Episode 104. An impromptu discussion about working with residential property management customers. How to gain customers and how to make the relationship work for your business.
An impromptu discussion about working with residential property management customers. How to gain customers and how to make the relationship work for your business.
Tersh Blissett: [00:00:00] The following podcast is a proud member of the Blue Collar Roots network, find all the shows by visiting https://ServiceBusinessMastery.com They would actually save money by going with us and we would have gotten there quicker and we wouldn’t have left the site with it not working and come back, a lot of those things are education for the property manager, but there’s some property managers is not going to be able to change that. Forty-five dollars an hour ton of material, MONZUR. And so.
Bryan Orr: [00:00:34] Hey, I’m Bryan Orr and you’re listening to the Service Business Mastery Podcast with Tersh Blissett today, we’re talking about an experience that both Tersh and I have, which is working for property managers. Both of our businesses were kind of built with property management customers being a big part of what we do. All right. So Tersh and I were just talking. We finished a recording. I shouldn’t ever recognize that we do more than one recording at a time. But this is authentically what just happened. And we were talking about how
Bryan Orr: [00:00:59] Both of us built our Businesses in many ways on a similar market. I’ll let you kind of introduce what That is…
Tersh Blissett: [00:01:06] One point of contact for multi houses. So if it’s a vacation rental, short-term vacation rental, or maybe a longer rental, call it a college town rental or just rental properties in general. We have a lot of rental properties in Savannah and then all the outskirts of Savannah are a lot more rental properties. And so if you can target after those properties is really nice because you’re taking care of one person or one group of people, making them happy, keeping them happy, and then you get a lot of return out of that. So you don’t get a lot of returns at one time, but you get a lot of returns over the period of a year. We don’t have a super slow season because of it. We’ll have a slow season, but there’s a demand there always because a renter is not going to just sit on an air conditioning unit that’s not working the best. They’re going to have it fixed because they pay rent. We pay rent, we pay six hundred dollars, we pay a thousand dollars. We pay twenty-five hundred dollars a month. I’m not going to be uncomfortable where someone else may just open up the windows because it’s 65 degrees outside. They’re not going to run the air conditioning. So that’s the difference in the two. But your dollar amounts, you’re not going to bill one hundred and fifteen dollars hundred and seventy-five dollars an hour on a property management company. They won’t tolerate that. They’ll go for someone who’s not going to be in business in a couple of years because they don’t understand their numbers and they’ll take that chance that they may or may not be in business overpaying two hundred dollars an hour for someone who is going to be in business for twenty or thirty years.
Bryan Orr: [00:02:43] All right. So I have a tactic here that I’m going to get to in a minute that helped us solve this problem that I found to be very effective. But let’s start here. Let’s put a pin in that topic and let’s ask the question. So we’re talking like commercial residential contractors out there. We’re talking easy here. But this is true of everybody. This is true of we mentioned locksmiths, but electricians and plumbers and landscapers and guys who do pressure washing or pool service, whatever you may happen to do. This is a relevant conversation to you. What is it that causes most people to not want to work for the rental market or the short-term vacation rental market? Because those are two kinds of different markets. You have the typical rental market. You work in a college town. So it’s a typical rental market, but it’s a fairly transient rental market, maybe a high-end rental market. I work in Orlando, which is a huge vacation rental market where people rent houses for very short periods of time to take vacations at Disney or Universal or whatever. So what are some of the reasons why guys don’t want to or companies don’t want to work for a vacation rental or rental company?
Tersh Blissett: [00:03:43] A couple of things. One would be the price. They want the lowest price possible and not all. There are some property managers that will pay whatever utilities are going to be, but other property managers would leave you over five dollars. And so that’s kind of frustrating. Trying to develop a relationship with another hang-up that I’ve heard people have is the demand that a renter is going to have some renters are just super duper nice and then others are. They need you out there right then. There are no ifs, and, or buts about it. They’re not going to sit around and wait three or four days for an AC guy to come out there when there is no there are some property management companies that refuse to pay any kind of overtime. They haven’t negotiated a deal with a company to not pay overtime. So they will make they’re to sit for a week without air conditioning. We’ve gone to fix stuff before and the tenant has paid us out of pocket and then tried getting the money back from the property management company. But we didn’t actually buy the property management company.
