Insights from a Property Management Entrepreneur: Navigating Challenges and Embracing Innovation

Hello champions of the traditional industries!

“Heroes of Traditional Industries” series is about stories of people who make a difference in their respective industry, share their journey and story how they got where they are now, how they use technology to create impact and share their unique perspective on how innovation can impact traditional industries and how idi it impact their business.

Today our hero is Parker Cox founder of Tenant Planet, Inc., a property management company. He is in the property management business for quite some years and will share with us his experience of running such a business and how he implemented technology and innovation, including AI in his business to scale and manage the operations better.

Okay. So how's the property management business going, by the way?🤔

Parker: It's moving well. I mean, we're going into the phase where my business partner and I become actually passive. You know, the two people we have taking over as our leaders have been with us for seven and a half, almost eight years, and almost six years so, they're seasoned, they know the business, but it's also hard to kind of. The key difference between a senior-level employee and a leader, I think, is fundamentally that a leader, if you don't know the answer to something, there's nobody to ask, right? It's like when you own the business. You either come up with the answer or it's like, right for them, they're used to just calling us when there's a problem. So, handing that authority downstream is a challenge. You know, they have to get used to, it's like, this is your judgment. How do you think you should handle it? You know what I mean? Because that's ultimately what business ownership looks like. So, it's going well, but of course, it's its own challenge. 🚀🏡 

As any business, actually. So how did you, uh, like what initially drew you to the property management industry, how did your journey start and how has your journey been so far? 🤔

Parker: Yeah, I didn't have some wild plan. I happened to know about real estate from the previous company I had, which was in insurance. I insured a lot of real estate, um, happened to meet my business partner. He had a plan for property management and it seemed like a better opportunity. So I kind of fell into it. Um, how was the journey? What I'll say is I'm very thankful that property management is what I did because we're going to do 4 million in revenue this year, give or take, but that's probably the equivalent in terms of difficulty of most businesses is like a 25 to 30 million revenue company. 💸

🏘️ And that sounds really silly, but the thing with property management is it has a few really unique difficulties. The first is it's like a non-technology-based marketplace. So I have almost a thousand clients in that company, but I have almost 4,000 tenants. And the issue that you have with that is I have, you know, a thousand people or a thousand properties that pay me.

But...?

Parker: Then I have three times as many people, four times as many people that expect to have access to me. So if you think about it, like an accounting firm or an attorney or a financial advisor, the amount of the public that expects to have access is like 1 to 1, right? Maybe your accountant needs to talk to your attorney every once in a while, or they need to talk to your wife, right? But like, they don't need to talk to your neighbour, and that's a really interesting problem to solve. I get paid from this small group, but I have a responsibility to both the small group and this much larger group.

🏘️ You know, it's funny. I have a lot of people now saying, "Oh man, offshore recruiting sounds like a great business, but I'm sure that's really difficult dealing overseas," right? or Digital marketing, and I'm like, honestly, neither of these businesses are as hard as even just the maintenance department in my property management company. Add on to that, leasing, accounting, customer service, right? It's like, there are five departments in property management that are harder than this entire company, and yet this company can scale in a way that that one can't. 📈

So it was kind of an advantage. I kind of look at property management on my entrepreneurial journey as like, I don't know, the Spartan who grew up in a crazy, unbelievable world where it's like, "Oh, you have to fight all the time," and then you go into the gladiator pits and it's like, "Actually, this isn't that bad," right? It's like Russell Crowe in Gladiator. He's like, "Dude, I've been at war for 25 years. This is pretty easy." That's how I feel. 💪

🧐 Interesting! So you raised a very unique challenge, and then I want to ask, in this case how do you prioritize customer service and satisfaction within your property management company, and what strategies do you employ to ensure a positive experience for all parties involved? 🏠

