to Successfully Scale Your PMC

Here are Freeze's top strategies.

Optimize Your Marketing for Efficient Growth

From day one, Bay Property Management has invested in its organic marketing efforts to help attract new business. Freeze himself became an expert in SEO early on and it’s the primary focus of his robust marketing team today.

“I started reading everything I could on online marketing, so SEO, pay per click, etc. Over that coming year, I became really skilled at doing all the marketing on my own,” says Freeze. “So if you were to type in property management companies, Baltimore property management companies, or any variation of those keywords, we could come up number one. And then we started getting phone calls 24/7.”


Bay grew rapidly as a result of its ability to generate web traffic and organic leads through SEO, and Freeze doubled the size of the business on a yearly basis for several years after the initial launch, eventually expanding into four different markets.

Freeze credits his and his team’s investment in low-funnel digital marketing tactics as the catalyst for his rapid business growth. The CEO estimates he gets between 120 and 140 new single-family leads a week, with almost all of them coming from online sources.

“We have 10 people in our marketing department that solely focus on that. Google is actually going through a big algorithm update right now, and you have to be on that. If you’re not on top of that, you’re not going to rank well in search. We spend a lot of time on that. Someone could probably argue the other side and say you should be more diversified, but at least that’s worked for us.”

Process Improvement Never Takes A Back Seat

One of the biggest pitfalls as a business grows is its process development and refinement. Scale requires processes, and enacting and optimizing these can often be a much bigger challenge than actually growing the client list.

A rapidly growing PMC has already optimized its process for finding new business. Defining the systems your company will depend on to be efficient is a new undertaking, something Freeze learned quickly as Bay grew to nearly 200 employees.


“When you’re managing 500 units, you know everyone at the company very well, and you can get away with not having systems, policies, procedures. When you have 190 people, you really have to have your systems down,” says the CEO.

Freeze notes that the challenges that come with a large company are not universal, and what you have to be prepared for at 50 employees is different from 150. It pays to have continuous improvement and always be optimizing. Process management is never something that’s done.

“So I think probably scaling from let's call it, you know, five employees to 15 to 50 To 100. You have to keep iterating. You have to continuously make improvements on what you're doing. So what worked for, let's call it 200 doors is not going to work for 1,000. So a good example, I guess when we started out. We had one person handling maintenance, we had one person handling accounting, we had one person as the property manager, right? And I would go out and get new business. Well, as the company continued to grow then we had two people on maintenance. And then we had two property managers. And as we were growing, we realize, wait a second, when a work order comes in, whose work order is that?”

Early on in the company’s growth, Freeze sought to define the exact responsibilities of all positions within the company in order to minimize overlap. Overlap in roles leads to inefficiencies that can be avoided with clear guidelines as to exactly what role is responsible for what upcoming tasks.

“We have a handbook for our property managers that’s probably 80 pages. We have a procedural guide for every single position,” says Freeze. “I don’t think anyone whom I’ve talked to that has scale has not had very, very defined policies, procedures, handbooks, because if you don’t, it’s going to be a total mess.”

Structure has helped create more traceable outcomes, which results in processes that are “more easily optimized and improved as the company continues to grow.

“We made a change when we had about 1000 or 1200 units from having maintenance coordinators and property managers to just having the property managers handle everything. It was a big switch for the company, but I think it was for the better because we know exactly when there’s a mistake that’s made. We can trace that and see exactly who was responsible for the problem instead of having four hands in the pie.”

Quality Employees Are The Backbone of Growth

“I don’t think there is anything more important than having good quality employees,” says Freeze. “You can get all the new business you want but if you don’t have good employees managing the new property, you’re going to lose it as quickly as you gained it.”

Bay did not grow to almost 200 employees without a developed process for finding good quality workers. While the hiring process has become much more role-specific now, Freeze credits a unique interview design that’s much more action-focused than response-focused as what has helped him pick the most suited people for property management.

