Editor’s note: The following is a transcription from Episode 3 of the Business Un-usual Series: The Post-COVID-19 World. In this episode, with the help of three experts in the property management space—Glenn Russell of Coastal Group Inc., Mitch Deminski of Solutions for Real Estate, and Troy Evans of Marketplace Homes—we discuss what they’ve learned overall during COVID-19, what they’d like to keep in place with their businesses, and how the property management will evolve when the pandemic is finally past us.
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Tony: Tony from Buildium here. As quickly as it’s upended the way we work and live, COVID-19 has pushed nearly every industry to rethink how business is done. While much of what the pandemic has brought us has meant great sacrifices. It’s also created an environment full of problem solving, ingenuity, and the opportunity to try things differently. But what are the real positives to come out of all this? What are the changes that we want to adopt for the long haul as economies start to reopen? And where will it go from here? We ask these questions and more in Episode 3 of Business Unusual, The Post COVID-19 World, featuring Glenn Russell from Coastal Group Inc., Mitch Deminski from Solutions for Real Estate, and Troy Evans of Marketplace Homes.
What’s been the silver lining for you and your business operations during the pandemic?
Troy Evans: As other companies start to adapt to the way that we’ve been set up for years from a cloud-based company that can still do the same thing for all of our homes, overcoming those hurdles, I think after this, is going to be a lot easier. You have all these businesses that have gone to more of a cloud-based, internet-base. Shopping, Amazon, right? And Walmart, Best Buy…all these places are now all online pretty much. I can just go and get something the next day. That’s going to be something that I think people start seeing. It’s sort of the “iBuyer Model.” You have Opendoor, Offerpad, Zillow—people are now getting the idea that, “I don’t even need a real estate agent. I can just sell my home to one of these companies and walk away fine,” which is another side of our company that we do.
Those things have started to become more normalized and I think that’s going to happen to our industry. And I think property managers and ourselves need to stay in front of that. We can’t be old school anymore. That’s how you get thrown to the side and you get kicked to the curb. So that’s one silver lining that I like is there’s going to be more of an adaptation, not only in the industry, but from a consumer standpoint for that type of business in this space.
Mitch Deminski: What I’ve found out was my employees are happier and they’re working harder, longer. Being in an office, I would see when someone would show up two minutes late and it would drive me crazy. I can’t do that now. I have to move my numbers. I have to move my numbers—and my employees know if I get a call from an owner, that’s like going to the principal’s office. So if I do get a call from an owner, what do I need to do is train my staff so that they feel that an owner can get the right answer. So there’s a little bit of education there. But what I’m finding out is, now remember my wife works with me, I’ll wake up 7:30, grab my coffee and where’s my wife? She’s already in there checking emails at 6:30, and well, I might as well go check my email and go downstairs. And, all of a sudden, it’s 11:00. I probably should take a shower.
But I’m seeing emails at 4 AM. When my employees would leave at 5, they would leave work at 5. I have one employee…she’s got two young kids. Well, she’s got to be the teacher during the day. So she’s smart enough; she figured out that she can go in at 4 in the morning, catch up, and as long as someone’s reaching out to her and they can get ahold of her, that’s okay. Because, at the end of the day, when we have our What About This, What About That (WAT WAT) walkthrough or our KPI meetings, she knows exactly what we’re looking for. So we’ll see people on there at 6 at night. So I’m backing off on that standpoint of, “Where are my employees?” to, “You know what? All that really matters are all the things get done that need to get done.”
Tony: Sure. Business has got to run and you’ve got owners and residents that need your help and that’s what it comes down to. But, yeah, it’s funny too because we talked about now that everybody is working more, they have more flexibility, but there’s always that temptation to work even more. And so that’s where the balancing act comes into play, because you want to make sure that people are still staying healthy and sane and not burning out.
Mitch Deminski: Sure, sure. And I would hope, my employees watch this. I would hope my employees would tell me that I’m working more. But I think we’re figuring out that balance of…I don’t have a problem with it, with an employee going out during the day and going grocery shopping. However, if the phone rings, they’re forwarding their phone to their cell phone, or I call or somebody else, they answer it and take the phone call. I don’t care. I don’t care because I know that the work’s getting done. So that’s a completely different change from what we were 6 months ago, but I think it’s going to be hard to find anything better than that, I think, in these days. And we have no intention of getting an office anymore.
