We Think a Phenomenal Property Management Brokerage System is the Perfect Solution for Concerned Sales Brokers

Before COVID struck our company ran an exceptionally tight ship. So much so that we were perfectly positioned for the vast changes soon to come barreling at us all.

We’ve mostly thrived during that time, and have grown tremendously. However, the quality of our work has declined much more than we’re willing to accept long term. It’s all relative of course. Much larger and better-funded companies than us are struggling much more, and overall we have taken market share hand over fist from property managers who found themselves in over their heads, but even still one of our top goals is to return to our former place as a company that makes mom and pop investors wealthy because we’re so exceptional at delivering long term consistent icome.

It’s a lot harder to be a rental investor these days, the profits simply are not there like they once were, and they are feeling the pressure. Time and time again in the past 24 months we’ve found that the first time a landlord endures one relatively bad resident (we rarely have very bad ones) or has to invest in a rough, extensive turnover after 5+ years of enjoying rental income, the odds of them selling the home with a relatively sour taste in their mouth and possibly never returning to the rental industry skyrocket.

Pre COVID our owners seldom sold because they were making tons of easy money. This isn’t all our fault, and obviously unavoidable in a changing world, and the biggest culprits by far are application fraud, skyrocketing repair costs, and other costs all combining for a perfect storm. We can’t stop the rising tide, but we can provide a sound trustworthy boat. In a relative sense, the evidence is clear that we are leading our industry, but it is not enough for our company.

We have the most amazing salary staff a company could ask for, but most were here before 2022 a year we consider to be by far the worst in our history in nearly every way, except growth which was not our priority. We want to double our size in a few years, and that means doubling our staff while maintaining quality which is an immense challenge these days.

a dynamic property management brokerage office

Since that time we’ve struggled to fill the old account manager roles that at one time were nearly all that made up the company. These roles typically require a real estate license, so we’re left with a relatively small pool of candidates who are open to a career path other than sales, or even apartment leasing which pays much better than we could hope to, while also driving their staff in much harder ways.

In effect, our model of lower pay offset by high-quality in-office time, and work-like balance, has not been a winning formula as our potential candidate pool shrinks and the modern mentality toward hourly pay evolves.

The primary reason we clung to that model was for control. We value our reputation immensely, but we also value research and development, strategy, knowing your customers intimately, and the thrill of creating a sound rental investment plan based on decades of past experience, and then remaining highly focused on the plan as you execute.

We felt that salary staff was the best method to achieve those results and for over a decade it almost surely was. We even took it so far as to target our earliest hires who had no past real estate experience, so that we could introduce them to our methods from the start, and again for years it worked wonders.

We aren’t going to delve into the psychology of the post-COVID worker, but we feel it’s quite clear a dollar simply doesn’t go as far as it once did for wage-earning employees. That combined with a period in 2022 where it felt a large portion of our workforce would never again attempt to deliver excellence, we were forced to start rethinking everything.

Another concept that entered our thinking at that time was how the modern mentality created an environment where it was by far easier to cede control of strategy, budgeting, and important decision-making completely to our customers, even though most of them hired us for our mantra, “low headache long term property management results”. If we’re constantly deferring to them, it’s not a low-headache experience. Furthermore, aren’t we supposed to be the in-the-trenches experts? The licensed agents taking hours of licensing class plus annual updates? While owners are more than happy to take control if you seem unwilling, incompetent, or disengaged, that is a failure for most of the owners who have chosen our company even if we end up delivering decent results.

More importantly, those tough experiences that cause owners to sell their long-term investments almost always occur when we didn’t drive the strategy either due to a lack of commitment from the account manager, a controlling mentality by the owner that has grown quite a bit, or likely both.

Another point is that hourly wages in some ways motivate managers to take a laid-back approach, and our company has always been aggressive. It’s part of our culture, and we aren’t willing to give it up. We will fight for it, and that’s why we’re making these changes.