Bryan Orr: [00:04:46] Another thing that I find in our market, at least that a lot of contractors don’t like with a short-term vacation rental is that they can be very demanding. You’ve already kind of mentioned that. But then also getting paid can be a challenge because they want to be billed, you know, they want to collect from the owner before they pay you. In most cases, just to understand the structure here. This is a really important part of business, is understanding the structure of your customer’s businesses if you’re working for a commercial customer. And so in the rental market, you have a realtor or their property manager, whatever their term is in your particular state, whatever the legalities are. And they have a fiduciary responsibility, which means they have a responsibility to the owner to act on their behalf as it regards this home. And they’re paid somehow. They’re compensated in some way. In many cases, it’s out of the rent. In some cases they have agreements where maintenance. Is included up to a certain amount. You know, there’s all kinds of different agreements that can exist, but in general, the basic concept is the property manager acts on behalf of the owner.
Bryan Orr: [00:05:42] They choose service providers and they get work done at this house and then they build the owner and the owner pays them. Right. And so some of them work on a flat monthly fee. Some work on a percentage of the overall home and their short term vacation rental industry. And a lot of cases, the realtors or the property manager are also responsible for the bookings. And so they kind of get it from both ends where they have a higher motivation to actually put people in the house and they get a cut out of that. In some cases, they’ll have a monthly stipend that they work off of in order to do standard repairs and anything over a small amount, they have to get approved by the owner. So there’s all these different things that play into it. And so billing is a necessary part of that because they’re not going to cut you a check every time you leave a job. And for residential businesses were built on code primarily, you know, we collect payment before we leave the house. And I think that’s a no go for a lot of small residential like commercial companies.
Tersh Blissett: [00:06:33] Typically, I find that you have to float it out with a 30 day no. But I see a lot of times as 45 or 60 days. Once you start getting into that rotation, it’s not bad. But that initial 60 days on a five or six-thousand-dollar system replacement, if you can’t float, the money is going to be a challenge for sure. You can put yourself in a serious bind, especially if you go gung ho on them. Just answer every call that they have replaced, every system that they approve. And you haven’t developed that relationship with them to the point where, you know, for a fact you’re going to get paid in 30 days. You make that assumption, but there’s a chance that you may be dragging out a little bit longer than that. It could sink your ship really quick.
Bryan Orr: [00:07:16] Right, and that’s something you have to be really careful with, especially if you don’t have a lot of working capital in your business, which, again, whole nother conversation, how much working capital to keep. But if you know that you’re a little tighter with the purse strings, you may not have some of those options. And so what I do with a new property management customer is, first of all, I do a really, really simple assessment of this company. Do they have a website? Do they have a reputation in the community? If they have those things in place, then, generally speaking, they’re going to be a little more on the safe side than somebody who calls you. And you look them up and you can’t even find them, look them up with the business and regulatory body in your state to make sure that they seem legit. A lot of people focus on credit checks and that type of thing. But for a small business, you know, who of you do actually does a proper credit check. And most of us don’t do that, but just do a very good general look. They look them up on social media. Just see how legit this company looks. And if they don’t have any legitimacy behind them that you can see, well, then make them what, the first couple of times. I’m not going to work for somebody with no reputation on a billing basis the first time unless I have some reason to believe that they are a real business and they’re doing the right thing. Usually when I get caught with a business is because I didn’t do that little bit of due diligence. And it’s like, oh, they created an LLC like three days ago and they really not really even a real business. And they’re managing three houses from their cousin and their grandma and they don’t have any money. Those are the people where you generally have your greatest exposure. Do you have any of those sorts of procedures in place when you first start working with somebody?
Tersh Blissett: [00:08:34] I like to meet the property managers. It’s not a job that we typically take over a phone call. Every now and then we’ll have one that if they call in and they say, hey, look, we have a normal service provider, but we can’t get out there right now, sometimes that’s a lot. Sometimes their service provider won’t go out there because I ain’t paid the bill. But typically in that type of scenario and they have an emergency, we need water rushing out. We’re going to need a credit card or some sort of quick payment, figure out how to get payment card, basically. But most of them, if I’m going after a new account, we’re going to have a relationship for a little while before I pull the trigger as far as sending people out there and getting a large amount of money racked up that they owe us.
Bryan Orr: [00:09:17] Yeah, that’s interesting because that’s not usually how it works for me. Usually, the way that I get a customer is by taking care of them when they’re in a pinch. And then that opens that conversation up for the in-person meeting or for having lunch or whatever. Then we get a chance to get our foot in the door. That’s what I find. And again, that may be a short-term vacation rental may be different. It’s a huge market down here. So there’s a lot of players in that marketplace down here.
