Calendar icon December 12, 2023

How to Build a Lead Generation Engine for a Property Management Company

Navigating the world of property management can often feel like a high-wire balancing act, particularly when it comes to property management lead generation. But fear not! 

The path to success becomes clear when you understand your target market, communicate effectively, and employ savvy lead-generation strategies. 

More good news: We know a guy who happens to be an expert in scaling up residential property management companies – Jeremy Pound, CEO of RentScale.

We reached out to Jeremy to talk about the ins and outs of how to approach successful customer acquisition strategies for residential property managers. In this article, he’ll help guide us through key steps, providing actionable insights to help you attract and secure your ideal property management clients

Let's turn those potential leads into lucrative opportunities!

Meet the Expert: Jeremy Pound, CEO of RentScale

Jeremy Pound is the CEO of RentScale, the largest sales consulting and coaching company in the residential property management industry. They’ve trained over 400 companies on how to successfully grow their property management business by becoming “new customer machines.” He is also the publisher of Strategic PM - The Magazine for Property Management Entrepreneurs and Executives.

 

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1. Define your ideal target market 

Not every prospect is a fit. And the key to growth is targeting the right people with your marketing strategies. 

When first starting out, a property manager might focus on pure hustle and price. But eventually, that’s no way to scale for profitability. (On that subject, Pound recommends the excellent management book, “What Got You Here Won’t Get You There,” by Marshall Goldsmith.)

“Something I talk about all the time is that the opposite of ideal fit client is a misfit,” says Pound. “You want to work hard to avoid those misfits, which means you need to label the right-fit clients, know who they are, and describe them. That's the best way to grow: not just getting more net clients, but getting better and better quality clients.”

In short, build high-quality leads by defining your ideal customer. Pound outlines the specific types of property management investor clients:

  • Experienced investors: “There are different types of experienced property owners. Are you going after those who value risk aversion and peace of mind? Maybe you're charging a little more and adding more ancillary services, but you're protecting them from all the things that can go wrong. Or are you going after really aggressive risk-takers who are looking to optimize every dollar possible?”
  • Accidental landlords: “Are you built to serve accidental landlords? Oftentimes homeowners move on, they move up, or they downsize, and they look to keep their very valuable properties as rental properties.”
  • Working professionals: “Maybe you’re going after working professionals, such as high earners who are building a portfolio as property investors. They got the real-estate investing bug, they know that maybe they don't want to pull their money into 401K and index funds, and so they're actually using new property to build a portfolio for retirement.”
  • Out-of-town investors: “Are you really built to serve out-of-town real estate investors? There are a lot of people, myself included, trying to build a diversified national portfolio of single-family rentals, and [some PMCs] are really built to serve that person because they need somebody local who's an expert and understands that local market.

Once you define your ideal customer, which is the most important step, everything comes from there, Pound says.

2. Clarify how you are built to serve those clients best

According to Pound, the simplest next step is to build your processes and procedures around that target ideal client.

“Everything we do should be a story around why all of our policies, our pricing, our procedures are all built to best serve that client,” he says. “I like to call this ‘avoiding the commodity tax.’ If you go out and spend money on advertising, or if you're buying new leads, or you're trying to spend money on SEO as if you're just a commodity and you've got nothing exciting to say – no sharp story, no compelling positioning – then you're basically paying the commodity tax.”

“You're going to have to buy all these leads, and most of those people are not going to buy from you,” he continues. “You might be buying 10 leads to close one deal, or you might be spending a bunch of money on advertising that's just going over everybody's head. Nobody's paying attention to it because it's not exciting.”

This brings us to the next strategy…

3. Use dog whistle language 

Pound emphasizes that what catches our attention is the uncommon, the novel, and the specific. 

Our marketing should cultivate that specificity. Here’s how:

“A term that we like to use around here is Dog Whistle Language,” Pound says. “If you know a dog whistle, only a dog can hear it. So when you know who your client is, it allows you to speak Dog Whistle Language – their language.” 