For example, every month a home is vacant that’s a minimum of 8% of the owner’s annual income that vanishes into thin air. Lost productivity with no benefit. If we pay an employee a hefty salary for all 30 days, where’s the motivation to negotiate, communicate, demonstrate, and otherwise cajole our customers into following the strategies we’ve so painstakingly outlined, blazed, and used to dramatic effect for nearly two decades?

If you are an owner-minded independent contractor with skin in the game though, how does that same situation play out? If you let that happen on all of your accounts in an environment where a great manager would have otherwise avoided that vacancy, you just lost 8% of your total annual income.

It is impossible to overstate how crucial great management is to a pleasant and highly profitable investing experience. We’re consistently astounded that owners will hone in on a 1% difference on a management fee quote, without ever asking about the fact that it would cost them on average over $50 a day when their home sits empty, not to mention that rates are lower, costs are higher, vacancy is more common, legal and liability risks rise, and much more. Similar to how earthquakes are measured on an exponential scale, and a 7 is orders of magnitude more powerful than a 5 on the Richter scale, an amazing manager delivers results at every phase, every day, for years and it compounds. A great manager compared to one who is just below average is like Usain Bolt racing a middle school child, and there’s serious money on this race.

We owed it to our customers to stop paying people not to drive hard for a winning strategy, or to feel the pain of vacancy directly, or lower rates, or a huge repair that results in that client selling their investment and never coming back. We needed partners who had as much to lose as we do, and our customers do, and that is why we made this change to partnering with brokers who have always operated by this customer-first mentality.

It’s possible we’d have always gotten great results with this model, but changes in housing over the past few years seemed to perfectly cue up this shift in strategy.

Sales agents are being forced to weigh plans B and C if they haven’t already had to move to them. Ancient property management (BC or before COVID) also filled sales brokerages with powerful myths that implied property management was a nightmare on day 1 and never stopped being so until you were out. Similar to the old adage about buying a boat. “Do you know the two happiest days of a boat owner’s life? The day they bought it, and the day they sold it”. For landlords who still do it like the good old days that probably holds true even now, but the rental market that we operate in is fast-paced, and almost all of our residents have buy quality credit, and they have chosen to rent for a specific reason. They have a lot to lose, always pay a one-month deposit, and they often move out leaving nothing needed but a cleaning and minor touch-up paint. Those stories that once dominated the water cooler in every sales office are retiring with many of the agents who loved to talk about them. Now we have a new generation that mostly knows rentals, expect them to run like well-oiled machines, and are well off and willing to pay for what they want. The average earnings for a property management account over 1 year is quite similar to a small sales commission. The volume of work is usually surprisingly similar too. One is crammed into 60 days, and one is spread over 24 months on average.

We’re also exploring offering other a la carte services with payments that can be easily processed, such as one-off sales or rental showings for owners, lease drafting, consulting, and whatever else the future may hold as a profitable transactional housing service.

Our expectation is that the need and desire for a la carte housing services will increase dramatically over time. It seems the inevitable outcome for an industry that was recently legally implicated for packaging services too aggressively. We are perfectly positioned to deliver those services efficiently, and with value.

Homes are growing even more important than in the past, and the desired services are increasing dramatically as our castle takes an ever more central role in daily life.

A major moment in our history was not long ago when we hired an excited new agent who first jumped into sales, struggled to make it work, and then became a valued part of our team. Despite the sales struggles, they were on fire about real estate and the excitement was contagious. It was also eye-opening. As they showed us the comradery, team communication, and excitement within their small sales office our instant thought was, we can do that and we are probably in a better position for it. The new breed of sales agents aren’t like the ones we used to hunt for to fill salary jobs, and we were missing an opportunity. Ironicially we’ve been fighting for control with staff whom we have very little leverage to negotiate with anymore, while an army of excited passionate brokers toils away in a low inventory sales environment begging for training, support, insights, and input that our staff often take for granted.