Bryan Orr: [00:09:40] So generally what we find is somebody will call us at six o’clock on a Friday and they’re panicking because they need their drain line cleaned or whatever. It’s leaking all over the place. And so I’ll usually or somebody will usually look them up real quick and just kind of see where they stand. And we’ll say, sure, we can do this first service call. We’ll give you billing on it as long as it doesn’t exceed five hundred dollars. But then we need that paid within 30 days and then we can look at what other calls we can do for you from there. And we’re just usually very careful about how much of a rolling tab will build up before we stop it and say, look, this needs to be paid before we do more. And that system seems to work pretty well as long as we do a little bit of due diligence on the front end and just make sure that they’re a legitimate business. They’ve been around a couple of years. They have a legitimate thing going because there are a lot of people who sort of start these very small businesses that are just managing a couple of houses. And those are the ones that generally are the highest risk, at least in my experience.
Tersh Blissett: [00:10:29] I agree with most of mine that I or through networking. Through friends of friends, we have a really good networking group here in Savannah. There are all kinds of events that we’ll go to and just meet each other and they’ll introduce me because they know what I want. I know what they want in a new customer, a new client. Through those conversations, it does take about a year of developing the relationship because they’re not going to let you in their little group. They’re not going to say, oh, yeah, you do air conditioning. I’m sure I can trust you. I’m going to tell my friends about you. You’ve got to be in that room for a little while. And then after that, it really does pay off. It seems like a pain sometimes, but it helps a lot. We get some phone calls, and you’re right, most of the ones that phone that we get six o’clock on a Friday afternoon or Thursday afternoon are going to be your short-term vacation rentals. You know, they’re showing up on Tybee Island or Hilton Head and they can’t get anybody to look at the air conditioning or the air conditioner broke. It’s frozen. I need to get out there, Isa. They can’t get anybody to drop what they’re doing to come out there and do that. We’ve gotten a couple of customers that way. I had actually reached out to one of them prior to that. And then the quickness of our response time kind of sold them on it. So when they did call, we were out there and in a timely manner. So they were like, OK, we’ll do it now.
Bryan Orr: [00:11:47] So if I was starting, we’re going to go back down to this. If I was starting a business tomorrow type of thing, which I wouldn’t because it’s exhausting. But if I was and I had to make a living doing it, I was actually just talking to Steven Reardon has a big YouTube channel and Steven just kind of went on and started his own business. And what I told him is I would really push into the rental market. And so he doesn’t have a short-term vacation rental and there’s not a whole lot of that where he is, I don’t guess. But just in the regular
Tersh Blissett: [00:12:14] Where is he at?!
Bryan Orr: [00:12:15] He’s near Raleigh, I think. Oh, OK.
Tersh Blissett: [00:12:18] I was actually watching one of his videos before you and I started talking. I didn’t realize until after I commented on it was from four years ago he was using a fair Clines or so Zachares or something as a hammer. And he was like, I know someone’s going to say it’s not a Hamer’s. I know the definition of a hammer and it doesn’t say anything about the shape of a hammer or anything. It just says something to cause a blow to another object or something. I was like, yeah, technically it was a hammer.
Bryan Orr: [00:12:40] Yeah, true. True. Stevens started a business and that was one of the pieces of advice I gave him. Is that a really easy way to get started with working is to pursue property managers, whether it’s short-term vacation or long-term, and provide them with all the things that they’re going to want in order to start doing business with you. And this can be a challenge for some people. But what we did is we would put together these packets and we would go and we would meet with them and it would have our insurance in there and it would have our price sheets and it would have our maintenance contracts that were designed specifically for property managers. And we would talk about the types of things the property managers want to be done on their homes, which are things like annoying things, things that you and I generally don’t like to do. But if you’re starting a business are really helpful, like doing dryer vent cleaning, for example, that’s a really big thing, and especially in the vacation rental market, because they launder all their linens inside the structure. And so that really helps with the drying times. And so constantly cleaning those out really helps and reduces fire hazards down in our market. We do a lot of pool heating because there’s all kinds of pools and these short term vacation rental houses. So we would add about that. And so every market’s going to be a little different. But we would go and it would have everything they would need. It would have a copy of our license and a copy of our our nine and a copy of everything that they would need in order to get us set up as a vendor as well as some pricing and things. So that way we could have that entire conversation with them. And that worked really, really well for me early on when I was kind of desperate for business. The really nice thing about working with a property manager is that you have that single point of contact and you get to do a bunch of different properties. Now, you mentioned pricing. Why do you think pricing is a big deal to them?