“I always try to enter the conversation that's already happening in their mind. If we have a very specific client, we know the problems that they're trying to solve, we know the frustrations they have and the goals they have. So let's just enter the conversation that's already happening in their mind! That’s going to make your content marketing less expensive and way more effective, and it's going to make your sales process even better.”

“If we can say what our prospects are already thinking, but we can say it better with more clarity, then they're going to key into that.”

Ask yourself:

  • What are they already thinking? 
  • What is the problem they're trying to solve?
  • What are the frustrations they have? 

Then, describe it even better than they can, says Pound: “That has been proven to create trust, to create authority. and to make them remember you.”

 

download rental inspection checklist template

 

4. Understand demand generation vs. demand fulfillment

“We want all our clients generating demand for their service,” Pound says. 

Demand fulfillment is “just going out and buying pay-per-click ads because people are already searching for your product.”

This is a commodity-based approach. Let’s say something needs a new roof. They’re just going to type “roofer Boca Raton.” Pounds says that’s demand fulfillment: “You're just fulfilling the demand that's there, right? You're just hoping to get lucky. You're spending as much money as possible and just showing up.”

Instead, Pound says, “Demand generation might be going out and talking to people about how if they've had any storm damage, they might be able to get their roof replaced through their insurance.”

“There's a lot of examples of this in property management,” Pound says, “especially when you're going out, and you're teaching people to invest in real estate – actually going out there and creating the market for your product. It's more sophisticated, but it's way more profitable, and you have way more control over that than just sitting around and playing the demand fulfillment game.”

Pound gives an example of a PMC going after high-net-worth individuals. 

“Let’s say you’re in Florida, where Publix is headquartered, you might be going after all the executives at Publix. You’re basically saying, ‘Look, there are other ways to pay for your kids' education. There are better ways to save for retirement. You can live a better life if you get involved in real estate investing.’”

That’s demand generation.

5. The Buyer’s Pyramid: Have campaigns for each level of the buyer’s journey

Source: "The Ultimate Sales Machine" by Chet Holmes

Time to get into the Buyer’s Pyramid. 

The top 3% are in the demand fulfillment mindset. They know what they need, they’re searching for the service or product, and they’re ready to buy.

Then there’s 7% that are loosely open or becoming open to the idea of needing a product or service. As Pound says, “Maybe they're kind of frustrated with their property manager, but they're not so frustrated yet that they're ready to go search on Google.”

That’s the moment to hit them with direct mail, email marketing, cold calling, or messaging that enters the conversation that’s already happening in their mind. Pound says to aim to say what they were thinking better than they can say it. Then they may move up into the 3% who are ready to make a decision. 

Below that is 30% of the potential market that isn’t aware of the existence of your product. They may be renting their homes or about to sell and simply don’t know that property management services exist.

Then there's another 30% of the market that just misunderstands. Pound elaborates: “Maybe they’ve been self-managing forever, and they think that property managers just take a piece of the pie rather than make the pie bigger.”

“Really good property managers explain to their prospects that they don't just take a piece of the pie,” Pound says. “Really good property managers actually expand the pie. They get more money for the property either by being able to charge more through marketing or reduce vacancy and turnover – and therefore, they're able to actually reduce all the losses that you would have from a rental property.”

In the end, you can focus on each of those separate types of prospects and build campaigns that speak directly to them. 

6. Track the numbers and optimize: Unit Acquisition Cost & ACV

To optimize your acquisitions, it’s key to understand your numbers. That’s obvious, but how do you do it, and what are the most important numbers to track? 

Pound points to unit acquisition costs (UAC), customer lifetime value, and annual contract value (ACV).

“We have monthly recurring revenue for months and months, if not years and years,” Pound says. “So you have to understand some of these numbers.”