Like high school sweethearts who moved apart and ran into each other after moving back home, circumstances had changed dramatically for us both and this pairing felt like a potential match made in heaven.

We also want to build a powerful ecosystem of passionate people, and hourly wage staff simply aren’t going to participate with the passion necessary to make it worth everyone’s time. Because we’re outlining a surprisingly unique concept, we control the direction we take. One of our first goals is to quickly begin building a Reddit and Facebook Group ecosystem for our broker partners to connect directly with each other to pass on advice and tips, as well as referrals, and another for those same brokers to connect with the millions of rental investors who usually start the process of hiring a property management company by consulting with large groups of like-minded people in groups just like this. We think we can build an engaging and mutually beneficial platform centered on the modern and unique MoveZen model, and what it can do for landlords who want to take a modern and unique approach to maximizing rental investment.

This idea came from our interactions with the bushy-eyed broker we noted before. They showed us a lively Slack chat channel filled with brokers desperate for all of the things we fought so hard to outline for our hourly staff, and that often went no further than that. We wanted a piece of that excitement and action and from that point forward the path was never in doubt.

We’re a team and customer-first business, and the issues above were the driving force for this pivot. The benefits outlined below were always well understood, and we’ve been weighing this shift every year since inception.

Once the team, customer needs, and relationship aspect of our business was cleared up we began to focus on the other benefits that will also accrue as a result of this shift.

Cash flow in an inflationary environment

Our company has always been bootstrapped and self-funded. From day one until today we’ve grown exponentially, yet still constantly struggle to take advantage of even a fraction of the opportunities we have to invest in our customers to reap win-win benefits for both us and them. In a business environment where our closest competitors hail from Silicon Valley (Proptech), or Wall Street (REITs and Private Equity), it’s difficult to compete and grow using only funds generated from operations. Those groups arrive on the scene loaded with funds, talent, and resources of all types.

Despite that, over the past few years, many of those have closed up, many others have poorly performing stock prices, and very few have attained the exciting levels that were once expected of them. All while we have grown on average 30% a year for nearly a decade, with a particularly significant increase right in the thick of the COVID challenges and after.

With this approach, we don’t have to start a new hire with a high salary, train them often from square 1, build their portfolio, and eventually see them become profitable all the while praying they don’t leave after so much has been invested.

Now your portfolio and ours grow together, and the costs come with the income, not long before. We also expect much longer-term commitments since that’s an inherent aspect of people who look to grow their own business of any kind. Since what we offer is essentially a brand-new concept, there aren’t a lot of great alternatives to lure these brokers away. We’ve also already moved so far up the learning curve that it will be very difficult for our competitors to ever catch up. They’ve been trying to for years and mostly failing, and that was in a time of plenty. Now those investors who once let them burn cash hand over fist are starting to ask some very hard questions.

It’s starting to look like the first major battle for housing is over, and there aren’t a lot of folks standing. We see a playing field ripe for the taking just as we are hitting our stride.

By better aligning our costs and incentive structure to when we recognize revenue, we may be able to continue to bootstrap our company long-term even as we pursue a national expansion. If not, our proven commitment to efficiency is gospel to potential investors in a high-inflation environment and there is probably no company more proven in their ability to do a lot with very little, than ours.

In short, this model is much more scalable, and that makes it much better suited to help us attain our national expansion goals. One final benefit of a volume approach to relationships is that we will be partnering with the best and the brightest from the housing industry en masse in the coming years. That will expose our company to a greater perspective, more open minds, more insights, philosophies, and other things that tend to differentiate good companies from great ones. We have a lot of crucial corporate roles we have to staff as well, and this opens up our potential talent pool in a way a much smaller salary staff never could.

What might we do with all the funds we were paying in salaries as a much larger team of brokers than we could ever hope to employ bring in local leads and grow with us? Invest in our services for customers, services to make our offering the best a broker could possibly hope for, and marketing our brand, strategy, and team.