Parker: Well, I'll give you the strategy, and then I'll give you some tactics. So from a strategy perspective, the first thing to recognize is that the clients are your customers, but the tenants are their customers. And so the reason I say that is if we can't answer two phone calls and one's a client and one's a tenant, we have to pick one. We pick the client, but the tenant is a very close second. Now, the other part of this, and I think, have you ever read the book "Unreasonable Hospitality"? 📚📞 You should read that book! 📚

Because part of it is like, The only way to do a good job for people at scale is if your people are happy. To make your people happy in the property management business is very difficult and the reason for that is everybody hates you. It sounds crazy, but I want you to think for a second. You're either telling a tenant, we can't fix your work, right? You have an issue, we can't help you and then you're making your client happy by saying, we're not spending your money. 💵

Or you're telling the client, I'm going to spend some of your money unexpectedly, and the tenant's going to be happy. I didn't go break their water heater, but in either case, one of them is mad at me. Right, and so at the end of the day, everybody hates you. Always from that though, the challenge that you have in the property management world is most people, humans are not comfortable existing in a state of accusation, suspicion, general disdain constantly, and it really is that like 80 percent of your conversations or somebody is in some way blaming you for something. So the way that you help your team be effective to then help your clients and then immediately after help your tenants is the first is you have to have release valves of issues.

So it's like, there's a lot of training around like be empathetic, right? I would be mad if my toilet broke, now I wouldn't blame my property manager, but I'd still be mad. That sucks. How am I going to use the bathroom, right? That sucks! So the point is, you can be empathetic to the issue without absorbing the anger. Does that make sense? 

Yeah, it makes sense 🎯

Parker: Beyond that tactically to handle we get about 2000 phone calls a month, I don't even know anymore. The last time I checked it was somewhere around 20,000 emails and we have a team of 24. So that gives you a sense of the scale of challenges and this is part of why I mean, there's a lot of things in property management that if we mirror the size of a 25 million, 30 million revenue company, but with the personnel and staff of a 4 million revenue company. A few things. I think a shared inbox is unbelievably good, I will have that in all of my companies going forward. A shared inbox where somebody can email it at my property management company, it's solutions@tenantplanet. com and then we internally process and send it to the right person.📧

That's very helpful because like phone calls, You get 2,000 phone calls in a month or you run the math and you say, okay, divide 2,000 by 30, that's about 70 phone calls a day. That's actually, well, it sounds like a lot, but when you got 24 people, that's not that many, right? The problem with phone calls is the same problem with emails.📞

And this is another good book you should read. It's called The Goal by I don't know, he's got a really long last name, but it's a really good book! It's very common in business schools, It's about how you manage a production line, it's actually written as a novel, but it's just streamlining production in a factory basically. 📚Worth the read!

But the point is when you actually look at any business, any thing that you're doing, service, business, product, business, whatever, like whether you have a factory or not, your team is a factory floor. The thing is that it takes several people to assemble this widget, whether it's digital service, whatever, to pass it off. So you take phone calls. The problem with phone calls is not quantity. If you could have every phone call come in every seven minutes over the course of a month, you'd answer everyone. And they'd be a 10 experience. The problem is with phone calls and emails is that they don't come in sequenced general, like perfectly symmetrical sizes.

You want to spread the workload evenly, like a ship with multiple boiler rooms. They're not all active at once, but when demand spikes, you have the capacity. That's how you handle peaks in calls and emails without overwhelming your team. It's about creating spillover capacity. 📞📧🛳️

With the rise of remote work and change in lifestyle preferences of people, how do you see the demand for rental properties evolving? And how does your company adapt to this shifting market dynamics? 🏘️