  • Unit Acquisition Costs (UAC): “How much does it cost you to acquire a door?”
  • Annual Contract Value (ACV): “How much does each customer bring me annually?”
  • Customer Lifetime Value (CLV): “How much does each customer bring me over their entire lifecycle as my client?”

Pound breaks down how CLV affects your judgment on UAC. If a customer stays with you for five years and you're making $200 a month, their lifetime value is going to be $12,000. 

“You start to understand that you're willing to invest a little bit more than you thought to acquire that customer,” Pound says.

This brings us to….

7. Build the list and lower your costs 

You want to be always building your list of potential clients and client referrals. 

“Think about that buyer's pyramid,” Pound says. “Think about attracting and courting those people that are lower in the pyramid before they're ready to buy. We can actually acquire those people for pennies on the dollar versus the really high expense of going after Google pay-per-click or buying leads.” 

“Let’s say one day, a major life or business event will happen that will turn a prospect into a buyer today. Instead of having to go to Google to look for you, where you have to spend $17 per click, they already look to you for advice and help because you’ve courted them over time. When the life or business event happens, they’re ready to buy from us.”

8. Sweat equity or check equity 

It takes investment to create clients. In the end, Pound says, that investment decision comes down to: “sweat equity or check equity.”

  • Sweat equity = time spent
  • Check equity = money spent

“Some entrepreneurs and business owners have more time than money, and they're going to want to spend money on advertising that works,” Pound says. “On the other hand, some entrepreneurs or property management owners have more time than money, and they're going to want to invest their time.”

Sweat equity could look like:

  • Networking with referral partners
  • Direct outreach (outbound) to investors 
  • Calling FSBOs 
  • Partnerships
  • Facebook Groups
  • Forums
  • Hosting events or going where the investors are
  • Social Media (LinkedIn, Twitter, YouTube, FB, Bigger Pockets)
  • Organic online marketing
  • Search Engine Optimization (SEO)
  • Webinars

Check equity could look like:

  • Direct mail
  • Digital marketing (Google ads/PPC, YouTube, LinkedIn, Bigger Pockets, FB)
  • Radio and TV
  • Pay-per-lead
  • Outdoor
  • Hosting premium events with recognized speakers

Final Thoughts

In the end, getting qualified leads and new business is all about targeting and positioning. As Pound says, “The punchline at the end of the day is: If you’re going to spend money and time, you might as well be positioned. You might as well have the right language – the dog whistle – so you can get more out of every ounce of your sweat equity or every penny of your check equity.”

For more insights from leaders like Jeremy, check out our Triple Win Podcast for residential property managers. Or, here are a few places to keep reading about growing your PMC:

Keep learning

Property Management Pest Control Gone Wrong: Resident Horror Stories & Nightmares