Tersh Blissett: [00:14:12] The feedback that I’ve received is that they have the homeowner’s best interest in mind, and if in their mind the best price is the best interest of the homeowner, it’s really difficult to change that if they’ve been doing property management for 20, 30 years. And in their opinion, the company with the best price has the homeowner’s best interest in mind. It’s difficult to change. The mindset in Stephen Reardon’s situation is like the ideal situation to be in, to go after those type of customers if they can call you and you’re going to get it taken care of, because a lot of the guys that I’ve run into that are significantly less expensive. They’re going to charge a ton of material. They’re not going to keep any inventory on their vehicles, and then they’re going to build a property management company to drop to the supply house and then back. So the property managers saying, yes, we’re charging forty five dollars an hour. Whether or not seeing is that the final ticket price is two seventy five for a contact or be replaced, whereas for me it would have been 250 maybe or whatever the price might be, and they would actually save money by going with us and we would have gotten there quicker and we wouldn’t have left the site with it not working and come back. A lot of those things are education for the property manager, but there’s some property owners that are not going to be able to change that. Forty five dollar an hour time material mindset.
Bryan Orr: [00:15:32] This is what I’m getting at, is that the property manager, they have a couple different motivations. So one motivation is they don’t want to rock the boat with their owners. They don’t want to have difficult conversations with their owners. They have so many of them. And so to have a conversation about pricing with every owner because you’re more is going to be super annoying for them, but on the other hand, they also don’t want to have conversations with their owners about their tenants being upset. So that is a factor to them. That’s something you can use to balance it. And on the other hand, they don’t want to have a problem with a vendor, which is you you’re the vendor where they’re not getting their bills on time that I can see their invoices on time, their administrative pain in the butt, and here’s a little hint. Most small businesses are an administrative pain in the butt for property managers, it’s a big pain point. They don’t get their invoices to them on time. They don’t have the right information on the invoices. They don’t get them proposals in a timely fashion. They don’t do those administrative pieces that really make it easier on a property manager. So that’s a huge part. That’s a huge selling point of it. Here’s what we do. And there’s some people who think this sounds sketchy on the face of it. But I’m going to explain it to you. By the time it’s all done, you’re not going to think it’s sketchy anymore. So instead of just keeping your prices low for property managers, because that’s what some people are attempting to do with property managers that are tempted to cut the prices so that they can get them because they’re like, well, I’m going to get all this work, so I’m just going to cut my prices in order to get all this work right don’t do that. Keep your prices what they are. But tell the property manager I’m going to give you a X percent discount for prompt payment. I’m not going to give you an upfront discount. It’s going to be a discount for prompt payment, which means that you don’t get the discount until you pay me, which means that it goes to you in the form of credit.
Tersh Blissett: [00:17:14] That’s exactly how I pay my vendors.
Bryan Orr: [00:17:17] So they give you a discount for paying like in the supply house, for example.
Tersh Blissett: [00:17:20] Yeah, my big account that can’t be mentioned. That’s unmentioned. Unmentionable. That is exactly how I pay if it’s a two percent or one percent discount, depending on how quickly I pay it.
Bryan Orr: [00:17:33] And that’s an hour I discount. But imagine let’s say it was 10 percent may say, oh my gosh, ten percent.
Tersh Blissett: [00:17:38] That’s a ten percent off of a million dollars worth.
Bryan Orr: [00:17:40] So that’s a lot of more. You may say that’s not much money or you may say that’s a lot of money. But trust me, you can afford to give good property management 10 percent discount it would be a lot easier to deal with. OK, but here’s what you tell them. Here’s how this works. I quote you my regular price, the same price as everybody else in the whole world pays. So if your owner calls me and asks for a quote, guess what? That quote is going to be the same as the quote I gave you. It’s not going to be different at all. Now, if you pay me on time, you’re going to get a 10 percent credit rating back to your company.
Tersh Blissett: [00:18:10] Do you actually write it back or do you just take it off the ticket?
Bryan Orr: [00:18:14] No, no, I can’t take it off the ticket because they have to pay me, OK, because they only get it if they pay me on time, so what this is doing is it’s dealing with the two biggest problems that exist with property managers, a them paying you on time, and B, then perceiving that you are too expensive because you’re not too expensive. And they say that, well, I’m going to do right by my owners, but it’s not really that. What it really is, is they don’t want to have to have conversations with all their owners because it’s really a pain and there’s nothing in it for them. There’s nothing in it for them to have to argue with an owner about a price there’s nothing in it for them. But if they’re
Bryan Orr: [00:18:47] Getting 10 percent back off of the retail price for prompt payment, then there is something in it for them, like significant, so if they do thirty thousand dollars worth of business with you in a month, which is easy for a property manager to do, I mean, we have property managers who do well more than that with us. They could be getting a three thousand dollar check written back to them.