Parker: So I think remote work is not going to have the actual impact that most people think it will on, you know, housing people still need, like, it doesn't change the population, I think that what we're going to see is that actually people are making different financial decisions. And I think this is the much bigger thing that is less spoken about, I think there's more renters in the world and I think that there will persist to be more renters in the world. If you actually look, I can speak to the U S market. I don't know about other parts of the world, but owning a home is actually a way to lose money right now. With the inflation rate and the devaluation of currency moving in the direction that it is, if you hold a home for 30 years and you buy it for 500,000 and it's worth 5 million when you die, every, you know, when you retire, everybody looks at that and they say, Oh my God, look, that was the easiest thing I ever did, I'm so much richer now, Oh my God, 10 X in 40 years, right. But actually that 5 million at the end, I think is going to be equivalent or less than the debt service and the inflation rate and then the ultimate buying power. 💼

So I actually think that we're heading into a world of additional rentership, I think that the biggest impact is the lack of housing availability. So I think building is going to have the biggest lever to pull and the most leverage on, on what happens in the rental market and the final piece I'll say is so Jeff Bezos is famous for saying the question that you have to ask is not what's going to change, but what's going to stay the same. Um, that's actually a much harder question to answer, right? 🌍

The reality in property management is there was property management, probably in ancient Babylon. Definitely in ancient Rome, certainly in, the middle ages in England, and there will continue to be property management when we become interplanetary, there will be property managers on Mars. So when you look at it from that perspective, I think that one of the key challenges, there's been a lot of VC backed property management companies that have not done well. And the reason why is they think that this is food delivery, that's new there's a lot to change, but you have this thing that has very deep roots, very clear set of behaviors around it that is very, this is a very deep monolith that is only going to shift minor bits. There's a reason why it exists, there's a reason why it's entirely commoditized, why it's low margin, because it's so, the grooves of this existence are so deep that it's like, it's not going anywhere. 🏠

Does that make sense? 🌍💼🏠

Yeah, makes sense. Speaking of this is, in what ways do you think technology has transformed the property management sector and how do you Incorporate those advancements in your business operations? Can give example where did implement various digital tools or automations in your processes? 🖥️🔧

Parker: Let me think about that for a second. 

Okay, take your time. ⏳

Parker: So, there's two types of technological advancement. One is a platform shift and one is incremental growth, okay? I don't think that there will be, maybe even within the next 20 years, a platform shift for property management, kind of like plumbing AI is not going to be able to fix your toilet. Eventually there'll be robots and they might run on AI, right? But as soon as you look at that, there's this undeniable human interaction component that means that when it comes to property management, you're dealing with horizontal technological improvements as opposed to vertical.  Once you take that to be true, there's a few key ones. We're pretty cutting edge as a company in terms of what we've developed and how we have driven our business. The key points I would say are, number one: we use a lot of AI when it comes to base communications. So everything from filtering emails to qualifying tenants, etc, right?💬

I do think that the next cusp is going to be AI agents as customer service reps. Property management is fundamentally a data transference business. It sounds crazy, but when you think about it, it's people ask us, “tell me about this property”, that's data knowledge, sharing that data knowledge. “Give me access to this property.” Okay. That's human. But then somebody asks, “I have a question about my lease”, “I have a question about a recent bill.”, “I have a question about a recent maintenance issue.” These are all data questions that unfortunately we have a human transferring that info and humans are a little bit more error prone but where we're going is at some point we'll be able to plug all of our data into a vector matrix, basically, and then they'll be able to source for example “Okay, you live at 123 Main Street.” “Yes.” “Yesterday you had a plumbing issue, Mr. Johnson, this is what happened, this was the bill, This is the vendor that worked on it.” That'll wipe out human beings in the base customer service. And I don't think that's true just for property management I think that's true forever. Customer service is data transfer, that's a very good thing for AI. 🤖🏢💬

But what do you mean by vertical? You said about vertical technology advancement and horizontal. Can you elaborate on that? 🔄