In the world of property management and real estate investing, maintaining a clean and pest-free environment is central to the well-being of the residents who live in your properties. That being said, effective pest control is not only a best practice, but also a strategic move that enhances your properties’ living experience, making your life as a property manager easier and your residents happier. Pest control is crucial for several reasons: Investing in pest control saves significant potential costs by avoiding large-scale infestations and property damage, enhancing resident satisfaction with a healthier, pest-free environment, and preserving property value. This approach reduces health risks, protects against liability, and maintains a good reputation by demonstrating the property management company’s dedication to providing safe, comfortable living spaces for great tenants. Ultimately, pest control sets professional property management companies apart from DIY and amateur real estate investors by safeguarding both residents' well-being and property assets. By addressing these points, you can foster a positive living environment that benefits both you and your residents. It’s important to note that our goal is not to call out “good tenants” vs. “bad tenants.” Instead, we always aim to foster a constructive dialogue focused on addressing problems and finding solutions. By emphasizing respect and fairness, we can help create a positive environment that benefits all residents, ensuring their rights and dignity are always respected. Also note that even though we here at Second Nature prefer the term "resident" over "tenant" to foster the human element, the word "tenant" may still be used occasionally due to its long-standing legal and real estate context. "House of Horror" Stories Most property managers have encountered their share of resident horror stories – and many, not for the first time. These tales often involve unexpected and severe pest infestations, made worse by residents' behaviors. Indeed, from bedbugs and roaches (the truly bad tenants any property manager is looking to be rid of) to animal issues, the range of pest problems is vast and daunting. Our "House of Horror Stories" video provides a vivid account of these situations, including some landlord horror stories that are too distressing to include here. Maggots falling from the ceiling: A tenant reported maggots falling from the ceiling onto their bed. The pest company discovered that these maggots were larvae of beetles infesting the air ducts in the neighborhood. Pets and extensive damage: Animals in one property caused extensive damage by covering all floors with feces and chewing through doors, door frames, flooring, HVAC systems, and appliances, with clean-up costs exceeding $15,000. Flushable wipes backup: A tenant flushing baby wipes caused a major sewage backup, leading to water damage throughout multiple rooms (including the living room and master bedroom), with clean-up costs close to $5,000. Donkey in the basement: During the purchase inspection, a donkey was found tied to the deck and later moved to the basement to hide it from animal control, calling for its quick removal. Rodents damaging appliances: Rats infested a property, chewing through a new dishwasher, insulation, and electrical wires, requiring repeated pest control visits and extensive repairs. These stories from a range of contributors highlight the unpredictable and often extreme challenges property managers face in maintaining their properties and ensuring the safety and well-being of their residents. How to Control Resident Pest Issues A robust pest control program is often the property manager’s best friend. After all, infestations can be difficult to proactively defend against, given that background checks, references, and tenant screening go only so far in uncovering the pest issues that can befall even the best tenants. Regardless of the challenges residents may present, a comprehensive pest control plan can mitigate potential infestations before they escalate into true horror stories. This includes timely intervention, and educating residents about maintaining cleanliness. Providing residents with clear guidelines on waste disposal and food storage can also significantly mitigate pest problems. Additionally, offering pest control services as part of a Resident Benefits Package can encourage residents to report issues early, allowing for swift action. Planning Ahead When dealing with problematic residents, it's essential to have a clear action plan. Issuing notices to clean the property promptly (e.g., with a 7-day notice period) is a critical first step. Leveraging a notice-to-clean template can streamline the process and ensure that you comply with tenant laws and legal standards. If worst things come to worst, an eviction notice may become necessary. However, this process is governed by various rules and regulations that can differ significantly across federal and state lines. It's important to be well-versed in these laws to avoid legal pitfalls. A detailed “notice to vacate” template can be incredibly helpful for property managers looking to take care of these complex situations. Nipping Things in the Bud In conclusion, maintaining a pest-free environment is integral to property management success. On-Demand Pest Control is a service in Second Nature’s fully managed Resident Benefits Package (RBP). It offers predictable, cost-effective, and fast solutions when a pest issue arises. Instead of expensive scheduled preventive treatments, residents can request service as needed. This approach ensures fast response times, directly addressing the problem at hand and saving costs over recurring treatments Property managers simply select the best pest plan from four tiers of service levels to include in their RBP. When an issue arises, the resident reports it in the On-Demand Pest Control portal, and the pest issue will be resolved. Learn more about On-Demand Pest Control by getting in touch, or read our latest study on the impact of our RBP on the resident experience.

Calendar icon July 3, 2024

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Your Guide to Property Management Laws, Regulations, & Rules