Tony: Right. That sounds awesome. You’ve really found a way to make it work and a way to balance everything.
Glenn Russell: Do we need the amount of office space that we now have? Probably not. And we’ve got two more years to go on the lease so I guess that’s not really an immediate problem, but would we ever want to buy the office building that we’re in? I don’t know. Not unless it’s a really good deal, because then we’re in the business…I mean, I think office space is going to become a little bit superfluous after this as people figure out that they need less than what they’ve been operating with. So it’s going to be really unusual times. I would like to have a more technologically proficient team. Macon and Ben on our team are really good. Kim has come a long way. I wanted her to start using the Showings Coordinator product.
Yeah. I think we can scale and yet not grow substantially in numbers of people. Anytime you can hire a software, let’s say the software costs you $6,000 a year, well what would an employee cost you that works 24-7, 7 days a week, holidays, and weekends? It wouldn’t be $6,000.
Tony: No, it wouldn’t be. Definitely not. Yeah.
Glenn Russell: So software is an amazingly good value. Now, I don’t want to lose the human touch—and I think that’s really easy to do. I’d just as soon hide behind texts and messages and resident requests formats as much as anybody, but we’ve tried to be very responsive when somebody comes in with a maintenance request to let them know that it was heard—that somebody is going to get back to them and we’re going to figure out what to do.
How have you seen the pandemic inspire a sense of community among your residents and staff?
Mitch Deminski: Yeah. I’m going to say with my staff again, I’m fortunate because—and this is a key component of property management staff is—they care. They care what a tenant’s going through, they care about spending the owner’s money, and I think they have a lot of empathy for what goes on. So with the phone calls…we didn’t really have that much. We can watch our delinquency numbers, but when the first calls started coming in, a lot of our fears were, “I’m not going to pay rent and I’m going to take advantage of this situation.” And we were the first call that people make, I mean, literally they’re out in the parking lot, “I just lost my job. What do I do now?”
And at first it was like, “Why are you calling us first?” But after it happened a couple of times and started listening, it was—they were scared. They didn’t know what was going to happen and what we have done (and my staff) is say, “What’s the situation? What can you do?” We’re providing resources on, “Click here for this charity. Here’s the food bank. Have you applied for unemployment?” And trying to help them that way. And our delinquency (rate) is incredible compared to what I thought it was going to be.
Tony: And we’ve heard that too. The month of May, even compared year over year, is only slightly down—and it’s greatly decreased even since April.
Mitch Deminski: Right. So yeah, we had our best month in March, under 2% delinquency, and April we were under, and remember commercial throws it way out. But if you took the residential side, we’re just over 4.5% delinquency, which is still great. And we’re tracking right now, May is looking better than April, which would have surprised me.
Troy Evans: One thing about this is the fact that people were coming together. At first, you have people fighting over toilet paper. However ridiculous as it was, that was probably the low point of all this. But there’s a sense of community out there where, whenever you’d see somebody probably wearing a bandana in the store before, you would think either that, “They are sick, or, what is that person doing?” And now they’re being safe for their family. There’s an understanding of what is going on and how you can help people. I was in Meyer the other day and I don’t know if you guys have Meyer in Boston, big, big superstore here in Michigan. There were these little gift cards where it said, “Donate however much money to help somebody in your local community get groceries right now,” due to everything going on. And I couldn’t find one of those cards. They were all gone. And hopefully it doesn’t wear off. I think it will, unfortunately—but that sense of community right now has been a pretty cool thing to witness, I think.
So after all this is over, what would you like to keep in place for your business?
Troy Evans: I definitely think that that empathy piece is big from all sides, but also just from an operations standpoint, the idea of communication—which we talked about a lot, being the biggest thing in property management. ‘What’s going on with my home? What’s going on with this? What’s this?’ And instead of a quick response, making sure it’s the right response in a decent amount of time; it’s definitely something that we’ve seen change. Instead of just responding so that they know that you got their email, sometimes it’s better to figure it out first, and respond back, answering all of their questions. Yeah, it may be a little bit more concise, but doing that to make sure that you’re getting all that data out there and not just answering what you think the question was and not internalizing it has been a big change that we’ve seen.