Parker: Yeah. So when you look at disruption within an industry, right? So an example of a vertical technological disruption, that would be Uber compared to taxis, Okay. So they take the entire user experience, start to finish, adjust the platform and now it's a vertical integration that's done better. You don't wave your hand out from the sidewalk and call a taxi and then have to pull money out of your wallet and then hope that the timing works and hope that guy isn't a weirdo and wonder how good he is as a driver, and then hope that you show up your designation, right? Instead no, no, no, we now have this piece of technology that enables a start to finish, we can adjust the user experience, improve it, iterate it at every interaction the user would have along the way. That is a vertical integration of a technological shift. When it comes to property management, you're not going to be able to find something like that. So there was a pretty close to that when the large property management software companies came out and you went from paper to online but even that was really just the bedrock of the horizontal focus. So what you see in property management is different. There's no way to have a start to finish user experience because of the variety and options required.🚖

So you have horizontal, it's like, well, we do maintenance in this one way, we handle accounting this other way, we do leasing that way, we do customer service this way so you can make these tweaks, but they end up being independent of each other. I can make maintenance better without improving anything else so you don't get this, catalyzation of benefit in the same way you get in a vertical situation. Does that make sense? 🏙️🔄🚖

Yeah, it makes sense! So you implemented a couple of digital tools. Did you see any change in efficiency, did it increase?, How did it help your company grow and what challenges did you encounter when you started implementing these tools? 📈⚙️

Parker: So I'm going to answer that in reverse. You will always have the challenge of adoption. When you have anyone who's successful at doing things one way, it can be really difficult. It's like giving a Formula One driver from 1967, putting him in a car today they're gonna be like, what is it, right? No, no, I promise it's faster, you're not going to know how to drive it, but you're a good driver so you gotta go figure this one out. So the number one reason why people struggle to adopt new technology is the J curve. 🔄📉

The J curve is new technology comes in I have to learn it, I become less efficient, less efficient, less efficient, I figured out, I figured out, okay, now it's better. So the reality with that J curve is as a leader, you have to be able to motivate people, sell them on the vision, and then ultimately struggle through a thousand conversations about people complaining to you while you shift because they will tell you all the reasons why it's worse and you have to be bought in on the vision and get them bought in and fight against them, the better the person speaking, the more they'll fight, at least the people who were great on the previous system. 💬💼

So back to what do we use? I'll give you one example. We use AI supported kind of chat bot specific for leasing. So somebody sees one of our properties, they're interested in asking, you know, “Hey, how much? “like tell me about the place”, When's it available? blah, blah, blah. Right? and most of that's available on the listing, but they'd rather have a text or chat interface, no problem. We need information from them, which is, are you a waste of our time? The property is 3, 000 a month. Do you make 10, 000 per month in income, right? Otherwise don't call us. Do you have a 700 credit score? We actually found that our leasing agents were spending roughly 30 percent of their time on the qualification process so everything from communicating with tenants, qualifying them, setting them up to show the property and that's a key driver of benefit when you're talking about a platform adjustment. ⏳📞

Okay, can we make more money? That's easy, right? Drive down expenses, drive up income, that's easy but a big one that you need to look at when you're determining about what technological adjustments to make is, “Can I reduce time for my team?” Because that fundamentally is a leading indicator of money and cost savings later. If I can get my team 30 percent of their time back, they can be doing 30 percent more money making activities. 📈💰

Okay, makes sense. And how did you make sure that the tools you implemented align with the requirements of your team? ⚙️👥

Parker: So I don't remember which book I read this in, but this is a really important topic. At the end of the day, it falls on you what company as an owner do you want to own? You can give your team the ability to offer an opinion without giving them authority and that's a very difficult line to walk as a leader and it's a hard conversation to have with your team, but it's much easier if you're a parent, because you do this with your 12 year old, where do you want to go out to eat tonight? They don't get to pick, but they get to have an opinion. I'm in the mood for hamburgers. Okay, I'm not saying we're going to a hamburger restaurant, but I'm taking your opinion, I'm going to see how it stacks up with everyone else's opinion and then I'm going to decide. So what I would say is it's kind of like a democratic dictatorship.