Property management activities involve overseeing rental properties, ensuring they’re maintained, residents are managed, and finances are handled effectively. While a real estate license is not always necessary to manage rental properties, licensing requirements can vary significantly by state. Typically, states may require property managers to hold a real estate license or work under a licensed broker. Property managers should familiarize themselves with the specific regulations in their state to ensure compliance. What Are Some Important Property Management Rules and Regulations? Property management laws encompass various areas, ensuring the safety, rights, and responsibilities of both property managers and tenants. Key areas include: Anti-discriminatory laws: Fair housing laws such as the Federal Fair Housing Amendments Act (FHAA) prevent discrimination based on race, color, national origin, religion, sex, familial status, or disability. Lease paperwork: Legally binding lease agreements must include specific terms and comply with local regulations. Safety, maintenance, and repairs: Property managers must ensure properties meet habitability standards, including weatherproofing, heating, water, and electricity. Financial management: Proper handling of security deposits, monthly rent collection, and financial records is essential to comply with regulations and avoid disputes. Property management laws by state Each state has specific property management laws that property managers must adhere to. For instance, in many (but not all) jurisdictions, property managers must obtain a real estate broker license to operate. These laws are typically drafted and enforced by various regulatory bodies such as the state's Department of Real Estate or similar agencies. For instance, the California Department of Real Estate is responsible for regulating real estate activities, brokers, and salespersons, including those who work in property management, while the Texas Real Estate Commission handles these responsibilities in Texas. These agencies ensure compliance with state licensing laws and often provide resources and guidelines for property managers of both residential properties and commercial properties. Below is a table linking to the respective government sites for state-specific regulations: State State Body Alabama Alabama Real Estate Commission Alaska Alaska Real Estate Commission Arizona Arizona Department of Real Estate Arkansas Arkansas Real Estate Commission California California Department of Real Estate Colorado Colorado Division of Real Estate Connecticut Connecticut Department of Consumer Protection Delaware Delaware Real Estate Commission Florida Florida Department of Business & Professional Regulation Georgia Georgia Real Estate Commission and Appraisers Board Hawaii Department of Commerce and Consumer Affairs' Real Estate Branch Illinois Illinois Department of Financial and Professional Regulation Indiana Indiana Professional Licensing Agency Iowa Iowa Department of Inspections, Appeals, & Licensing Kansas Kansas Real Estate Commission (for commercial real estate property management only) Kentucky Kentucky Real Estate Commission Louisiana Louisiana Real Estate Commission Michigan Michigan Department of Licensing and Regulatory Affairs Minnesota Minnesota Department of Commerce Mississippi Mississippi Real Estate Commission Missouri Missouri Division of Professional Registration Montana Montana Department of Labor and Industry Nebraska Nebraska Real Estate Commission Nevada Nevada Real Estate Division New Hampshire New Hampshire Real Estate Commission New Jersey New Jersey Real Estate Commission New Mexico New Mexico Real Estate Commission New York New York State Division of Licensing Services North Carolina North Carolina Real Estate Commission North Dakota North Dakota Real Estate Commission Ohio Ohio Division of Real Estate & Professional Licensing Oklahoma Oklahoma Real Estate Commission Oregon Oregon Real Estate Agency Pennsylvania Pennsylvania Real Estate Commission Rhode Island Rhode Island Department of Business Regulation South Carolina South Carolina Real Estate Commission South Dakota South Dakota Real Estate Commission Tennessee Tennessee Real Estate Commission Texas Texas Real Estate Commission Utah Utah Division of Real Estate Virginia Virginia Department of Professional and Occupational Regulation Washington Washington State Department of Licensing West Virginia West Virginia Real Estate Commission Wisconsin Wisconsin Department of Safety and Professional Services Wyoming Wyoming Real Estate Commission Note: This list excludes resources from Idaho, Maine, Maryland, Massachusetts, and Vermont. Tenant screenings Tenant screenings are a critical step in property management, involving background checks, credit checks, income verification, employment verification, rental history, and proof of ID to assess prospective tenants. This process helps ensure that potential renters are reliable and financially responsible. It's important to obtain signed consent before running credit checks, as required by the Fair Credit Reporting Act (FCRA), to comply with legal standards and protect tenant privacy. Another important guidance is provided by the Fair Housing Act, which prohibits discrimination in housing-related activities based on race, color, national origin, religion, sex, familial status, and