“I had a list of 30 to 40 questions that had nothing to do with property management. I would ask questions like ‘who is the vice president?’ ‘What is 46 times 24?’ I used to have this brick wall in my office and I would ask how many bricks are on the wall. I would ask them to name something that’s complicated but you know really, really well, and take five minutes and explain it to me. And I would just keep going on and on for probably 30 minutes with these questions.”

Freeze never particularly cared if the candidates got the answers correct. He was much more interested in their process for getting to the answers and how they handled the abnormal interview.

“In property management, you’re constantly dealing with problems. You’re basically problem-solving when you’re a property manager, and if you can’t deal with complicated questions, you’re probably not going to be able to deal with complicated situations. So I would just start blasting off for 30 minutes all these random questions, and some people did great with it and we would hire them. We probably had 25% of all people who wouldn’t even finish the interview.”

Resiliency is a key trait for a property manager, and Bay’s interview process succeeded in testing for one of the harder traits to ID in an interview setting. Freeze’s process also includes a timed writing test designed to see if candidates can write clearly and quickly when applying for a company that’s very email heavy. The process is designed to test ability more so than experience, and it’s helped get the right people in place from the beginning, allowing Bay to offer a better property management service that is more marketable.

Compliance Is Key

Compliance is hard enough in the heavily regulated world of property management, but one of the biggest challenges as you expand into other markets is managing the different laws and ordinances in each individual market. Freeze believes that compliance is “far and away” the biggest challenge of scale.

“All of our leasing agents have to know different things in different jurisdictions that we’re in, because the requirements are different,” says Freeze. “We have attorneys review our stuff every single year, all of our lease documents, addendums, etc. Even with all that said, there is so much legislation that is passed every quarter that it can be tough to stay up on it.”

Managers at Bay’s regional offices are required to be diligent in remaining current with the nuances in local leasing laws and ordinances, which can change monthly.

“They really are changing that much, as crazy as that sounds. And then when COVID happened, it was a complete and utter nightmare. They were changing weekly, and the odds of getting hit with a big class-action lawsuit go up, and you can be sued for something that you don’t even know you’re doing wrong. So always make sure you are totally buttoned up and spending extra money on compliance. I can’t say that enough. You can’t spend too much on that.”

Advantages of Scaling a Property Management Business 

With these tools for scaling a PMC, you can increase the size and scope of your business in order to achieve higher levels of efficiency, profitability, and growth. Let’s look at what benefits you stand to gain from scaling your business.

Business growth

Scaling a business can help to grow your business by expanding the customer base, increasing sales volume, and improving operational efficiency.

Improved profitability

As a business grows, it can benefit from economies of scale, which can help to reduce costs and improve profitability.

Competitive advantage

Scaling a business can help to create a competitive advantage by allowing it to offer a wider range of products or services, enter new markets, and achieve greater brand recognition.

Improved access to capital

A larger and more successful business is often able to attract more investment and secure better financing terms, which can help to fuel further growth. In the case of property management, it can also drawn clients.

Attracting and retaining top talent

Scaling a business can help to create new opportunities for employees, increase job security, and improve overall job satisfaction, which can help to attract and retain top talent.

Increased innovation

As a business grows, it can invest more resources into research and development, which can help to drive innovation and create new products or services.

 

download rental inspection checklist template

 

Tools You Need to Scale Your Property Management Business  

The property management industry is an enormously tech-savvy group of people. In our network of property management companies, we’ve seen quick adoption of new tools and tech like AI, cloud-based systems, etc. 

Of course, the property management tools you choose will depend on the specific needs and goals of your PMC. Second Nature’s RBP aims to provide tools that are customizable across multiple property management levels, needs, and niches. With fully managed and integrated services that add value for residents and investors you can much more easily see the benefits of scale.

Here are some other tools and property management software we’ve seen most highly rated in our industry.