At the end of the day, I don't really care what my team wants from the perspective of we're going to do what I think is best, the both the success and failure falls on my shoulders and so you can't be overly diplomatic about recognising, that when it's up to you, it falls on you at the same time, you'll isolate everyone If you say “this is what we're doing” and they have good insights, right? “this could be better, this could be worse.” So you have to create this world where they have a voice without hands. Does that make sense? 👥

Yeah, it makes sense. We talked about employees, but implementing all these tools and innovations how do we make sure that actually they also improve the tenant experience and at the same time, increase their satisfaction? Also how do you actually measure the impact of the tools that you implemented?

Parker: So there’s a couple ways to answer that. The first is every business owner and this is a fine line to walk, you need to be very data driven. We use data, feedback, surveys, etc. but at the same time the word that's coming to mind is conviction. You need to have conviction in your vision and it's a risk because you could drive off a cliff, right? Imagine you're at the wheel of the car and you look and it's like, we're going West, it's like certain parts of the world, you drive too far West, you run into the ocean, everybody drowns, right? And that's the reality of just business ownership.📊

At the end of the day, it's recognizing that ultimately when it comes to implementation like I said, everybody's going to hate it, you're asking them to do way more work with worse outcomes for a period of time. Usually I’ve seen it’s a process and you're asking people to follow your vision, right? This is Moses walking through the desert with the Israelites. It's like we're 40 years is what six months feels like when your team doesn't get it so you have to be an evangelist of the vision and buy in, you have to have patience while they hate it and then you have to celebrate every small win that comes along and “see, I see, I told you, see, yeah, look how great it is, look how much more you can do, look how much more money you'll make, look how much easier this is,” once you do that, you're in a much better place.🎯

As you increase efficiency, what I call is like the North Star, you have to remind them that the entire purpose of these systemic changes is not to become a bigger, more faceless organization, but simply to be able to drive better results for customers and clients. You have to have people bought in on the recognition that when your clients are happy and your customers are happy, you win, your job's easier, we make more money, we grow, right? that's how this whole thing works. It's kind of like training people on this, on the life cycle, It's like “Dude, eat your vegetables and you'll feel better.”📈

That's what it's like saying like the vegetables are helping your clients instead of helping yourself, help your clients and you'll feel better, it'll be a better business, you'll enjoy your time more. They don't trust you until they start eating vegetables and realize “Oh, wow. He's right. I do feel better.” 🥦📈🤝

Yeah, you touched an interesting aspect. So with the implementation of these tools, how much did the roles and responsibilities change for your team? How did you make that smooth transition and what kind of training did you offer them?

Parker: Yeah, I think it's handholding, it really is. I don't mean to oversimplify this, but it's kind of like teaching a kid to ride a bike. You can't pedal for them, you can't sit there for them, but you can stabilize them while they're learning. And I think that's the way you have to envision a transition like that with your team.🚴

Fundamentally, when I look at all of this, roles shouldn't change too much, but what they should be is clarified at the end. What you'll find is when people become more efficient, it becomes a lot clearer as to what they do.

I'll give you an example: think of a server in a restaurant. Everyone can say a server takes orders, delivers food, makes customers happy. A crazy, inefficient server is not going to do that well and won't have any time or space for additional tasks. They'll think, "Well, actually, I'm supposed to fill up the waters, I'm supposed to seat people if the host isn't available, I'm supposed to fold silverware," and so on.🍽️

When someone becomes efficient and good at their job, all of a sudden, their actual roles are very clear. It's the server who has perfect control of the floor and knows, "I do this for this table, I do that for that table, and I've got time for this, and then I handle that, and I take that thing on." When someone's efficient, what they do becomes much clearer. It doesn't change. ✅

It's interesting to see how property management companies can leverage technology to improve operations and customer satisfaction. This is not over as part 2 of the interview with Parker Cox is coming out soon so stay tuned for some more juicy insights about how property management companies can benefit from various digital tools, automations and innovations to help them thrive in this environment.

You can get in touch with Parker Cox here.
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