That brings us to the other major motivation in this pivot, and that is scalability. It’s always been our focus, we are embarking on a national expansion and have been growing and executing exceptionally well all along the way. Our self-funded cash challenges are an obvious problem, especially given how ridiculously well-funded our competition usually is. Our staff model was not going to work without partnering with private equity investors. Not only that but giving them immense control over the decisions we make, control that should always lie with customers and team members if at all possible. We probably will seek a small investment round at some point in the near future as that is a necessary first step to our eventual goal of being a publicly listed national leader in housing services. If we walk into those negotiations with an army of highly profitable, committed, passionate brokers who would like to someday own the stock of the public company they work with (we already share resources and reputation), our bargaining position will be immensely better.

Another major motivation in this shift is that we can make it work economically now, whereas we couldn’t in the past. For nearly two decades our property managers were jack-of-all-trade hybrids who often had to spend the first half of the day sweeping up bugs and spider webs to present a great move-in, fighting traffic while handling an emergency maintenance issue, and then getting back to the office to run our relatively technically complex digital flow and system. Finally, pick up the phone and deliver amazing customer service. As one might imagine, that was hard to find. Yet we did time and time again until 2022. We’ve found a couple, but those golden nuggets are extremely rare these days, and they require pay that we simply couldn’t turn a profit with unless they are always firing on all cylinders.

Over the years we’ve implemented a technical support group whose primary focus is to always be at their battle station, serve as the glue that binds the team together, the digital revolution front lines, and as a more consistent method for us to deliver more services to our account managers and customers, much more efficiently, and at a much higher standard. Now if that maintenance emergency crops up while the account manager is stuck in traffic, they don’t have to worry about every detail. They have a partner filling them in, who’s probably already dispatched a water shutoff, and the broker can now focus on what matters, delivering that tough news to their client in a way that makes it abundantly clear we feel your pain, but we will make this into a minor issue for you because we are the best, and we are committed.

We’ve also implemented a field operations division. That means our customer service rock stars are rarely stuck in traffic, rarely sweeping up bugs, or cobwebs, changing smoke detector batteries, or handling home visits for our customers so we can show our owners how great nearly all of our residents treat their homes, and our residents how valued they are when we offer to complete small gestures for them like a light bulb change while there handling that owner need. These aren’t inspections, they’re customer connections made on a home visit. Now they’re where they should be, communicating to the highest standards in the industry with passion and competence on higher stakes issues that are the focus of real estate licenses.

We’re also implementing a full repair and maintenance division in the coming 24 months.

Finally, a big benefit for our customers is dramatically increased flexibility. Particularly in a high-interest rate, high-cost environment, the number of types of projects that make financial sense dwindles dramatically. It would take years, if it ever happened, for us to build a portfolio to cover the cost of opening an office and paying a salary in a smaller town like Mebane NC, or the significant opportunity between Richmond VA and NoVA / DC.

With a brokerage model, we can base an independent manager there, it’s not far from several of our offices, and they can thrive while building a full-featured service offering of sales, property management, and their favorite a la carte services. They would be a true housing expert constantly surrounded by a buzz of housing activity. We would grow with them, and if that was 2% a year or 20% they would still be an important part of what we’re doing.

Also as we’ve noted they can offer a lot more services, based on their personal preferences, than we could by paying a salary and forcing staff to take on tasks they may or may not be attracted to.

Many rural landlords and managers struggle because it can be tough to run a tight ship with the person you see around town 3 times a week. With our model, we can deliver objective, consistent, well-communicated results where the local broker acts as their advocate in the process only, and the residents know company policy will be enforced. This should allow locals to become rental investors while creating some distance between them and the community. The same goes for the local manager as well.

We’ll also be able to deliver most of the high-tech tools and services we offer in larger cities to more rural areas with the help of local brokers building their broader housing sphere of influence naturally.