And I think that’s going to continue to stick because from a consumer standpoint, they’ve answered all of my questions. That’s all I would want. ‘Take a day to get my questions answered. I don’t need you to respond in 10 minutes,’ has definitely been a big change that I think we’re going to continue to see and I’d like to continue to see. I also think what I would like to continue to see are investors who, and you don’t have to be huge with thousands of problems, which some of our clients have, but 10, 25 have been reaching out—and that’s a group that has been very difficult to get in front of before. They were very secluded. They were doing a lot of stuff internally and them navigating these problems has been a big hurdle.
So I think that’s where we’ve been seeing an influx in those clients coming in and I am hoping that that’s something that’s going to continue to stick is the idea that a property management company, while I may lose some of my income on a monthly basis, is actually there to benefit me so that my risk is diminished, where I’m going to make up that loss in cash from a loss in risk. Eviction, staying up with things like that. Rent deferments, all those things have become a, “What am I supposed to do?” Let us handle it. That’s what we’re in the job to do. No, it’s not just we’re doing this to do it, we’re doing it because we know what issues happen on a day to day basis. We can take you from your 10 homes, get you to 20. Yeah, there’s some cost that’s involved in it, but I hope now you can see the value in what we bring to the table. And I think with the other property management companies I’ve spoken to, that’s what they’ve seen as well, is that value and what they bring and consumers seeing that as well.
Tony: It sounds like you wouldn’t want a ton to change because you had this sort of blessing in disguise happen and you adapted, you changed up your business model a bit, and you’ve already put a lot of work into it. But I’m curious, what do you think the post COVID-19 world looks like for owners, residents and your business? Is it kind of more of what you’ve been doing? Do you want to keep pushing it even further?
What does the post-COVID-19 world look like for you owners, residents, and your business?
Mitch Deminski: The only thing that I wish that we could improve on is the face-to-face stuff. Again, it’s with my office staff. I also have 22 real estate agents. Six of them are on my leasing team. Getting face-to-face with them. I was going to call it “Lunch with the Broker,” but that makes it sound like it’s more about the broker, so “Lunch with an Agent.” So I want to get back in front of my agents and I, of course, would go out and meet with my owners and go have a pop, or whatever, with my owners. So that part of it, I can’t wait to get back. I’m a little bit more social, so I want to have that connectivity.
But we’re running strong. Our numbers are strong revenue-wise. There’s a little bit of a dip because we can’t do some of the things that we need to do out there, but we’re strong as ever. And actually, we added more new units in March than we ever had. And I got 3 owners that called me today about looking for property management. So it’s kind of weird. In the last 10 days, I’m getting a lot of leads for property management.
Tony: Wow, that’s really interesting.
Mitch Deminski: Yeah, it is interesting.
Tony: And they’re finding you just online through all the good Google reviews that you where they’re seeing you?
Mitch Deminski: Marketing is a multi-channel thing, whether it’s the Google reviews, we got referrals. We have a strong referral base from agents that recommend us that help investors buy and they say, “Hey, go talk to Mitch and check out Solutions for Real Estate and jump on their website.” And then, all of a sudden, they look at the reviews; it just solidifies everything. So by the time they pick up the phone and talk to me, they’re pretty much sold. And then when I get on the phone and I tell them, “Well, I’ve been an investor for 22 years and I treat it like it’s my own,” it makes it easy for them.
Tony: That’s great to hear. Congrats on winning all those new clients.
Glenn Russell: Well, I think there’ll be more renters because many people are going to be reluctant to take the risk to buy. So I think we’ll have plenty of renter possibilities. Now, the credit may be a little sketchier for the next year or two. For our owners, I’m told that the interest rates are going to be in the twos this winter. Well, I came into the business when the interest rates hit 17 and a half. So 2% sounds awfully good to me.
Glenn Russell: So if somebody wanted to pull money out and buy another property or pull money out and semi-retire. I mean, there are any number of ways to benefit from this market. So putting their heads in the sand and crying, “Woe is me,” to me is missing the opportunity.
Tony: So what do you think really you’ve learned at the end of the day about what you do as a property management business and the role that you want to play in the world going forward? I know that’s a big question. It’s the kind of thing that a lot of people think about when we have a sea-change event like this.
What has this crisis taught you about who you are and the true purpose of what you do each day?