Bryan Orr: [00:19:05] Now, here’s that’s where people start to think it’s sketchy. Oh, that sounds like a kickback. Well, no, it’s a payment credit. That’s a totally legitimate thing, a prompt payment credit is a totally real thing, and that is why you’re giving it to them. That’s a legitimate reason you’re giving them money back because they’re paying you on time. That’s the risk that a property manager represents to your business. Right. Is that if you were working for regular old Joe homeowner, you got COD, he would pay you right away. it would be COD, right. This property manager, they don’t pay you right away. So that stretches your system. It’s more work, it’s all this sort of stuff. And so that’s not great. But if they pay you on time, you’re happy. Thumbs up all around.
Tersh Blissett: [00:19:39] Well what’s prompt?
Bryan Orr: [00:19:40] What do I call prompt? Yes. We call prompt of 30 days from the bill date. OK, so not from the performance date, which that also gives us a huge motivation to get them their bills quickly. So we’re usually billing out within a day or two of the time that we did the work. So we bill out, we give them 30 days from the time that they receive it to pay us. If they get it within the 30 days, they get anywhere from five to 15 percent. And we do flat five on replacement. So replacement’s to get the ten five on replacement’s and it’s anywhere from five to 15, depending on how long they’ve been with us, whatever we decide, and so that is an excellent system because the argument that it’s about price, how much different is it? And obviously, are there companies out there that are charging an arm and a leg? Sure. And they’re not going to work for the property management business. It’s not going to work. But companies like you and me, we’re not on the really high side of pricing. We’re in the nice kind of soft middle, certainly not the cheapest. We’re not the one guy in a truck charging type of material, but we’re definitely not the big company. Huge, huge prices.
Tersh Blissett: [00:20:32] If I was one guy in the truck, I would be charging the same as I’m charging right now. I don’t know that I would. But looking back, if I had to start over tomorrow, charge the exact same thing, a Tersh right now. I want to have that conversation with the customers later.
Bryan Orr: [00:20:44] Right. But you’re not charging six dollars for a capacitor. You’re not one of these really, really high-priced companies out there. So your prices are not outside of range. And so literally, do you think the issue with a property manager is, oh, man, you’re going to pay twenty more bucks than that other guy for that capacitor? Do you think that’s really the issue? No, the issue is, is they don’t want their owner calling around later and finding out that there’s somebody who’s twenty bucks less and then having to have that argument with them. Right. They don’t want to have to have that conversation. But if they’re making a ten percent prompt payment credit that they’re not going to get from anywhere else, they’ll be more than happy to have that conversation with that owner and say, no, I Tersh his business is the best. It’s a great business. And they believed all that stuff before, but it was just too much of a pain. You didn’t incentivize them to have that conversation.
Tersh Blissett: [00:21:25] Now, that goes back to the property management company?
Bryan Orr: [00:21:28] Correct. That 10 percent goes back to the property management. It now, if they want to give it back to the owner, they can, but they don’t have to because they’re the one paying you anyway. Right.
Tersh Blissett: [00:21:37] I know some companies will take and give them gift cards. Rather than giving them a credit,
Bryan Orr: [00:21:43] You can do that too, sure, and then they could actually keep it personally. And that becomes more like a kickback, though.
Tersh Blissett: [00:21:48] Yeah, when I see it happen is for apartment complexes and the apartment complex uses the gift cards to rent things, to have a party for the office or for the community. They’ll have like a little get together for the apartment. And so they’ll want a target gift card for this and then a Pizza Hut gift card and then so you can buy all these pizzas and get decorations from Target or whatever and then have a little party at the office there.
Bryan Orr: [00:22:15] Yeah, there’s things Like that you can do. Again, what you don’t want to have is you don’t want there to be an incentive for managers who have a fiduciary responsibility to their owners to make decisions based on their own benefit. That’s what you don’t want to have to happen. But in this particular case, you’re talking about a 10 percent difference in price. And so clearly, they’re not going to use you or not use you over 20 bucks on a service call or on a part. That isn’t the real reason. It’s just a reason that allows them to dismiss you because they don’t want to have to deal with that pain and suffering. They’re going to use you because you’re good and because you show up and because you don’t cause heartache. That’s the main reason. It’s just a more ambiguous thing for them to discuss with their owner all you have to do is give them that little extra motivation if you’re going to cut your prices anyway for property managers because you’re already saying, look, I know I’m going to have to be a little more lean for these people. I’m going to have to find a way to come down to where they are from a pricing standpoint. That’s fine, do that, but just do it in a more creative way. Don’t do it in a way where you’re just cutting your prices for property managers. Do it in a way where you’re keeping your prices the same, but you’re just giving them a credit-based on their prompt payment. And that solves both problems.
Tersh Blissett: [00:23:23] That makes perfect sense. But going back to tax ramifications, is there a benefit doing that versus doing the other or is it a benefit doing the other gift cards over the other? Actually giving a credit.