  1. Slack: A cloud-based platform that makes communicating with your team easy. You can get immediate responses from team members, and even vendors or clients you add to your channels.
  2. LeadSimple: Sales CRM and process automation
  3. RentCheck: Automating property inspections
  4. Process Street: No-code, simple process and workflow management
  5. Airtable: a low-code platform to build collaborative apps to visualize data, processes, etc.
  6. Zapier: A tool that allow syou to integrate all your applications and set up automated workflows between them.

These are just a few of the many property management tools available. It's important to evaluate the specific needs and goals of your business, and choose a tool that best fits those requirements.

How Second Nature Helps With Scaling  

Second Nature was built on the idea that we could help make property management easier for everyone involved – residents, investors, and especially property managers. To that end, we’ve built fully managed services that generate greater value for your PMC by delivering better resident experiences. 

Our team takes care of the details for you so that your team can focus on growth, reputation, and quality. Learn more about Second Nature’s industry-leading resident benefits package and how it can help you scale with greater ease.

Keep learning

How to Optimize Operational Frequency with Processes and Software

Property management software is currently helping property managers establish efficient and reliable processes at a higher rate than ever before in the PM industry. With that development in the proptech industry has come the development of tech for self-managers that has changed the capacity of the accidental landlord. Thus, the demand for efficiency at scale has risen in order to separate the professional from the amateur, and the establishment of processes that allow such a thing has become a critical topic for professional property managers. Optimizing property management processes Carter Fleck of Triton Property Management, a growth-oriented firm out of northern Virginia that is approaching 300 units with larger goals for 2024, joins us to share his expertise on process definition. Fleck is the General Manager responsible for operations and strategic growth, and he has been developing effective processes to ensure efficiency at Scale at Triton, and in the process, he has garnered an understanding of how to do so. “A lot of failing,” says Fleck. “In the early days, we were getting a lot of good and bad feedback, but typically the bad feedback is what you adjust off of.” Fleck believes that assumptions are the enemy when it comes to defining procedures and sourcing software for your PMC. “The image that we use is if you're going to build a sidewalk before people even start walking on a field, it's kind of dumb. You have to see where people will walk first, and then you'll build a gravel path. So number one, you see where they walk, see where their intentions are in the grass, then you build a gravel path. And then eventually, once that walkway is established, that's where you build your processes and procedures.” The analogy is a visualization of the concept that you have to see how people operate before you can establish processes to make how they operate more efficient. Fleck encourages the negative experiences of process breakdown and cites them as the only way to really nail down what your processes should look like. “Over time, between the tenants giving feedback and owners giving feedback, we adjusted our processes. It's a mix between figuring out where the owners walk and where the tenants walk, and then building paths that align.” Fleck details an example of how Triton adjusted its process after an assumption it made got challenged: "We had an assumption that payment plans were helpful for residents," says Fleck. "And so the way we handled delinquency is we would reach out to them and would be like, ‘you need to pay this. Do you have a payment plan option?’ And they would always say yes. Our process was we'll put you on a payment plan, we'll invite you to a payment plan, you'll accept the payment plan, and then we'll monitor the payment plan. That in itself was a lot of work, but we thought it was doing well. But some of the owners that we had managed for mentioned that another property manager doesn't allow any payment plans. And if you're not fully paid up by the end of the month, then the eviction process starts if you’re over $500 due. So we're like 'alright, well, we'll serve you in that we'll change our processes.' And we did, and our delinquency percentage shrunk significantly. So, consistently, by the end of every month, we're around 5% APR. Whereas with payment plans we're like 5 to 10%.” Fleck obviously credits seeing the assumptions in motion as what prompted the need for process iteration, and he firmly believes that making too many of these assumptions is one of the biggest mistakes growing property management companies make. Like any business experiencing growth, process definition is critical to achieve efficiency at larger volumes. What Fleck is essentially advocating for is processes based on what you know, not what you think, and there is a big distinction. Managing property management software Fleck has installed both general and tech-based processes, and cites that understanding of how people interact with processes as the key in both areas. "They don't focus on user experience. That's really important. Number one, how the tenants like the tech, but specifically how the people who are using the tech are gonna adopt it. So when we were choosing a rent inspection software, we had so many people recommend one, software and I, we almost pulled the trigger on it. But then I was like, let's do a trial run on both these two. And we chose the other one because it was way better user experience for property managers. So user experience, both for us and for residents." Tech is a tool that is ultimately as good as its users, and if it's not used correctly or at all, its potential is wasted. An over-reliance on technology can actually go hand-in-hand with an under-reliance, as both often spring up from a lack of understanding of how to choose, implement, and manage it. In this vein, Fleck can't recall many property managers who operate with too much tech. As long as you're not purchasing redundant software and you've done and continue to do your due diligence, tech-based process can make your business more efficient. "I more often find myself having that conversation," says Fleck. "When I'm talking to property managers in my sub-market, who aren't connected with like a NARPM, who aren't connected with like a Crane group, or who aren't connected with a Second Nature, aren't connected to the tune of what the property management industry is doing and the cutting edge of it, I'm just like, 'you could save so much of your time and you could scale this so much more if you only even if you just had tenant Turner, or if you had LeadSimple.'" No matter what your story is a property manager, if growth is in the cards, so is process and technology refinement. Hopefully, Fleck's experience in these areas can help you stay efficient and organized as door counts grow.