Troy Evans: From our company’s standpoint, and where we position ourselves in the industry moving forward is, we’re where we’ve seen ourselves grow over the past few years. Every company has their niche. Our niche is property management, but there’s a broader niche than that. Ours is in property management for the investor. And I think during this, we found that niche and what we’ve been good at; the idea of having a nationwide reach with the same operation, same people that you have to deal with. You know what your cost is going to be. You know what level of service you’re going to get. You know what to expect with all of your homes. And we can help connect dots along the way with some of our relationships, which has been a big plus for us. And then the people that we’ve seen very happy with our services mainly are those investors who are looking to grow. So that broader scope of just property management and all these things that we were doing has really narrowed down to that one focus.
And I think that’s where we stand in this world. Not only right now, but also moving forward. ‘How do we get somebody who has the same interest as me? How do I get somebody who knows the industry like I do to help out with the same goals and knows what I’m looking for to do,’ how to connect those dots. I think that’s where we’re going to stand on this in this world. We know that there’s always going to be those local property management companies and other nationwide property management companies, but the way we differ from that is very investor focused. And I think that’s our strong suit, to be honest.
Mitch Deminski: Yeah. It’s almost like back to the basics, right? I think that I look at our commandments on what we do—and now they’re even more important. And our team, we all know that they’re important, and if we can stick to those, then everything else will be okay. So here’s the things that I stand on and I expect this out of my team: Respond to owners same day. Always follow up. Don’t let things happen, make things happen. Remain professional when others don’t. We are the professionals. So whether an owner’s upset about something or a tenant’s upset, we can always remain professional. That’s why they call us. Again, this is the one we talked about earlier. If I think a situation’s getting heated, pick up the phone!
Tony: Yeah, exactly.
Mitch Deminski: Do not tolerate abusive or foul language, except for me. I’m kidding. For tenants, sometimes it’s better to wait for things to cool down. They’re in the middle of a situation. Sometimes it’s like, let’s not get back to them immediately today. Priority emergency calls remain a priority. So when we got a sewer backup, we are on it. Stay on it until it’s complete. And then the last thing, which has kind of been interesting lately, never let an owner have a negative balance; it’s a state violation. So what we’re finding out in this scarcity mentality that’s going on, owners are acting a little bit differently when we have a major repair and they’re not getting back to us. I had to fire two owners yesterday because of that. Yeah.
Tony: You’re liable, right? You have to do the right thing. You have to buy…
Mitch Deminski: It’s my livelihood. So we have a major repair, I’m going to burn through their reserve. I need an answer and they don’t even call me back. Call, email, every day. So I just can’t have it. So I think that’s a trend that’s happening in our owners. It’s hard enough to collect money from tenants. Now I have to chase owners. I’m not doing that. So keeping an eye on that one. So I’m interested to see if more of that comes, but I will tell you, these are the people that were marginal to begin with. Maybe they shouldn’t be in the business anyway.
Tony: Yeah, exactly. Right. And I think with this, one of the things that, the same that goes with property managers, that maybe they didn’t really have their act together and they just, they’re not ready to adapt and they don’t really want to adapt, and that’s just how it is. And maybe they’ll get…
Mitch Deminski: I mean in 2017, this is our procedure manual. If you notice how thick it is. How to answer a phone call. All that stuff got done three years ago, and it’s all in there. When we write it, it’s how to log into Buildium and all that stuff. And these are the way we run our programs. That was the foundation of everything where we’re at. And I needed to do that for me to get out of some of the day-to-day stuff because I need to work on the business, not in the business. So I need to make sure it keeps raining. I want to keep everybody employed and keep, you know. There’s a lot of people that this is our livelihood. So if I’m not at 30,000 feet, then I’m actually…all my employees, they know what to do. I’m just getting in their way. They’re better at it than I am. I can tell you that.
We hope you enjoyed the Business Un-usual Video Series. These days, sharing insights and thoughts with the property management community is one of the quickest ways to move into this new chapter together. So we’ll keep providing a platform for property management businesses to do just that.
What are some of the victories and struggles your businesses has faced during COVID-19? Comment below and let us know. Also, if you have even more to say, we’d love to hear it. Please make your voice heard in our COVID-19 survey through the link in the description below. The more people that contribute, the more we’ll learn as an industry. Thanks in advance. Until next time.
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