Bryan Orr: [00:23:34] But don’t ask me tax questions.
Tersh Blissett: [00:23:36] I’m not a tax expert. You’re my thought is that most of your gift cards you can go to lose and pick up, it can be written off as a material charge.
Bryan Orr: [00:23:44] Oh, I see what you’re saying.
Tersh Blissett: [00:23:45] So you’re saying for you as a company, you’re saying for your business? Yeah, well, no. I mean, if you’re giving them a credit, then you’re saying you made less income.
Bryan Orr: [00:23:52] Right? Right. If you reduce the side of the equation for you, there’s no question for you as a contractor for them. No, it’s makes no difference. I just give them the credit. That’s the simplest way to do it. And then that way, if they feel kind of funny about it and they want to give the owner of that credit back, well, then they can there’s nothing stopping them. You’re just giving them the money because they’ve earned it, because they paid you promptly.
Tersh Blissett: [00:24:12] There’s some property management companies that we do work for. They pride themselves on not taking any money from us, not necessarily not taking money from us. But some property management companies will take our price and then mark it up another ten or fifteen or twenty percent, and then they take that cut from the home. And then a lot of the ones that we do work with, that’s one of their selling features to the homeowner as they don’t make up anything. They just whatever our bill is, is their bill.
Bryan Orr: [00:24:40] And that is your bill. Your bill is the full amount, right?
Tersh Blissett: [00:24:43] Yeah. And so that way, whenever they may be the ones who may have an issue with keeping that 10 percent.
Bryan Orr: [00:24:49] Yeah. And if they feel like that dishonors their owners and fair enough.
Tersh Blissett: [00:24:53] There ya go.
Bryan Orr: [00:24:54] In fact if they want to take the 10 percent off right off the beginning and charge 10 percent less, and just because they know they’re going to pay on time, that’s fine. They can do that.
Tersh Blissett: [00:25:01] Their managers don’t have to pay. The homeowner doesn’t have to send them a check, then they pay you.
Bryan Orr: [00:25:08] Ok, I see what you’re saying. Just because of lead time, is that what you’re saying? Yeah, my way of looking at it is a good property manager is going to have money in escrow. They’re going to demand money in escrow. Yeah, all of our customers have all the good ones have money in escrow with their owners. If it’s big money, well, then their owners can wire money in. If it’s a change out or something like that, they can wire money in for that. I don’t generally let them use that excuse because that’s mostly all that is. It’s mostly just an excuse.
Tersh Blissett: [00:25:31] That’s kind of my point. If somebody’s looking to get in the property management, if they say that kind of thing, it’s either an excuse or is a red flag not to use them or not to work with them, because if they truly don’t have any money in escrow, especially for service calls, if you’re doing ten thousand dollars or the service calls for a month and they don’t have that kind of money in escrow, there’s an issue, at least some of the money.
Bryan Orr: [00:25:55] That comes down to a law issue. If the owner doesn’t have what’s called privity with you, which means that they’re not privy to the agreement that you have with the property manager. And so if the property manager doesn’t have money under their control, then the property manager really doesn’t have the right unless they legitimately have power of attorney on that property. And they don’t always in that case, the property manager doesn’t really have the right to even approve those things, whereas if they have the money in escrow for that purpose, will then they pay you. They’ve made the approval they pay you, but you run a big risk if you’re in a situation where they’re legitimately not able to pay you unless they get that check from the owner. Because what if the owner doesn’t pay the owners, not the one who approved? They are
Tersh Blissett: [00:26:33] Exactly. And most cases are
Bryan Orr: [00:26:35] Their cases that the owner does approve. Sure. But in a lot of cases, especially with four hundred dollars here. Five hundred dollars they’re. A lot of cases it’s the manager who’s approving and if they’re approving, they should have that money sitting there.
Tersh Blissett: [00:26:45] We don’t authorize anything over 250 without the property manager, but we’re that kind of comes into a stink is whenever you have tenants call in after-hours because a lot of the property management companies come straight to us after hours and so they can call and we could go out there and do two hundred and thirty dollars worth of work and then the homeowner might have their own guy. And then so you really get into a stink. If the property management company doesn’t have that money in escrow and they’re coming straight from the homeowner themselves, you’re not going to get that. Two hundred thirty dollars or that. After hours, Tombak,
Bryan Orr: [00:27:19] The owner of the company that I worked for before I started my own company, he used to call it the Golden Rule all the time. And he would say, remember the golden rule, he who holds the gold rules? And that is true. And as long as the owner still has the money in their pocket, the transaction is not done. That’s correct.