disability, ensuring equal access to housing for all individuals. Learn more about Tenant Screening Tips for PMs Lease agreements A lease agreement is a legally binding contract between the landlord and tenant, outlining the terms of the tenancy. Key components of rental agreements include lease terms, rent amount, security deposit regulations, and common clauses such as maintenance responsibilities and lease renewal terms. Regulations governing lease agreements can vary by state, so it's essential to ensure that leases comply with local laws. For instance, state laws often contain security deposit limits, provisions for the return of unused portions, as well as a clear accounting for any deductions. Consulting with a lawyer is crucial to ensure your agreement is legally sound and reflects your specific circumstances. We’ve shared some relevant resources below: Learn more about property management agreements, featuring a free template Learn about security deposit insurance, and its pros and cons Financial management Effective financial management in property management involves establishing clear rent collection procedures and maintaining organized financial records. This includes tracking rent payments, managing tenants’ security deposits, and adhering to landlord-tenant laws to avoid legal disputes and financial penalties. Keeping detailed records can help property managers resolve issues efficiently and ensure transparency with tenants and property owners. Solutions such as property management software can streamline financial operations, automate routine tasks, and perhaps most importantly - ensure accuracy and regulatory compliance with respect to various accounting regulations and legal requirements. Evictions Evictions are a legal process to remove a tenant from a property. Common reasons for eviction from rental units include nonpayment of rent, property damage, lease violations, and criminal activity. Property managers must follow their state's rules for eviction notices, such as unconditional quit terminations and termination for lease violations, to ensure the process is lawful and fair. State laws regarding unconditional quit terminations and terminations for violation of a lease vary widely. Unconditional quit notices typically demand that tenants move out immediately without an opportunity to remedy the violation. States like Indiana and Mississippi allow landlords to issue these notices for serious or repeated violations, with Mississippi requiring 14 days to move out. For lease violations, the notice period and the opportunity for tenants to remedy the breach also differ by state. For example, in Kentucky, tenants generally have 15 days of written notice to cure a violation, but if the same violation occurs within six months, landlords can issue a 14-day unconditional quit notice. In contrast, states like Iowa and Maine require a seven-day notice period for tenants to address lease violations before eviction proceedings can begin. In California, on the other hand, tenants must be given three days or more to cure the violation before landlords can file for eviction (source). These legal nuances emphasize the importance of PMs and tenants understanding their specific state regulations to navigate eviction processes appropriately. Property maintenance and repairs Maintaining rental properties is a legal obligation for landlords, ensuring that properties are safe, habitable, and free from hazards like lead, asbestos, and mold. This includes weatherproofing, providing adequate heating and water, and ensuring electrical systems are functional. You can find out more about these issues in our Property Maintenance Guide for PMs. Landlords must also give notice to tenants before entering the property for repairs, as required by most state laws. When in doubt, consult a legal advisor to ascertain the specific laws that apply to you in your state. Tenants have the right to a habitable living environment, and failure to meet these standards can lead to legal consequences as well as issues with occupancy rates. Indeed, when landlords fail to make required repairs, tenants have several options depending on their state's laws. Tenants may withhold rent, make the necessary repairs themselves and deduct the cost from the rent, pay a reduced rent, report the issue to local building inspectors who can order repairs, or even break the lease and move out. Additionally, tenants can sue the landlord for a partial refund of past rent or for damages caused by the substandard conditions, including discomfort and emotional distress. Get our preventative maintenance checklist for property management Learn about the importance of pest control to maintain a pest-free environment Second Nature's Guidance Staying informed about state-specific regulations, maintaining organized records, and ensuring compliance with federal laws such as the Fair Housing Amendments Act is key to successful property management. On a practical level, understanding and adhering to property management laws and regulations is crucial for property managers to ensure smooth operations, maintain property value, and foster positive tenant relationships. Learn more about property management company best practices, marketing, and more in our Second Nature Community.

Calendar icon July 3, 2024

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