Calendar icon April 19, 2024

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Why offer a tenant benefits package?

In the residential real estate sector, like everywhere else, residents and property investors alike are getting younger – and with this generational shift comes expectations for a certain level of convenience and support. To put it bluntly, today’s residents want their needs proactively anticipated. It’s something they're willing to pay (and stay) for. That’s where a tenant benefits package comes in. In this article, we’ll explore what a tenant benefit package is, how it improves the experience for both property managers and tenants, and crucial mistakes to avoid. Before we get into the details, we want to give a shoutout to our very own “Resident Benefits Package” – which is how we refer to the benefits comprised in the “tenant benefits package.” “Tenant” is not yet a legacy term, but we here at Second Nature are trying to evolve it. That’s because, in our experience, property managers work hard to make renters feel like they’re not just parties to a contract – they’re residents. On one hand, this is just humans being humans, but on the other hand, it also encourages them to invest in care for their new home and add value to the property. Ready to get started now? Build your Resident Benefits Package today. What is a tenant benefits package? A tenant benefits package is typically a bundle of services, conveniences, and provisions offered by a property manager on top of the basic lease agreement. They represent a triple-win situation for property managers, residents, and property owners, as they enhance the overall rental experience, generate additional income, and protect the real estate investment. It might include conveniences such as online monthly rent payment options, or portals for submitting maintenance requests and tracking their status. It could also include various financial perks, such as credit rating improvements that are contingent on on-time rental payments, or discounts on nearby services such as fitness centers. It might also include amenities ranging from move-in concierge or utility set-up services, to identity protection services, to HVAC filter delivery. The cost for resident benefits packages is typically included in the lease and added as a monthly fee, with the fee being dependent on the specific benefits. Indeed, the benefits contained in a tenant benefits package will vary depending on the property manager and the type of rental property. The overall goal is to provide tenants with an enhanced quality of life while simplifying the experience of renting. At Second Nature, we pioneered the only fully managed resident benefits package, in response to PMs who wanted to make their business stand out. Our RBP includes an array of services and supports for residents, from filter delivery to credit building to maintenance. Why should property managers offer a tenant benefits package? Beyond the triple-win considerations mentioned just above, there are compelling and concrete reasons why property managers should offer tenant benefit packages. We'll turn to these now. Ancillary revenue Some tenant benefit packages include optional services or add-ons that can generate additional revenue streams for the property manager. This might include things like renter insurance or HVAC filter delivery. Resident experience Tenant benefit packages deliver numerous savings and value to tenants, beyond the value they would get if they were obtaining the same benefits "à la carte." Additionally, by offering additional services and conveniences, benefit packages can make tenants feel valued and more satisfied with their living experience. For instance, maintenance hotline requests, tenant portals, and air filter replacements all make life easier. Add-on services like identity theft protection can offer a sense of security. And discounted renters insurance coverage, utility concierge services, or other perks can save tenants money. Decrease tenant turnover and vacancy rates In a competitive rental market, tenant benefit packages can be a major differentiator toward boosting retention rates and reducing vacancy rates. Properties that offer these packages can also attract a wider pool of qualified tenants, and potentially command higher rents. Note that certain benefits in the package, like online rent payments and maintenance requests, can automate tasks and free up the property manager's time. This allows them to focus on more value-added initiatives. How does the tenant benefits package improve the tenant experience? Tenant