Bryan Orr: [00:27:35] And so it doesn’t matter how nice the property manager is and how much you like them and all that kind of stuff. If that property manager doesn’t have that money in an account that’s theirs to spend, then the transaction is not done, regardless of the fact that you did the work and that’s you where you just don’t want to be in those positions. And and that’s what I’m saying with property managers. You just have to be creative. You have to come up with creative ways to do things that work for them, for you and the owner.
Bryan Orr: [00:27:57] And as a business, you’ve got to be the type of business that is going to do the right thing by the owner. First off, the you know what you’re doing. You’re going to do a good job. You’re only going to suggest things that are helpful. You’re doing all the right things. Once you have that peace down and you’re not charging exorbitant prices, well, then you are a good value to that owner. I mean, you’re going to be within 10, 20 percent of what they’re going to get somewhere else. And if you’re going to do it quickly and you’re going to take care of them and their tenants aren’t going to have problems, then you’re a good value to them. Now, all you got to do is figure out a way to convince the property manager that. And I found this is one of the easiest ways to make it easy for them to make money doing what they do and also make it easy for them and motivate them to pay you promptly.
Tersh Blissett: [00:28:35] That’s the best of all.
Bryan Orr: [00:28:36] The world’s the best of all the world’s.
Tersh Blissett: [00:28:39] I would normally say best of both worlds. But there’s a couple of different worlds in there.
Bryan Orr: [00:28:43] A few different worlds. Yeah, true. So what else have we missed about property managers?
Tersh Blissett: [00:28:48] Don’t sweat it if the tenants get mad at you. Yes, I’ve mentioned it before. That’s the one neutral review that I have. And this goes back to like you were just saying, keep the homeowner’s best interest in mind. First, they wanted a water heater replaced and the water heater didn’t need to be replaced. And it was in our best interest to let the homeowner know that the water heater doesn’t need to be replaced. And the tenant was not happy that we told them that,
Bryan Orr: [00:29:14] Yeah, you’ll get into all kinds of stinks. And so this requires special training. And this is actually a way that we market our business. I have this kind of one page sheet that I give to property managers that then they can fire to their owners. And this is related to selling them maintenance plans because it’s a great benefit to them to have maintenance plans on these houses, because, as you know, they’re not going to be cared for as well as regular homeowner occupied house. And so in that, I mentioned that all of my staff are trained to deal with tenants or short term vacation occupants and so they know don’t talk. That’s what it comes down to. Don’t talk to them.
Tersh Blissett: [00:29:46] Shut up. They’re not your friend.
Bryan Orr: [00:29:49] Don’t talk to them. That’s all that is
Tersh Blissett: [00:29:52] So much easier said than done.
Bryan Orr: [00:29:53] I know. And I’ve been so again, I’m not saying this is an owner. I’m saying this as a technician who’s been there and who’s done this many times, though, if you’re going to talk, just it make it total like nothing small talk. You are just a worker there doing your job. That’s all you’re doing. What do you think? Oh, you know, I’m going to see what I can find. You know, we’ll see what we can do. I’ll I’ll let the property manager know what what’s going on. Well, I’m just checking your air conditioner. That’s what I’m doing. Yeah, absolutely. When’s it going to be fixed? I’m going to talk to your property manager. We’ll see what we come up with. Nothing answers. That’s all you give them. Because anything you say will be used against you in the court of law, in a court of law or otherwise. Yes, many, many times. It’s so much. You know, all of this is old. Yeah. Should really be replaced. Oh, OK. That’s going to be an issue.
Tersh Blissett: [00:30:39] That’s the worst or something calls in your leisure bill to go.
Bryan Orr: [00:30:41] Well, yeah. You know, that’s anything here that could cause my life to go up. Well, yeah, your coil’s a little dirty. Ding, ding, ding, ding, ding. OK, there you go. You’re going to have to deal with that now, you know, and
Tersh Blissett: [00:30:51] You’re going to be paying their bill off.
Bryan Orr: [00:30:55] Have you seen anything on that call? That call looks like it’s moldy to me. Yeah, I think that might be Molde. Ding, ding, ding, ding, ding, ding, ding. You’re going to be subpoenaed, you know, like, seriously, don’t. Yeah.
Tersh Blissett: [00:31:03] You don’t even say that word.
Bryan Orr: [00:31:04] Sorry, I meant to say moisture.
Tersh Blissett: [00:31:08] Bacterial growth.
Bryan Orr: [00:31:09] Bacterial growth, right? Yeah. I just said that’s a whole different topic. But just very quickly, what I tell my people to say is if somebody says is that mold,
Bryan Orr: [00:31:17] Here’s the answer. I’m not a mold expert at all. Exactly. I’m not trained in licensing and mold remediation. I’ve nothing to say about that. I can clean air conditioners. That’s what I’m licensed and certified to do, clean and fix air conditioners. But as far as deciding what’s what and a bacterial growth world, I’m not trained
Tersh Blissett: [00:31:35] And needs to be tested in a lab.
Bryan Orr: [00:31:36] That’s it. That’s not what I do.
Tersh Blissett: [00:31:38] Another thing about the. Maintenance, just to add on top of that really quick selling maintenance is to property management companies. A lot of times whenever they call and say they want to do a home inspection, they’re going to clean up the house and fix everything that’s screwed up. If you’re going to go in there as a service provider, they don’t give a crap. If they have 12 mattresses in different rooms or they have holes in walls, they’re not going to put a picture over it to cover it up. So we use that as an advantage to help out the property managers. So we say, look, we’ll take a quick note. If there’s anything like super crazy going on, they have a marijuana farm in their backyard that they’re going to mow down the next town. The property manager comes out there. We can keep note of that kind of stuff and pass it along to the homeowner. And that’s kind of a selling feature to them for maintenance.
Bryan Orr: [00:32:24] Yeah. Again, property managers are highly motivated by their lives not being difficult because heaven knows that being a property manager is a difficult life. That is not an easy job. And so if you can make their lives easier and less stressful, then that’s going to be very motivating to them. So set up programs have conversations that make it clear that that’s your motivation. You’re there to help. And if you’re starting a business, like I said, is it always hearts and flowers? Absolutely not. It can be a nightmare sometimes, but it’s a great way to get a business scaling quick to the point where you can pay the bills. And early on when you’re starting a business, that’s a really big concern is getting to that point quickly. And I would definitely suggest, considering that marketplace just putting some checks and balances in place and looking at creative ways to market to that business. And a lot of it is handshake. A lot of it’s going to be what can people in the eye and getting to know people and meeting people in the community. I had good luck even going door to door, going in there, association meetings and meeting them, low pressure, just being prepared with all the information they need to get you rolling. You want to make it as easy as possible for them to choose you when they need you. And that’s where being prepared and having your insurance and your licenses and everything that they are going to want to see, having it all ready for them and ready to hand to them. So that way, when they want to you see that first time it’s a piece of cake.
Tersh Blissett: [00:33:33] Exactly. Don’t fall into that price drop.
Bryan Orr: [00:33:35] Yeah. Don’t get to the point where you’re not making money. If you’re paying the customer to do work for them, that’s a really bad thing. And in the future, we’re going to talk about fully loaded labor rates and all that kind of stuff. Tersh is going to get into all that. I can almost assure you that most of you sitting out there aren’t charging enough and you’re probably losing money on half the service calls. You do and you don’t know it. And you want to argue with me about it right now. But later on, you’ll learn that that’s probably the case.
Tersh Blissett: [00:33:56] And every time you’ve ever told somebody that they’re ripping a customer off and then later on you’re like, oh, maybe you weren’t charging enough.
Bryan Orr: [00:34:03] Maybe I’m the one who’s going out of business and just living on change. That’s that’s what I learned hand in the air. I learned that seven years in the business that, oh, actually, I’m losing money hand over fist in service and just making it on change-outs. And that’s why I’m barely breaking even. We’ll talk about that in the future. But property management is a good way to get rolling. This is the Service Business Mastery Podcast thank you for hanging in there with us, Tersh, and I, we have a lot of episodes in the future. You should see this whole list of different ideas and episodes that Tersh as he’s a list maker. So I’m excited about that. I’m glad that the Service Business Mastery Podcast is part of the blue-collar roots network. You can find all of the podcasts by going to blue-collar roots dotcom. And right there you can see all of them, including the building ABC Science podcast, which is one that I’m excited about, Bill, as kind of a soft-spoken guy. So when you first listen, you may think, is he excited about what he’s doing or is he maybe on some Quaaludes or something? But then you’ll listen and you’ll find out. There’s a lot of good knowledge there with Bill. He’s a super-smart guy. And, yeah,
Tersh Blissett: [00:35:09] Just pay attention to him and your head.
Bryan Orr: [00:35:11] Exclude. Yeah. If you actually start listening to everything he’s got to say, you’ll learn all sorts of
Tersh Blissett: [00:35:15] Ones is full of all
Bryan Orr: [00:35:17] Sorts of tips and tactics and techniques and measurement and all that kind of stuff. Bill is just one of those guys who is so humble that sometimes lets other people there’s many times that he’s let me say dumb things. And then actually everything that you just said is incorrect. You take that all back. That would be great. So we don’t have a lot to say. Anyway, thank you for listening and we will talk to you next time on the Service Business Mastery Podcast.