benefit packages can significantly improve tenant satisfaction in several ways, by making life easier, more convenient, and potentially more affordable. For instance, if an online portal (a baseline feature for most property management software) is included for rent payments and maintenance issues and requests, this eliminates the hassle of writing checks or waiting on hold to speak with someone about a clogged drain. In other words, tenants have the peace of mind of knowing they can manage their tenancy 24/7 from the comfort of their own devices. Some packages might include features like filter delivery services or regularly scheduled HVAC maintenance. This frees tenants from having to remember these tasks – and ensures their apartment is well-maintained. Certain packages might also offer "verified vendor" services – in other words, a vetted vendor network that can help provide a more secure feeling to residents when service providers are on-site. On the financial side of things, a benefits package might offer discounts with local suppliers for various goods and services, or on a renters insurance policy obtained through the property manager (with applicable waivers for residents who have their own insurance). This can save tenants money on a necessary expense. Some packages also help residents with their credit scores via credit reporting and credit building services, so they can transition from renting to home buying when the time is right. The idea is that the credit reporting program reports on-time rent payments automatically to all credit bureaus, helping residents build their credit simply by paying their rent on time. Some benefit packages include resident rewards programs that represent a powerful and positive incentive for on-time rent payments, including gift cards or cash. As far as living perks go, packages sometimes include added benefits such as access to fitness centers or community events. This provides tenants with additional spaces to relax, socialize, or stay healthy. Packages can include security deposit alternatives that serve to provide a means for residents to be financially liable for damages without having to pay a significant lump sum upfront, such as pure insurance, surety bonds, and ACH authorization programs. Ultimately, tenant benefit packages create a more professional and responsive image for the property management company, which helps tenants feel valued and allows them to experience a smoother, more stress-free rental experience. What are the mistakes to avoid when offering tenant benefits packages? Property management companies should take care to avoid certain pitfalls when implementing tenant benefit packages to ensure they are providing true value to tenants as well as delivering profitability to the PM company itself. For instance, it's important to ensure that the services you're offering are actually relevant to your target renters. For example, young professionals might appreciate discounts on gym memberships, while families might prefer pet-sitting services. You should also take care to clearly communicate what's included and not included in the package to new residents. Don't oversell the benefits – focus on how they genuinely improve the living experience. It's also very important to set realistic expectations for response times on standard maintenance requests, emergency maintenance requests, or virtual concierge services. Likewise, be clear on all available payment methods, as well as rent due dates, late fee structures, and any associated payment processing fees. If your package includes services from third-party vendors, ensure that these vendors are reputable and reliable. Research their customer service record and responsiveness to ensure a smooth partnership and a positive experience for tenants. Above all, regularly monitor the usage of different benefits within your benefits package. This can help you refine your offerings and ensure you're not spending where spending is not required. Looking for a Resident Benefits Package? If you’re looking for a “plug and play” resident benefits package, Second Nature’s RBP is the way to go. Designed to be easy to implement and simple to use, all the services it includes are managed by Second Nature – which means there’s no day-to-day upkeep required from the property manager: Second Nature keeps it running. It’s a simple way to grow your business and create great experiences that residents will pay and stay for. Learn more about our fully-managed Resident Benefits Package.

Calendar icon April 2, 2024

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